In the recent decision of Crystele Designer Homes Pty Ltd v Wood the NSW Supreme Court found that the Tribunal (NCAT) did have jurisdiction to deal with claims of non-major defects that had been particularised in a document filed four days after the expiration of the two-year warranty period under s 18E of the Home Building Act.

Section 18E of the Home Building Act states:

PROCEEDINGS FOR BREACH OF WARRANTY

1. Proceedings for a breach of a statutory warranty must be commenced in accordance with the following provisions:
   • proceedings must be commenced before the end of the warranty period for the breach,
   • the warranty period is 6 years for a breach that results in a major defect in residential building work or 2 years in any other case,
   • the warranty period starts on completion of the work to which it relates [...],
   • [...]
   • if the breach of warranty becomes apparent within the last 6 months of the warranty period, proceedings may be commenced within a further 6 months after the end of the warranty period,

The section then describes what constitutes a “major defect” - there are only two categories of defects, “major” and everything else. The statutory warranties are set out in s 18B and set out the building standards that a builder / contractor must achieve. Failure to achieve these standards will result in a breach of a statutory warranty. Accordingly, if something is found to be a defect (whether “major” or otherwise), it would constitute a breach of the statutory warranties, entitling the home owner (and any subsequent owner) to make a claim against the builder in NCAT for either a rectification order or compensation (money order). Such an application must be made within the warranty periods as set out above – that is within 6 years from the completion of works giving rise to a “major” defect and within 2 years in the case of any other defect. If the defect only becomes apparent during the final 6 months of these periods, the warranty period is extended by a further six months. Any application made outside of these statutory warranty periods would prima facie mean the Tribunal does not have jurisdiction to deal with the claim.

In Crystele the works giving rise to the defects was completed on 09 November 2018. On 14 October 2020 the homeowner filed an application in the NCAT raising “major” defects. To the extent the application set out “major” defects it was within the 6-year warranty period. However, the application also alluded to “Other defects to be identified”. On 13 November 2020 the homeowner filed a “Points of Claim” document which particularised 22 defects some of which were not “major” defects. Prima facie these non-major defects were raised outside the two-year warranty period. Did the NCAT still have jurisdiction to deal with them?

The Court in Crystele said yes for the following reasons:

• the informal nature of NCAT and its purpose to facilitate the just, quick, and cheap the resolution of the real issues between the parties;
• NCAT’s legislative power to extend time-limits for the doing of any thing under the Home Building Act; and
• where an initial application raising the prospect of “major” and non-major defects was made within time, a subsequent document particularising further but related defects could be filed outside of time.

Despite the leniency granted in Crystele, do not risk flirting with the warranty periods set out in the Home Building Act. Think you have a claim? Speak to Hamilton Mott today to ensure your claim is not made out of time.