Whos responsible for these defects and how do i get them to pay 1 september 2011

© Copyright 2011 Teys Lawyers www.teyslawyers.com.au

Who’s Responsible for These Defects and How Do I Get Them to Pay?

Webinar, 1 September 2011


Seven Things You Need to Know About Building Defects

1 • Do you have home warranty insurance?

2 • When did the defect become apparent?

3 • Defects liability periods

4 • O H S issues

5 • Lot v common property

6 • Maintenance

7 • When should you get an expert?


Sources of Defects

Workmanship (Builder / Subcontractor) •  Either not building according to the design or good building prac]ce (BCA, Australian Standards or other industry standards)

Design (Engineer / Architect) • Has designer exercised reasonable skill, care and diligence

Combina]on of Workmanship &

Design


Causes of Ac]on for OCs

1.  Negligence •  Possible defendants

–  Builder / subcontractor –  Designer (architect, engineer etc) –  Developer (in limited

circumstances) –  Principal cer]fying authority (PCA) –  Strata manager –  Building materials supplier

2.  Statutory warran]es •  Possible defendants

–  Builder –  Developer

3.  Other


Relevant Limita]on Periods

Negligence 6 years from the date the cause of

ac]on accrues (s.14 Limita]on Act)

Statutory Warran]es

7 years a_er the comple]on of the work (s.18E(1) HB

Act)

Building Ac]on

10 years a_er date on which the final

occupa]on cer]ficate is issued (s.109ZK(1) EPA Act)


Jurisdic]on

1.  Consumer Trader and Tenancy Tribunal (Home Building Division)

–  Applica]ons up to $500k

–  Applica]ons about insurance claims must be lodged within 10 years of comple]on

–  Must fall within defini]on of ‘building claim’ in s.48A of Home Building Act

–  Mandatory jurisdic]on for building claims

2.  Supreme, District and Local Courts


Case Study 1

OC of over 200 units

Significant water penetra]on issues

OC independently retained expert who described defect but not cause

Builder rejected content of report ci]ng ‘wind-‐driven’ rain as cause

OC wasted a year in the process

OC approached TEYS Lawyers for leier of demand

TEYS Lawyers advised need to determine defect (not describe it)

Consultant engaged and invited builder to observe tes]ng. Rec]fica]on work iden]fied and es]mated at >$5m

Builder conceded responsibility and agreed to rec]fy

Outcome achieved in 6 months – less than $10k in legal fees billed to date

Background Outcome


Case Study 2

OC of over 100 units

Significant defects affec]ng many units (cost es]mate circa $10m)

Legal proceedings commenced by another law firm – claimed against HOW policy

Builder aiempted rec]fica]on, was unable and engaged lawyer to defend claim

OC spent a year in the process

OC approached TEYS Lawyers

Consultant engaged and invited builder to observe tes]ng. Rec]fica]on categorised as type and cause

Prototypes for rec]fica]on devised and agreed with builder

TEYS Lawyers discon]nued unnecessary proceedings. Deeds of seilement agreed with builder for rec]fica]on at his cost

On-‐going legal spend on li]ga]on reduced to $nil

Background Outcome


Home Warranty Insurance

HWI Mark 1 1 May 1997 – 30 June 2002

HWI Mark 2 1 July 2002 – 30 December 2003

HWI Mark 3 31 December 2003 – Present


Managing Legal Risk

Very Contractor / Builder

Friendly

Very Owner / Principal

Friendly

Master Builders Assoc Deacon 2 1998/2005

Australian Standards AS4905 2002

Royal Australian Ins]tute of Architects

CIC 1 1997

Australian Standards

AS 2124 -‐ 1981

Australian Standards AS 4300 – 1995

[D&C]


AS 2124 -‐ 1986

Australian Standards AS400

1997


AS 2124 -‐ 1992

Australian Standards AS 4902 [D&C]

Master Builders Assoc GCC 3 Circa

1980

ABIC MW-‐1 2003

Property Council PC1

1998


Access Issues

•  Access to Neighbouring Land Act 2000

•  Conveyancing Act 1919 (s.88K and s.177)

•  Deeds (indemni]es, security, insurance, OHS, etc)


Issue a Payment Claim whenever a contractual entitlement to make a

progress claim arises, otherwise on the last day of the month

Failure to Issue a Payment Schedule within 10 days of Payment Claim (or less if contractually required)

2 days no]ce of inten]on to suspend

works before suspending

Payment Schedule Issued indica]ng Scheduled Amount which is approved for payment and providing reasons as to why

Scheduled Amount may be less than the Claimed Amount must be issued within 10 days of

Payment Claim (or less if contractually required)

Recover as a debt due in Court

NoMce of IntenMon to Apply For AdjudicaMon

giving further 5 days (2nd chance) to issue a Payment Schedule to be given within

20 days of expiry of due date for payment

Failure to Issue a Payment Schedule within 5 days of No]ce

AdjudicaMon ApplicaMon made within 10 days of

expiry of 5 day 2nd chance

Payment Schedule Issued within 5 days of No]ce

Schedule Amount

If less than Claimed Amount

For approved part of Claimed

Amount

AdjudicaMon ApplicaMon made to determine en]tlement to balance, within 10 days of receiving

Payment Schedule

Failure to Pay Scheduled Amount by the due date for payment under

the contract

2 days no]ce of inten]on to suspend

works before suspending

AdjudicaMon ApplicaMon made within 20 days of expiry

of due date for payment

Recover as a debt due in Court

Adjudicator Accepts Appointment within 4 Days of AdjudicaMon ApplicaMon Being Made (or failing acceptance, a new Adjudica]on Applica]on can be made within 5 days of expiry of the 4 day period for accep]ng first applica]on)

AdjudicaMon Response within 5 days a_er receiving Adjudica]on Applica]on, or 2 days a_er

receiving no]ce of Adjudicator’s acceptance, whichever ]me expires later

Adjudica]on Response not permiied

Adjudicator Determines Adjudicated Amount, due date for payment and applicable rate of interest within 10 days of accep]ng appointment to act as Adjudicator, unless the par]es agree to extend the ]me for determina]on

Failure to pay Adjudicated Amount

Request Adjudica]on Cer]ficate and give 2 days no]ce of inten]on to suspend works

File Adjudica]on Cer]ficate as judgment for unpaid amount in Court

Or

Or

Or

Or

PAYMEN

T PAYMEN

T PAYMEN

T PAYMEN

T PAYMEN

T PAYMEN

T Full payment is made prior to expiry of period in which a Payment Schedule can be issued

Payment within 5 days of determina]on unless later ]me determined by Adjudicator

Debt recovery process (including process set out in the Contractors Debts Act)

Claimant’s steps Respondent’s steps Adjudicator’s steps

References to days in this flowchart are references to business days. This flowchart demonstrates the payment mechanism set down by the Act and should not be construed as legal advice.

Building and Construc]on Industry Security of Payment Act 1999 (NSW)

Scheduled amount must be paid by the contractual due date for payment otherwise , within 10 business days of the Payment Claim


Join our next webinar

Join us for our next webinar at 4.00pm on 6 October 2011

‘How To Prevent Building Defect Li7ga7on Tearing Your OC Apart’

Reserve your seat now at: hips://www3.gotomee]ng.com/register/772441334


About The Presenter

TEYS Lawyers prac]ce na]onally in strata ]tle law represen]ng owners corpora]ons, bodies corporate and apartment owners. The firm’s prac]ce groups include building defects, management rights, strata community disputes, by-‐laws and rules and levy and fee collec]on.

Subscribe for their free e-‐newsleier StrataSpace and find out more about them at www.teyslawyers.com.au

Chris worked for many years in leading commercial construc]on law prac]ces ac]ng for government, developers and contractors in disputes in the building, transport infrastructure and resources sectors. He has been involved in all forms of dispute resolu]on including li]ga]on, arbitra]on and alterna]ve dispute resolu]on in a range of jurisdic]ons in Australia. In the last few years, he has brought his specialist construc]on industry knowledge to the strata sector and now only acts for owners corpora]ons in a range of disputes in various jurisdic]ons.

Whos responsible for these defects and how do i get them to pay 1 september 2011

Economy & Finance