The construction industry and a new duty of care …
It is well understood that the Home Building Act 1989 NSW (Home Building Act) provides that the building work “be done with due care and in accordance with the plans and specifications in the contract”. Under the Home Building Act, claims for major defects must be made within six years of the completion of the work and two years in other cases. If the builder wishes to join others in any claim it is his obligation to do so.
In June 2020, the Design and Building Practitioners Act 2020 NSW (Design and Building Act) commenced. This act imposes a range of additional statutory obligations on builders, architects, engineers and others working in the building industry. Furthermore, this act was introduced because although the Home Building Act imposed statutory warranties, there was doubt that a duty of care existed and this act changes that position. Section 37(1) of the Design and Building Act stipulates that:
A person who carries out construction work has a duty to exercise reasonable care to avoid economic loss caused by defects —
(a) in or related to a building for which the work is done, and
(b) arising from the construction work.
The new law provides that claims can be made for six years from when the loss becomes apparent or for up to ten years after the work was completed and with no distinction between major and minor defects. Moreover, the new duty of care is retrospective and extends back as far back as ten years. If the claimant considers others should share the responsibility for the loss they must be joined in the claim by the claimant. This is a different approach to that taken in claims commenced under the Home Building Act.
This is important legislation that will benefit those who wish to claim loss for defective building work because they were unable to establish a duty of care or who missed the limitation period in the Home Building Act.
The COVID19 pandemic and force majeure clauses in contracts ….
A force majeure clause in a contract relieves the affected party from performing the obligations set out in the contract because the event is outside of the reasonable control of that party.
In Australia, force majeure is recognised as a contractual obligation and does not form part of the common law. This means that the terms of the force majeure clause in a contract are negotiated between the parties. Common events that permit a party to terminate a contract include but are not limited to “acts of God“, “natural disasters“ and “acts of war“.
If a new contract is being negotiated, parties should be prudent and negotiate the introduction of an additional event such as “global pandemic“.
In existing contracts, the force majeure clause should be examined to determine if the clause applies to the present COVID19 pandemic circumstances.