Owners Corporations: Pursue Builders for Defects
Defects in apartment complexes…
I am always surprised at the great difficulty many owners corporations experience in seeking to obtain a special resolution to commence proceedings against a builder within the 10 year time period from issue of an occupancy permit for defective works.
If the works are warranted and the builder is still solvent and especially where defect reports exist, I’m surprised at how often I’m (1) advising on the remedial building works contract to rectify major defects (usually balconies, membranes, roofing works and plumbing works) instead of (2) advising on the proceedings to recover from the builder or other party.
Just today, I saw another one. No VCAT. No County Court. No pursuit. Nothing!
Why!?
I can’t understand why so many owners corporations do not pursue their builder for works requiring rectification which are clearly covered by warranties.
After all, they obtain expert evidence to figure out what the problem is including leak detection reports, engineer reports, mould testing, building consultant costing and defect analysis and engineer prepared scope of works and even QS costing, why not recover loss?
I know VCAT is super slow but County Court can have trial on in just over a year especially if the plaintiff building lawyer really knows what they’re doing and how to minimise delay, usually by accommodating defendant and respondent inspections and keeping the claim simple and narrow so that limited issues are raised and limited parties are involved - things can achieve results at mediation sooner.
If it is just plumbing related defects there can be claims made against the plumbing insurance or plumbers directly too AND with offers to settle made, OCs can even avoid proceedings.
My question is: why are owners corporations paying for rectification works themselves when there’s a viable claim against a builder?
I don’t get it. Somebody inform me why this happens so often. Is it the votes are stacked against pursuing builder or developer by interested parties (BTW - I have seen that many times) I mean many of these cases are clearly viable but conflicts abound.
If you are a strata committee member, lot owner or chair and have a strata property and you have say 10 to 20 or more lot owners and you have obvious building defects in the common property that need to be rectified and you are within 10 years of an occupancy permit - You should be obtaining legal advice as an owners corporation on claiming. As an example our firm like many specialist building claim lawyers offer an initial consultation for these cases at no cost to understand steps and costs. All committees in this position should be exploring these options.
Remember legal costs can be claimed for legal proceedings where the making of a reasonable pre litigation Calderbank Offer or post commencement Rules based offer is made and rejected.
This article is a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
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