Statutory Warranty Period – building has defects –Home Building Act Time Limits – Some recent cases

12/04/2021

After the changes that were made to the Home Building Act 1989 in 2015 “structural and non-structural defects” were replaced with “major defects” and “non-major defects”.  The Home Building Act 1989 (HBA) thereafter provided for a 6 year warranty period for major defects and a 2 year warranty period for any other non-major defects for residential home Owners to bring a defects claim.

To establish whether you have a 6-year warranty claim or a 2-year warranty claim:

1. It needs to be decided when the Statutory Warranty period starts. This is generally the date when the building work was completed. The test to determine the date of completion differs depending on whether you are a lot Owner of a Strata Scheme, or an Owner of a residential building.
2. Next, it is important to work out whether each defect in the building is a major defect or any other non-major defects as defined in section 18E(4) of the HBA.
3. If the defect is deemed to be a major defect, you have 6 years in which to make a claim from the date of completion of the building work; otherwise you have 2 years from the date of completion of the building works.

Under section 18E(4) of the Home Building Act 1989, “major defect” means:

(a)         a defect in a major element of a building that is attributable to defective design, defective or faulty workmanship, defective materials, or a failure to comply with the structural performance requirements of the National Construction Code (or any combinations of these), and that causes, or is likely to cause –

(i)          the inability to inhabit or use the building (or part of the building) for its intended purpose, or

(ii)         the destruction of the building or any part of the building, or

(iii)       a threat of collapse of the building or any part of the building, or

(b)         a defect of a kind that is prescribed by the regulations as a major defect, or

(c)         the use of a building product (within the meaning of the Building Products (Safety) Act 2017) in contravention of that Act.

major element of a building means –

(a)         an internal or external load-bearing component of a building that is essential to the stability of the building, or any part of it (including but not limited to foundations and footings, floors, walls, roofs, columns and beams), or

(b)         a fire safety system, or

(c)         waterproofing, or

(d)         any other element that is prescribed by the regulations as a major element of a building.

The following are recent cases decided by NSW Civil and Administrative Tribunal (NCAT) giving a snapshot of what defects are considered to be major defects.

Fire Safety System

S18E of the HBA includes a fire safety system as one of the major elements of a building.  The Tribunal has found in a recent case, a fire safety system as a major defect as if any of the components fails, the fire safety system fails.

Waterproofing

In 2019 the NCAT Appeal Panel found that the water ingress caused by the Builder’s defective workmanship in tiling and waterproofing the balconies was a major defect.

In a recent case in 2020 the Appeal Panel found that the defects in the balcony waterproofing were major defects because water penetration into building cavities was likely to cause the threat of collapse of the building or any part of the building, and if the defects were not rectified, the water penetration was likely to keep occurring.  The Tribunal also recognised that the entire roofing was part of the waterproofing and as such, it was a major element of the building.

However, a basin overflow in a bathroom was not accepted as a defect in a major building element because the overflow of the basin did not make the basin itself part of the waterproofing system to the building. The Tribunal found it to be a non-major defect.

Further, the Tribunal viewed the lack of overflow relief in the sewerage system was not within waterproofing and not a major element of the building. The Tribunal regarded it as a mere defect in the sewer drainage system.

The Tribunal also found cladding is part of the waterproofing system for the building and as such defects identified in the cladding are major defects.

Combustible Cladding

After the amendment of the regulation in April 2018, combustible cladding is now considered a major defect.

In 2020 the Appeal Panel affirmed that combustible cladding was a major building defect.

In this case, the Builder carried out the residential building work at a Strata Scheme located in Ryde. The Owners Corporation claimed that the cladding material installed to the external wall was combustible and did not comply with the Building Code of Australia (BCA), and therefore the Builder was in breach of the Statutory Warranties under the HBA.

The Tribunal’s opinion was that the purpose of installing cladding is to protect residents of the building from illness or injury caused by a fire and also to prevent the spread of fire between buildings. Accordingly, the Tribunal affirmed if a combustible cladding installed to the building does not comply with the BCA, then the material is not suitable for the purpose for which it is intended namely being used as a cladding for a residential building, because the material will not achieve its purpose.  Of course, there may be other circumstances where the defects you are experiencing can be considered as major defects.

If you, a Home Owner or a Strata Scheme are having difficulties in resolving issues with your Builder and others including the Developer of the Building pertaining to defects in relation to your house, granny flat or strata complex and need advice on what to do next and what your options are with a view to resolving the matter efficiently and cost effectively, please contact our experienced Building and Construction Solicitors at Watson & Watson Lawyers.  

Do not delay as the Statutory Warranty period may expire shortly in relation to the defects that arise in your building.  Please contact Richard Watson Accredited Specialist, Building and Construction or his Personal Assistant Shereen DaGloria to discuss your matter and seek 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.