A recent Supreme Court decision involving a dispute between an Owners Corporation and a building expert engaged to inspect the property and provide a building defects report has raised the following issues:
- the need for an Owners Corporation to consider the scope & brief provided to their building expert;
- whether or not the Owners Corporation’s brief is reflected in the expert’s fee proposal;
- the use to which an expert report can be put; and
- how an Owners Corporation works with its building experts.
Briefly, once the building expert conducted the inspection they advised the Owners Corporation that the number of issues they were required to report on was not within the scope of the existing fee estimate and that its fees would increase. The Court referred to an email from one executive committee member agreeing to the increase but not to any meeting minutes. The building expert’s fees were substantially more than initially estimated.
When the building expert commenced proceedings to recover the additional fees, the Owners Corporation claimed there was no agreement to pay the increased fees, that it had only requested a defects report rather than a more detailed (and more expensive) litigation compliant defect report, that it had received no benefit from the report and it had paid the building expert in full.
The building expert further claimed that the Owners Corporation had breached copyright by providing the report to its insurer whose investigator (it was claimed) had set out word for word parts of the report. The building expert sought an injunction preventing use of its report.
As the building expert’s fee estimate set out terms that could not possibly apply to the contract the Court looked at the purpose of the contract which was to obtain an expert report that the Owners Corporation could use to pursue the builder or its insurer.
The Court found that the contract could be read to enable the Owners Corporation to provide the report to others. Even if this was not the case, the Court held there was an implied consent by the copyright owner (the building expert) to the use of the report for the purpose of the Owners Corporation pursuing its claim against the builder or its insurer. The injunction to prevent any further breach of copyright was refused.
The Court also determined that the Owners Corporation had received some benefit from the report, that the report was worth less than what was claimed and awarded the building expert a significantly lower amount that it had claimed. This was partially due to the building expert preventing the Owners Corporation from using the report requiring it to engage a new expert.
Owners Corporation’s should take from this case the need to provide a clear scope of work to its building experts. This includes defining the work to be inspected, the type of report required and the purpose the report is required for.
It is common for further defects to be discovered during the course of an expert inspection and often a fee estimate will have to be increased for this reason. However, in this case, there was a disparity between what the Owners Corporation wanted and the type of report they received. This difference could have been reduced with closer supervision and a more specific brief.
If there is any doubt over what type of report is required, or how to prepare a brief, an Owners Corporation should seek advice as building defect reports can be costly and take time to prepare in circumstances where time may be an issue.
Author: Allison Benson
Date: 13 May 2014