Statutory Warranties under Home Building Act – Liabilities of Builder, Sub-Contractor and Developers

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.

Following the Home Building Act there was implied into every Contract between an Owners and a Builder to do residential building work, various warranties which are set out in Section 18B of the Home Building Act.  These are often referred to as “statutory warranties”.  There have been thousands of cases dealing with this obligation.

Over the years there have been extensions as to who may be liable for the failures to comply with the statutory warranties.

For many years, for the holder of a Contractor’s Licence or a person required to hold a Contractor’s Licence, the statutory warranties were implied into each Contract to do residential building works.

The Home Building Act was expanded.  The Developer (as defined) was bound to provide the statutory warranties even though the residential building work may have been carried out by others.

The 2014 amendments to the Home Building Act now expressly sets out that the statutory warranties are incorporated into all Contracts by a Sub-Contractor to undertake the residential building work.

Separately from the question as to who is bound by the statutory warranties is the question as to who receives the benefit of the statutory warranties.

The benefit is received not only by the Owner who entered into the Contract but in certain circumstances, by immediate successors in title and in certain circumstances by any successor in title.

The overlapping obligations by the Builder, Developer, Sub-Contract or extends the rights of Owners and subsequent successors in title.

The Home Building Act also provides for Home Warranty Insurance be provided in relation to residential building works on many (but not all) circumstances.  A claim against a Home Owners Warranty Insurer is a backup claim and only can be brought once there is a triggering event which gives rise to an opportunity to a Home Owner to make a claim on the Insurance Policy.

There were changes to the statutory warranty regime by the 2014 amendments to the Home Building Act including for example the change of a warranty by the Builder and others from a warranty -

“that the building work will be done in a proper and workmanlike manner”

To a warranty “that the building work will be done with due care and skill”. 

These changes may not impact upon all cases, however it will in certain cases impact upon the prospects of success and the particular evidence required in your case.

One needs to properly consider the whole factual matrix to determine what is the appropriate course to be adopted.  There are time limits which apply and careful consideration needs to be given to those matters.

Importantly the 2014 amendments clarifying that a claim can be made against a Sub-Contractor in relation to works undertaken by the Sub-contractor has not been utilised as often as we believe it should be utilised.  To bring such a claim an Owner or other claimant must be able to identify the particular Sub-contract works and the particular Sub-contractor who carried out the works.

There are particular Sub-contract works where a possible claim against the Sub-Contractor would be cost efficient.  There are others that such a claim will not be cost efficient. 

An example of circumstances where it may be cost efficient, is where particular works have been undertaken by specialised Sub-Contractors for example, plumbing.

Where the works were carried out by a Builder or Developer who undertook the whole of the design and construct obligations for the residential project the Consultants such as an Engineer would be a possible Sub-Contractor who would be liable pursuant to the statutory warranties implied into the Sub-contract.

One always needs to remember that if you make a claim you must be able to prove the claim.  We can assist in identifying the entity who undertook the works.  The liability for losses is most often proven by way of the appropriate Expert evidence.  Inappropriate Expert evidence may give you some hope but if the evidence of the Expert engaged by you is not accepted by the Court or Tribunal, it is false hope which will not assist you in your claim to a warranty.

Richard Watson and the Solicitors at Watson & Watson have had many years of experience with thousands of building cases dealing with many Experts.  We know many appropriate Experts and in particular, we know Experts who may be inappropriate for your case.

If you have defective or incomplete building works please do not hesitate to contact Richard Watson or his Personal Assistant Shereen Da Gloria to discuss this important matter.  If you are a Builder against whom a claim is made consideration would need to be had as to whether you have any rights against others in relation to the claim by the Owners or subsequent Owners.

This is only a preliminary view and is not to be taken as legal advice without first contacting Watson & Watson Solicitors on 02 9221 6011.