Australia: Residential Focus - 1 February 2017

Last Updated: 8 February 2017
Article by Jarrad McCarthy and Christine Jones

Under section 18E of the Home Building Act 1989 (the Act), the fact that a person has enforced a warranty under section 18B in relation to a particular deficiency in the work does not prevent the person from enforcing the same warranty for a deficiency of a different kind in the work (the other deficiency) if:

  1. the other deficiency was in existence when the work to which the warranty relates was completed;
  2. the person did not know of the existence of the other deficiency when the warranty was previously enforced; and
  3. the proceedings to enforce the warranty in relation to the other deficiency are brought within the relevant period.

This begs the question: what does 'enforced' mean? There is no definition, or legally recognised meaning of 'enforced' in section 18E(2). It is notable that previous forms of the subsection had the words "in proceedings" after the words "enforced the warranty".

In excluding those words, the present form potentially includes non-proceeding types of enforcement, such as negotiated settlements. Commentary on section 18E(2) notes that the failure to provide a definition of 'enforced' creates structural shortcomings.

In discussing the meaning of 'enforced' within the context of the then s 18D, the NSW Court of Appeal noted that 'enforced' must at least include, even if it does not mean, enforced by judgment. Of course that decision (Honeywood v Munnings [2006] NSWCA 215) predated and was the catalyst for the introduction of section 18E(2).

The issue was considered recently by the NCAT (in Huynh v Devine Building Pty Ltd [2016] NSWCATCD 93), in circumstances where the respondent submitted that as the applicant's complaints had been the subject of an order for rectification from NSW Fair Trading, the applicant had previously enforced the warranty and was not entitled to bring fresh proceedings.

Had that proposition been accepted, it would have undermined Division 2 of Part 3A of the Act which, with section 48J, requires home building disputes to first be investigated by NSW Fair Trading (one outcome of which is the making of a rectification order) before they are brought to the Tribunal.

The Tribunal considered that section 18E(2) was directed to limiting the effect of res judicata and paraphrased the section in terms of proceedings and further proceedings, stating that section 18E(2) does not purport to expand the circumstances in which a res judicata could arise. Accordingly, the Tribunal found that obtaining an order for rectification from NSW Fair Trading was not the enforcement of a warranty for the purpose of section 18E(2).

In the media

NSW Set for Several More Years of Construction Boom
Going forward, Australian Construction Industry Forum (ACIF) expects the value of construction work done to rise further from $52.986 billion in financial year 2015/16 to more than $54 billion in each of 2016/17, 2017/18 and 2018/19 respectively (26 January 2017). More...

A welcome step towards more homes but still more to do
The Property Council today welcomed Planning Minister Rob Stokes and the State Government's proposed changes to the Environmental Planning and Assessment Act 1979 (EP&A Act) as a good next step to streamlining the planning system and boosting housing supply in NSW (16 January 2017). More...


Australian Bureau of Statistics
18/01/2017 Building Activity, Australia, Sep 2016 (cat no. 8752.0).
18/01/2017 Construction Activity: Chain Volume Measures, Australia, Sep 2016 (cat no. 8782.0.65.001).
18/01/2017 Engineering Construction Activity, Australia, Sep 2016 (cat no. 8762.0).

Practice and courts

ABCB: What would it take to make you change?
An online survey is underway to get a better understanding and insight into the attitudes and behaviours of various stakeholder groups regarding using the NCC. In particular, using Performance Solutions versus the Deemed-to-Satisfy compliance option (23 January 2017). More...

Standards Australia Draft for Comment - AS 4349.2
Standards Australia have released a draft of AS 4349.2 Inspection of buildings: Part 2 - Common areas of group titled properties for public comment (17 January 2017). More...

ABCB's 2017 NCC Information Seminars Registrations Now Open
Registrations are NOW OPEN for the Australian Building Codes Board's (ABCB) 2017 NCC Information Seminars. The series will include presentations from the ABCB, Standards Australia and local Building Control Administrations.

Senate Inquiry Update
Non-conforming building products
Status: Accepting Submissions; Date Referred: 11 October 2016; Submissions Closed: 01 December 2016; Reporting Date: 25 May 2017.

NSW: [Draft regulation] Fire safety proposed reforms to buildings (multi-unit residential, commercial, retail, industrial, health care and public-assembly structures) The proposals, which cover a broad range of buildings, and various stages of the building lifecycle, form part of the Government's response to a recent Statutory Review of the Building Professionals Act 2005. The draft reforms follow consultation with key industry and community stakeholders. More...

BPB: Have your say on improving fire safety in NSW
The NSW Government is seeking to improve fire safety in new and existing buildings and is asking for your feedback on changes to relevant legislation and certification. Public consultation on the proposed reforms to the Environmental Planning and Assessment Regulation 2000 closed 31 January 2017). More...


Champion Homes Sales Pty Ltd v Commissioner for Fair Trading, Office of Finance, Services and Innovation [2017] NSWCATAP 15
Appellant company holder of contractor licence under Home Building Act 1989 – disciplinary action by an acting director, Department of Finance Service and Innovation against appellant and four office bearers for breach of statutory warranty under s18(B)(1)(a) of the Act – appellant required to pay a penalty of $3,500 – appellant and office bearers lodged applications for administrative review of decisions – orders that determinations against office bearers set aside and decisions made that no action be taken – order that determination against appellant be set aside but appellant cautioned – appeal by appellant – failure by Tribunal to give reasons why the appellant should be cautioned.

Gorr v Minkley [2017] NSWCATAP 13
Building contract- adjustment to contract sum following deduction of work for which provisional allowance made. Damages - set-off of balance of unpaid contract price. Decision- inferences to be drawn from amount awarded in decision, express reasons contrary to inference.

Huynh v Devine Building Pty Ltd [2016] NSWCATCD 93
CONTRACTS – Home Building Act – Statutory warranties – time limits – whether complaint to Department of Fair Trading "enforcement" – obtaining work orders from Department of Fair Trading not enforcement of warranties for purposes of s18E Home Building Act – waterproofing not shown to be defective.

Trevor John Kelly t/as TJ & Kelly v Smith [2016] NSWCATCD 92
Home Building – recovery of extras and variations not authorised in writing-quantum meruit.

Kratz v East Coast Formwork & Concrete Pty Ltd [2016] NSWCATCD 94
Service of directions, substantial breach, termination, rectification costs and incomplete work.

Nayak v Rockwall Constructions Pty Ltd [2017] NSWCATAP 18
Building contract – claims for variations – contract requirements not followed – alternative claims based on quantum meruit – elements of a quantum meruit claim – whether evidence established those claims.


Constitutional instruments

Admin istrative Arrangements (Administration of Acts—General) Order 2017— Published LW 30 January 2017.

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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Jarrad McCarthy
Christine Jones
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