Builders Successfully Defends Owners Excessive Claim and Reduces Home Owners Claim by 80%

05/05/2015

Garry approached Richard Watson after receiving a claim in the Consumer Trader & Tenancy Tribunal (CTTT) from the Purchaser of a home which he had built and which was sold in November 2012.  Garry built the house having obtained an Owner/Builder Licence.  The Purchaser  from Garry as the Owner sought damages for a breach of the statutory warranties provided for by the Home Building Act 1989.  These are provided by Section 18 of the Home Building Act in relation to obligations by a Builder to provide the statutory warranties.

The Owners claim was for in excess of $92,000.  The builder Garry was concerned as to his liability and was of the view that there was very little wrong with the building works.  Garry approached Richard Watson who considered the matter.

Although the Builder was very experienced there is requirement to obtain an independent expert to respond to the building consultants report which was prepared on behalf of the Owner.  The evidence of the Builder is not independent and evidence by the Builder as to the quality of the work would not be accepted by a Member of the Tribunal.

Following receipt of instructions from Garry, Richard Watson assisted in obtaining the appropriate Expert to review the building works and to prepare the necessary response to the report of the Building Consultant engaged by the Owner.  The Building Consultant engaged on behalf of the builder provided a report indicating that the cost of rectification in relation to elements of work for which Gary as Owner/Builder would be responsible was less than $10,000.  The Expert engaged on behalf of Garry also questioned the calculation of the Building Consultant engaged on behalf of the Owner.  The Building Consultant on behalf of the Owner described 17 areas of claimed defective work and indicated that the cost of rectification was in excess of $92,000. 

The Tribunal having considered the matter ordered that the Builder pay the Owner the sum of $18,071 being the assessed cost of rectification of the alleged claim relating defective work.

There were issues relating to the calculation which could have been subject to an Appeal.   However one needs to consider the cost of any such action such as taking an appeal throughout the whole dispute process and resolution by agreement or ligitation.

Is this a success for the Owner?

Each of the Owner and the Builder had incurred significant legal costs and were entitled to be legally represented as at that time the Owner’s claim was in excess of $30,000.  The Tribunal Rules relate to the quantum of the claim made rather than the amount allowed at the Hearing. 

In these proceedings the Tribunal ordered that the Builder pay the Owners costs. The fundamental basis seems to be that the Tribunal considered it a success for the Owner notwithstanding that the Owner received less than 20% of the Owner’s expected $92,000 as set out in the Owner’s claim. 

This decision is inconsistent with a decision of the Tribunal on almost exactly the same facts for whom we acted for the Builder who was awarded costs in a Judgment in 2015.

It is critical that all parties take all steps to attempt to resolve matters as there are risks associated with any proceedings. 

Not all findings or decisions of the Tribunal are appellable.  Further, the costs associated with an appeal are not insignificant. 

In those circumstances one always needs to consider all alternatives available. 

One method which is under utilised by most litigants or parties in the various proceedings is by making an appropriate offer of settlement at the appropriate time.  The appropriate time if at all possible is before any significant costs are incurred.

We consider all aspects of the matter and make recommendations in this regard.

In this case despite the Tribunal holding that the Owner was successful in the claim for the purpose of costs we do not believe that the Owner will believe that the Owner was successful as the award was significantly less than the costs the Owner incurred and further the costs of recovering the Owner’s costs will be significant and to a significant degree will be unrecoverable from the Builder. 

Please contact Richard Watson for initial advice in relation to any Building and Construction matter whether considered significant, insignificant, complicated or uncomplicated.  Nothing should be taken for granted.  We will advise in relation to all aspects.

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