This document summarizes a webinar about building defects and how to determine liability. It discusses the key parties responsible for defects, including builders, subcontractors and designers. It outlines important factors to consider such as when the defect became apparent, warranty periods, and jurisdictional bodies to handle claims. Case studies are presented where expert determination of the defect source helped achieve resolution with the responsible party rectifying defects in a timely manner without excessive legal costs. Managing risks through standards, contracts and expert guidance is advised.

1. Who’s
Responsible
for
These
Defects
and
How
Do
I
Get
Them
to
Pay?
Webinar,
1
September
2011
©
Copyright
2011
Teys
Lawyers
www.teyslawyers.com.au

2. Seven
Things
You
Need
to
Know
About
Building
Defects
1
2
3
• Do
you
have
home
• When
did
the
defect
• Defects
liability
warranty
insurance?
become
apparent?
periods
4
5
6
• O
H
S
issues
• Lot
v
common
• Maintenance
property
7
• When
should
you
get
an
expert?
©
Copyright
2011
Teys
Lawyers
www.teyslawyers.com.au

3. Sources
of
Defects
Workmanship
Design
(Engineer
/
(Builder
/
Architect)
Subcontractor)
• Has
designer
exercised
• Either
not
building
reasonable
skill,
care
Combina]on
of
according
to
the
design
and
diligence
Workmanship
&
or
good
building
Design
prac]ce
(BCA,
Australian
Standards
or
other
industry
standards)
©
Copyright
2011
Teys
Lawyers
www.teyslawyers.com.au

4. Causes
of
Ac]on
for
OCs
1. Negligence
• Possible
defendants
– Builder
/
subcontractor
– Designer
(architect,
engineer
etc)
– Developer
(in
limited
circumstances)
– Principal
cer]fying
authority
(PCA)
– Strata
manager
– Building
materials
supplier
2. Statutory
warran]es
• Possible
defendants
– Builder
– Developer
3. Other
©
Copyright
2011
Teys
Lawyers
www.teyslawyers.com.au

5. Relevant
Limita]on
Periods
6
years
from
the
Negligence
date
the
cause
of
ac]on
accrues
(s.14
Limita]on
Act)
Statutory
7
years
a_er
the
comple]on
of
the
Warran]es
work
(s.18E(1)
HB
Act)
10
years
a_er
date
Building
on
which
the
final
occupa]on
Ac]on
cer]ficate
is
issued
(s.109ZK(1)
EPA
Act)
©
Copyright
2011
Teys
Lawyers
www.teyslawyers.com.au

6. Jurisdic]on
1. Consumer
Trader
and
Tenancy
Tribunal
(Home
Building
Division)
– Applica]ons
up
to
$500k
– Applica]ons
about
insurance
claims
must
be
lodged
within
10
years
of
comple]on
– Must
fall
within
defini]on
of
‘building
claim’
in
s.48A
of
Home
Building
Act
– Mandatory
jurisdic]on
for
building
claims
2. Supreme,
District
and
Local
Courts
©
Copyright
2011
Teys
Lawyers
www.teyslawyers.com.au

7. Case
Study
1
Background
Outcome
OC
approached
TEYS
Lawyers
for
OC
of
over
200
units
leier
of
demand
TEYS
Lawyers
advised
need
to
Significant
water
penetra]on
issues
determine
defect
(not
describe
it)
Consultant
engaged
and
invited
OC
independently
retained
expert
builder
to
observe
tes]ng.
who
described
defect
but
not
cause
Rec]fica]on
work
iden]fied
and
es]mated
at
>$5m
Builder
rejected
content
of
report
Builder
conceded
responsibility
and
ci]ng
‘wind-­‐driven’
rain
as
cause
agreed
to
rec]fy
Outcome
achieved
in
6
months
–
less
OC
wasted
a
year
in
the
process
than
$10k
in
legal
fees
billed
to
date
©
Copyright
2011
Teys
Lawyers
www.teyslawyers.com.au

8. Case
Study
2
Background
Outcome
OC
of
over
100
units
OC
approached
TEYS
Lawyers
Consultant
engaged
and
invited
Significant
defects
affec]ng
many
builder
to
observe
tes]ng.
units
(cost
es]mate
circa
$10m)
Rec]fica]on
categorised
as
type
and
cause
Legal
proceedings
commenced
by
Prototypes
for
rec]fica]on
devised
another
law
firm
–
claimed
against
and
agreed
with
builder
HOW
policy
TEYS
Lawyers
discon]nued
Builder
aiempted
rec]fica]on,
unnecessary
proceedings.
Deeds
of
was
unable
and
engaged
lawyer
to
seilement
agreed
with
builder
for
defend
claim
rec]fica]on
at
his
cost
On-­‐going
legal
spend
on
li]ga]on
OC
spent
a
year
in
the
process
reduced
to
$nil
©
Copyright
2011
Teys
Lawyers
www.teyslawyers.com.au

9. Home
Warranty
Insurance
HWI
Mark
1
1
May
1997
–
30
June
2002
HWI
Mark
2
1
July
2002
–
30
December
2003
HWI
Mark
3
31
December
2003
–
Present
©
Copyright
2011
Teys
Lawyers
www.teyslawyers.com.au

10. Managing
Legal
Risk
Master
Builders
Royal
Australian
Assoc
GCC
3
Circa
Ins]tute
of
Architects
1980
CIC
1
1997
Master
Builders
Australian
Australian
Standards
Australian
Property
Assoc
Deacon
2
Australian
Standards
Standards
AS
AS
4300
–
1995
Standards
Council
PC1
1998/2005
AS4905
2002
4902
[D&C]
[D&C]
AS
2124
-­‐
1981
1998
Very
Very
Contractor
/
Builder
Owner
/
Principal
Friendly
Friendly
Australian
Australian
Australian
ABIC
MW-­‐1
Standards
AS400
Standards
Standards
2003
1997
AS
2124
-­‐
1992
AS
2124
-­‐
1986
©
Copyright
2011
Teys
Lawyers
www.teyslawyers.com.au

11. Access
Issues
• Access
to
Neighbouring
Land
Act
2000
• Conveyancing
Act
1919
(s.88K
and
s.177)
• Deeds
(indemni]es,
security,
insurance,
OHS,
etc)
©
Copyright
2011
Teys
Lawyers
www.teyslawyers.com.au

12. Building
and
Construc]on
Industry
Security
of
Payment
Act
1999
(NSW)
Issue a Payment Claim
Full
payment
is
made
prior
to
expiry
of
period
in
which
a
Payment
Schedule
can
be
issued
whenever a contractual entitlement to make a
progress claim arises, otherwise on the last day of
the month
PAYMENT
PAYMENT
PAYMENT
PAYMENT
PAYMENT
PAYMENT
2
days
no]ce
of
Failure
to
Issue
a
Payment
Schedule
Payment
Schedule
Issued
Respondent’s
steps
Claimant’s
steps
Adjudicator’s
steps
inten]on
to
suspend
within
10
days
of
Payment
Claim
indica]ng
Scheduled
Amount
which
is
approved
works
before
suspending
(or
less
if
contractually
required)
Or
for
payment
and
providing
reasons
as
to
why
References
to
days
in
this
flowchart
are
references
to
business
days.
Scheduled
Amount
may
be
less
than
the
Claimed
This
flowchart
demonstrates
the
payment
mechanism
set
down
by
the
Act
Amount
must
be
issued
within
10
days
of
and
should
not
be
construed
as
legal
advice.
Payment
Claim
(or
less
if
contractually
required)
NoMce
of
IntenMon
to
Apply
Recover
as
a
debt
For
AdjudicaMon
due
in
Court
Or
giving
further
5
days
(2nd
chance)
to
issue
a
Payment
Schedule
to
be
given
within
20
days
of
expiry
of
due
date
for
payment
Scheduled
amount
must
be
paid
by
the
contractual
due
date
for
payment
otherwise
,
within
10
business
days
of
the
Payment
Claim
Schedule
Amount
Failure
to
Issue
Payment
Schedule
Issued
Failure
to
Pay
Scheduled
Amount
2
days
no]ce
of
within
5
days
of
No]ce
If
less
than
For
approved
inten]on
to
suspend
a
Payment
Schedule
Or
by
the
due
date
for
payment
under
Claimed
Amount
part
of
Claimed
within
5
days
of
No]ce
the
contract
works
before
suspending
Amount
AdjudicaMon
ApplicaMon
AdjudicaMon
ApplicaMon
made
within
10
days
of
made
to
determine
en]tlement
to
AdjudicaMon
ApplicaMon
Recover
as
a
debt
expiry
of
5
day
2nd
chance
balance,
within
10
days
of
receiving
made
within
20
days
of
expiry
due
in
Court
Payment
Schedule
of
due
date
for
payment
Or
Adjudicator
Accepts
Appointment
within
4
Days
of
AdjudicaMon
ApplicaMon
Being
Made
(or
failing
acceptance,
a
new
Adjudica]on
Applica]on
can
be
made
within
5
days
of
expiry
of
the
4
day
period
for
accep]ng
first
applica]on)
Adjudica]on
Response
AdjudicaMon
Response
not
permiied
within
5
days
a_er
receiving
Adjudica]on
Applica]on,
or
2
days
a_er
receiving
no]ce
of
Adjudicator’s
acceptance,
whichever
]me
expires
later
Payment
within
5
days
of
determina]on
unless
later
]me
determined
by
Adjudicator
Adjudicator
Determines
Adjudicated
Amount,
due
date
for
payment
and
applicable
rate
of
interest
within
10
days
of
accep]ng
appointment
to
act
as
Adjudicator,
unless
the
par]es
agree
to
extend
the
]me
for
determina]on
Failure
to
pay
Adjudicated
Amount
Debt
recovery
process
(including
process
set
File
Adjudica]on
Cer]ficate
as
out
in
the
Contractors
Debts
Act)
Request
Adjudica]on
Cer]ficate
and
give
2
days
no]ce
of
inten]on
to
suspend
works
judgment
for
unpaid
amount
in
Court
©
Copyright
2011
Teys
Lawyers
www.teyslawyers.com.au

13. Join
our
next
webinar
Join
us
for
our
next
webinar
at
4.00pm
on
6
October
2011
‘How
To
Prevent
Building
Defect
Li7ga7on
Tearing
Your
OC
Apart’
Reserve
your
seat
now
at:
hips://www3.gotomee]ng.com/
register/772441334
©
Copyright
2011
Teys
Lawyers
www.teyslawyers.com.au

14. About
The
Presenter
Chris
worked
for
many
years
in
leading
commercial
construc]on
law
prac]ces
ac]ng
for
government,
developers
and
contractors
in
disputes
in
the
building,
transport
infrastructure
and
resources
sectors.
He
has
been
involved
in
all
forms
of
dispute
resolu]on
including
li]ga]on,
arbitra]on
and
alterna]ve
dispute
resolu]on
in
a
range
of
jurisdic]ons
in
Australia.
In
the
last
few
years,
he
has
brought
his
specialist
construc]on
industry
knowledge
to
the
strata
sector
and
now
only
acts
for
owners
corpora]ons
in
a
range
of
disputes
in
various
jurisdic]ons.
TEYS
Lawyers
prac]ce
na]onally
in
strata
]tle
law
represen]ng
owners
corpora]ons,
bodies
corporate
and
apartment
owners.
The
firm’s
prac]ce
groups
include
building
defects,
management
rights,
strata
community
disputes,
by-­‐laws
and
rules
and
levy
and
fee
collec]on.
Subscribe
for
their
free
e-­‐newsleier
StrataSpace
and
find
out
more
about
them
at
www.teyslawyers.com.au
©
Copyright
2011
Teys
Lawyers
www.teyslawyers.com.au