Beware of the Limitation Periods – Building Claims


The Home Building Act provides for claims against the Builder, Developer of Subcontractor in relation to residential building work in particular circumstances.  However there are time limits in which claims must be notified and separately, time limits in which to commence proceedings.

There are prerequisites before a claim can be made on the Home Building Compensation Funds (which was previously known as Home Owners Warranty Insurance) (HOW).

If you are an Owner or Claimant in relation to disputes relating to residential building work, which work it is covered by Home Builders Compensation Fund (or Home Owners Warranty insurance) you should notify the insurer in the appropriate form as early as possible.  Strict limitation periods apply.  There is no reason why you cannot notify the insurer as soon as you are aware of a problem.

Over the years the periods in relation to which one can bring a claim whether against the Builder, Developer or Subcontractor has varied.  Further there are different limitation periods for different aspects of the residential building work.  For example currently the limitation period is 6 years from the date of completion of the works for claims relating to major defects and for all other defect claims must be made within 2 years from the date of completion of the works.  

You (whether an Owner, the Builder or Subcontractor) should consider all aspects that may arise as early as possible so that you can obtain advice at the earliest possible time.

Over the years we have acted on behalf of many Owners and it is critical to take steps to bring the claims within the relevant limitation periods and notify the HOW Insurer of a possible claim within the prescribed time limits.

We have acted for various Builders against whom a claim has been made where there have been real issues as to whether the claim has been made within time.

Recently we received instructions to act on behalf of a project home builder (the Builder) who had been served with a claim issued out of the NSW Civil and Administrative Tribunal (NCAT).  A claim had been lodged about 4 years after the completion of the works.  The Solicitor acting for the Owner of the property had been corresponding with the Builder directly for some considerable time in relation to various claimed defects prior to issuing the claim out of NCAT.

The Solicitor engaged by the Owner commenced proceedings issued out of NCAT on behalf of the Owner.

The first issue that arose was a consideration of what where the claimed defects and whether they fell within the appropriate definition of (at that time) “structural defects” or were the claimed defects “other defects”.  If the defects were “structural defects” then the claim would be within the limitation period.  If the defects were not “structural defects” the claim was made out of time and even if there had been defects (other than structural defects) the Owner’s claim would be unsuccessful.

The issue as to whether defects are structural (the previous classification) or major defects (the current classification) is to be determined objectively.  It is often that an Owner thinks a defect is “major” when on a review of the defect it is not “major” as defined. 

In the recent case to which we refer to in this article, the Owner incurred significant fees and expenses in obtaining expert/s reports and legal fees.

However it was clear on the basis of the expert evidence on behalf of the Owner that the defects were not structural and accordingly the claim would be unsuccessful having regard to the limitation period in which to bring the claim for defects which were not structural defects.

After pointing this out to the Solicitor for the Owner and considerable discussions between the Owner and the Owner’s Solicitor, the Owner agreed to pay to our client costs incurred (including our legal costs and disbursements for expert opinion) so as to resolve the matter.

Which Court or Tribunal hears the Case?

Primarily claims relating to claims for breach of statutory warranties or a Builder claiming moneys due by an Owner which fall within the time limits and the jurisdictional limits within of NCAT are decided by NCAT. If such action is commenced in a Local Court or District Court (which would also have jurisdiction) the matter would be dealt with by NCAT if either party made an application to NCAT to decide the dispute.

Different limitation periods and monetary limits apply to different Tribunals and Court for example, the Supreme Court of New South Wales, the District Court of New South Wales, the Local Court or NCAT.

It may be that the Owner’s claim will be within the time limits provided for such proceedings to be commenced in NCAT however the Builder’s claim relating to the same project might be outside the time limits as provided for in proceedings to be commended by the Builder in NCAT.  In those cases it is appropriate for both proceedings to be transferred from NCAT to the appropriate State Court either the Local Court, the District Court or the Supreme Court.

Care needs to be taken that proceedings are commenced and are maintained in the appropriate jurisdiction.

If you are involved or likely to be involved in any building and construction, commercial or strata dispute, or if you have any doubts as to the time limits or monetary limits of particular Courts or Tribunals, please contact the experienced Solicitors at Watson & Watson.  Please contact Shereen DaGloria the Personal Assistant to Richard Watson to discuss your matter and to make an appropriate conference to discuss the matter with us.

This is only a preliminary view and is not to be taken as legal advice without first contacting Watson & Watson Solicitors on 9221 6011.

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