New Zealand Law Society - Failure to supply building guarantees results in fine

Failure to supply building guarantees results in fine

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Gerald James Thomson has been fined $12,800 and ordered to pay $16,700 in compensation to two of the three complainants for making false representations about Homefirst building guarantees to home owners.

Mr Thomson had pleaded guilty in Christchurch District Court to three charges under section 13(i) of the Fair Trading Act 1986. 

The Commerce Commission brought the case against him after three home owners in the Canterbury region complained of not receiving a builder's Homefirst guarantee when they contracted on the basis that Thomson would apply for the guarantee.

The Commission says Mr Thomson never intended to apply for an independent guarantee and, as a result, his customers didn't receive the protection they were led to believe they had.

In sentencing Judge Callaghan said the contract specifically provided that a Homefirst Guarantee would be applied for and most home buyers, particularly first home buyers, rely on the confidence they can expect from a guarantee such as this.

"[The conduct] cannot be described as simply careless. 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."

"The issue of a Homefirst Guarantee not being applied for has left [complainants] bereft of the comfort of the sanctity of a guarantee," he said.

Commissioner Anna Rawlings says representations about building contracts need to be scrupulously accurate, not least because of the importance of the purchase.

"Whether they are making promises orally or in writing, the building services provider needs to do what they've committed to do. We also encourage consumers to follow up where possible to make sure they are getting the service they think they are getting," she says.

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