When an owner bought a commercial property from a developer, it was previously thought that the owner could not make a claim for losses he suffered due to defective building work performed under the contract between the builder and the developer.
An owner of residential premises was protected by section 18D of the Home Building Act 1989 (NSW). This section provides that successors in title to property are protected by the Statutory Warranties in the Act. So if you buy a residential property and defects emerge from building work done before you bought it, you will have a claim against the builder (provided you bring the claim within the stipulated period, which is 6 years for a breach that results in a structural defect or 2 years in any other case). But no such statutory warranty is in place for a buyer of commercial premises.
The NSW Court of Appeal, in a judgment handed down on 25 September 2013, has decided that a claim can be brought by a purchaser for latent defects resulting from unworkmanlike building. In The Owners – Strata Plan No 61288 v Brookfield Australia Investments Ltd, judges Basten, MacFarlan and Leeming all agreed that the general law could impose a duty of care on a builder that would extent to subsequent owners of commercial premises.
This is a far-reaching and novel development in the law. Indeed, the respondent in this appeal (Brookfield) argued that it should not be liable as such a duty has never been previously recognised in the law and it was entirely novel, meaning that liability should not be upheld. Brookfield also argued that, as the legislature had not seen fit to pass a law creating such a duty, it was not the provence of the courts to do so.
The court was not persuaded by these arguments. The court also looked to other jurisdictions and said that similar liability had been found to exist in those jurisdictions, namely the Appeal Division of the Supreme Court of Victoria, the Supreme Court of Canada, New Zealand and Singapore.
The impact of this case is that if defects emerge in a property that you have recently acquired, whether residential or commercial, you may have a claim against the builder for these defects despite the fact that you did not contract with the builder and may not even know who he/she is.
Contact Drayton Sher Lawyers should you wish to pursue such a claim or if you require advice with respect to your building and construction law rights.