A recent QCAT decision has upheld a homeowner’s right to damages for a builder’s breach of statutory warranties. 

Becker Watt Lawyers acted for the Respondent Owner who had claimed his house was not constructed to meet the appropriate wind classification rating. QCAT rejected the Builder’s appeal and upheld the first instance decision that the Builder had not constructed the house in accordance with the requisite building standards. 

The ramification of this decision is that Builders need to carefully consider the criteria set out in the Australian Standards and National Construction Code. The requirements specified in these building standards will be strictly interpreted by the Courts and QCAT. 

Summary of Appeal

The Owner contracted with the Builder for the construction of his house in Townsville. A dispute arose regarding the quality of the building work, including the classification and design wind speeds used by the Builder.  

The Owner’s position was that the house was constructed to the lower C2 wind classification when it should have been constructed to meet a C3 wind classification. 

The Builder entered five (5) grounds of appeal through which it claimed the first instance decision in favour of the Owner was incorrect. In the ultimate decision of the QCATA tribunal, all five (5) grounds were found to be without substance and the appeal was dismissed. 

Result of Litigation

The dispute between the parties began regarding defective works and non-payment of the final progress claim. Ultimately, the dispute has resulted in a substantial loss for the Builder. 

The Owner claimed that the house was not built to the applicable standards, including the appropriate wind rating, additionally various items of the works were defective. The Builder, while maintaining that it was willing to rectify legitimate defects, refused to respond to the Owner’s allegations as to the breach of statutory warranties and the failure to construct the house to the correct wind-rating.

The basis of the initial dispute between the parties was the nonpayment of an amount of $13,743.18 claimed for negative variations1 and $7,100.00 which the owner claimed as liquidated damages upon payment of the final claim by the Owner. Eventually, the claimed amount of $13,743.18 was dropped by the Builder. However, the Builder pressed its claim that the $7,100 in liquidated damages was not appropriately deducted from the final claim. The continuation of the dispute from that point culminated in the initial hearing and a decision in favour of the Owner and ultimately the appeal. The Builder failed in on all points of the appeal and it was subsequently dismissed. 

The consequences of the appeal are hard-hitting on the Builder, as the loss is the result of the culmination of almost six years of litigation, the cost of which ran to an order for $220,000 in damages for the original decision and an order for $420,000 in costs from the original matter. This doesn’t factor any costs for the appeal which have yet to be determined and is silent on the costs that the Builder expended in litigating the matter.

Key Takeaways

It was the Builder’s position that it was not in breach of an Australian Standard that resulted in the original decision against it, which was ultimately confirmed on appeal. The statutory warranties implied into domestic building contracts are an intrinsic part of the building industry in Queensland and Courts are likely to strictly interpret the warranty in circumstances that it finds there has been a breach. 

Despite the Builder having engaged building engineers for having the design wind classification assessed and arguing that the C2 classification was valid, the Builder was found to be in breach due to the Tribunals interpretation of which Australian Standard was applicable and how they are to be applied.

For more general information, you can view the judgment here.

  1. During construction the contract was varied, and the total contract value was reduced. The Builder initially insisted that the Owner pay him the full contract value so that he could then refund the amount of the negative variations. This position was rejected by the Owner who simply wanted the value of the contract reduced by the amount of the negative variations.  ↩︎