Hypotheticals by Manny Wood. Published in the Coffs Coast Advocate on 22 August 2015.
Raymond and Cynthia purchased their home in 2014. When they purchased the property, their solicitor discovered that the home had been built in 2006 and there was home warranty insurance taken out at the time by the licensed builder, trading as ABC Homes.
Six months later, Raymond and Cynthia noticed that one of the walls of the house developed severe cracks. They obtained a specialist engineer’s report which stated that the foundations of the house were constructed in a faulty manner.
Raymond and Cynthia consult their solicitor and are informed that the potential remedies in the circumstances include suing the builder for breach of contract, breach of the Home Building Act or finally, making a claim against him in negligence.
The solicitor advises them that unfortunately, because the building contract was between the builder and the previous owner, they are not parties to the contract and cannot enforce a breach of its terms.
The solicitor advises them that as “successive” owners of the property, they are entitled to the benefit of the provisions of the Home Building Act. Their solicitor also informs them that the Home Building Compensation Fund, only covers them if it is not possible to make a claim against the builder where the builder becomes insolvent, dies or disappears.
Unfortunately, their solicitor also observes that there is a six year limitation period under the Home Building Act, from the completion of the construction of the home, upon which to make a claim. This limitation period had expired and Raymond and Cynthia are barred from making a claim.
In relation to the claim for negligence, there is also a six year limitation period. Raymond and Cynthia are relieved to hear that even though there is also a 6 year limitation period for taking action, in their circumstances, the limitation period did not start to “run” until the faulty work was “discoverable”, which was not until recently.
Their solicitor writes to ABC Homes, demanding that work be undertaken to rectify the faulty foundations on the basis of negligence and fortunately for Raymond and Cynthia, ABC Homes undertake the rectification work without the necessity of court action.
