There is a lot that can be said about defects and defect claims. We’ve collated 5 frequently asked questions about defects to help steer you in the right direction.

Does my liability for defects end after the expiry of “defect liability period” under my contract?

No. The defect liability period is normally the period where the principal (or other contracting party) has to give you the opportunity to rectify the defect before going elsewhere – think of it like a “first right of refusal” period.

Your liability often persists for much longer beyond this period. The name for the actual period is the “limitation of actions period” and this is the timeframe within which someone can bring a claim against you in court.

Some of the periods are (note these are the timeframes in NSW and they can differ across borders):

• For a breach of contract (your contract says that you will do “X” but you fail to deliver “X”) – 6 years from when the breach occurs.

• For a breach of a deed (the same as the above but you signed the contract as a deed) – 12 years from when the breach occurs (though this the subject of some upcoming changes in Queensland).

• For a negligence claim (you do, or do not do, something which a competent contractor in your position would have done or not done) – 6 years from when the “cause of action” accrues.

Refer our article here for more information of negligence claims specifically.

How do I know if something is defective? Do I need to know and understand every possible Australian and international standard?

Not exactly. The best place to turn will be your contract and what it says about the definition of defects and the quality of the work you are to perform. Normally this will refer to performing the works in accordance with good industry practice and in accordance with relevant legislation – this will almost always include some standards (such as those in the National Construction Code) but won’t necessarily incorporate others unless they are expressly mentioned (such as international standards, or non-industry-wide requirements). You will hopefully also have a prescriptive scope document or principal’s project requirements document that states what you are constructing or delivering. It then becomes a job of comparing the work performed, with those quality assurances and scope requirements, and seeing if they align.

This is often a lot easier than it sounds, especially where scope documents are vague or rubbery or totally silent as to certain elements. This reinforces the importance of keeping your contracting party up to date on developments and producing good records.

What do I do if I’m told to rectify something that I don’t think is a defect?

It depends (sorry, we know you all hate that answer). Your specific situation will drive the answer to this question more than the law or your contract will. For  example:

• Are you still in the delivery phase of the project? If so, you might perform the works and claim them as a variation.

• Does the contracting party hold high-value security over your contract? If so, you might perform the works to get back your security but argue over it later.

• Have you demobilised and been paid your contract sum? In this case, you might stick to your guns and refuse to perform the works at all.

It is worth remembering that in most cases the contracting party needs you too: the defect won’t fix itself.

Can I be told to rectify a defect from someone other than the party who contracted me?

Yes. Across Australia there is legislation in place which gives regulators the power to direct rectification of defects in certain circumstances. Three of those pieces of legislation from NSW are:

• The Residential Apartment Buildings (Compliance and Enforcement Powers) Act 2020. Among other powers, this act allows the Secretary of the Department of Customer Service to issue a “Building Work Rectification Order”. This order does exactly what it sounds like and requires the rectification of serious defects within a stated period.

• The Home Building Act 1989. Likewise, under this act the Secretary may issue a rectification order to take specified steps in order to ensure that a defect is rectified in a residential building.

• The Design and Building Practitioners Act 2020. Under this act the Secretary can, among other things, give a stop work order to someone performing works believed to be defective.

Am I only ever liable to the person who contracted me to do the work?

No (at least not in NSW). Under the Design and Building Practitioners Act 2020 the builder of a class 2, 3 or 9c building (effectively residential buildings) owes a duty of care to the owner of the land and each subsequent owner of the land. This means if the developer sells the apartments you built, you still owe a duty of care to those owners.

Know How to Respond!

Defects can range from simple fixes to complex disputes. It’s best to get legal advice if you’re ever stuck, so reach out if you neee help and we’ll be happy to guide you through the process.