Progress Payments and Deposits in the Cabinet Making Industry
In 2018, the Cabinet Makers Association or WA (CMAWA) met with the then Minister for Commerce, the Hon Bill Johnston MLA, in relation to difficulties experienced by cabinet makers in claiming progress payments from their clients under the provisions of the Home Building Contracts Act 1991 (HBC Act).
As the law currently stands, cabinet makers are able to charge their clients a 6.5 per cent deposit where the contract price is above $7,500 and below $500,000. Once work commences, however, they are legally not able to charge their clients progress payments until the finished cabinet or product is placed on the client’s premises. This is because the HBC Act requires that ‘…property in the materials, passes absolutely to wonder on the payment being made.’ As the finished product can cost tens of thousands of dollars and take several months to make, cabinet makers must bear this cost themselves before receiving payment, which can create cash flow difficulties for some businesses.
The Department of Mines, Industry Regulation and Safety (DMIRS) is examining options to address the concerns raised. To inform its consideration of this issue, a survey of CMAWA members was carried out in December 2018. This also provided an opportunity for DMIRS to improve its understanding of the industry and the issues it is currently faced with.
Survey responses indicate that the progress payment provision is a contentious issue for cabinet makers and also confirms a high level of non-compliance with the deposit taking and progress payment provisions of the HBC Act. While no cabinet maker has been prosecuted in recent years, there appears to be a need to change to the law to provide a better outcome for cabinet makers while continuing to protect the interests of consumers. It is important that any change to the law to address this issue is subsequently enforced to ensure all cabinet makers are playing by the same rules.
A Consultation Paper is currently being drawn up by the DMIRS which will be open for Pubic comments soon. The purpose of this Consultation Paper is to obtain industry and public comments on options for change that have been identified. Following receipt and analysis of comment, DMIRS will provide a final report with recommendations for change to the Minister for Commerce, the Hon John Quigley MLA.
For further information, please contact the CMAWA’s Executive Officer.