The Act previously required work to be performed "in a
proper and workmanlike manner'"– the legislation now
requires that work is to be "done with due care and
skill". Terms in home-building contracts need to
reflect this change.
The term "structural defect" is replaced with the
concept "major defect" in order to cover significant
defects that may not be structural in nature: in other words, the
range of defects covered by the former "structural
defect" enforcement regime has broadened generally. HOWEVER
the new concept does not cover many defects, such as wall cracking,
there were previously considered to be structural defects.
A "major defect" is generally defined as
follows: a defect in a major element of a building that is attributable
to defective design, defective or faulty workmanship, defective
materials, or a failure to comply with the structural performance
requirements of the National Construction Code (or any combination
of these), and that causes, or is likely to cause:
the inability to inhabit or use the building (or part of
the building) for its intended purpose, or
the destruction of the building or any part of the
a threat of collapse of the building or any part of the
A "major element of a building" is defined
generally to mean:
an internal or external load-bearing component of a building
that is essential to the stability of the building, or any part of
it (including but not limited to foundations and footings, floors,
walls, roofs, columns and beams), or
a fire safety system, or
or any other element prescribed by the regulations.
The limitation period for commencing proceedings for an alleged
breach of a statutory warranty is now 6 years for a major defect,
and 2 years for non-major defects.
The shorter limitation period for non-major defects has been
the subject of protests by owners' corporations because of the
tighter time frame for claims to be made on defects that previously
fell within the meaning of "structural defect".
The defences available to a claim for breach of a statutory
warranty have been expanded. It is a defence for the builder to
prove that the deficiencies of which the owner complains arise
instructions given by the owner, contrary to the advice of the
person who did the work (being advice given in writing before the
work was done), or
reasonable reliance by the builder on written instructions
(given before the work was done or confirmed in writing afterwards)
by a professional acting for the owner, who was independent of the
Duties of Claimants
A person relying on the benefit of a Statutory Warranty now has
to mitigate loss;
to make reasonable efforts to give written notice to the
builder within 6 months after the breach becomes apparent;
not to unreasonably refuse a builder or sub-contractor access
to the site to rectify any defective work;
and failure to comply may be taken into account by a Court or
These provisions increase the options available to builders to
Extension of Statutory Warranty Regime
The statutory warranties will now be implied into all contracts
for the provision of residential building work.
This increases the chances that sub-contractors will be liable
to the principal contractor for a breach of the statutory
Resolution of Building Disputes
The changes include broadening the rectification orders that can
be made by Fair Trading inspectors, allowing for staged
rectification with deadlines specified for the work to be
completed. In certain circumstances, builders will be able to apply
to have these deadlines extended.
The amendments require courts and tribunals to have regard to
the "preferred outcome" – which is that
rectification of defective work is to be done by the party
So if the fault lies with a sub-contractor, the preferred
outcome is for that contractor to attend to the rectification,
rather than it being the responsibility of the builder.
What should you do?
The changes are substantial and it is prudent for building
contracts to be aligned with the concepts in the legislation. Nick
Kallipolitis and Ray Frangi can deal with any changes that need to
Nick can also advise about building and construction disputes
and the ramifications of the changes to the legislation.
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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