Understanding The Law... Building & Construction Law

The following Q&A's have been provided to help you better understand Building & Construction Law.

Q. My next door neighbour has backfilled behind a decorative wall on one side of my property which is within my boundary and despite repeated attempts to stop this my neighbour continues to disregard my wishes. Is there anything I can do?

A. You need to retain a solicitor to write to your neighbour to serve them with notice that this practice is to stop and that they are to remove the backfill from your premises otherwise you will obtain equitable relief and take action against them for trespass.

Q. I went to a large well known building company which is involved in the design and construction of luxury homes. Some years ago I obtained a DA but construction has still not gone ahead as I had some reservations on the design. I have had a number of conversations with them and nobody seems to want to do what I want. What should I do in the circumstances?

A. There are a number of choices available to you including the following:

(i) Find another builder.
(ii) Negotiate with your current builder to find a satisfactory way of having your instructions carried out.
(iii) Buy the plans from them and have another builder do the building work for you.
(iv) If you have signed a building contract with them then seek specific performance.
(v) If there are misrepresentations involved then pursue your remedies at law.
(vi) If there are any breaches of the Home Building Act, Trade Practices Act or any other Act then pursue your remedies there.

Q. I applied for a DA some time ago to build some home units and for a variety of reasons only limited work has commenced on site. I wish to maintain the DA and on sell the property which will be far more valuable if this can be done. What can I do?

A. Obviously if you allow the DA to lapse you will have to apply for a new one which you may find it difficult to obtain. Irrespective you will need to prove to the local council that substantial works have commenced on the site and provided you have enough time you should carry out substantial earthworks which may assist you in this regard.

Q. Do I have to go to the local court to take action against a builder for defects?

A. No. Often where small building matters are started in the civil claims court the CTTT will refuse to accept them as it considers the former venue to be a more appropriate one within which the matter is to be heard.

Q. Do solicitors have an automatic right of appearance before the CTTT?

A. No. If the value of a building claim before the CTTT falls below $25,000 solicitors must approach the tribunal for leave to appear on behalf of their client.

Q. Do lawyers bring any value to proceedings before the CTTT NSW?

A. Yes. Often irrespective of the value of the matter before the tribunal complex contractual issues may arise where the member would appreciate some assistance in this regard.

Q. Do lawyers have any automatic right of appearance before the CTTT?

A. Yes. On matters over and above $25,000 up to the jurisdictional limit of $500,000.

Q. Are experts’ reports important in building and construction and home warranty matters?

A. There is a significant variation in the types of reports which are required for a wide range of building matters. Often these reports go to the heart of the matter and serve to explain issues which are essential to the court or tribunal’s understanding of what has or has not occurred. In home building matters experts’ reports are required not only to identify the range of defects but also to quantify and perhaps suggest rectification or repair as appropriate.

Q. When is home warranty insurance not required?

A. Where the value of the works is less than $12,000.

Q. How long is the defects liability period?

A. 13 weeks.

Q. For how long does home warranty insurance provide protection?

A. For six years.

Q. Are licensed builders required to perform all building work in NSW?

A. No. For a building work above $1,000 licensed contractors are required but with large building works that is, above three storeys, there is no current licensing regime for builders who service this area.

Q. What does home warranty insurance cover?

A. Formerly it used to cover both defects and the death, disappearance and insolvency of the builder, however today defects remain to be addressed directly by the builder with the latter three categories the subject of insurance.

Q. I have designed and constructed a number of houses over many years and I am concerned as to whether I could be pursued by a building warranty insurer where they have settled with the claimant and my involvement has been zero?

A. Yes. The old system was predicated on the basis that the insurer would either pay to have the works rectified or cash settle the matter. Irrespective once this had been done the builder would be pursued to recover the monies paid to the claimant.

Q. Are all defects recoverable from the builder?

A. Where the defects are within tolerance then neither rectification nor compensation can be claimed from the builder.

Q. Is it normal to prepay the builder prior to the commencement of works?

A. Where the value of building works is less than $20,000 a 10% deposit is required by the builder. Where the value exceeds this figure then only a 5% deposit may be claimed. As for other payments relating to the building works they may be either preclaimed or claimed during the course of construction. With most building contracts there is a retention which can be held back pending satisfactory completion of the works mainly to cover defects.

Q. Should a home warranty certificate be sighted before the builder commences work on site?

A. Yes. Although building warranty insurance is of limited value as it now no longer covers defects it is extremely important where builders or building companies go to the wall which occurs with greater frequency in times of an economic downturn.

Q. What should I do where I am physically threatened by the builder and I am dissatisfied with the progress and quality of the works performed?

A. First you should report it to the police. Second - retain a lawyer and obtain independent legal advice. Third - if you are in arrears bring the arrears up to date. Fourth - refuse to pay where the builder is clearly in breach of contract. Five – check all variations to ensure that they are properly claimed and are within time.

Q. How effective is disputes resolution when dealing with Australian construction and infrastructure projects?

A. Parties in dispute are often dissatisfied with the disputes resolution procedures in contracts. Unfortunately disputes are widespread throughout Australia and are normally associated with cost overruns irrespective as to how or why they arise. Essentially the majority of parties are not satisfied with the time, cost, process and outcome of disputes resolution. A lot of this can be traced back to insufficient time being applied to disputes resolution clauses at the time of precontractual negotiations. As in all these cases very little time is spent on precontractual matters with some contractors preferring to issue documentation themselves without referring it for proper legal advice to avoid these issues. The fees charged in this area are not a cost but investment in the future and it gets back to the age old adage of being penny wise but pound foolish. Who can afford the increased costs of unsatisfactory disputes resolution or litigation when the real money should have been spent up front obtaining proper legal advice and assistance rather than throwing buckets of money at a process which will surely leave one party badly disadvantaged and potentially wearing substantial costs.