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Topic
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In a strata building, the home warranty insurance company has denied liability in respect of an architecturally designed external feature wall, which in the short term rotted and continues to rot, as it was not able to withstand the elements. It is contended by the insurance company that it is a maintenance issue as the panelling was decorative plywood timber. and not structural. The owners corporation contends that the material used by the builder was not good and suitable for the purpose for which it was used, and that the feature wall was in fact a structural element of the building forming part of the external walls and roof of the building. The actual roof of this feature wall covered a storage area.
Relevant section of Home Building Act is S18B and Regulation 71 of the Home Building Regulation.
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Replies
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Hi Rita C,
Will need further info;
1) How old is your building, the strata registration date will be fine.
2) does this issue form part of a bigger HOW claim
3) Have you an expert report/s and if so what did the report/s say
It may be difficult for the forum to help. If you want email me directly so we can communicate and I can get the full info I need to help. With your permission once I know the facts I can up date the forum. My email is below.
Hi Rita C,
I am interested in this issue as I work in the industry, however I’m sure it has some complexities to it that might prevent its resolution through the forum. Just a couple of questions to narrow down the issue:
- how long since the work was completed?
- who selected (or specified) the panelling material – the architect, the builder or someone else such as an owner?
- did the timber material have, or have specified, a protective paint or clear coating or treatment?
- Were you left with any instructions from the builder regarding ongoing maintenance, such as repainting?
- Do you recollect any discussion or query from the builder or architect on the issue prior to installing it?
- was there any change to the original design that might have meant that the original design intent was not met? Eg the wall location changed or the roof line changed that might have lead to more weather exposure?
If you can answer the above, I might be able to assist or at least help clarify why it has been rejected.
Regards,
Rob T
Hi Rita C,
Thank for the additional information.
To start with some technical background, all timber finishes in an external environment will deteriorate over time. The time taken to deteriorate will depend on a number of factors, primarily the exposure severity, construction detailing, timber suitability for the exposure, protective paints or treatment used (if any) and level of maintenance following completion. Responsibilities for getting these right fall with the architect, the builder and the owner, depending on at what point you are in the building life cycle.
The reason/s for the failure as you describe could be attributed to any of, or a combination of the above factors and responsibilities and really would need further investigation to narrow it down. It can become quite complex with many arguments and counter arguments. However, the severity of deterioration does suggest that the timber material was unsuitable for the weather exposure as one could expect the material not to be that critically dependant on the protecting coating, if any.
If the insurer is saying that it is a maintenance issue, the task is to demonstrate that the wrong material was used in construction and that this was the builder’s responsibility (and not that of the architect).
That said, pursuing a claim may involve time and money and this needs to be weighed up against the cost of replacing or repairing the material.
I am happy to give you an opinion (at no charge) on whether it is worth further pursuing a claim, but I would need to examine the documentation and the site to do this. I am contactable via our website at http://www.thorburnassociates.com.au .
Regards,
Rob T
Hi Rita
I am still a little bit in the dark particularly to whether your HOW claim is being (a) managed by a solicitor and (b) whether you have an expert under the Uniform Civil Procedures Rules or the CTTT Expert Code of Conduct engaged. Possibly not by the statements in your email, it would seem that the Owners Corporation is attempting to run its own claim. I want to be helpful not critical but if the OC is running their own claim they need to get some advice from an experienced strata solicitor particularly experienced with HOW matters.
I’ve printed off the strata plan and I can confirm that the subject storage areas are part of common property even though they are allocated as exclusive use to the units.
I notice that Rob T has logged onto Flatchat and given you some advice, and this advise is quite reasonable in regards to establishing that the materials are not fit for purpose and to give you some guidance to the remedial methodology, however Rob has missed the point of your email and that is that its under a HOW claim. To establish a defect as a recognised expert under the Expert Code of Conduct you must establish that one or more of the statutory warranties under the Home Building Act 1989 has been breached. I can advise you as a senior court expert that in my view statutory warranties (a) (b) and (e) have been breached (see below);
18B Warranties as to residential building work
The following warranties by the holder of a contractor licence, or a person required to hold a contractor licence before entering into a contract, are implied in every contract to do residential building work:
(a) a warranty that the work will be performed in a proper and workmanlike manner and in accordance with the plans and specifications set out in the contract,
(b) a warranty that all materials supplied by the holder or person will be good and suitable for the purpose for which they are used and that, unless otherwise stated in the contract, those materials will be new,
(c) a warranty that the work will be done in accordance with, and will comply with, this or any other law,
(d) a warranty that the work will be done with due diligence and within the time stipulated in the contract, or if no time is stipulated, within a reasonable time,
(e) a warranty that, if the work consists of the construction of a dwelling, the making of alterations or additions to a dwelling or the repairing, renovation, decoration or protective treatment of a dwelling, the work will result, to the extent of the work conducted, in a dwelling that is reasonably fit for occupation as a dwelling,
(f) a warranty that the work and any materials used in doing the work will be reasonably fit for the specified purpose or result, if the person for whom the work is done expressly makes known to the holder of the contractor licence or person required to hold a contractor licence, or another person with express or apparent authority to enter into or vary contractual arrangements on behalf of the holder or person, the particular purpose for which the work is required or the result that the owner desires the work to achieve, so as to show that the owner relies on the holder’s or person’s skill and judgment.
Accordingly as this is common property it is clearly a structural element of the façade and the statutory warranties have been breached I have no idea why the insurer has rejected this item.
What are your options
If the OC has engaged a lawyer to lodge and manage the claim, then they really should be able to deal with this issue. Your expert under the direction of the lawyer should be able to place a very firm argument that this matter should be accepted as part of the claim.
If the OC hasn’t engaged a lawyer or your expert is not supportive of placing an argument, then an obvious question needs to be raised to whether any other issues have been missed or not supported by relevant argument. Its not too late to get a solicitor involved, so it would be my strongest recommendation to get this claim managed correctly. I word of caution for all OC dealing with HOW claims, if you deal with them yourself the insurer may well offer you a settlement and with it a settlement agreement to sign. Be very careful that you do not waiver your rights to making further claim which is a normal standard clause within insurers settlements agreements and this is just one issue to why you need to have a solicitor involved. Normally the solicitors fees can be reasonably recuperated from the insurer, but in making this statement you need to disucss what component of the fee and when solicitors and experts fees can be recuperated with your instructing solicitor.
Summary
The bottom line is that if we were dealing as the experts in this matter we would not accept any argument placed by the insurer that this is not a legitimate defect as applied under the statutory warranties and remedial repairs must proceed. It is obvious to me from the photographs that the materials used and the manner of installation is not fit for purpose.
I can’t help you any further without being engaged. We are happy to help however you’ll need to discuss this with your Executive Committee. I hope this is of some assistance to give you some direction. If you haven’t appointed a strata solicitor and you have no idea where to start, we can give you a short list of solicitors experienced in this area and you can make your own enquiries.
Hi Rita C,
I looked at the wall in question yesterday and I can make the following observations and comments on the failure of the material and your HOW claim:
Observations:
- The plywood material forms an external cladding to a box type structure adjoining one side of the building.
- The box structure has a dual function of creating a visual feature to the building plus serves as external walls and roof to parts of the internal building space;
- The box structure appears to be built with a lightweight framed substructure, a waterproofing membrane over this substructure and the external plywood cladding system to provide both protection to the waterproof membrane and an attractive external appearance;
- The plywood cladding system has failed at numerous locations mainly on the roof and wall directly facing the street due to severe rot in the plywood timber plus numerous cracks and weathering of the protective coating.
Comments:
- I consider the plywood cladding to be a “structural element of the building” (under Reg 71) as it forms part of the external walls and roof of the building (ie the box structure). It’s function is not only decorative but also is for the proper performance and function of the underlying waterproofing.
- In view of the severity of failure of the plywood material since its installation in 2006, I consider that the material used has not been suitable for the purpose (under the Act Part 18B (b)).
- Given the above, I believe that you would have strong grounds to appeal against the insurer’s rejection of you claim. The key issue now appears to be to demonstrate to the insurer that the plywood cladding is a “structural element”. As it is a legal definition, I suggest you engage legal assistance to approach the insurer together with further expert technical advice.
Please note that all of the above should be read in the context of my more detailed report which is available to you outside of the Forum.
I trust this has been helpful.
Regards,
Rob T
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