Win for owners corporation against builder

A Court of Appeal decision will assist residential strata schemes to sue builders for negligent building work.

The Mantra Chatswood Hotel, a serviced apartment business managing units in a strata plan, brought a claim for negligence against the apartment’s builder, Brookfield Australia Investments. It was seeking compensation for loss arising from the cost required to repair building defects.

The court found the owners corporation was vulnerable and was owed a duty of care by the builder because there was no way it could have protected itself from the builder’s negligence.

As a result of this case, it is likely that the expense of rectifying defects which could cause property damage, including to lot property, could be claimed from the builder. This could mean the builder could be responsible for the leaking window or balcony that gives rise to water damage within the property.

Although the case is not binding in other states and territories, it is certainly persuasive. It should also assist commercial strata schemes in Victoria, the ACT and Queensland as well as many residential strata schemes in Queensland and the ACT.

The builder is appealing to the High Court which will likely be heard in the next few months. For updates on how these development could affect you consult your solicitor.

SOURCE: The Law Society of NSW