Home Owners successful in Claim denied by the Builder, Breach of Statutory Warranty – Builder’s Defence denied

02/09/2020

Watson & Watson received instructions to act on behalf of the Owners of a home who engaged a Builder to undertake building works for a large new residence in a prestige area of Sydney.

Watson & Watson on behalf of the Owners commenced proceedings issued out of New South Wales Civil and Administrative Tribunal.  The Owners claimed the cost of rectification of the defective work based on breach by the Builder of Statutory Warranties provided for pursuant to Section 18 of the Home Building Act.

The Builder claimed:

1. That the Builder was not responsible for the defective work as it was a design fault by the Consultants engaged by the Owners.
    
2. That the Builder should be entitled to return to the site to rectify any defects found by the Tribunal.  This is pursuant to Section 48MA of the Home Building Act which states:
   
   “Rectification of defective work is preferred outcome in proceedings
   A Court or tribunal determining a building claim involving an allegation of defective residential building work or specialist work by a part to the proceedings (the “responsible party”) is to have regard to the principal that rectification of the defective work by the responsible party is the preferred outcome.”
    
3. That the Builder had a defence to the claim under Section 18F of the Home Building Act.  Section 18F has changed over the years and the particular form of the section that applies depends upon the date of the Contract.  At the time of the date of the Contract Section 18F provided for the following:
   
   “In proceedings for a breach of a statutory warranty, it is a defence for the defendant to prove that the deficiencies of which the plaintiff complains arise from instructions given by the person for whom the work was done contrary to the advice in writing of the defendant or person who did the work.”
    
4. S18F was amended by the Home Building Amendment Act 2014 to include the current 18F(1)(b) allowing the Builder to rely on written instructions given by a relevant professional, such as an architect or engineer.  That amendment came into force on 15 January 2015 and does not apply to any contract entered into before that date.
    
5. Further the Builder claimed approximately $49,000 was owed for additional works carried out on behalf of the Owners.  The Owners conceded $5,000 approximately and claimed that the balance of the items claimed by the Builder were for works that the Builder was required to undertake as part of the Builder’s obligation to rectify defective work and to complete the scope of works as per the Contract (as varied).  The Tribunal only allowed $5,000 as was conceded.
   
   There were other issues that arose however they were less significant value than the above.

On behalf of the Owners we engaged an experienced Building Consultant who undertook various inspections and prepared reports in relation to the property.  The Builder engaged a Building Expert who countered with a report in reply. 

The matter was before the New South Wales Civil and Administrative Tribunal (NCAT) who recently delivered it’s Decision.

The Tribunal found in favour of the Home Owners and made an order that the Builder pay to the homeowners a sum in excess of $300,000 after allowing for the sum of approximately $5,000 which they conceded. 

This case confirms our view that one needs to carefully prepare the case.  In this particular case there were real issues concerning water ingress into the residential property over many years which had not been rectified by the Builder.  One issue that arose was whether the water ingress issues continued after some rectification works have been undertaken by the Builder.

Part of the presentation of the case was a presentation of in effect a diary maintained by the Owners through emails and particularly photographs from which once presented in the appropriate form found a basis of the Owners being able to establish with the Tribunal of the water ingress over the period of time.  

This presentation in the form of a chronology diary established that the water ingress continued after the Builder had undertaken works which the Builder submitted had rectified the issues. 

A further issue that arose in this case but does not arise in many building cases is the defence that is available to a Builder pursuant to Section 18F of the Home Building Act. 

It is critical for Builders who want the protection of the Section 18F defence to take action throughout the course of the construction.  It is also critical for the Owners and the advisors to the Owners to consider any written advice or matters that may constitute a defence so that the construction is undertaken in a proper and workmanlike manner. 

In this particular case, if the Section 18F defence had been successful it would have significantly reduced the Owners’ claim. 

Also the selection of the appropriate Building Consultant was critical to the outcome in this case, in which the evidence of the Expert briefed by Watson & Watson on behalf of the Home Owners was generally preferred by the Senior Member of NCAT over the evidence of the Expert briefed on behalf of the Builder.

Care is needed in preparation including the selection of the appropriate Expert for the appropriate case.

Watson & Watson are experienced in all matters relating to building and construction issues including the selection of appropriate experts for your case.

If you have any issues as either the Builder or a Home Owner our experienced building and constructions Lawyers who are adept in all building and constructions matters including Owners Corporation matters can assist you.  Please contact Richard Watson Accredited Specialist stream of Building & Construction or his Personal Assistant Shereen Da Gloria to discuss your concerns and seek appropriate timely advice.

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