Australia: Residential Focus - 29 June 2016

Last Updated: 6 July 2016
Article by Christine Jones and Jarrad McCarthy
Most Read Contributor in Australia, September 2017

Wesfarmers General Insurance Ltd v Jameson [2016] NSWCATAP 136

This appeal followed NCAT's decision to find the insurer liable to meet the costs of rectification of the defects in the Owners' residence constructed in 2008/09, namely defects in the sewerage and drainage of the building. At first instance the respondent owner was successful, the Tribunal confirming the existence of a structural defect. The significance of the structural defect classification is that a six year period of insurance applies, rather than a two year period of insurance for other than structural defects.

The appeal raised two issues. Firstly the appellant alleged that the respondent's application was out of time as an appeal against a decision of an insurer under Part 3A of the Home Building Act 1989 was required to be made no later than 45 days after written notice of the decision was given. The facts were that the insurer declined the claim and then engaged in further correspondence which included an invitation to invoke its internal dispute resolution procedure (which was taken up). After the internal review decision further correspondence was entered into. The appeal was lodged within 45 days of the correspondence ceasing. The Appeal Panel found that as the correspondence between the parties demonstrated an intention to internally resolve the issues, the 45 day period did not begin until either a resolution had been made or further discussions concluded. Accordingly, the appeal was within time. Tribunal further found the appellant was estopped from denying that it was continuing to accept and respond to correspondence from the respondent and obliged to consider the submissions as if no final decision had been made. The Tribunal further indicated that, despite this, it would have been willing to extend time.

The second issue raised on appeal concerned the definition of "structural defect" contained in the policy. According to the policy a structural defect meant "any defect in a Structural Element of the building that is a attributable to Defective design, Defective or faulty workmanship or Defective materials (or any combination of these)..." The appellant argued that because the drainage pipes did not constitute a Structural Element there was no structural defect. However the Appeal Panel read the definition as containing four alternatives;

  1. a defect in a structural element that is attributable to defective design;
  2. defective or faulty workmanship;
  3. defective materials; or
  4. any combination of these,

provided those have one of the following four consequences, namely closure from use, preventing practical use, destruction or physical damage or threat of imminent collapse.

The Appeal Panel noted that raw sewerage was back flowing into the respondent's residence and causing the floors to flood with effluent. As the defect prevented the practical use of the building the Appeal Panel upheld the Tribunal's decision and confirmed that the defect was structural.

The Appeal Panel also considered the adequacy of the Tribunal Member's reasons. Despite noting that it would have been preferable if the Tribunal Member had further explained his reasoning, the Appeal Panel considered the reasons provided to be sufficient in light of the guiding principle to facilitate the just, quick and cheap resolution of the real issues in proceedings.

We can only assume this decision will be subject to further appeal. The interpretation adopted effectively makes all defects structural defects and makes redundant the distinction in the periods of insurance under the policy and the Act as it was at the time.

In the media

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NSW Budget: Boosting housing supply and affordability

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Easier building and renos with new code

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Exploring the beliefs of Australian prefabricated house builders

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Practice and courts

Announcements, Draft Policies and Plans released 2016

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Property owners whose homes have been affected by loose-fill asbestos insulation have until August to register with the Fair Trading Loose-Fill Asbestos Insulation (LFAI) taskforce. More...

Simplified NSW Housing Code – Draft Changes On Exhibition

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Howe v NSW Coastal Homes Pty Ltd [2016] NSWCATAP127

Administrative Law – appeal from the Consumer and Commercial Division of the Tribunal – home building dispute – appeal by builder on errors of law – no errors found- leave to appeal granted- appeal by builder dismissed- leave to appeal sought by homeowners – leave to appeal granted to homeowners and additional order made. More...

ACT Builders Pty Ltd v Haridemos (No 2) [2016] NSWCATAP 118

Costs- special circumstances, relative strength of case. More...

Wesfarmers General Insurance Ltd v Jameson [2016] NSWCATAP 136

HOME BUILDING ACT 1989 – application for leave to appeal – original application made out of time – 45 days required by Home Building Act – Regulation 65 of the Home Building Regulation 2004 – whether Tribunal had jurisdiction to hear matter – point not taken before Tribunal below
HOME BUILDING ACT 1989 – home warranty insurance – meaning of "structural defect" – meaning of "structural element" More...

The Owners - Strata Plan No 84741 v Nazero Constructions Pty Limited & Ors [2016] NSWSC 832

[DEEDS] - where construction contract between two parties - where performance of one party to construction contract guaranteed by third party - where the three parties execute a Deed of variation and release at same time as settling proceedings between two of those parties to which the guarantor was not a party - construction of the Deed - meaning of the expression "the parties" - separate question as to whether guarantor released from obligation to guarantee certain obligations of the party not released under the Deed. More...

Howe v NSW Coastal Homes Pty Ltd [2016] NSWCATAP 127

Administrative Law – appeal from the Consumer and Commercial Division of the Tribunal – home building dispute – appeal by builder on errors of law – no errors found- leave to appeal granted- appeal by builder dismissed- leave to appeal sought by homeowners – leave to appeal granted to homeowners and additional order made. More...

Yong v Antworks Pty Ltd [2016] NSWCATAP 133

Costs – Special Circumstances More...

Tuck v White [2016] NSWCATAP 132

Contract – need for intention to create legal relationship, inferred contract
Damages – obligation to make best assessment More...

Cominos v Di Rico (No 2) [2016] NSWCATAP 138

COSTS – where transitional provision applies such that the Legal Profession Act 2004 and the Legal Profession Regulation 2005 relating to ordered costs in proceedings commenced prior to 1 July 2015 continue to apply COSTS – form of order – where order is for "costs incidental to proceedings" – unclear whether wording of order is clerical slip or intentional – failure to give reasons for making the order in that form – appeal allowed More...


Regulations and other miscellaneous instruments

Environmental Planning and Assessment Amendment (Loose-fill Asbestos Insulation) Regulation 2016 (2016-321) — published LW 16 June 2016

This publication does not deal with every important topic or change in law and is not intended to be relied upon as a substitute for legal or other advice that may be relevant to the reader's specific circumstances. If you have found this publication of interest and would like to know more or wish to obtain legal advice relevant to your circumstances please contact one of the named individuals listed.

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Christine Jones
Jarrad McCarthy
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