When Can An Own­er Com­mence Pro­ceed­ings In The 6 Months After The Expiry Of The Statu­to­ry War­ran­ty Periods

When a defect claim emerges in the final six months of statu­to­ry war­ran­ty peri­ods, own­ers may still have time to act. This update explains when pro­ceed­ings can be com­menced under the Home Build­ing Act 1989 (NSW), fol­low­ing recent Supreme Court guidance.

Own­ers cor­po­ra­tions often dis­cov­er defects in their build­ings in the last 6 months of the statu­to­ry war­ran­ty peri­ods afford­ed under the Home Build­ing Act 1989 (HBA) leav­ing lit­tle time to con­sid­er the issues and if nec­es­sary, com­mence proceedings.

Sec­tion 18E(1)(e) of the HBA pro­vides that if a breach of a statu­to­ry war­ran­ty “becomes appar­ent” with­in the final six months of the applic­a­ble statu­to­ry war­ran­ty peri­od, pro­ceed­ings may be com­menced with­in a fur­ther six months after the expiry of the war­ran­ty period.

In The Own­ers – Stra­ta Plan 87003 v Raysons Con­struc­tions Pty Ltd [2025] NSWSC 66, the Supreme Court of New South Wales con­sid­ered the cir­cum­stances in which a par­ty may rely on the six-month exten­sion under s 18E(1)(e) of the HBA.

Key take­aways: 

• the onus rests on the par­ty seek­ing to rely on the six month exten­sion, to establish:
  • the breach of the war­ran­ty became appar­ent in the final six months of the six-year war­ran­ty period;
  • the claimant did not know, and could not rea­son­ably have known, of the breach-the war­ran­ty ear­li­er; and
  • pro­ceed­ings were com­menced with­in six months after the war­ran­ty peri­od expired.
• what is con­not­ed by “becomes aware (or ought rea­son­ably to have become aware) of” is not the defect itself, but the breach of the statu­to­ry war­ran­ty and “that it is essen­tial to dis­tin­guish between a defect …and a breach of warranty”. 
• aware­ness of a defect is not the same as aware­ness of a breach of statu­to­ry war­ran­ty.
• a defect is a phys­i­cal issue in the build­ing, where­as a breach of war­ran­ty is a legal con­clu­sion about whether the work com­plies with the statu­to­ry war­ranties in s 18B of the HBA [56 – 57]
• a gen­er­al aware­ness of issues such as cracks, leaks or oth­er vis­i­ble irreg­u­lar­i­ties does not of itself estab­lish aware­ness of a breach of the statu­to­ry war­ranties. Observ­ing a prob­lem is not the same as under­stand­ing its tech­ni­cal or legal sig­nif­i­cance. In many cas­es, expert inves­ti­ga­tion is required to deter­mine whether the issue amounts to a breach of war­ran­ty. Accord­ing­ly, the rel­e­vant ques­tion is not when the claimant first noticed the defect, but when they became aware, or ought rea­son­ably to have become aware, that it con­sti­tut­ed a breach of war­ran­ty. This aware­ness will often arise only after the issue has been inves­ti­gat­ed and assessed by a suit­ably qual­i­fied con­sul­tant [58].
• aware­ness of minor or unre­lat­ed defects does not nec­es­sar­i­ly mean an appli­cant was aware (or ought rea­son­ably to have been aware) of more seri­ous defects that emerge lat­er. The Court reject­ed the builder’s argu­ment that any ear­li­er knowl­edge of defects pre­vent­ed reliance on the six-month exten­sion. Instead, each alleged defect and its con­nec­tion to a breach of war­ran­ty must be assessed indi­vid­u­al­ly [100].

In oth­er words, it will be nec­es­sary to attend to the par­tic­u­lar breach­es of war­ran­ty, as man­i­fest­ed in par­tic­u­lar defi­cien­cies, in order to deter­mine whether what was sued on was or ought to rea­son­ably have been appar­ent ear­li­er than the final six months. 

For further information please contact:

Michael Byrnes, Partner
Phone: + 61 2 9233 5544
Email: mjb@swaab.com.au

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.