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An agreement from the owners corporation to owners or occupants to supply amenities, such as, electric vehicle charging infrastructure, telecommunication services, window cleaning, garbage disposal and recycling services.
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Posted 03 April 2019
Category: Building Defects
The statutory warranty period for āminor defectsā under the Home Building Act 1989 (āHBAā) is only 2 years.
However, in a recent case,Ā Hutching v HopeĀ [2019] NSWCAP 59, the Tribunalās Appeals Panel highlighted the distinction between the limitation periods for statutory warranties, and the limitation period for breach of contract ā which is 6 years from the date the cause of action arises.
Therefore, if a contract contains terms identical to the statutory warranties the Owners may be able to sue for either damages with respect to āminor defectsā within the 2 year statutory basis, or the same āminor defectsā within 6 years on a breach of contract basis. It should be noted that NCAT only has jurisdiction for claims brought within 3 years, so it may be necessary to file with the courts.
The risk that statutory warranties will also become contract terms is increased by subsection 7(2)(f) of the HBA, which requires thatĀ applicable statutory warranties be expressly incorporated into residential building contracts. Careful contract drafting is required to avoid unwanted consequences.
The two main standard form contracts put out by buildersā organisations attempts to restrict the contract inclusion of the warranties to their statutory form, and therefore retain only the statutory liability period for āminor defects” by drafting thus:
The Housing Industry Association (HIA) form prefaces the warranties with the words:
āTo the extent required by the Home Building Act ā¦.ā
The Master Builders Association (MBA) BC4 form uses the following preface:
āPursuant to s.18B of the Home Building Act 1989 ā¦ā
The more consumer friendly NSW Fair Trading form merely uses āStatutory Warrantiesā as a subheading to the warranties, but notes:
āThese warranties do not in any way reduce or limit the contractorās obligations in relation to workmanship, materials, completion or other matters specified in Clauses 2 and 3 or elsewhere in this contract. No provision of this contract can reduce, restrict or remove these statutory warranties.ā
The effect of these qualifications is yet to be tested in either the courts or a relevant tribunal. The HIA and MBA forms probably do enough to ensure the contract does not offer anything beyond the statutory warranties. However, references to clauses 2 and 3 in the Fair Trading proviso point out that there will normally be other clauses, which whilst not identical to the warranties may nevertheless cover a claim for defects within 6 years.
For owners, the ideal situation is to draft contracts so that the warranties appear without qualificationĀ and without references to statutory provisions.
***The information contained in this article is general information only and not legal advice. The currency, accuracy and completeness of this article (and its contents) should be checked by obtaining independent legal advice before you take any action or otherwise rely upon its contents in any way.