High Court Rejects Appeal by Builder of Lagani Apartments

In a key decision for ACT owners corporations, the High Court of Australia recently rejected a special leave application by the builder of Lagani Apartments to appeal the decision of the ACT Court of Appeal in Koundouris v The Owners – Units Plan No 1917 [2017] ACTCA 36. This High Court decision is important because it was the final avenue of appeal for the builder and the more expansive interpretation of the application of statutory warranties under the Building Act 2004 remains in place.  Click here to read the article published in the Canberra Times on this decision.

 

 

Focus on Builders: B & T Constructions Pty Ltd (ACT)

B & T Constructions (ACT) Pty Ltd (ACN 105 358 825) was a builder that was responsible for the construction of numerous residential apartment buildings in the ACT.

On 18 May 2017, administrators were appointed to B & T Constructions (ACT) Pty Ltd and following this, on 20 July 2017, RSM Australia were appointed as liquidators of this company.

Owners of apartments buildings which are three storeys or less (excluding any storey used exclusively for carparking) and were built by B & T Constructions (ACT) Pty Ltd should make a claim against either QBE Insurance or the Master Builders Fidelity Fund for any breaches of statutory warranties by B & T Constructions (ACT) Pty Ltd within 90 days of 20 July 2017.

Visit ASIC’s website here to view the notice.

If you think you may have a claim, contact Christopher Kerin on 02 6140 3270 or christopher@kerinbensonlawyers.com.au

Building and Construction Legislation Amendment Act 2016 – What You Need to Know

On 20 August 2016, the Building and Construction Legislation Amendment Act 2016 (the Legislation) commenced operation. The Legislation is the culmination of several years of consideration by the ACT Government and amends the following laws:

  • Building Act 2004;
  • Building and Construction Industry (Security of Payment) Act 2009;
  • Building (General) Regulation 2008;
  • Construction Occupations (Licensing) Act 2004;
  • Construction Occupations (Licensing) Regulation 2004; and
  • Planning and Development Act 2007.

The Legislation is focused on improving building quality in the ACT as well as the accountability of various construction industry protagonists. Broadly speaking, the Legislation addresses the following issues:

  • under the Building Act 2004 and Building (General) Regulation 2008 – building certification and stage inspections, certificates of occupancy and use, statutory warranties, residential building work contracts, building inspections and inspectors and exempt building work conditions;
  • under the Building and Construction Industry (Security of Payment) Act 2009 – power to make a code of practice for authorised nominating authorities; and
  • under the Construction Occupations (Licensing) Act 2004 and Construction Occupations (Licensing) Regulation 2004 – notifying loss of eligibility and changes of register details, licence applications and renewals, corporate and partnership licenses and nominees, ongoing eligibility, interim and automatic suspensions, powers of ACAT in relation to occupational discipline orders, rectification orders and mandatory qualifications and codes of practice.

The key amendment for apartment owners is the application of statutory warranties to buildings higher than three storeys (previously statutory warranties only applied to buildings of three storeys or less not including basement carparking). Unfortunately, this amendment (together with the appointment of building inspectors) did not commence on 20 August 2016. Rather, the new statutory warranty regime will commence on a day fixed by the Minister but must commence within 12 months of notification (ie no later than 19 August 2017).

Further, statutory warranties are only available to owners corporations and lot owners by virtue of the fact that contracts to carry out residential building work are taken to contain statutory warranties by force of section 88 and that such owners corporations and lot owners are successors in title to the developer. This means that once the new regime in relation to statutory warranties comes into force, it is only contracts to carry out residential building work entered into after this commencement date that will give owners corporations and lot owners the right to sue builders for breach of statutory warranties (once the relevant buildings are completed).

Allison Benson Christopher Kerin
Legal Practitioner Director Legal Practitioner Director
Ph: (02) 4032 7990
allison@kerinbensonlawyers.com.au
Ph: (02) 8706 7060
christopher@kerinbensonlawyers.com.au

Case Note: Are you obliged to allow the original builder to repair building defects? Not always

In a win for Owners Corporations (and home owners) in NSW, a recent Supreme Court decision has validated the right of the Owners Corporation, in certain circumstances, to refuse an offer by the original builder to conduct remedial work where there are agreed building defects.

The case arose after the builder met with the Owners Corporation’s expert on site. Although the builder agreed to repair some items, including some bathrooms, the builder did not admit there was a systemic defect involving the construction of the bathrooms. Nor did the builder, despite requests by the Owners Corporation’s expert and lawyer, provide a detailed programme of works for the remedial repairs that was acceptable to the Owners Corporation’s expert. The Owners Corporation sought rectification orders through the NSW Office of Fair Trading and these orders were made. Unfortunately, the orders did not provide for a detailed scope of remedial work. Following the orders being made, the builder contacted the Owners Corporation directly and sought access to the property to conduct works. Despite further requests for a detailed scope of remedial works none was forthcoming until after commencing of legal proceedings although the builder argued it was ready, willing and able to conduct the remedial work under a new contract for $1.00.

At the final hearing (some six years later) the builder argued that the Owners Corporation’s claim should either be dismissed or the amount claimed be limited to the amount for which the builder could have conducted the work.

The Court found for the Owners Corporation and ordered damages be paid. While there is a legal principle that a plaintiff must mitigate its loss, there is also a principle of acting reasonably. This means a plaintiff is able to recover its estimated costs of rectifying the damage except to extent it was unreasonable to insist on reinstatement. The Court stated that in building contracts “it is also generally accepted that the owner must give the builder a reasonable opportunity to rectify any defects … except where its refusal to give the builder that opportunity is reasonable or where the builder has repudiated the contract by refusing to conduct any repairs”.

In providing this opportunity, the Owners Corporation is not mitigating its loss but mitigating the builder’s damages. What is reasonable depends on the circumstances of the case but it includes whether or not the builder has attempted to repair the defect and if owner had reasonably lost confidence in the willingness and ability of builder to do the remedial work:  The Court found the onus was on the builder to prove that the Owners Corporation acted unreasonably. In this instance the builder’s scope of works was deficient, early attempts at rectification were unsatisfactory & it was appropriate for Owners Corporation to commence proceedings. Although the Owners Corporation had rejected the builders offer to conduct the works this was reasonable as it had lost confidence in Builder by this time.

 

Author: Allison Benson

Office: Sydney & Newcastle

Email: allison@kerinbensonlawyers.com.au

Date: 31 August 2014

Case: The Owners – Strata Plan No 76674 v Di Blasio Constructions Pty Ltd [2014] NSWSC 1067