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Posted 17 March 2022
Category: Strata, Building Defects
Answer: You have lost that warranty and your claim will be dismissed and if legal proceedings have been subsequently commenced you could be facing a large adverse costs order, as what transpired below.
The Owners Corporations initiated proceedings against the builder and developer but the Tribunal found that as it was not commenced within 7 years (as was the statutory time limit which applied at the time) of the date of completion of the building work, the owners had no recourse and the application was dismissed.
The home owners commenced proceedings against the owner builder but did not commence proceedings in time under the Home Building Act 1989 (HBA). The Court held that the date of completion was the date of inspection by the certifier for the final occupation certificate under section 18E of the HBA and the application was dismissed.
In this case, the builder returned to rectify defects but this action did not extend the completion date of the property and therefore did not extend the statutory warranty period. Further, the Tribunal determined that the builder’s failure to comply with an undertaking did not extend the statutory warranty period and the application was dismissed.
MJA Group Pty Limited (“MJA”) retained Build-Care Pty Limited (“Build-Care”) to carry out construction works. Build-Care achieved practical completion on 5 January 2001. The Owners Corporation commenced proceedings on 16 January 2008. Under the applicable HBA, the proceedings had to be commenced within 7 years, as it stood at relevant times.
The District Court determined that the claim was not made within the statutory time limit. The Court of Appeal upheld the primary decision and held that the limitation period expired before the proceedings were commenced as the construction works were completed by Build-Care when practical completion was achieved on 5 January 2001. Despite commencing proceedings only a few days after the expiry of the limitation period, the Owners Corporation’s case was dismissed and the owners corporation were ordered to pay the costs of the proceedings.
Defects were present from the outset and were raised by the owners corporation. The builder/developer spent 5 years promising to fix the defects, but ultimately did not. After the statutory warranty had expired, the builder/developer began ignoring requests to fix or contribute to fixing the defects.
When the owners corporation finally decided to get legal and expert advice, the time limits for bringing action to enforce the statutory warranties had expired for most of its losses. The owners corporation was unable to pursue the builder/developer for the defective works and the application was dismissed.
Check out our Building Defects Handbook to access a helpful guide to answer all your FAQ’s around defects and ideally assist you in ensuring the best way to stay on top of any issues.
***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.