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Posted 16 January 2015
Category: Building Defects
Owners Corporations’ Duty to Act Reasonably in Relation to Loss and Damage Arising from Building Defects
In two recent decisions concerning claims made by Owners Corporations against Builders for admitted defective work, the Supreme Court of NSW has considered and applied the old principles concerning mitigation of loss and the obligation to act reasonably, to present day strata building defects in:
These cases have held that:
In the Di Blasio Case the Supreme Court found that the Owners Corporation acted reasonably in commencing proceedings after:
This resulted in there being no reduction in the Owners Corporation’s award of damages against the Builder for the defect rectification costs.
In the Dyldam Case the Supreme Court awarded the Owners Corporation costs of the additional year that the proceedings took, when the parties agreed on the Builder returning to rectify the defects and the rectification scope of work but the Builder initially refused the Owners Corporation’s condition that an independent Superintendent be appointed (at the Builder’s cost) to oversee and sign-off on the rectification work to be performed by the Builder.
What does this mean in Practice for Owners Corporations
What the recent court decisions mean in practice for Owners Corporations is that unless there is some valid and reasonable grounds for not allowing the Builder to rectify its own defects such as if it is insolvent, its building licence has been cancelled or the defects are of such an extreme and possibly dangerous nature that the ability of the Builder to undertake rectification works is brought into question then:
New Amendments to the Home Building Act
The new amendments to the Home Building Act include:
These amendments impose a statutory obligation on Owners Corporation similar to the obligations imposed by the Court in the Di Blasio Case and the Dyldam Case.
Where Bannermans Can Help
These two cases and the new amendments to the Home Building Act should not necessarily deter an Owners Corporation from preserving its rights by commencing proceedings against the Builder.
The Owners Corporation should protect their rights so that they can maximise their chances of obtaining a satisfactory resolution and rectification of its common property in the most commercial manner.
Bannermans can help Owners Corporations in providing advice on:
***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.