Greater consumer protection for NSW strata owners

Are you a NSW strata owner that has discovered your building has a defect? If so, you should be aware of a new law that was recently introduced which may give you a right to claim economic loss for the defect.

As you may know, all strata owners are automatically part of an owner’s corporation which, until recently, was responsible for costs associated with the repair of building defects. This was because owner’s corporations were not owed a duty of care by those involved in the construction of their strata scheme, that is, until the introduction of The Building and Practitioners Act 2020 (NSW) (the Act) which was introduced on 11 June 2020.

The Act states that anyone involved in the construction of a strata scheme has a duty to exercise reasonable care to avoid economic loss, caused by defects arising from the construction of a strata scheme. 

The duty to exercise reasonable care applies retrospectively.

Duty to exercise reasonable care to avoid economic loss

The above duty of care is owed to current and subsequent owners of the land, including owner’s corporations. Before the Act was introduced, builders, developers, designers, suppliers, certifiers, supervisors and others involved in construction of strata schemes, did not owe a duty of care to avoid economic loss to owner’s corporations. This caused a lot of issues for owner’s corporations, essentially making the owners of strata schemes financially responsible for rectifying any building defects.

The duty of care applies to all strata schemes, such as residential apartments, villas, townhouses, office buildings, storage units and warehouses.

We recommend you speak to one of our strata lawyers who can provide your owner’s corporation with advice as to whether it has grounds to make a claim for economic loss.

The duty to exercise reasonable care to avoid economic loss is retrospective

Generally, a claim for economic loss may be made as soon as the loss became apparent, within the last 10 years prior to the Act coming into force. It is yet to be seen exactly how Courts and tribunals will interpret the retrospective application of the Act.  As such, if you are not sure whether your claim falls within this time frame, we strongly recommend you speak to one of our legal specialists.

Compensation for economic loss

If an owner’s corporation believes there are building defects caused by anyone involved in the construction of their strata scheme, they should draft a list of these defects, detailing costs incurred on rectifying the defects, the Act also allows reasonable costs incurred for alternate accommodation if the building was not inhabitable while the defects were being rectified.

Evidence is also needed to prove defects were caused by a breach of the duty of care owed to the owner’s corporation by those who were involved in the construction of their building. The type and amount of compensation awarded for economic loss tends to differ on a case by case basis. Our legal specialists will be able to provide you with an accurate estimate of the type and amount of damages you can expect to receive.

Conclusion

The Act provides that those involved in the construction of a strata scheme have a duty to take reasonable care to prevent the owners from suffering economic loss due to building defects. This duty of care also applies retrospectively.

If owners of a strata scheme can prove the duty of care has been breached, they may have a right to claim compensation from whoever breached this duty.

It is important to discuss your owner’s corporation’s claim for economic loss with a lawyer who specialises in strata law so they can assess whether there are grounds for compensation and to give you an estimate of how much compensation will be received. 

If you would like to discuss whether you have a right to claim compensation for economic loss due to a breach of duty to take reasonable care, please contact us on (02) 9923 2321 or email enquiries@somervillelegal.com.au.

For more information contact Jackson O’Keeffe jokeeffe@somervillelegal.com.au (02) 9923 2321.

 

 

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