In light of recent times and an incredibly tough market, we are seeing an increase in claims whereby the Builder seeks to join third parties (usually Contractors engaged to perform works or verify works) to share any potential damages Order.
Recently we saw in the case of Ladyzhenskii v Hallbuild Pty Ltd (Building and Property) [2022] VCAT 1019, the Tribunal held that a Builder can claim contribution from its subcontractor.
The Applicant (the Owner) engaged the Respondent (the Builder) to construct a dwelling, including a concrete driveway, front path and cark park (the Driveway). The works were completed in September 2017, but several months after, the Owner noticed that the Driveway was defective. After multiple unsuccessful attempts to repair the Driveway, the Builder engaged a new subcontractor (the Contractor) to perform remedial works. The remedial works undertaken on behalf of the Builder had failed to rectify the defects in the original work. The Owner then issued proceedings against the Builder for defective building work.
Based on the expert evidence produced, it was common ground amongst both parties’ experts that the Driveway was defective. Given such common ground, the Tribunal found that the Builder failed to comply with warranties set out under s8 of the Domestic Building Contracts Act 1995 in that the Builder failed to carry out work in a proper and workmanlike manner. However, the experts disagreed as to what was required to remedy the defective Driveway. The Tribunal held that it was essential to put the Owner in a position had the contract been properly performed. Which in this case, was the cost for the Owner to rectify the Driveway.
At the same time, the Builder claimed contribution under s23B Wrongs Act 1958 against the Contractor. The Tribunal found that the remedial work was carried out by the Contractor and that he had guaranteed his work to the Builder. As a result of such findings, the Tribunal ordered that the Builder may recover contribution from the Contractor in respect of the amount ordered to be paid to the Owner.
The issue however when Builders join Contractors, is that it tends to complicate matters. It leads to the litigation being protracted due to all parties needing to file pleadings and any counterclaims (or Third Party Claims) and the hearing time is longer which causes further delays given the Tribunal’s timetabling delays currently being experienced at present.
This case serves as a timely reminder when engaging Contractors to ensure you have proper engagement terms and conditions about works and defects. Similarly, payment and guarantees should be clearly identified in writing. It is also important to put parties on notice of any defects as soon as possible.
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