On 20 June 2024, the NSW Civil and Administrative Tribunal (NCAT) passed a decision in the case of Raysons Constructions Pty Ltd v The Owners Strata Plan No 87003 [2024] NSWCATAP 113 where it was held that the provisions of the Home Building Act 1989 (NSW) (HBA) for statutory warranties were not complied with as required by section 18E.
Primary Judgment
The Owners Corporation commenced proceedings against the builder, Raysons Constructions Pty Ltd on 26 November 2020, seeking damages for defective work completed on 15 July 2014, and alternatively seeking a work order for the builder to rectify the defects pursuant to section 48MA of the HBA.
The builder opposed the proceedings on the basis that the defects were not major defects in accordance with the HBA and that the proceedings were not commenced within the time allocated (6-year warranty period).
However, although the Tribunal found that the owners corporation was aware of the defects in respect of the statutory warranties as early as 2014, the Tribunal found that the owners corporation was not aware the defects amounted to breaches of statutory warranty.
The Tribunal made an order that the builder repair the defects in accordance with the experts report of the owner’s corporation for both general and structural defects. The Tribunal also held that the owner’s corporation was entitled to the extension of the warranty period. As a result, the builder then appealed this decision.
The Appeal
On appeal, the main issue in contention was:
- Whether the Tribunal erred as a matter of law in finding that the Respondent was entitled to rely upon s18E(1)(e) of the HBA to extend the warranty period for claims.
In response to this issue, it was confirmed that the Tribunal erred in concluding that the owner’s corporation could not form the view that the significant defects were not capable of being interpreted as breaches of warranty until the owner’s corporation obtained an expert report to that effect. The owner’s corporation was aware of the breach(es) of statutory warranty since 2014 and did not become aware in the last 6 months of the warranty period. This decision was made against the weight of evidence and internally inconsistent as there is no explanation given by the Tribunal as to how it arrived at this decision and there are no authorities that support that finding. Therefore, the finding reached was considered an error and the ground of appeal succeeded.
Impact
The decision of this case has a significant impact on builders and the construction industry as a whole. This decision has provided builders with a win, ensuring that the HBA is enforced and applied correctly in future cases.
The outcome of this case is a reminder of the importance of understanding the provisions surrounding statutory warranties. It is important to note that both parties must be aware of their rights and obligations under legislation that regulates statutory warranties.