The Importance of Clearly Identifying the Scope of Works and Providing Notification when Achieving Practical Completion

Construction

The Home Building Act 1989 NSW (the Act) contains certain statutory warranties (the Statutory Warranties) which apply to all builders performing residential building works. The Act has strict time limits on when owners can bring claims against builders for breaches of the Statutory Warranties.

A recent decision of the Appeal Panel of the NSW Civil & Administrative Tribunal highlights the importance of clearly defining the scope of works and giving proper notification of achieving practical completion and the role this plays in determining the time limits for enforcing the Statutory Warranties.

In Jandson Pty Ltd v James [2021] NSWCATAP 274, James (the Owner) brought a claim against Jandson Pty Ltd (the Builder) for defective works. The Builder asserted the Statutory Warranty period had expired and the Owner was out of time. The Tribunal was required to determine when the works were completed.

To determine the date the works were completed the Tribunal referred to Section 3B of the Act which provides the completion of residential building work occurs on the date that the work is complete within the meaning of the contract under which the work was done. Initially, the Tribunal determined the date of completion of the Builder’s works was the date of issue of the Final Occupation Certificate (being 20 October 2010) meaning the Owner’s claim was in time.

The Builder appealed the decision on the basis that the Builder’s contractual scope of works did not encompass all of the works that were required to achieve the Final Occupation Certificate. The Builder argued the date of practical completion was in fact an earlier date and was reached when the Builder’s works were determined as complete under the contract and not the date of the Final Occupation Certificate. On appeal, the Tribunal agreed. As a result of the works reaching completion on this earlier date the Tribunal found the Owner was out of time and the Statutory Warranty period had expired.

This case serves a as an important reminder to residential builders to always:

  1. Clearly define the scope of works to be performed and, in particular, what is excluded from that scope; and
  2. Provide proper notice when achieving Practical Completion.

Keystone are experts in construction law and can assist builder’s facing claims for breaches of the Statutory Warranties.

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