Home Owners’ Claim approximately $500,000 settled by Builder for $95,000

14/10/2015

The Builder who had been served with proceedings issued out of the NSW Civil & Administrative Tribunal (NCAT) by the Home Owner instructed Richard Watson an Accredited Specialist lawyer experienced in Construction Law and associated matters. 

The Home Owners claimed against the Builder in excess of $370,000 for alleged costs of rectifying defective work which was said to be in breach of the statutory warranties provided under the Home Building Act. 

The Home Owners entered into a Building Contract with the Builder for approximately $860,000 for residential building works for renovations of a Home. The Home Owners had also entered into a separate Contract for the supply and installation of timber flooring at the house directly with a supplier. 

Disputes arose between the Home Owners and the Builder and also between the Home Owners and the supplier of the timber flooring.  The building works were significant with high quality finishes, however, there were some issues that were required to be considered. 

The Builder attempted to resolve the issues and complete the claimed incomplete and alleged defective work but could not resolve the Home Owners’ claims.  The Home Owners engaged solicitors experienced in the Building and Construction claims and, in particular, in relation to claims on behalf of Home Owners relating to breach of Statutory Warranties by a Builder.  The solicitors engaged various building consultants including a structural engineer, geotechnical engineer and building consultants.  Reports were obtained and the Home Owners claimed the cost of rectification in excess of $370,000.  The Home Owners also claimed other amounts and reimbursement of the Home Owners’ legal and consultant’s costs.  The total claim was approximately $500,000.  The Home Owners filed their claim in NCAT.

The Builder attended the directions at the NCAT and was ordered to file all its evidence in response to the claim made by the Home Owners.  This was a large task as it requires an appropriate response to each of the expert’s evidence prepared and lodged on behalf of the Home Owners.  Without an appropriate response the Builder would likely be held responsible for the sums claimed.  A relatively short time was provided by the Tribunal for the Builder’s response. 

The Builder approached Richard Watson and advice was given to the Builder as to the evidence necessary.  Appropriate building experts were engaged to respond to the claims by the Home Owners in particular the claims as set out in the opinions of the experts briefed on behalf of the Home Owners.

The building consultants engaged on behalf of the Builder inspected the property and formed the opinion that the claims by the Home Owners were substantially overstated.

Unfortunately having regard to the time limits imposed by NCAT significant costs were incurred by the Builder in obtaining the necessary evidence to respond to the Home Owners’ evidence. 

There were other issues that arose which required the Builder to be involved in the preparation of a detailed statement as to the process of various claims throughout the building process.  There had been some delays in the completion of the works and issues arose as between the Home Owners and the Builder as to the cause of those claims.  All in all the disputes escalated. 

In hindsight the disputes would have been easier to contain if the building contract and agreement relating to the project had been better documented.

The matter was listed for hearing and the evidence as required on behalf of the Builder was prepared.  Agreement was reached just before the hearing with the Builder paying $95,000 and the Home Owners accepting $95,000 in full and final settlement of the Home Owners’ claims.  The Home Owners were significantly out of pocket and the Home Owners would have been better served if a mature attitude had been taken at the time that the dispute originally arose.  A comprise at that time would have saved the Home Owners a very large sum in expenses which could have been better used by the Home Owners.  The Builder was put to large expense.  It may have been but one never knows that the delay in engaging the appropriate experts to respond to the clearly excessive claims by the Home Owners may have contributed to the overall delay and costs in resolving the matter. 

The NCAT has a current policy whereby it wishes to have the matters resolved expeditiously.  The consequences of this policy is that once the process commences it continues until the matter is resolved or otherwise determined by the NCAT.

We suggest that once there is a dispute that you engage experienced lawyers such as Watson & Watson Lawyers to ensure that all attempts are made to resolve the matter at an early stage.  Not always is it possible to resolve the matter however there are processes that can be considered such as making an appropriate offer of settlement which may protect you against an adverse costs order or otherwise to enable you to receive a cost order in the event that you are otherwise successful.

The costs associated with proving defects, ascertaining adjustments for variations and provisional allowances with the original contract sum and otherwise righting wrongs, can be high.   In these difficult circumstances it is crucial that you act early and it is crucial that you consider the appropriateness of the experts to be briefed.  It is not in your interest to engage an expert whose evidence will not be accepted by the Tribunal. 

In this case the law of common sense clearly indicates that where there is a building the contract for significant works (in the order of $800,000), the cost of rectification of defects (particularly minor) will almost in every case be much less than $350,000.  If as in this case, you as a Home Owner find that experts briefed on your behalf come to such conclusion then we recommend that you obtain a second opinion.

If you as a Home Owner, proprietor or builder find yourself in such a difficult position, please contact Richard Watson an experienced Building & Construction Lawyer accredited by the Law Society of New South Wales as a Commercial Litigator in the Building & Construction stream of practice.

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