Vikram Misra, Barrister at Clarence Chambers, begins his series into building and construction. In this first article, he discusses the critical considerations and implications surrounding “Work Orders” within the context of Home Building Act claims for defective work, shedding light on the intricate decision-making process courts and tribunals undertake when determining whether rectification by the responsible party is the preferred outcome.
When acting for homeowners in proceedings brought under the Home Building Act 1989 (NSW) (“the Act”), an aspect of the claim that has the potential to be inadvertently overlooked is in regards to section 48MA of the Act. Section 48MA relevantly reads:
A court or tribunal determining a building claim involving an allegation of defective residential building work or specialist work by a party to the proceedings (the
“responsible party”) is to have regard to the principle that rectification of the defective work by the responsible party is the preferred outcome.
The effect of section 48MA, or more commonly known as a “work order”, is that rectification of the defective work by the responsible party (the builder) is the preferred outcome. This does not mean that a work order is the mandatory outcome, neither is it a presumption.
A court or tribunal makes a discretionary decision to (or not to) order the preferred outcome of rectification based on the evidence before it. If the aim of the homeowner is to obtain a money order instead of a work order, relevant evidence on this issue must be marshalled in accordance with the timetable. As the focus of the evidence in these claims is usually on the defective works, it is sometimes the case that evidence relating to s 48MA is overlooked and forgotten to be included in the homeowner’s evidence in chief. By the time the omission is picked up, an application for leave to adduce further evidence on the point may not be granted.
Whether the preferred outcome should be ordered is an objective assessment that turns on the facts of each case and whether there is a reasonable basis for any objection raised by the homeowner to the builder being permitted to rectify the defective work. Factors that are relevant to the exercise of the discretion include (but are not limited to):
i) a failure to acknowledge that works are defective;
ii) the fact that the builder is no longer licensed;
iii) whether the builder is willing to return to rectify the works;
iv) whether the homeowner can have confidence that the rectification works will be performed properly by the builder who originally did the work;
v) whether the relationship between the parties has broken down (note that personal animosity in of itself is not sufficient to displace the primacy of a work order for defective work); and
vi) whether such an order would support a timely and cost effective resolution of the dispute.
The flexibility of orders made under s 48O of the Act permits an order that the builder fulfil a work order by engaging another party to carry out the work order on behalf of the builder. Further, the making of a rectification order need not be an all or nothing proposition and it may be appropriate to make a money order in relation to some portion of the defective works the subject of the claim.
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Vikram Misra was admitted as a solicitor in 2012 and called to the NSW Bar in 2015. He maintains a broad commercial practice and is regularly briefed in matters relating to taxation law, property law, construction law and equity. Vikram has completed a Graduate Diploma in Taxation Law at the University of Sydney in 2015 and a Master of Laws majoring in construction law and contract law at the University of Melbourne in 2016. Vikram is also a contributing author to the Security of Payment (NSW) and (SA) sections of the looseleaf Commercial Arbitration Law & Practice Service for Thomson Reuters. You may connect with Vikram via email counsel@vikrammisra.com or LinkedIn
