What is a “Major Defect” under the Home Building Act 1989. How long have you got to make a claim for breach of a statutory warranty?

Posted on Jan 27, 2016 by Janine Wilson   |   Categories: Building & Construction, Litigation & Dispute Resolution

During 2015, the terms “Structural Defects” and “Non-Structural Defects” were removed from the statutory warranty provisions of the Home Building Act 1989. These terms were replaced by “Major Defects” and “Other Defects”.

This change was to more than just the terminology. The definition of Major Defect is more restrictive than the previous “structural defects” which is likely to result in less claims in respect of Major Defects.

A claimant has a period of 6 years from the date that the relevant work was completed, to make a claim for a breach of a statutory warranty that results in a Major Defect in residential building work.

For all other defects, the time period in which to make a claim is 2 years from the date the work was completed.

So what is a Major Defect? This is a two stage test.

Firstly, the defect must be to a major element of the building which is defined in the Act to be:

  1. An internal or external load-bearing component of a building that is essential to the stability of the building, or any part of it (including but not limited to foundations and footings, floors, walls, roofs, columns, and beams); or
  2. A fire safety system; or
  3. Waterproofing.

The second stage of the test is that the defect must be one that is attributable to defective design, defective or faulty workmanship, defective materials, or a failure to comply with the structural performance requirements of the National Construction Code (or any combination of these), and that causes, or is likely to cause:

  1. The inability to inhabit or use the building (or part of the building) for its intended purpose; or
  2. The destruction of the building or any part of the building; or
  3. A threat of collapse of the building or any part of the building.

It is the second stage of the test that considers the severity of the defect and is much more limited in its application.

These amendments have been in force for around 10 months. There are very few cases which have considered the two stage test to determine whether or not a defect is major.

For instance, I recently had an inquiry as to what work might fall within the definition of “waterproofing” works?

Good question. There is no definition of “waterproofing” provided in the Home Building Act.

The Regulations to the Act describe waterproofing in these terms:

“Work involved in any protective treatment of a dwelling designed to prevent the penetration of water or moisture into the dwelling or in the protective treatment of wet areas in a dwelling designed to prevent the unwanted escape of water from those areas by using solid membranes or membranes applied by brush, roller or any other method.”

This description of waterproofing works is given in respect of a different section of the Act (not relating to statutory warranty claims) but I expect that it is likely to be used should this question be considered by a Court or Tribunal.

The majority of home building cases are determined by the Consumer and Commercial Division of the NSW Civil and Administrative Tribunal. As more cases travel through the Tribunal and Court system over the next 6 to 12 months, we should start to see some judicial interpretation of these sections.

For further information or assistance, please contact our Commercial Lawyer, Janine Wilson. Call Baker Love on (02) 4944 3322 or contact us here.