Defective work—Appeal Panel considers the scope of ‘major’ defect
The Home Building Act
In Ashton v Stevenson; Stevenson v Ashton  NSWCATAP 67 NCAT’s Appeal Panel considered the vexed question of what is a ‘major’ defect under the Home Building Act 1989 (Act).
The concept of ‘major’ defect was introduced by the Home Building Amendment Act 2014 and replaced the former, and arguably more liberal, the definition of “structural” defect.
There has been little judicial guidance on the meaning of ‘major’ defect, and whether the definition departs substantially from that of a ‘structural’ defect.
A ‘structural defect’ was a defect that “prevented the continued practical use of the building or any part of the building”.
A major defect is one “in a major element of the building that causes or is likely to cause: … the inability to inhabit the building for its intended purpose or, the destruction of the building or a threat of collapse of the building“.
A ‘major element’ means a load-bearing component that is essential to the stability of the building, a fire safety system or waterproofing.
Major defects attract a six-year limitation period but all other defects just two. Time runs from completion of the work. For new strata schemes ‘completion of the work’ is the date of the occupation certificate.
Defective strata schemes are already under pressure to identify minor defects within the two year period. This difficult task may now be that much harder if defects in the waterproofing systems, often not discovered until past this date, are indeed non-major defects.
Ms Ashton renovated the 18th-century terrace in Darlinghurst both under an owner-builder permit and under contracts with others. She then sold the house to Mr Stevenson.
After the sale defects emerged. Mr Stevenson sued Ms Ashton for damages for breach of the Act’s statutory warranties.
At first instance, the Tribunal determined that there were ‘major’ defects in the waterproofing works associated with the construction of a balcony and the installation of wall cladding.
Ms Ashton was ordered to pay Mr Stevenson $42,317. Both parties appealed on numerous grounds.
The Appeal Panel disagreed with the Tribunal classification of the water ingress being a major defect. As a result, Mr Stevenson was out of time to claim for those defects. The Appeal Panel said:
‘ … The definition of “major element” includes “waterproofing”. This inclusion does not, however, mean that any, or all, defects involving an imperfection in the system of waterproofing of a building is a “major defect”….
 Subsection 18E (4) (a) (i) …requires that there be a proven, or probable, inability to inhabit, or to use the building. This requires proof of something more than an inconvenience.’…’
This decision reinforces the necessity for applicants to obtain expert evidence not only supporting each of its alleged defect claims but of the facts which diminish the ability to inhabit or to use the building.
Ashton v Stevenson highlights the vigilance required of owners in the early investigation of potential defects. This not only includes commissioning a comprehensive defects report but most likely the issue of proceedings prior to the expiry of the two year period.
Are you having problems with your builder and defective building work?
Clare Peacock is an experienced construction lawyer working on Sydney’s Northern Beaches. Clare provides practical, cost-effective building approval advice to property owners, builders and strata managers. Services include residential building disputes, body corporate issues and strata building problems.