Builder found guilty of misleading clients over home-build guarantees

Wednesday, 22 June 2016

Flaxmill builders included a home guarantee which the company did not signed up to on customers' behalf.

Christchurch building company director Gerard James Thomson has been fined $12,000 and ordered to pay nearly $17,000 in compensation after misleading clients about home-build guarantees.

Thomson, director of Flaxmill, appeared in the Christchurch District Court on Monday for sentencing after earlier pleading guilty to three charges under the Fair Trading Act.

Thomson promised three of his Canterbury clients a Homefirst building guarantee but did not apply for them. The customers complained and the Commerce Commission prosecuted the company.

In sentencing, Judge Callaghan said the Flaxmill contract provided for the guarantee and most home-buyers, especially first-home buyers, took confidence from guarantees.

Flaxmill's contract breach could not be described as simply reckless, Callaghan said.

'It is more than that - it is gross carelessness or gross recklessness because of the very nature of the contract that said a guarantee would be applied for.'

Commerce Commission, commissioner Anna Rawlings said two of the complainants discovered faults in Flaxmill's workmanship which would otherwise have been covered by guarantee.

The home owners were unable to remedy the faults situation as the HomefirstGuarantee application had to be made before building started.

Verbal or written representations about building contracts needed to be scrupulously accurate, Rawlings said.

The commission prosecuted two directors of Christchurch-based building company Balmoral Homes in 2010 who were fined $15,000 each, ordered to pay a total of $97,000 in reparation and a further $30,000 for emotional harm reparation for six complainants.

Balmoral Homes misrepresented to customers that they would receive Master Build Guarantees for their work despite the company being suspended from the Registered Master Builders Federation.

In other instances, Balmoral Homes accepted payments from a number of consumers for Master Build Guarantees but did not forward the applications and payments to Master Build Services.