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Ensure you are covered – how the date for completion of building work affects your coverage under the Home Building Act

The Home Building Act 1989 regulates the residential building industry in New South Wales and establishes minimum rights of homeowners, builders and contractors.

The Act provides a range of statutory warranties from builders to homeowners in relation to work having to be completed with a certain level of skill, care and diligence and for the purposes intended. These warranties are in effect for six years for major defects and two years for all other defects, commencing from the date when the work was completed.

The Act provides that residential building work will be considered 'complete' when the requirements of the contract are met. In the case of there being no contract, the work will be considered 'complete' when there are no major defects and the project has achieved its intended purpose. This will be considered to have been met on the earliest of the following events:

  • the date the builder hands over possession of the building to the owner;
  • the date the contractor last carried out work (other than remedying minor defects);
  • the date of the issue of an occupation certificate; or
  • 18 months after the owner-builder permit was issued;

unless an earlier date for practical completion can be established.

The definition of the date of completion of work was reviewed recently in the case of Ashton v Stevenson [2019] NSWCATAP.

Facts

The previous owner of the property, Ms Ashton had undertaken renovations of the property under an owner-builder permit. The new owner, Mr Stevenson purchased the property with settlement taking place on 4 May 2016. Mr Stevenson discovered a water leak during a period of heavy rainfall and sought to rely on the warrant provisions under the Act.

The availability of this relief depended on whether his claim commenced within the relevant time period, being 2 years from the date of completion (as the issue in question was not considered a major defect). Mr Stevenson commenced proceedings on 20 November 2016.

Mr Stevenson argued that the date that the work was completed was 7 February 2015, being 18 months after the date the owner builder permit was issued. This would mean that he had commenced his claim within the two year period and so had the benefit of the home owners warranty provisions.

Ms Ashton provided evidence from third parties who had moved into the property on 16 May 2014 who considered the work to be complete except for a parquetry floor and carpet in the attic. The carpenter also provided evidence of the fact that the flooring was completed in May 2014.

Decision

It was decided that Ms Ashton successfully established that the work was completed at an earlier practical completion date than that argued by Mr Stevenson as at May 2014, the works were largely complete and the home could be used for its intended purpose even though an occupation certificate had not been issued at this date.

Conclusion

This case demonstrates that homeowners seeking to rely on the protections afforded by the home owners warranty provisions must be careful in considering the date of completion of work to ensure their claims are commenced within the relevant time provisions.

This article was written by lawyer Alexandra Haverkamp. 

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