Attwood Marshall Lawyers Senior Associate and NSW Law Society Accredited Specialist in Dispute Resolution, Charles Lethbridge, discusses the changes made to legislation to better protect homeowners who are engaged in disputes with builders over defective work and breaches of building contracts.
It’s been said that effectively two economies are in existence during the COVID-19 pandemic. Firstly, there is the heavily-reported underperforming economy where a significant number of businesses are struggling, causing Australia and most of the world to plunge into a recession. Then there is the surprising ‘quiet achieving’ economy, where certain industries have not only benefited, but thrived, due to the pandemic conditions.
Of all the industries that have seen a surprising uptick in activity, the building and construction industry has shown significant growth. Many people, who would otherwise have spent their hard-earned cash on expensive overseas holidays, have decided to put their money into building or renovating their home. The Government provided further incentives to homeowners by way of the HomeBuilder program, which is currently available to those who are eligible up until 31 March 2021.
With additional building activity comes a spike in building disputes. As the new year kicked off, we experienced an influx of enquiries relating to building defects. In our experience, defects (minor or major) to building works are an inevitable part of the building process and they are not necessarily attributable to a builder’s poor workmanship.
The most common domestic building disputes we see concern:
- claims of incomplete or defective works;
- variations to the scope of works;
- delays in construction;
- payment claims; and
- breaches of building contracts.
Many of these disputes are the result of poor communication between the builder and customer and misconceptions about the scope of works to be delivered.
New protection for homeowners
The high number of building disputes has been a significant concern with state legislatures from all jurisdictions putting in place layers of legislation with a view to streamlining disputes and assisting both builders and customers in the dispute resolution process.
New building legislation enacted in NSW imposes multiple new obligations on design practitioners (e.g. architects), engineers, builders and other specialists that engage in construction work. The legislation redefines the relationship between practitioners and owners by imposing a new duty of care.
The Design and Building Practitioners Act 2020 (NSW) and the Residential Apartment Buildings (Compliance and Enforcement Powers) Act 2020 (NSW) impose significant reforms for the construction industry with a view to boosting consumer confidence in the residential construction sector. Consumer confidence was battered in 2019 when high-profile construction failures such as Sydney’s Opal Tower and Mascot Towers were front and centre.
The legislation imposes a duty on every person who carries out construction work to exercise reasonable care to avoid economic loss caused by defects. A new statutory duty is owed to each owner of the land in relation to which the construction work is conducted and includes all subsequent owners.
This represents a significant change in the law as it reverses the trend of judicial decisions and High Court authorities, most notably the High Court’s decision in Brookfield Multiplex v Owner’s Corporation Strata Plan 61288  HCA 36, which provided significant protection for those in the building industry against claims from homeowners.
All participants in residential development should urgently consider how this new duty of care could affect their risk profile for future projects as well as completed projects. It is important to note that participants are not permitted to ‘contract out’ of the duty of care.
Defective building work
The Home Building Act 1989 in New South Wales and the Queensland Building and Construction Commission Act 1991, effectively govern residential building in those states.
The legislation contains building licensing regimes, rules of conduct for builders, statutory warranty requirements, consumer protection provisions and dispute resolution processes.
Defective building work is usually separated into two groups:
- structural defects; and
- non-structural defects.
In Queensland, a structural defect can be identified to the Queensland Building and Construction Commission (QBCC) within 6 years and 6 months from the date of completion of the work.
A non-structural defect can be identified to the QBCC within 12 months from the date of completion of the work.
In New South Wales, a claim can be made by a customer in respect of a structural defect within 6 years from the date of completion of work. For non-structural defects, a claim can be made by customers within 2 years.
The most common types of defective building work include:
- slab and footing failures including cracks in concrete;
- voids or cracks in masonry walls;
- incorrect dimension of garages, carports, verandas bedrooms and other living areas;
- cracking, splits or open joints between panels and/or distortions in wall cladding and in roof cladding including cornices;
- cracks and external rendered surfaces;
- water ingress; and
- visible blemishes.
How Attwood Marshall Lawyers can help with a building defects dispute
Attwood Marshall Lawyers acts for both homeowners and building practitioners in building disputes from relatively minor non-structural defect disputes to significant class actions related to major building defects. Equipped with a Law Society Dispute Resolution Accredited Specialist, we have an enviable track record of assisting builders and homeowners in Queensland and New South Wales to achieve satisfactory resolutions without having to embark upon the expensive, lengthy, and uncertain court process.
We have access to experts who can provide independent reports on issues in dispute, including structural problems and rectification works required (as well as the costs involved and who is responsible).
Litigation in any form is a stressful and costly exercise, especially when the parties are deeply entrenched in their own positions. We have found that bringing the parties together by way of an informal settlement conference with an experienced and independent Mediator is the best way to resolve these types of building disputes.
We want to help you resolve your dispute and take away the stress in your life.
If you are involved in a building and construction dispute, please contact our Department Manager, Amanda Heather, on (07) 5506 8245, email firstname.lastname@example.org or free call 1800 621 071 to find out where you stand.