Building Work Contractor’s Act 1995 – Magistrates Court Jurisdiction Threshold

The Magistrates Court in South Australia has a special jurisdiction under the Building Work Contractor’s Act 1995 not only to order compensation against a builder, but also to require a defaulting builder under a Domestic Building Work Contract to perform remedial work. The conventional wisdom at common law is that injunctions are not granted requiring builders to go back and fix defective work, because such orders have a history of giving rise to further dispute and court time, and so this statutory power of the magistrates in South Australia is somewhat unusual in the common law world.

At the moment, the rule is that if the claim is for more than $40,000, either party has the right to have the case transferred up to the District Court. Under the Statutes Amendment (Courts Efficiency Reforms) Bill 2012, this threshold is being shifted up to $100,000.

On a related point, Magistrates Court proceedings under the Building Work Contractor’s Act 1995 are ordinarily treated as “small claims” even if for more than $6,000 – the present limit for these small claims in which lawyers are only allowed to appear with special permission. The threshold for small claims is also going up – from $6,000 to $25,000. This means that claims for payment for construction work of less than $25,000 brought in the Magistrates Court will usually be run without lawyers. In practice, however, we can expect that the majority of these small claims will be now run by way of adjudication under the Building and Construction Industry Security of Payment Act 2009, which applies to contracts entered into from 10 December 2011.

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