Author: Hannah Stanley, Building Disputes Tribunal Registrar

As a homeowner, discovering structural defects in your home is the last thing you want and most wonder where to go from there in terms of their rights and how to remedy the situation.

The Courts are often a long and expensive road to go down. The Weathertight Homes Tribunal process is much the same. These options are costly, time consuming and incredibly stressful in an already stressful time. Often with added complications like production and inspection of documents, joinder of additional parties and cross-claims, these processes are by no means quick and simple. Arbitration under the Arbitration Act 1996 is another avenue to explore, however both sides must agree to this as a process and arbitration is not always guaranteed to be a swift option unless an expedited framework is agreed on.[1]

The good news is that you are not confined to these options. There are two very important and handy legislative instruments all homeowners should be aware of.

Firstly, the implied warranties provided for in Part 4A of the Building Act 2004 which are a powerful tool for homeowners who find themselves in this position. These implied warranties exist whether or not the existing homeowner was a party to the original contract for the construction or alteration of the home. They provide homeowners with a secret weapon when it comes to sub-standard building work.

Secondly, the Building Act 2004 goes one step further and provides that homeowners may initiate proceedings including adjudication under the Construction Contracts Act 2002 for a breach of one or more of these implied warranties (section 362J of the Building Act 2004). Adjudication is a practical and relatively straightforward means of dispute resolution.

Implied Warranties

Builders and other trade professionals involved in the construction or alteration of a home are often hesitant to rectify shoddy work for homeowners who were not a party to the original contract. However, the implied warranties recognise these parties are legally required to rectify any unsatisfactory building work carried out on a residential home within the previous ten years. Any longer than ten years and these implied warranties will not apply.

A breach may come in the form of defective building work or perhaps issues with Building Code compliance. For example, your builder may have substituted a cheaper alternative for a material specified in the building plans which subsequently causes damage to the home. Subcontractors engaged by the main contractor must also ensure their work is up to the appropriate standard. For example, tilers and waterproofing contractors engaged by the builders. Developers are also subject to these implied warranties.

The implied warranties provide an incentive for trade professionals to make sure the work they do is of a high standard and for developers and on-sellers to ensure the dwelling meets each of the standards of the implied warranties.

The warranties implied into contracts entered into after November 2004 are provided for in section 362I of the Building Act 2004 and, unless otherwise stated in the contract, are as follows:

  • Building products will be new and suitable for the intended purpose;
  • If the contract states a purpose or the owner’s expected result – the building work will be reasonably fit for that purpose and the materials will be of a nature and quality reasonably expected to achieve that result;
  • The building work will be done:
    • in a proper and competent manner;
    • with reasonable care and skill;
    • according to the plans and specifications of the contract;
    • according to the building consent; and
    • according to all laws and legal requirements;
  • The building work will be completed by the date stipulated in the contract (or within a reasonable time if there are no specific timeframes); and
  • The household unit will be suitable for occupation when the work is complete.

Adjudication

Section 362J(2)(a) of the Building Act 2004 provides that proceedings can be brought by existing and subsequent homeowners in the form of adjudication under the Construction Contracts Act 2002 should there be a breach of one or more implied warranties. This, of course, must be within the ten year timeframe.

When looking at all the available options, adjudication under the Construction Contracts Act 2002 stands out as one of the best available dispute resolution tools for the following reasons:

  • There is a presumption the parties will bear their own costs;
  • A practical and relatively uncomplicated process without obstacles such as production and inspection of documents;
  • Adjudication is cost effective with greater cost certainty compared to bringing proceedings in Court;
  • The process follows a strict statutory timeline and takes 45 days from start to finish on average;
  • The Construction Contracts Act 2002 provides for a series of deadlines the parties must adhere to during the process;
  • The process is all done on the papers, there are no hearings to attend; and
  • The adjudicator will ultimately issue a determination which is enforceable by entry as a judgment in the District Court.

The Building Disputes Tribunal offers an adjudication service that will facilitate and guide you through an adjudication claim from start to finish with a fixed fee scheme available for low value claims. The specialist adjudicators are experienced in construction matters and produce sound and well-reasoned determinations. Further information about the adjudication, mediation and arbitration services offered can be found here: https://www.buildingdisputestribunal.co.nz/.

It is always recommended that specialist legal advice be sought at the outset to determine the best options for you in your given circumstances.

 

[1] If you were minded to go down this path, an efficient and proportionate arbitration offering would be arbitration under the Building Disputes Tribunal Arbitration Rules.

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