Home Building – Statutory Warranty Claims (Defective Works)

Section 18B of the Home Building Act 1989 (NSW) implies the following warranties into every contract to do residential building work in New South Wales:

    (a) a warranty that the work will be done with due care and skill and in accordance with the plans and specifications set out in the contract,

    (b) a warranty that all materials supplied by the holder or person will be good and suitable for the purpose for which they are used and that, unless otherwise stated in the contract, those materials will be new,

    (c) a warranty that the work will be done in accordance with, and will comply with, this or any other law,

    (d) a warranty that the work will be done with due diligence and within the time stipulated in the contract, or if no time is stipulated, within a reasonable time,

    (e) a warranty that, if the work consists of the construction of a dwelling, the making of alterations or additions to a dwelling or the repairing, renovation, decoration or protective treatment of a dwelling, the work will result, to the extent of the work conducted, in a dwelling that is reasonably fit for occupation as a dwelling,

    (f) a warranty that the work and any materials used in doing the work will be reasonably fit for the specified purpose or result, if the person for whom the work is done expressly makes known to the holder of the contractor licence or person required to hold a contractor licence, or another person with express or apparent authority to enter into or vary contractual arrangements on behalf of the holder or person, the particular purpose for which the work is required or the result that the owner desires the work to achieve, so as to show that the owner relies on the holder's or person's skill and judgment.

Section 18E provides the periods within proceedings for a breach of a statutory warranty must be commenced, as follows:

    (1) Proceedings for a breach of a statutory warranty must be commenced in accordance with the following provisions--

        (a) proceedings must be commenced before the end of the warranty period for the breach,

        (b) the warranty period is 6 years for a breach that results in a major defect in residential building work or 2 years in any other case,

        (c) the warranty period starts on completion of the work to which it relates (but this does not prevent proceedings from being commenced before completion of the work),

        (d) if the work is not completed, the warranty period starts on--

            (i) the date the contract is terminated, or

            (ii) if the contract is not terminated--the date on which work under the contract ceased, or

            (iii) if the contract is not terminated and work under the contract was not commenced--the date of the contract,

       (e) if the breach of warranty becomes apparent within the last 6 months of the warranty period, proceedings may be commenced within a further 6 months after the end of the warranty period,

       (f) a breach of warranty "becomes apparent" when any person entitled to the benefit of the warranty first becomes aware (or ought reasonably to have become aware) of the breach.

We have acted in many home building statutory warranty claims for both home owners and builders.  Such cases tend to become highly technical on the expert evidence required to support or oppose the claim. Engaging the right expert, be that a building consultant or specific engineer, early is crucial.

In one case in which we acted for the home owners, we obtained structural and soil engineering evidence to support a claim that the subject house should be demolished and rebuilt on a different type of foundation.  The house was built on highly reactive, deep soft soils which did not suit the pier screw type foundations that had been built.  The house was sinking and cracking. We were ultimately able to negotiate a good settlement at Mediation because of the robust expert evidence we had obtained.

In another case, we acted for a pool builder in relation to a pool constructed near Byron Bay. It was a relatively complex pool design with a horizon edge.  The home owner was claiming breaches of statutory warranties and for the costs of full demolition and reconstruction of the pool. Our expert evidence advised that the pool did not require demolition but could be fixed for a fairly modest sum.  We were able to negotiate a settlement for a modest sum based on our expert evidence.

In a case in which we acted for a builder, the home owners had claimed breaches of the statutory warranties in relation to drainage issues under the house.  We were able to negotiate a settlement of the matter for a fairly modest sum and avoided the risk and need of a Hearing in the Tribunal.

In another case, we acted for a builder in relation to non-payment of his invoices and allegations of over-charging as well as breaches of the statutory warranties.  The matter concerned some major renovations to an existing 100 year old house in the Tweed area. We obtained expert evidence from a building consultant which supported the builder’s claims of high quality of work in what was a complex construction job.  The matter could not be settled and proceeded to Hearing in the District Court.  We obtained a Judgment for the full amount claimed by the builder and a costs order against the home owner, which we were able to enforce and recover from the home owner.

Claims for breaches of statutory warranties can be quite complex on the expert evidence required.  If the matter proceeds to Hearing, the experts are usually required to produce a joint report to narrow the issues in dispute.  At the Hearing, the experts are often asked to “hot tub” where experts for both sides are in the witness box together and asked questions by both lawyers and the Member hearing the matter.  Good legal representation at a Hearing in the Tribunal is very important.

If you require assistance with a home building statutory warranty matter, please do not hesitate to contact Clint Braid at S+P Walters Solicitors on 6621 8833 or email clint.braid@spwalters.com.au.