Is the Builder’s Claim Doomed?

23/08/2016

A Builder or Contractor who undertakes residential building work in New South Wales must comply with the Home Building Act.

There are many safeguards for Owners of property incorporated into the Home Building Act including the requirements for amongst other things:

1.         A Licenced Builder.

2.         An appropriate Contract, namely in writing that complies with the requirements of the Home Building Act.

3.         Appropriate insurances for the project including Home Owners Warranty Insurance.

Not all persons who undertake building works comply with the Home Building Act.

If a person who does building work wishes to recover money for work undertaken even though the Builder/Contractor has not complied with the Home Building Act, there is some opportunity to recover moneys for the work undertaken.

Of course it is better for the Builder/Contractor to be compliant with all its obligations under the Home Building Act, as there are not only penalties for failure but also in some circumstances it is difficult if not impossible to recover outstanding money for works undertaken.

It also requires an experienced Lawyer such as Richard Watson of Watson & Watson Building and Construction Lawyers to work through the requirements to be entitled to payment. 

In certain circumstances for example when the Builder does not have a complying Building Contract the Contractor may recover on the basis of quantum meruit.  The instructing of Senior Counsel does not of itself guarantee success for the Builder who has not complied.  One of many cases in which Richard Watson helped the Owner demonstrates the difficulties and the need for an appropriately experienced Building and Construction Lawyer to achieve the required outcome.

Richard Watson received instructions from Michael who was being pursued by a Builder for work undertaken by the Builder at a property in the Northern Districts. 

In this case the Builder had not entered into a Building Contract which complied with the requirements under the Home Building Act. 

The Builder took advice from other Lawyers including a Senior Counsel and thereafter pursued the claim against Michael.  There were a few issues if navigated the Builder would have obtained judgment and would have recovered in this particular case. 

The Builder could not sue on the “agreement” as there was no written Contract which complied with the Home Building Act requirements.  In those circumstances the Builder has a possible and probability (subject to some restrictions) to recovering a fair value for the work based on the principle of a claim for quantum meruit, which in effect allows a claim against the Owner of a property who has benefited from those works. 

In this case the Builder pursued the claim against Michael based on an oral contract between the Builder and Michael.  In the Defence to the claim on behalf of Michael we asserted that as there was no Contract that complied with the Home Building Act the Builder could not base its claim based on the Contract (as is the Law).  Notwithstanding the Builder maintained the claims and the matter was listed for Hearing.  Preparation for Hearing was undertaken on behalf of Michael.  We undertook our factual enquiries which is always necessary.  This gave us an insight into the Builder’s difficulties.

Statements were prepared and evidence was assembled at a cost to the Builder and a cost to Michael.  The Builder obtained further legal advice just before the hearing date set for the case.  As a consequence which the Builder indicated to us just before the Hearing that the Builder would be seeking to amend its claim to include a claim against Michael based on a claim for quantum meruit.  This sounded feasible but for one thing.  At the Hearing for the quantum meruit claim to be successful the Builder needed to prove that Michael received some benefit from the works.  At the Hearing the Builder appeared without Lawyers (even though the Builder had the benefit of advice from Senior Lawyers) but was not in a position to succeed because he was not in a position to prove that Michael was the Owner of the property.  Worse still for the Builder was in fact the property was not owned by Michael but was owned by his Wife.  In those circumstances the Builder was doomed to fail in a claim against Michael.  However, if the Builder had pursued the Owner of the property, the Builder would have recovered some money for the works undertaken.  This is one of many issues that arise in building matters as in many Court cases we see. 

The Builder did not recover any money for the work at that property.  This is one of many traps in seeking to recover funds that you believe that you might be entitled to.  On the other hand the Owner may have good reason to defend a claim by a Builder based on factual matters.  Occasionally (more often than one would think) the claimant fails not because they do not have a genuine right to claim but because the appropriate steps to recover are not taken.  Often we see that Claimants do not produce in the appropriate form the evidence that is required to be successful in their case. 

The above case is one of many different cases in which we have seen such issue arise. 

If you have a claim or a claim is being bought against you please contact Watson & Watson experienced Building and Construction Lawyers by contacting Richard Watson or his Personal Assistant Shereen Da Gloria for advice to achieve the best possible outcome.