Section 18B of the Home Building Act 1989: Understanding Breach of Statutory Warranties & Claims in NSW

Introduction

The Home Building Act 1989 (NSW) provides essential protections for those involved in residential construction projects in New South Wales. A key component of this legislation is section 18B, which automatically applies a set of statutory warranties to every residential building contract, covering crucial aspects like workmanship, quality of materials, and compliance with plans.

When these statutory warranties are breached, it can result in significant disputes between homeowners and builders. This guide offers a comprehensive overview of the warranties under section 18B, common types of breaches, and the process for making a claim to help homeowners and builders navigate their rights and obligations.

Interactive Tool: See If You Qualify for a Statutory Warranty Claim

Understanding Section 18B Statutory Warranties in the Home Building Act 1989 (NSW)

Key Warranty Types for Homeowners & Builders

Under Section 18B of the Home Building Act 1989 (NSW), every residential building contract in NSW automatically includes several key guarantees. These warranties establish fundamental obligations for builders.

The statutory warranties ensure that:

• The work will be performed with due care and skill.
• All materials supplied will be suitable for their intended purpose.
• The work will comply with the plans and specifications outlined in the contract.
• The work will be completed within a reasonable timeframe.
• For new dwellings, the work will result in a structure that is reasonably fit for occupation.
• The work and materials will be suitable for any specific purpose the owner has communicated.

Warranty Coverage & Duration

These statutory warranties protect both the original homeowner and any subsequent owners, also known as a successor in title. Thus, if a defect becomes apparent after the property is sold, the new owner retains the right to make a claim against the original builder.

The warranty period begins from the date the work is completed and extends for:

• Six years for major defects
• Two years for all other defects

These timeframes remain in effect even if the property changes ownership during the warranty period. Importantly, builders cannot use contractual clauses to waive or limit these warranties, as any such terms are legally unenforceable.

The warranties apply to all residential building work, including:

• Subcontractor work
• New constructions
• Renovations
• Repairs
• Subcontractor work

Case Studies on Statutory Warranty Breaches

Garofali v Moshkovich: A Case Study

The 2021 case of Garofali v Moshkovich [2021] NSWCATAP 242 provides a clear example of a significant breach of statutory warranties related to a swimming pool installation. The tribunal determined that the builder had performed defective work by using incorrect backfill material around the pool, classifying it as a major defect due to its potential safety implications.

Key details include:

• Homeowners sought compensation for an overpayment of $13,315.36.
• A joint expert conclave report confirmed the material defects, heavily influencing the tribunal’s decision.
• The builder’s late attempt to alter their expert’s testimony was discredited, underscoring the importance of consistent expert evidence.

Allianz Australia Insurance Ltd v Waterbrook: A Case Study

In the 2009 NSW Court of Appeal case of Allianz Australia Insurance Ltd v Waterbrook [2009] NSWCA 224, a crucial legal principle regarding statutory warranties was established. The court ruled that subsequent owners of a property retain the right to make a claim under these warranties, even if the defects were visible when they purchased the property.

Furthermore, the court found that an insurance policy clause attempting to exclude coverage for reasonably visible defects was void under the Home Building Act 1989 (NSW). As a result, the protections under section 18B apply regardless of a defect’s visibility at the time of purchase. The Court of Appeal also affirmed that the assessment of damages for such breaches should follow the principles established in Bellgrove v Eldridge [1954] HCA 36.

Homeowner Rights & Builder Obligations in NSW

A Homeowner’s Right to Redress

If a homeowner believes a builder has breached the statutory warranties under section 18B of the Home Building Act 1989 (NSW), they have the right to seek a solution. The initial step requires the homeowner to notify the builder in writing about the defect within six months of it becoming apparent. This notification gives the builder an opportunity to rectify the issue at their own expense.

Should the builder fail to resolve the problem satisfactorily, the homeowner can take further action, including:

• Engaging an expert: An independent expert can be hired to assess the defects and compile a formal report.
• Commencing legal proceedings: The homeowner can initiate a case against the builder in the NSW Civil and Administrative Tribunal or a court.
• Claiming under the Home Building Compensation Fund: This is an option if the builder has become insolvent, passed away, or disappeared.

It is vital for homeowners to act within the specified warranty period. The period is:

• Six years for major defects
• Two years for all other defects

Both periods start from the date of completion.

Available Defences for Builders Against Warranty Claims

While statutory warranties offer strong protection, the Home Building Act 1989 (NSW) also outlines specific defences for builders under Section 18F. A builder may not be liable if they can prove the defect resulted from circumstances beyond their control.

These defences apply if the breach of warranty was caused by:

• Instructions given by the homeowner that went against the builder’s advice
• The builder’s reasonable reliance on instructions from a person acting on the homeowner’s behalf, such as an architect or engineer

To use these defences, a builder must show they provided written advice to the homeowner, warning them about the potential risks of following their instructions. This underscores the need for clear and documented communication.

However, builders cannot use contractual clauses to limit or remove these statutory warranties, as such terms are prohibited by Section 18G of the Home Building Act 1989 (NSW).

How to Make a Statutory Warranty Claim

The Legal Process & Key Timeframes

To make a claim for a breach of statutory warranty under section 18B of the Home Building Act 1989 (NSW), homeowners must follow a specific legal process within strict deadlines.

The process involves several important steps:

• The first step is to provide the builder with written notice detailing the defect as soon as it is discovered.
• The builder must be given a reasonable opportunity to fix the defective work. Homeowners cannot unreasonably refuse the builder access to the property for assessment and rectification.
• If the builder fails to resolve the issue, the homeowner may need to seek legal advice to prepare and file the necessary documents to start legal proceedings.

Legal action must be commenced within the relevant warranty period. This timeframe is:

• Six years from the date of completion for major defects
• Two years for all other defects

Once proceedings begin, the homeowner will need to participate in the legal process. This may involve:

• Mediation
• Providing additional evidence
• Attending hearings

Gathering Evidence to Support Your Claim

To build a strong case for a breach of the statutory warranties under section 18B, you will need to gather relevant evidence. Compiling thorough documentation is essential for supporting your claim in any legal proceedings.

Key evidence to collect includes:

• Expert reports: An assessment from an independent building expert can formally identify defects and their cause.
• Photographs: Clear photos of the defective work provide visual proof of the issues.
• Contracts: The building contract and any related documents outline the agreed-upon scope and specifications of the work.
• Correspondence: Keep a record of all communication with the builder, including emails, letters, and notes from conversations.

Conclusion

Understanding the statutory warranties under section 18B of the Home Building Act 1989 is essential for protecting homeowner investments and clarifying builder responsibilities in New South Wales. These automatic guarantees cover workmanship, materials, and compliance, and knowing the specific timeframes and procedures for making a claim is crucial for resolving disputes effectively.

If you are facing a dispute over a breach of statutory warranty, seeking professional legal advice is the best way to safeguard your rights and navigate the claims process. For trusted expertise tailored to your needs, contact the specialised construction lawyers at PBL Law Group.

Frequently Asked Questions