Can Property Owners Prevent a Builder from Fixing Construction Defects in NSW?

Introduction

Construction defects can create significant challenges for property owners in New South Wales, often raising the question of whether they can prevent the original builder from returning to fix those issues. Understanding the legal principles that govern these situations is essential, as the answer depends on a careful balance between the rights of owners and the obligations of builders under both contract law and the Home Building Act 1989 (NSW).

This guide explains how property owners must generally act reasonably when dealing with construction defects, including when they may be justified in refusing a builder access to carry out rectification work. By outlining the circumstances that shape these decisions, this article aims to provide clear and practical guidance for anyone navigating the process of resolving construction disputes in NSW.

Interactive Assessment: Can You Refuse Access?

Why You Generally Cannot Prevent a Builder from Rectifying Defects

The Legal Principle of Mitigating Your Loss

When you suffer a loss because of a breach of contract, such as defective construction work, you have a legal duty to act reasonably to minimise that loss. This principle, known as the duty to mitigate, requires you to take reasonable steps to reduce the financial impact of the builder’s breach.

Courts generally recognise the following outcomes when you fail to mitigate your loss:

• You are not entitled to recover losses that result from your own unreasonable conduct or that could have been reasonably avoided.
• If you fail to act reasonably to mitigate your damages, a court may prevent you from recovering costs you otherwise could have claimed from the builder.

Providing a Reasonable Opportunity for Builder Rectification

In construction disputes, the duty to mitigate your loss generally requires you to provide the original builder with a reasonable opportunity to rectify any defects. This obligation exists even if it is not explicitly stated in your building contract.

Allowing the builder to fix the issues is often considered the most cost-effective solution, as it enables them to minimise the damages they must pay. Consequently, you must typically allow the builder a chance to make repairs, unless your refusal to grant them access is considered reasonable in the specific circumstances of your case.

When You Can Reasonably Refuse the Builder Access

A Reasonable Loss of Confidence in the Builder’s Willingness & Ability

A property owner may reasonably lose confidence in a builder’s capacity to fix defects, justifying a refusal of access. This often occurs after a history of unsatisfactory construction work or when previous attempts at rectification have been of poor quality.

Courts have recognised that owners are not required to give a builder an unqualified right to re-enter the property if the builder’s conduct suggests incompetence or unwillingness to perform the work correctly.

Several factors can contribute to this loss of confidence, leading to a reasonable refusal:

• Unprofessional Conduct: Actions such as subcontractors failing to attend at agreed times or entering without permission can erode trust.
• Aggressive Correspondence: If the builder’s communication about the defects claim is unnecessarily aggressive, it signals an unwillingness to resolve the issue collaboratively.
• Inadequate Planning: A repeated failure to provide a sufficient scope of work for rectification can indicate an inability to address the problems properly.
• Poor Past Performance: When earlier repairs were unsatisfactory, an owner may reasonably conclude further attempts will also be inadequate.

The Builder Denies Defects or Fails to Respond Adequately

You may refuse access if the builder consistently denies that any defects exist. The owner’s position strengthens when this denial persists deep into legal proceedings, showing an unwillingness to acknowledge responsibility.

Courts have supported an owner’s decision to engage another contractor in such circumstances. In Ippolito v Cesco [2020] NSWSC 561, the builder was alerted to water ingress problems but denied defective workmanship over an extended period.

The court ultimately found it reasonable for the owner to have someone else carry out the repairs.

The Builder’s Proposed Construction Rectification Method is Unreasonable

An owner is often justified in refusing access when the builder’s proposed rectification method is inadequate or unsuitable. Disagreements over the manner of repair become decisive if the builder’s plan deviates markedly from expert recommendations.

You are not acting unreasonably if you rely on professional advice to reject an unsatisfactory repair method. For example, when a builder proposes a scope of work that falls well short of an independent expert’s assessment, it is reasonable to refuse the proposal and bar the builder from performing substandard repairs.

The Builder Fails to Return to Site or Address Defects Promptly

If a builder fails to return and carry out repairs, causing residential construction delays, it can be reasonable to refuse any future access. The duty to mitigate loss applies equally to the builder, and unnecessary delays may breach this duty.

Consider a situation where a builder, notified about serious water ingress, neither undertakes the necessary work nor proposes an adequate fix. In such cases, an owner may hire another tradesperson to prevent further damage, and the original builder may have to compensate the owner for third-party repair costs.

A Real-World Example When Refusal Was Justified

Case Study Background: The Owners v Galyan Pty Ltd

The NSW Supreme Court case of The Owners – Strata Plan 89041 v Galyan Pty Ltd (2019) NSWSC 619 provides a practical example of a justified refusal. The dispute involved the Owners Corporation of a residential apartment building in Ettalong, New South Wales—a situation often requiring legal advice for an owners corporation—together with the builder and property developer.

Defects were first identified in February 2014, prompting the Owners Corporation to commission a report from a licensed builder.

The resulting report highlighted the scope of works required through two key figures:

• There were 30 distinct building defects requiring rectification.
• The builder addressed only 19 issues, leaving 11 outstanding.

The Owners Corporation made several attempts to obtain an adequate scope of work for the remaining defects. However, with the statutory defect liability period nearing its end and confidence in the builder rapidly eroding, the Owners Corporation refused further access and commenced legal proceedings.

Why the Court Sided with the Property Owner’s Refusal

The Supreme Court held that the Owners Corporation acted reasonably in refusing access—a decision that can be critical in a NSW Supreme Court strata dispute—because it had legitimately lost confidence in the builder’s willingness and ability to complete the repairs.

The court considered several factors when evaluating this loss of confidence:

• A sufficient scope of work was never provided; the proposal eventually supplied fell well short of the expert’s recommendations.
• Correspondence from the builder was described as “unnecessarily aggressive.”
• Earlier rectification performed by the builder’s subcontractor was found to be of unsatisfactory quality.
• The subcontractor failed to attend the property at agreed-upon times and entered without permission or authority.

How Legal Frameworks Shape Your Decision

The Role of Your Construction Contract & Its Clauses

Construction contracts commonly provide a builder with the right to rectify defects, usually set out in a defects-liability clause. These terms outline both the procedure and the timeframe for repairs, and failing to follow them can bring significant financial consequences for the property owner.

The importance of these clauses was underscored in the South Australian Supreme Court case of Bedrock Construction and Development Pty Ltd v Crea [2021] SASCA 66. In that case, the contract allowed the builder 10 working days to fix any notified defects, yet the owner denied the builder access and instead pursued the full cost of rectification from a third party.

The Court of Appeal’s decision emphasised several key points:

• the owner had breached the contract by refusing access for rectification;
• the owner’s damages claim was reduced to reflect work the original builder could have carried out;
• the case shows that owners must follow the agreed-upon procedures in their construction contract.

Although this was a decision in South Australia, the underlying principles apply in New South Wales as well.

Key Obligations Under the Home Building Act 1989 (NSW)

In addition to your contract, the Home Building Act 1989 (NSW) creates specific legal duties for owners in construction-defect disputes, making it crucial to get legal help with strata building defect claims. These duties aim to encourage fair and reasonable resolution before matters escalate.

Two key Sections of the Act guide the dispute process:

• Section 18BA: This Section imposes a direct duty on owners to mitigate their loss, requiring reasonable efforts to notify the builder of a breach within six months of discovery and to allow reasonable access for rectification.
• Section 48MA: This provision makes rectification by the original builder the preferred outcome in a dispute. Although it does not remove an owner’s right to damages, the NSW Civil and Administrative Tribunal will generally favour a work order over a monetary order, particularly for defective rather than incomplete work.

Conclusion

Property owners in New South Wales must generally act reasonably to mitigate their loss, which typically means providing the original builder with an opportunity to rectify construction defects. However, you are justified in refusing the builder access under specific circumstances, such as when you have reasonably lost confidence in their ability, they deny the defects exist, or their proposed repair methods are inadequate.

Navigating these construction disputes requires a clear understanding of your legal rights and obligations, so contact PBL Law Group’s expert strata lawyers in Sydney for trusted legal advice to ensure your rights are protected. If your dispute involves broader issues of construction contracts or defective work, our building and construction lawyers can provide further specialist guidance.

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