A defect list is an allegation. It still has to be proved.

We act for builders, contractors and developers defending defect claims. We do not act for homeowners or owners corporations bringing them.

What the statutory warranties say

Section 18B of the Home Building Act 1989 (NSW) implies warranties into every contract to do residential building work: due care and skill, in accordance with the contract plans and specifications; materials that are good, suitable and, unless the contract says otherwise, new; compliance with the Act and any other law; due diligence, within the time stated or a reasonable time; and a new dwelling reasonably fit for occupation. Under section 18D they run to successors in title, so a claim can arrive from a later owner or from an owners corporation.

Where the defences usually sit

There are many occasions where a builder can defend a defect claim. In our experience most defences fall into one of three categories, and sorting the schedule into them is the first useful step.

• Scope. The item was never part of the contracted work — specified by the owner's own consultant, carried out by a trade the owner engaged direct, or priced out as a deletion. A defect in someone else's scope is not your breach.
• Not defective. The work complies with the contract, the approved plans and the standard the specification adopted. A finish the owner has gone off is not a defect, and neither is a tolerance inside that standard.
• Out of time. The warranty period had run before proceedings were commenced. Which period applies turns on whether the defect is a major defect — a defined question, not a descriptive one.

The clock runs from completion

Section 18E gives an owner six years to commence proceedings for a breach resulting in a major defect and two years in any other case. Both run from completion of the work, not from when the owner noticed the problem — and section 3B fixes that date its own way, so it is not automatically your final invoice. Where a breach becomes apparent in the last six months of a period, the Act allows a further six months after it ends.

“Major defect” is a defined term, and that definition is where these arguments are won and lost: a defect in a major element causing or likely to cause an inability to inhabit or use the building for its intended purpose, its destruction, or a threat of collapse. Load-bearing components essential to stability, fire safety systems and waterproofing are each major elements — which is why claims that look cosmetic are often run as six-year claims.

The owner has obligations too

Section 18BA imposes duties on the person with the benefit of a warranty: to mitigate the loss, to make reasonable efforts to give written notice of a breach within six months after it becomes apparent, and to allow reasonable access to rectify. A failure to meet them can reduce what is recoverable. Section 18F is a separate defence where the deficiency arose from the owner's instructions given contrary to the builder's written advice that they were likely to produce it — the reason to put that advice in writing on the day.

Quantum is a separate argument

Liability and quantum are different questions, and the second is often more productive. That it may cost $50,000 to fix apartment flooring does not mean you are liable to pay $50,000. Since Bellgrove v Eldridge (1954) 90 CLR 613 the measure of damages has been the cost of rectification — but only where that work is necessary to produce conformity with the contract and a reasonable course to adopt. A quote is evidence of what one builder would charge for one scope — not proof the scope is necessary or the method reasonable.

Section 48MA runs the same way: a court or tribunal deciding a building claim alleging defective residential building work is to have regard to the principle that rectification by the responsible party is the preferred outcome — you rectifying at your own cost, not funding the owner's contractor at the owner's price.

Where these claims are decided

Under section 48K, NCAT has jurisdiction over a building claim up to a statutory limit on the amount claimed; above that, a court. We appear in NCAT and in the District Court. If a claim is large enough to belong in the Supreme Court, we will tell you that early and help you find someone who runs matters there.