Home Building Act 1989—Major or Minor Defects
The Appeal Panel’s decision in Ashton v Stevenson (discussed in issue 7, August 2019) has been subject to appeal.
At first instance, the Senior Member classified defects to the external balcony and cladding as major defects. The Appeal Panel disagreed and held that those defects were ’minor’. One effect of this decision was that those defects were subject to a two year limitation period and Mr Stevenson was out of time to make a claim.
Mr Stevenson appealed to the Supreme Court. The matter came before Harrison AsJ for hearing in November 2019. The first ground of appeal was that the Appeal Panel had incorrectly interpreted the test for establishing a major defect, set out at s18E (4) of the HBA.
In submissions, Mr Stevenson put great emphasis on the legislative purpose of s18E (4) and relied upon the second reading speech to argue that Parliament had introduced the new ’major’ defect test to expand, and not restrict, the range of defects attracting the six year limitation period, and that it should be construed to give the fullest relief to consumers.
Mr Stevenson also argued that the Appeal Panel erred because its interpretation of s18E (4) disregarded the words ‘likely to cause’ and the effect of this was that only defects that had already caused the consequences in s18E (4) were deemed to be major defects.
The Court agreed with the submission on the interpretation of and impact of the word ‘likely’.
[92]: At [96] the Appeal Panel again placed too great an emphasis on the present manifestation of the consequences under s18E(4)(a)(i) to (iii), despite the legislation also permitting defects which are ‘likely to cause’ those consequences to be major defects.
Harrison AsJ.
Harrison AsJ set aside the decisions of the Appeal Panel and remitted the matters back to NCAT for determination.
Whilst this issue remains in a state of flux home owners are recommended to protect their position by the early issue of proceedings.
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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.