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Dealing with Building Defects - A legal snapshot

Building defects are a common cause of legal dispute between building owners and contractors, as well as strata managers and tenants. Building owners and builders, and owners and tenants are often found quarrelling as to the cause of the defect, whether it is a defect or acceptable wear and tear, and thus who should shoulder the costs associated with rectification works.

We all too often see the ramifications that delaying the required works can cause, so we thought it useful to explain a few key points as regards building disputes and will also look at your legal rights when it comes to fixing defective building work.

Types of Building Defects

In the construction or renovation of a building, a contract usually binds you with your contractor, engineer and architect, and for certain products, your supplier. Yet despite all these overarching contracts, a variety of issues can occur which result in disagreement involving multiple parties. In Australia, the most common disputes arise from defective or poor finished works which could happen during the construction of the building itself; the renovations of the structure; repair works; addition of fittings and other site works.

In a publication by the Melbourne TEC Chambers called Construction Disputes – Australia, Dr. Donald Charrett, an expert Australian barrister practising construction law who (just cause some people have amazing brains)  happened to also be an engineer for over 30 years, said that the most common types of construction disputes “ …are typically about one or more of time, cost or quality.” Aside from citing schedule delays and cost variations, he expressed his thoughts on quality as a source of dispute, highlighting: “Has the Contractor executed the work in accordance with the contractually specified quality, or are there defects that require rectification?”

Where it is due to poor communication, the use of substandard materials, or due to a failure in execution, there are instances when builders, contractors, and construction professionals deliver work, the quality of which is less than what was promised and agreed upon in the contract. It is the proving of this that happens to be the contentious part, however, if you take the time to compile your thoughts and evidence, it makes it easier to argue your point. Of course, should nothing happen, you can then explore your legal options with the help of a lawyer specialising in construction litigation.

The Role of the Regulatory Authorities

As you most probably know, in Australia, the National Construction Code or NCC—a regulatory framework created by the Australian Building Codes Board — is the main legal reference used in settling disputes related to construction work. It "… provides the minimum necessary requirements for safety, health, amenity and sustainability in design and construction. It provides guidance and compliance measures for buildings and building elements ... which must be complied with.” The NCC is the main rulebook followed by professionals in the construction, engineering, and infrastructure sectors, where building owners can also refer to.

Aside from the NCC, local governments in different states and territories also provide prescribed standards for construction work, including design, planning, building utility, and other related aspects. 

What To Do in Building Disputes

It is standard in most contracts to have internal mediation in cases of disagreements in the quality of construction work delivered. If an internal resolution is not possible, the next step is to undergo  external arbitration which seeks a cheaper resolution and alternative to a lengthy and more costly litigation. Although an arbitration is not necessarily required, Australian Standards like the AS4000 and AS4300 require the plaintiffs and defendants to resolve their construction dispute following the procedures in the Arbitration Guidelines, the International Chamber of Commerce Arbitration Rules Australian Disputes Centres, or the Australian Centre for International Commercial Arbitration.

Should your dispute reach the courts, keep in mind that the process for commercial and industrial building defect disputes is different from lodging residential construction complaints. While the latter are tried by a specific body like the NSW Fair Trading or a relevant tribunal in the state or territory, higher-value residential building  complaints and commercial building disputes are tried by intermediate level courts where construction matters are heard or by state supreme courts.

See to it that you lodge your complaint within 6 years from the date of the breach for contract-based claims. If your claiming under a deed, make sure that you file your construction-related complaint within 12 years from the date of the breach, if you're in Victoria.  For accuracy, check the legislation and find the statute of limitation applicable to your state or territory.

Building Defects in Your Structure: Your Legal Options

A construction project may sound complex in nature, with different specialists and skilled workers in the field of engineering, architecture, and construction involved in the overall delivery. However, at the end of the day, it is still a contractual obligation, binding the employer (you) with your contractor and providers of professional services.

In case of a substandard construction work or a defect in a renovation job, the contractor or builder still is liable for a breach of contract since they failed to deliver the work according to the standards and quality required from them by Australian standards. When this happens, you can always take advantage of the remedies made available by law.

  • Award of damages – You, as the plaintiff, will be entitled to general damages award to compensate you for the breach of contract.

  • Claims – This is the sum of total loss or damage you might have incurred due to the building defect. It is calculated as liquidated sum in the form of a debt.

  • Specific performance – You can demand your contractor to perform its obligations under the contract.

  • Injunction – You can file this to prevent your contractor from exercising a right that they are actually not entitled to or to prevent them from not fulfilling their obligations.

There are other legal actions you can take to exercise your right in cases of defective building work. It is still best to consult with your barrister since the remedy applicable to you depends on the circumstances surrounding your agreement with your contractor and the actual damage to your structure.

How to Avoid Disputes Related to Building Defects

Nobody wants to undergo the costly process of settling construction disputes in the courts. Whilst there are no certainties as regards construction – trust us we have seen too much to not be cynical – the key is to be thorough in your investigations, documentation and communication. If you require a third party opinion on your matter before you go back to your builder, feel free to ask a member of the Remedial team for a chat.

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