Australia: Residential Focus - 24 October 2018: Part 1 - Home building claims

Last Updated: 27 October 2018
Article by Christine Jones and Lauren Stables
Most Read Contributor in Australia, October 2018

In David Cameron Jones t/as Oz Style Homes v Panchal [2018] NSWCATAP 238, the NSW Civil and Administrative Tribunal Appeal Panel (the Panel) considered whether time limits on jurisdiction in s 48K of the Home Building Act 1989 (NSW) (HBA) apply separately to each claim brought in an application or whether each application constitutes one building claim.

Facts

The Tribunal below had ordered the Appellant (the Builder) to pay damages to the Respondents (the Homeowners) for breach of the statutory warranties under s 18B of the HBA and for liquidated damages for delay in completion.

The Tribunal below held that the proceedings were commenced outside the warranty period in respect of any breaches of statutory warranty other than those which resulted in a major defect (finding that there were two major defects). The Tribunal below also determined that the claim to liquidated damages was brought within the three year time limit imposed by s 48K(3) of the HBA.

The Builder sought leave to appeal on five grounds, including that the Tribunal below erred in finding that NCAT had jurisdiction under s 48K of the HBA by finding that each cause of action pleaded by the Applicant was a separate, or individual, building claim such that NCAT was required to consider its jurisdiction separately for each cause of action.

Relevant Sections of the HBA

Section 48A of the HBA defines a building claim as a claim for:

  • the payment of a specified sum of money
  • the supply of specified services, or
  • relief from payment of a specified sum of money
  • the delivery, return or replacement of specified goods or goods of a specified description, or
  • a combination of two or more of the remedies referred to in paragraphs (a)–(d)

that arises from a supply of building goods or services whether under a contract or not, or that arises under a contract that is collateral to a contract for the supply of building goods or services, but does not include a claim that the regulations declare not to be a building claim.

Section 48A(2) extends that definition to include:

  • an appeal against a decision of an insurer under a building cover contract required to be entered into under this Act
  • a claim for compensation for loss arising from a breach of statutory warranty implied under Part 2C.

Under section 48K(3) of the HBA, NCAT does not have jurisdiction in respect of a building claim relating to building goods or services that have been supplied to or for the claimant if the date on which the claim was lodged is more than three years after the date on which the supply was made.

Under section 48K(7) of the HBA, NCAT does not have jurisdiction in respect of a building claim arising from a breach of a statutory warranty implied under Part 2C if the date on which the claim is lodged is after the end of the period within which proceedings for a breach of the statutory warranty must be commenced (as provided by section 18E).

Builder's argument on appeal

The Builder argued that pursuant to s 48A(e) of the HBA, multiple building claims within one application are deemed to be a singular building claim. Therefore, in determining whether the claim was within the jurisdiction of NCAT it was necessary to consider all subsections of s 48K. Accordingly, if NCAT's jurisdiction is precluded in respect of one component of a building claim, NCAT has no jurisdiction in respect of the whole of the building claim. Support was said to be derived from s 48K(1) which provides that the jurisdiction limit of $500,000 is for the total of all claims made in the application.

A similar conclusion was said to be reached in Marsh v Linmore Pty Ltd [2006] NSW CTTT 672 in which the Tribunal found that the three year limitation under s 48K(3) included claims for breach of statutory warranty. This decision has not been followed and was rejected in Marks v Stafflair [2012] NSW CTTT 199.

Decision

It was held that s 48A(1)(e) does not provide that a claim comprised of separate components (including, for example, breach of contract and breach off statutory warranty) constitutes one building claim. The Panel emphasised that different remedies may be sought in respect of breach of contract or breach of statutory warranty. Section 48A(1)(e) provides that a claim for more than one remedy in respect of a breach is one building claim, it does not provide that all claims in respect of alleged breaches of contract or statutory warranty brought in one application constitute one building claim.

It was further held that under subsections 48K (3)–(8), different limitations periods are allocated to the different categories of building claims. Subsections 48K (3)–(8) apply distributively in respect of each separate claim for alleged breaches of contract or statutory warranty, notwithstanding that the claims may be made in a single application to NCAT. NCAT'S jurisdiction to determine each building claim must be determined separately.

Accordingly, whilst the proceedings were commenced outside the warranty period for breaches of statutory warranty for non-major defects, NCAT still had jurisdiction with respect to claims for damages for delay and breach of statutory warranties which resulted in major defects (being claims which were brought within time).

The Panel noted that the arguments advanced by the Builder would severely limit the jurisdiction of the Tribunal for no obvious purpose reducing the period in most cases to two years.

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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Authors
Christine Jones
Lauren Stables
 
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