BuildLaw Issue 37 October 2019 - Page 28

The builders right to fix
by tom grace
Introduction
When a dispute over defective building work turns ugly, the owner is sometimes tempted to refuse the builder the opportunity of returning to rectify the defects. There are risks in this course. This Update considers a recent NSW Supreme Court decision on the topic.1
If an owner engages a new builder to carry out rectification work, the new builder will be cautious on at least three accounts:
• The new builder will be concerned that the old builder was incompetent, and therefore be cautious as to work that has been covered over. The caution might extend to requiring destructive testing, or to rebuilding work that was perhaps adequate in the first instance.
• The new builder may also have concerns as to whether the owner is applying an exacting standard to the work, and whether they also will fail to measure up.
• The third vexed issue is that of warranty: which of the builders will be liable if a defect later emerges in the construction?
Anecdotal evidence indicates it is not unusual for the new builder to charge around 30% above the cost the first builder says it would have incurred in rectifying and completing the work.
In general, owners should be very cautious when considering excluding the builder from the opportunity of rectifying defective work.
Recently, the New South Wales Supreme Court again looked at this issue.