Suing for Strata Building Defects

Written on the 23 July 2021

What is the Problem with Most Strata Buildings?

Strata buildings often do not have home building insurance, and therefore, they have to ask the builder to get the building defects fixed. But another problem is, the builder can not get all the building defects fixed. Hence, strata buildings have to sue the builder or send them into insolvency to claim rights from the building insurance, if there is any.

It is important to note that running these cases demand a high amount of time and energy. With the builders vigorously trying to defend themselves and with the High Court narrowing the law in this area, it is harder for strata buildings to win the case. That being said, running these cases in the superior courts is more time-consuming, more costly, and harder to win.

The problems presented above make us realize that we need to go back to the basics on how to claim such rights. Thus, we have listed down some non-insurance claim legal actions for strata building defects.

What is Considered a Defect?

In general terms, a building defect is a part of the building that is not functioning adequately as it should or as it is supposed to satisfy the legal requirements applied. An example involves when a fire door in a strata building does not meet the required fire resistance level.

On the other hand, in legal actions, what is considered a defect varies widely depending on the legal basis for the claim. For instance, claiming legal actions differ under contract claims, statutory warranty claims, and negligence claims.

Contract law recognises a defect as a failure to comply with the standards laid out in the contract.

Statutory warranty recognises a defect as a failure to meet the Australian Standards, but not limited to the required standards in the contract.

Negligence law recognises a defect as a failure to comply with the standard duty of the strata building or owners.

Overview of Contract Claims

The contract between the developer and the builder doesn't involve strata building as a party. It is due to the fact that strata building does not exist at the time the contract was made, and only comes into existence upon completion. Therefore, strata buildings are not able to sue the developers or builders directly under the contract since they are not legally bound.

Nevertheless, some legal principles can permit claim legal actions by strata buildings under construction contracts. It is vital for strata buildings to understand the applicable construction standards and terms in the contract when they want to pursue the strata building defects litigation.

The losses claimed for a breach of contract can cover a broader range of losses than just the cost of rectifying the building defects. However, contract laws are not the primary basis for strata building defects litigation, but the statutory warranty is (which will be discussed later on).

Overview of Statutory Warranty Claims

There are home building laws undertaking warranties in each state to ensure the basic level of construction, regardless of the contract terms. The statutory warranty is the most common basis for strata building defects claims. Below are the examples taken under the Victorian Domestic Building Contracts Act 1995:

- All work should be done according to the plan specified in the contract.

- All work needs to comply with the legal requirements, such as the Building Act 1993.

- All work has to be performed appropriately.

- All work needs to be completed in the period specified in the contract.

Under the statutory warranties, legal actions can be taken in the Tribunals or civil courts. The losses claimed for breaches of statutory warranties are different from contract claims. It is generally more limited to just the cost of rectifying the building defects.

Overview of Negligence Claims

Strata buildings or owners have standard duties that they have to satisfy, and often in doing so, failure to comply can cause injury or loss to another person, making them liable for that failure.

The idea of negligence claims is to make claims for strata building defects against developers, architects, engineers involved in the construction of the building. Negligence claims have been favorable in the past, the Water's case and Woolcock case are some of the examples. These cases have opened up building defect cases for building owners. However, the previous court decision has been contradicted by the Brookfield case in 2014, ruling that the builder does not owe a duty of care to the strata building.

Despite the Brookfield case, negligence claims for building defects are still worth pursuing because of the offer that claimants get. Here are some of the abilities that claimants receive:

- Make claims against any parties associated with the construction of the building.

- Rely on a broader range of duty breaches aside from just contract and statutory warranty-based failures.

- Demand damages claims beyond the cost of rectifying the defects.

Source:
SmartStrata