Australia: Residential Focus – 10 May 2017

Last Updated: 12 May 2017
Article by Georgia Appleby

Most Read Contributor in Australia, September 2018

M & M Building Pty Ltd v Keith [2017] NSWCATAP 88

The NCAT Appeal Panel recently considered an appeal by a builder that the Tribunal had erred in determining that the owners had effectively terminated the MBA BC4 contract, either pursuant to the agreement or at common law.

Termination pursuant to the contract

The owners submitted at first instance that they were entitled to terminate the building contract (clause 28) provided they notify the builder of the matters in dispute (clause 26) in sufficient detail (clause 27) and meet with the builder in an attempt to resolve the dispute (clause 26).

They argued that they satisfied the requirement of notification as they emailed the nominated Fair Trading inspector a table listing what they claimed to be the outstanding and defective works. The inspector then forwarded this table onto the builder who acknowledged receipt and marked up the table with comments. They claimed that this table met the requirements for detail under clause 27 as it went beyond reciting the mere facts and accurately set out the matters giving rise to the issuing of the termination letter.

The owners also argued that they had satisfied the requirement to meet with the builder under clause 26 as they had attended a site visit and dispute resolution meeting organised by the Fair Trading inspector.

These arguments were successful at first instance with the Tribunal finding that the owners had validly terminated the agreement pursuant to the terms of the contract.

Conversely, the Appeal Panel found that the owners had not sufficiently notified the builder of their intentions to terminate the contract if the items in the table were not addressed. This was because the table was not notice given by the owners to the builder, but merely a document given to the Fair Trading inspector outlining the alleged outstanding and defective works. The fact that this was then forwarded to the builder did not transform this table into a notice of dispute.

The Appeal Panel also found that no such right to terminate the contract existed under the agreement. This was because the purported right of the owner to terminate under clause 28 was no more than a right to determine the employment of the builder, not a right to terminate the entire contract.

Termination at common law

At first instance the Tribunal held that the builder's failure to carry out the work with due diligence within the time stipulated by the contract amounted to a fundamental breach of contract and was in fact a repudiation of the contract by the builder.

The Tribunal below also found that the termination letter, although not terminating the contract validly pursuant to its terms, was sufficient to advise the builder unequivocally that the owners terminated the contract for reason of the failure of the builder to proceed with the works with due diligence.

This was reversed on appeal with the Appeal Panel finding that clauses 26 and 27 of the contract must be complied with before the owner can exercise their common law right to terminate for repudiation. This is because the object of clause 26 is to bring about a situation whereby the parties resolve their dispute without requiring litigation. Similarly, the object of clause 27 is to ensure that the precise matter of the complaint is brought to the attention of the builder, thereby clarifying the matters in dispute.

In failing to meet the requirements of these clauses, the Appeal Panel held that the owners did not fulfil the contractual preconditions to enliven their right to terminate the contract for repudiation at common law.

In the media

Quality Control and Conformance: Making Contractors Accountable
On most building projects, quality control, conformance of the materials used and how the materials are installed is generally left as self-regulating exercise by the building contractors and their sub-contractors (05 May 2017). More...

Compliance blitz to target Parramatta River building sites
The NSW Environment Protection Authority (EPA), Department of Planning and Environment, and local councils will join forces for a soil and erosion control blitz at construction sites around Parramatta River throughout May (01 May 2017). More...

Practice and courts

ABCB Advisory Note: AS 3660 Pt 1 Termite management –New building work; AS 3786 – Smoke alarms
From 1 May 2017, this transition ends and only the 2014 editions of these Standards will be able to be used under the Deemed-to-Satisfy Provisions. More...

Senate Inquiry Update

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

NSW

NSW BPB: April 2017 e-news 2 May 2017- the e-news is a regular digest of work by the Board, legislative updates, events, training and consultation opportunities Read our April 2017 e-news.

Cases

AAI Ltd t/as Vero Insurance v Kalnin Corporation Pty Ltd; Kalnin Corporation Pty Ltd v AAI Ltd t/as Vero Insurance [2017] NSWSC 548
CONTRACT – indemnity by defendant to plaintiff for loss suffered as a result of claim made by owners corporation under residential building insurance policy – proper construction of indemnity – whether condition precedent to liability established – whether plaintiff issued policy of the kind referred to in indemnity – whether plaintiff was obliged to indemnify owners corporation for loss now claimed against defendant; BUILDING AND CONSTRUCTION – whether defects in residential building were structural defects – whether defects complained of by owners corporation were in a structural element – whether defects were structural defects that were likely to result in physical damage to any part of the building – proper construction of reg 57AC of Home Building Regulation.

Owners Corporation SO 79417 v Trajcevski [2017] NSWCATAP 101
APPEAL – Civil and Administrative Tribunal – inadequate specification of questions of law – appeal dismissed NEGLIGENCE – Owners Corporation – no duty of care HOME BUILDING ACT 1989 – S 3B – proper construction – date of completion LEAVE TO APPEAL – no substantial miscarriage of justice – application for leave dismissed.

Sea Breeze Homes v Heffley [2017] NSWCATAP 99
Appeal – No question of law – Whether leave ground established.

Siad v Viselle & Brennan [2017] NSWCATAP 91
Consent order – appeal – no evidence to show that agreement to settle was not reached - reasons for the disputes were given and they comprised allegations of defective work; work not as requested; incorrect size of materials; materials not as specified; ingress of water; and insufficient fixing for weight.

M & M Building Pty Ltd v Keith [2017] NSWCATAP 88
Home building contract – requirements for termination – whether requirements applied to termination at common law – whether contract terminated – Home Building Act requirements for variations – whether required to be in writing and signed by the parties – whether denial of procedural fairness in allowing submissions concerning termination at common law – claim for damages for breaches of contract by builder – failure to give reasons for non-application of s48MA Home Building Act – builder not licensed – was builder entitled to extension of time – was contract validly suspended by builder – acquiescence by home owners in change of plans – estoppel.

Liao v SJB 5 Pty Ltd t/as Laing & Simmons Ryde [2017] NSWCATAP 92
CONTRACT – construction - contract in writing – to be construed without reference to prior negotiations.

Legislation

NSW

Proclamations commencing Acts

Regulatory and Other Legislation (Amendments and Repeals) Act 2016 No 60 (2017-159) — published LW 28 April 2017 - The object of this Proclamation is to commence provisions of the Regulatory Reform and Other Legislation (Amendments and Repeals) Act 2016 that: repeal provisions of the Architects Act 2003, Architects Regulation 2012 and Building Professionals Act 2005 that require complaints made under those Acts against architects and accreditation holders to be verified by statutory declaration.

Regulations and other miscellaneous instruments

Fire and Emergency Services Levy (Ad Valorem Rates) Order 2017 (2017-160) — published LW 28 April 2017.

Bills passed by both Houses of Parliament – week ending 05 May 2017

Gas and Electricity (Consumer Safety) Bill 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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