Should builder choose rectification method?

Residential construction disputes over defective work can be complicated and expensive, especially when they become emotionally charged.

Builders generally have the right to rectify defects in their own work, though in residential construction disputes exercising this right can inflame an already tense situation.

What right does a builder have to choose how a defect should be rectified?

This is the question that both parties are often left asking.

A homeowner will often ask themselves, ‘why has this been done this way, when I want it done like that?’; a builder will often ask ‘why should I do it that way, when I can give a better overall product doing it like this?’.

The recent decision of the Owners of Strata Plan 76888 v Walker Group Constructions Pty Ltd[1] deals with a builder’s right to rectify defects cost effectively, even if this does not strictly comply with the contract specification.

The facts of the case

Walker Group Constructions constructed a residential apartment building in NSW. A systematic issue arose in each apartment relating to waterproofing in tiled wet areas, specifically from the installation of bathtubs and their subsequent failure to comply with the relevant Australian Standard.

Walker Group proposed rectification by either:

  • Re-lining the walls of the affected wet areas with villaboard, and then re-tiling; or
  • Lining the walls of the affected areas with a glass splashback over the existing tiles.

The owners corporation did not agree with either of these options, instead wanting the builder to ‘rip it out, and start again’.

What was the outcome?

The Court held that the rectification options proposed by the Walker Group were both acceptable, finding that:

  • Neither option ‘involved any substantial or significant compromise in terms of amenity and utility’ (rejecting the argument that both options amount to the appropriation of space within the units).
  • Contractual conformity had been reached when the building was finished and the Certificate of Occupancy had been issued (so the only issue that should be dealt with is rectifying the work so that it complied with the relevant Australian Standard).

What are the implications?

Where a failure to meet an Australian Standard has occurred, and the builder proposes a rectification method that the owner does not agree with, the Courts will ask:

  • Does the proposed rectification involve ‘any substantial or significant compromise in terms of amenity or utility’?
  • Will the proposed rectification breach the relevant Australian standard?

If the answer is no in both cases, then the owner cannot object to the rectification method.

What does this mean for builders and homeowners having these disputes?

Where a defect arises solely from the failure to meet an Australian standard, an owner cannot require a builder to simply ‘rip it out and start again’. This is not a license for builders to promise something and then produce something else. However the case does provide a stronger basis for a builder to argue that the rectification method is reasonable and ought to be accepted by the owner. This legal clarification will assist in diffusing emotionally charged disputes sooner rather than later – saving time, money and avoiding stress.

If you find yourself stuck in a residential construction dispute, contact the Construction Dispute Resolution team at Meyer Vandenberg. We specialise in resolving complex construction disputes early and before costs escalate.

For more information contact:

Alisa Taylor | Partner
(02) 6279 4444