Building Claim with Complications
30/09/2021
In late 2018 Watson & Watson Lawyers received instructions to act on behalf of the Builder who had just received an Application by the Owner issued out of the NSW Civil and Administrative Tribunal (“NCAT”).
In June 2013 the Builder entered into a Contract with the Owner to undertake renovations and an extension including an upper floor to a residential building for an agreed Contract Sum of approximately $350,000.
The Owner in her NCAT Application claimed in excess of $250,000 for claimed costs of rectification of alleged defective work.
After receiving instructions, we investigated the matter and ascertained that there were many issues that could arise.
Extra Work undertaken by Builder in late 2015 at request of Owner’s Building Consultant
In October 2015 more than 1 year after the date of Practical Completion, the Owner engaged a Building Consultant who prepared a Report as to requirements to rectify claimed defects to the upper floor addition. The Builder did not agree with all the matters that were set out in the Report however, in an effort to resolve the matter with the Owner without litigation, the Builder negotiated with the Owner’s Consultant as to the work the Consultant required and the Builder undertook the work as required by the Building Consultant in accordance with the Owner’s Consultant’s directions.
In early 2016 the Building Consultant agreed the works were constructed in accordance with the Consultant’s instructions and requirements. In addition, the Builder paid a sum of money to the Owner to cover other incidental matters claimed by the Owner which were disputed by the Builder. As far as the Builder was concerned, the dispute had been settled.
A Claim in 2018 in excess of $250,000
In late 2018 the Owner obtained a Report from a further Building Consultant and claimed in excess of $250,000 for rectification of claimed defective work.
In December 2018, the Owner filed the Application at NCAT making the claim. The claim was essentially based on alleged claims of breach of Statutory Warranties essentially on the basis that part of the building work was not carried out in a proper and workmanlike manner.
The Builder disputed the Owner’s claim. The Builder advised us that the Builder had returned and undertook work in late 2015 (at the Builder’s costs) which work was requested by the Building Consultant engaged by the Owner (Owner’s Building Consultant) who had signed off on the work. That work was undertaken by the Builder notwithstanding, that the Builder did not believe the whole of the work was necessary.
The Owner’s claim at NCAT was supported by a Building Report from the same Building Consultant who had overseen the work in early 2016 and had signed off that work.
Statutory Warranty – Limited Period
Having regard to the date of Practical Completion of the work (September 2014), the claim made in December 2018 for breach of Statutory Warranties would be limited to structural defects. Other defects which are not within the category of structural defects as defined by the Home Building Act were not covered for more than 2 years after the date of completion of the works.
Some of the claims in the NCAT proceedings related to water ingress issues which may have been as a consequence of a structural defect.
Building Consultant on behalf of the Builder
As recommended by us, we engaged a Building Consultant (Builder’s Building Consultant) specialising in water ingress issues who inspected the property with us and thereafter prepared a Report.
In effect, the Builder’s Building Consultant disputed the claims by the Owner’s Building Consultant and further, indicated that there were relatively inexpensive rectification solutions that could have been undertaken to resolve the issues.
Extent of Scope of Works
Some of the difficulties in relation to this property related to the scope of works which were included in the original scope of works to be undertaken by the Builder for the Owner. This occurs on occasions in relation to renovations and extensions of old existing homes. It is very important at the time of entering into the Contract, to clearly state what works are included in the Contract scope of works and if there is any doubt, what works are excluded from the contractual scope of works.
The Contract as prepared in this case, was not absolutely clear on these aspects. Also care is required having regard to the Statutory Warranties under the Home Building Act.
The Builder’s position was that some of the defects claimed in the NCAT proceedings were in fact, defects in the old part of the house which was not the subject of the scope of works to be undertaken by the Builder.
Issues for Consideration
On our review, it appeared that issues arose in relation to:
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Was the dispute (or any part of it) settled previously.
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Whether the works undertaken by the Builder specifically at the request of the Owner and the Owner’s Building Consultant, additional works outside the original scope of works for which a claim for payment could be made by the Builder; and
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Whether the claim in relation to the items claimed, were within the time allowed to make a claim for breach of the Statutory Warranties.
The case was complicated as a consequence of the Builder attempting to please the Owner by doing the works as required by the Owner’s Building Consultant. We have seen the Builder’s wish to please and assist the Owner outside of the terms of the Contract without appropriate documentation caused significant issues for the Builder at a later date.
In hindsight it would have been better at that stage, for the Builder to engage his own Building Consultant and try and resolve the matter once and for all at that stage.
Offers of Settlement
The matter progressed and numerous offers were made by the Builder in response to the Owner’s claim which was in excess of $200,000 plus costs.
After the matter had been listed for hearing, there was a Mediation in an attempt to resolve the disputes, prior to the matter being heard by the Court. Offers were made. The Builder on our recommendation, made a ‘without prejudice’ offer immediately following the Mediation.
This had two alternative purposes; namely:
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Hopefully the matter could resolve; or
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In the event that the matter was not resolved and had to be determined by the Court; the offer may have had a bearing on the Costs order following the Court hearing. If the Builder’s offer was more favourable to the Owner than the final decision of the Court, then as from the date of the offer, the Builder would likely receive an order that the Owner pay the Builder’s costs.
Those costs would likely be considerable.
Application for Adjournment of the Hearing
As it happened, the matter did not proceed smoothly. Approximately one week before the hearing was to commence, the Owner made an Application for the Hearing date to be vacated and sought to make further substantial claims. The Court allowed the adjournment on the basis that the new claims should be considered, notwithstanding the lateness of the claims.
The problem with this was that the case had to be reconsidered completely at significant costs to each party.
The Owner had the benefit of a Building Warranty Insurance formerly known as Home Warranty Insurance to cover the Owner for the sums sought (to a maximum of $340,000) in the event that the Builder was unable to pay the amount ordered following the Hearing.
The Owner’s position simply seemed to be that the Owner would pursue the matter to finality. This was at great cost to the Owner, and also the Builder who engaged Watson & Watson Lawyers and Consultants to defend the claim.
Adjourned Hearing
As it happened, the Court listed the case for Hearing 6 months later.
Settlement
After the adjournment of the original hearing date, the Owner’s position changed in that as far as we perceived, her Lawyers accepted our proposition that the Owner was at risk in relation to costs since the date of the offer made by the Builder (which was a reasonable offer), which had been rejected by the Owner.
Eventually the matter was settled effectively for the amount offered in the earlier settlement offer by the Builder to the Owner months before.
The Builder was satisfied with the outcome which was substantially better than any other outcome that would be possible, especially if the Builder had not made an early offer to settle the matter.
Watson & Watson experienced Building and Construction Lawyers can assist you with all matters relating to building and construction. Even those disputes which appear straight forward can sometimes become difficult and expensive.
Please contact the experienced Lawyers at Watson & Watson by contacting Richard Watson Accredited Specialist Commercial Litigation in the stream of Building and Construction or his Personal Assistant Shereen Da Gloria to discuss issues you face.
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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07/03/2022
Recently Watson & Watson Lawyers acted for a property owner who entered into a Building Contract for completion of the building of two properties following termination of a Contract with the original Builder.
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21/01/2022
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15/11/2021
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09/11/2021
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02/11/2021
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25/08/2021
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11/08/2021
An Occupation Certificate is required for:
(a) The commencement of the occupation or use of the whole or any part of a new building (be it a residential or commercial building/property).
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12/07/2021
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05/07/2021
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26/04/2021
All parties benefit from an early resolution. Watson & Watson Lawyers have recently been involved in numerous Easement issues and two of which are referred to below.
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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
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05/04/2021
The Home Building Act 1989 (“Home Building Act”) (HBA) sets out in Section 18B warranties (Statutory Warranties) as to residential building work which are implied in every Contract pertaining to residential building work.
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30/03/2021
If you have an Order from NCAT in your favour you need to consider your options to best achieve your desired outcome which almost always, is to receive payment of the outstanding money due to you.
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23/03/2021
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27/01/2021
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20/01/2021
In a recent case of Lindvest DM Pty Limited v CPDM Pty Limited [2020] NSWSC 1290 Justice Stevenson in the Supreme Court of New South Wales considered the matter.
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14/12/2020
Watson & Watson act on behalf of many Owners and many Builders in relation to disputes as to defective work undertaken by a Builder in construction of a residential property. Claims up to $500,000 are generally dealt by NSW Civil and Administrative Tribunal (NCAT). There are hundreds of cases before NCAT dealing with the issue and possible claims by a Home Owner against a Builder for Orders relating to defective work.
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07/12/2020
The relevant issues in relation to Easements include:
What are the terms of the proposed Easement including the parties’ rights and obligations?
Whether the Easement is reasonably necessary for effective development of the land.
Whether the Easement is not inconsistent with public interest.
What are the alternative proposals to the Easement which is the most appropriate Easement?
What is the appropriate compensation to be paid?
Who pays the legal and other costs of the parties?
Whether all reasonable attempts have been made by the Plaintiff to obtain the Easement requested.
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30/11/2020
In the case of Hanson v Metricon Homes Pty Limited [2020] NSWSC 401 the Supreme Court has considered various obligations of Tribunal Members including failure to allow adjournments. One of the general principles is Section 36 of the Civil and Administrative Tribunal Act (NCAT Act) which provides in essence, guiding principles that proceedings in the Tribunal are to facilitate the just, quick and cheap resolution of the real issues in the proceedings.
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11/11/2020
Often if the matter cannot be resolved one or other of the parties commences proceedings in the NSW Civil and Administrative Tribunal (NCAT) and seeks various orders in their favour.
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21/10/2020
In the recent case of Rice v JR & SD Farmer trading as TA Urban Bespoke Homes [2020] NSW CATAP 208 allowed an Appeal against at Decision of NCAT at first instance. One of the main issues in this case related to the enforceability of variations undertaken during the process of building work in relation to residential building work.
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24/09/2020
In late 2018 Watson & Watson received instructions to act on behalf of the Owner of land who received a DA approval in July 2018 for the construction of a home on land he purchased in 2014.
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17/09/2020
Watson & Watson were instructed by the Builder in relation to a dispute between the Builder and the Home Owner resulting from residential building work pursuant to a Contract. Each of the Builder and the Home Owner commenced proceedings in the New South Civil and Administrative Tribunal (NCAT).
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08/09/2020
Watson & Watson acted on behalf of the Owners of a home which had been purchased from the previous Owner in 2012.
In this matter the Tribunal ordered:
That the Builder pay to the Owners in excess of $300,000; and
That the Builder pay the Owners’ costs of and incidental to the proceedings on an ordinary basis as agreed or assessed.
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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.
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11/08/2020
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05/08/2020
In litigation, it is important to not expose your clients to risks that can be easily avoided and to not fight battles that do not need to be fought. Litigation is costly and risky enough.
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29/07/2020
The Design and Building Practitioners Act 2020 became law in 2020 and extends the duty of care of various specific persons relating to the carrying out of construction work, namely a duty to avoid economic loss by defects in or related to a building which work arising from the construction work.
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02/07/2020
On 19 June 2019 the New South Wales Court of Appeal considered the requirements for obtaining a stay of execution of a Judgment Debt arising under the Building and Construction Industry Security of Payment Act 1999 (NSW) (“The SOP Act”).
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02/07/2020
On 19 June 2019 the New South Wales Court of Appeal considered the requirements for obtaining a stay of execution of a Judgment Debt arising under the Building and Construction Industry Security of Payment Act 1999 (NSW) (“The SOP Act”).
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24/06/2020
With few exceptions, the Consumer and Commercial Division of the NSW Civil and Administrative Tribunal (NCAT) has jurisdiction to hear and determine any building claim brought before it under part 3A of the Home Building Act 1989 (HB Act) where the amount claimed does not exceed $500,000.
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17/06/2020
Watson & Watson have acted for the Builder and in other cases, for the Owner in relation to issues, rights and the effect of a termination of a Building Contract. There is also a separate issue as to the whether the Builder can suspend the works. The issue usually arises when works are significantly progressed but not completed and the relationship breaks down between the parties to the Building Contract. If the Builder suspends the works, the Owner is in a very difficult situation as the works have stopped and the Owner is not able to bring the works to completion without bringing the works out of suspension.
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19/05/2020
Watson & Watson Lawyers currently act for many Owners, Builders or Subcontractors who are either serving or and receiving Payment Claims and some of the matters are proceeding to an Adjudication Application and Determination.
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28/04/2020
One trap for Contractors issuing multiple invoices that are styled as Payment Claims under the Act is issuing more than one per month, where the construction Contract in question does not permit more frequent Payment Claims.
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21/04/2020
As we have considered in another article, when one landowner applies for an Easement over a neighbour's property, it is:
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06/04/2020
Beware: Strict time limits under the Building and Construction Industry Security of Payment Act 1999 (NSW) continue to apply notwithstanding the havoc wrought to all financial areas by the virus.
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23/03/2020
When one landowner seeks an Easement over a neighbour's property if the matter cannot be resolved, the person seeking the Easement can approach the Court, usually the Supreme Court of New South Wales to seek an Easement over the neighbour’s land for a specific purpose for example, to drain water (stormwater easement).
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20/03/2020
Following a Decision on 14 March 2020 of a Senior Member of the New South Wales Civil and Administrative Tribunal (NCAT) in the case of Paraiso and CBS Build Pty Limited, we received instructions to act on behalf of the Owner, Ms Paraiso to consider the decision of the Senior Member at first instance.
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17/03/2020
The recent case of Mann V Paterson Construction Pty Ltd [2019] HCA 32 has the effect of changing the law that applies to claims in Quantum Meruit in certain circumstances.
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29/02/2020
We recently acted for a property Developer who had a dispute with a Builder.
Within 11 days from our initial conference with our client, we were able to achieve resolution of the dispute, after commencing urgent Supreme Court of New South Wales Equity Division proceedings, involving a solicitor from our office appearing twice as advocate before the Duty Judge.
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18/02/2020
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08/01/2020
There are many circumstances in which a land Owner would need an Easement from the Owner of adjacent land.
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10/12/2019
At Watson & Watson we have for many years acted for one party or another in litigation in all areas including commercial work, banking and finance, building and construction, strata and criminal in particular, white collar crime.
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04/11/2019
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.
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04/09/2019
The NSW Civil and Administrative Tribunal (“NCAT”) has jurisdiction and functions as may be confirmed by the NSW Civil and Administrative Tribunal Act (the NCAT Act). The jurisdiction of NCAT is wide and varied. However one needs to find the authority for NCAT to deal with the matter in a particular Act.
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26/06/2019
It is not unusual for a Municipal or Local Council to stipulate conditions as part of its Consent to a Development Application, such as the Consent is deferred and does not start to operate until the Applicant has satisfied certain conditions.
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11/06/2019
The HIA standard form Building Contract for residential dwelling construction work contains a separate Deed of Guarantee. The Deed of Guarantee is often utilised in a situation where the property is owned by a company and the company is contracting with the Builder for the construction work. A director of the company may be expected to provide a guarantee on behalf of the owner company.
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05/06/2019
Usually (but not always) a Builder is required to provide a Home Building Compensation Fund Policy in relation to home building work.
Such a policy covers the home owner and others (as set out in the Home Building Act) in relation to various claims and in particular in relation to:
1. Cost of rectification of defective work; and
2. A contribution to costs to complete incomplete building works.
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02/04/2019
In New South Wales, there is a system for Contractors (and Sub-Contractors) in building projects to recover moneys owed to them “quickly”. This system has been put in place under the Building and Construction Industry Security of Payments Act (SOP Act). There are some exceptions in the SOP Act. This Act is a law of the NSW parliament.
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26/03/2019
This article relates to a situation that sometimes arises during a building project where one of the parties becomes insolvent. This insolvency may apply to a corporation or an individual and may apply to both the Builder and the Owner or principal in a project.
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19/03/2019
In NSW a person who enters into a House Building Contract with a Builder can in certain circumstances, sue that Builder if the house has building defects. In those circumstances, the Owner must bring the case within a certain time frame, which is the Limitation Period.
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06/03/2019
In New South Wales there is a system by which building professionals “check” that new residential buildings and major renovations have been built to the appropriate standards. This system of certification, which involves the issue of construction certificates and occupation certificates, was at one stage exclusively managed by local authorities.
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25/01/2019
The Opal Tower building at Australia Avenue at Sydney Olympic Park has recently been in the news. Various people noticed cracking in this multi-storey apartment building in January 2019. After investigation all of the residents left the building and after many weeks have not returned. It is not known when the extent and nature of the defects in the building will be ascertained and how and when the building will be repaired.
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16/01/2019
When a land owner wants to construct a building, the relevant planning authority will require the owner to have a plan to drain stormwater from the building and the surrounding land. The authority, (usually the local council), will generally insert that requirement into the Development Consent to ensure that the proper drainage of stormwater will become a condition to be complied with prior to the final approval or the construction of the building.
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09/01/2019
Under the NSW Home Building Act, a person who is a party to a residential building contract with a Builder has certain rights. Implied into such Building Contracts is the statutory warranties provided for under Section 18B of the Home Building Act. We have provided further information in relation to these warranties in our article dated 2 February 2018.
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07/12/2018
When a person in NSW wants to build a house, townhouse or block of apartments, that person must seek approval to undertake the building works from the local certifying authority. That certifying authority is generally the local council or municipal body. The person seeks this approval by lodging a Development Application with the local council or municipal body. In some circumstances the approval can be granted by a private certifier.
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06/11/2018
Watson & Watson have been involved in many issues where valuations of real estate were required to enable a party to receive “compensation” based on the valuation. In the past 18 month we have given advice and engaged valuers in relation to matters concerning the following issues.
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28/09/2018
The NSW Home Building Act, 1989 is a piece of legislation designed to protect Home Owners from defective building works. When parliament passed the legislation into law it recognised that Owners were at a disadvantage when dealing with Builders.
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11/09/2018
In August 2018 The Owners – Strata Plan 66375 v King the NSW Court of Appeal made findings and decisions in relation to the obligations of the Developer and the Builder under the statutory warranty regime under the Home Building Act.
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21/05/2018
The High Court of Australia has recently affirmed that there are only limited opportunities for appeals against security of payment determinations by adjudicators.
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23/04/2018
Watson & Watson have been involved in many cases involving building and construction in particular residential building issues considered in various Courts and Tribunals including particularly at the New South Wales Civil and Administrative Tribunal (NCAT) or its predecessor Consumer Trader and Tenancy Tribunal (CTTT).
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19/04/2018
Expert witnesses are under obligations of independence and an overriding duty to the Court and Tribunals to present their opinion and evidence accurately and without bias. These duties are well documented in Court cases and also in Codes of Conducts for Experts in various Courts and Tribunals. Providing reports and giving opinion and evidence in accordance with the Code including impartially on matters relevant to the area of expertise of witness overrides the Experts duty to a particular party.
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09/04/2018
An Owner will either engage a qualified Builder to carry out the work or may obtain a Home Owners Building Permit. This article relates to matters other than work undertaken by the Home Owner directly and in particular with a Home Owner Building Permit.
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07/03/2018
This was considered by the NSW Court of Appeal in 2005 in the case of Berwarrina Shire Council v Beckhaus Civil Pty Limited [2005] NSWCA 248 (Berwarrina case).
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05/03/2018
Watson & Watson have been acting for owners, Builders and others in proceedings brought generally by Owners or subsequent Owners who may be entitled to bring a claim in numerous jurisdictions including the Civil and Administrative Tribunal (NCAT) which has jurisdiction for claims up to $500,000.00. Other claims in excess of that sum are commenced in the District Court of NSW or the Supreme Court of NSW, each of them have jurisdiction.
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21/02/2018
There are thousands of disputes relating to the quality of building works in particular concerning the construction of residential property including units, apartments, townhouses, duplexes, houses. The Home Building Act 1989 deals with obligations and rights of the parties including the Builder and Owner.
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09/02/2018
One would have thought that the rules relating to costs would be simple. Unfortunately they are not. Each commentary that we have reviewed has dealt with costs without consideration of the whole of the provisions relating to costs. Assumptions have been made which do not always apply.
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05/02/2018
Subject to a few exceptions there is legislation including the Workers Compensation Act 1987, the Payroll Tax Act 2008 and the Industrial Relations Act 1996 by which a Principal Contractor may withhold payment to a Sub-Contractor if the Sub-Contractor fails to provide a Sub-Contractor’s Statement, in effect a declaration that the Sub-Contractor has paid all its obligations under the Workers Compensation Act, Payroll Tax Act and Industrial Relations Act.
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01/02/2018
The Home Building Act 1989 relates to the carrying out of residential building work. Prior to the Home Building Act one needed to look at the express terms of the Contract to determine the obligations of the parties.
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03/01/2018
More often than one would expect we find that Builders and Owners who enter into Agreements for the construction of renovations or new homes do not have agreements which are enforceable particularly by the Builder against the Owner.
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17/11/2017
There are many “standard form Contracts” which are in existence including NSW Residential Building Contract for Homes issued by Home Industry Association (HIA), Master Builders Association (MBA) or Australian Building Industry Contracts (ABIC) to name a few.
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15/10/2017
Often we at Watson & Watson are approached by an Owner or a Builder, where the Owner claims that all moneys have been paid for the building works and that the Builder will not provide the Certificates required to enable the issue of an Occupation Certificate relating to work that has been undertaken at the home.
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21/09/2017
The Court of Appeal of the Supreme Court of New South Wales recently considered the obligations of a Claimant who had an Adjudication Determination in its favour for approximately $11 million in garnisheeing the Developer’s Bank Account.
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18/09/2017
In the Court of Appeal Decision Ku-Ring-Gai Council v Chan decided 7 September 2017. Ku-Ring-Gai Council as Certifier was held not liable to the Owner Builder or to the subsequent Purchasers. This was even though Council Inspectors inspected the works on several occasions and failed to identify defects or that the building was not in accordance with the approved plan. The Council issued an Occupation Certificate. The property has been occupied.
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20/07/2017
When two parties run a Court case and the Court makes a decision, generally the Court awards costs to the winner of the case. So if a Defendant wins its case, the Court will order that the plaintiff pay the legal costs of the defendant.
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30/06/2017
A recent High Court decision issued on 21 December 2016 has underlined the need for Builders and their lawyers to take care in conducting cases involving Security of Payments claims. That case was the decision of Southern Han Breakfast Point Pty Limited and Lewence Construction Pty Limited.
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29/05/2017
The Court of Appeal in New South Wales has recently considered an appeal on a case over the Security of Payments Scheme under the Building and Construction Industry Security of Payment Act 1999 (NSW) which could have greatly altered that scheme.
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11/05/2017
A recent decision of the NSW Supreme Court has confirmed it is vital that parties claiming for building defects obtain properly prepared Building Reports from appropriate and acceptable Experts to give evidence on your behalf in order to recover your losses.
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28/03/2017
The NSW Court of Appeal is currently weighing the issue of whether a person who has bought a defective building can sue the Certifier of the building.
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01/11/2016
Liquidators have been appointed to Huxley Homes. Issues arise as to what rights Owners now have and what remedies are available to have your homes completed or defective work rectified.
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20/04/2016
The Federal Government recently passed changes to the Law which may affect Building Contracts, with those changes scheduled to commence in November 2016.
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06/04/2016
Building Licences in New South Wales are issued by the New South Wales Government.
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31/03/2016
A person who applies for a Building Licence in New South Wales can often find the process complicated. New South Wales law requires that a person who applies for a Building Licence should not only have sufficient education but also enough experience being supervised by a Builder. The rules in New South Wales set out the required building experience, which can involve working on building projects under the supervision of a registered Builder.
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16/12/2015
A selection of recent Building & Construction matters in which we have acted that it will provide prospective clients with a good indication of the type and complexity of matters we handle.
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02/09/2010
This e-Bulletin is to make builder members aware that on 1 September 2010 all building certification work undertaken by a council, must be undertaken by a council officer who is an accredited certifier under the Building Professional Board certifier accreditation scheme.
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11/03/2010
This paper will focus upon some practical issues that arise in relation to the use of an expert to make a determination. It is hoped that the matters which are identified will assist in avoiding pitfalls that may be overcome in drafting an agreement to submit a dispute that may arise under it for expert determination and also to identify the factors which circumscribe court action which might arise as a result of such a determination.
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01/03/2010
The Dividing Fences Act provides that adjoining owners of property are required to share equally the costs of a “sufficient dividing fence”, what is a “sufficient dividing fence” will depend upon all the circumstances of the case.
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