A decision handed down by the Supreme Court last week (Oct 10) that a builder had no ‘duty of care’ to an Owners Corporation throws yet another spanner in the defect rectification works.
And with 85 percent of respondents to a UNSW survey reporting defects in their apartment buildings, the consequences are potentially cataclysmic.
“The ruling basically proposes that a builder has no obligations to an Owners Corporation except if they have rights under the Home Building Act – which are limited,” says leading strata lawyer Colin Grace whose law firm had run the duty of care case.
Buildings over three storeys high are exempt from Home Warranty Insurance so owners seeking defect rectification have to take their case through the courts.
This decision on a commercial building – holiday flats – follows an earlier ruling by the same judge on residential blocks who said the Government had excluded this style of building from HWI protection for a reason and it wasn’t up to the Court to fill the gap.
“So if you are a residential building above three storeys your only rights are for statutory warranties and if the builder goes bust your rights against anyone else are almost gone,” says Colin.
“Also if you are a commercial or industrial building you have no rights against a builder anyway, if these cases are followed.”
Grace Lawyers and their clients are pondering whether to take this to a higher court – as the judge suggested in his ruling – but the decision must be another blow to the confidence of apartment buyers.
“The result is an owners corporation may end up with no rights against anyone for defective building works,” says Colin. “They will just have to repair what the builder built.”
You can read the judgment HERE and Grace Lawyers’ response HERE. Meanwhile for a radical change in the way we deal with defects, have a look at an idea that’s getting a lot of interest across StrataLand HERE.
Meanwhile you can rock up to the Strata Community Australia Lot Owners Day on Saturday, October 20th – including Flat Chat Live – at the Sofitel Wentworth in Phillip St in Sydney’s CBD. Entry is $60.50 including lunch and refreshments. Get there by 9am to register your question for the live Q&A. More details HERE.