When a defect claim emerges in the final six months of statutory warranty periods, owners may still have time to act. This update explains when proceedings can be commenced under the Home Building Act 1989 (NSW), following recent Supreme Court guidance.
Owners corporations often discover defects in their buildings in the last 6 months of the statutory warranty periods afforded under the Home Building Act 1989 (HBA) leaving little time to consider the issues and if necessary, commence proceedings.
Section 18E(1)(e) of the HBA provides that if a breach of a statutory warranty “becomes apparent” within the final six months of the applicable statutory warranty period, proceedings may be commenced within a further six months after the expiry of the warranty period.
In The Owners – Strata Plan 87003 v Raysons Constructions Pty Ltd [2025] NSWSC 66, the Supreme Court of New South Wales considered the circumstances in which a party may rely on the six-month extension under s 18E(1)(e) of the HBA.
Key takeaways:
- the onus rests on the party seeking to rely on the six month extension, to establish:
- the breach of the warranty became apparent in the final six months of the six-year warranty period;
- the claimant did not know, and could not reasonably have known, of the breach-the warranty earlier; and
- proceedings were commenced within six months after the warranty period expired.
- what is connoted by “becomes aware (or ought reasonably to have become aware) of” is not the defect itself, but the breach of the statutory warranty and “that it is essential to distinguish between a defect …and a breach of warranty”.
- awareness of a defect is not the same as awareness of a breach of statutory warranty.
- a defect is a physical issue in the building, whereas a breach of warranty is a legal conclusion about whether the work complies with the statutory warranties in s 18B of the HBA [56 – 57]
- a general awareness of issues such as cracks, leaks or other visible irregularities does not of itself establish awareness of a breach of the statutory warranties. Observing a problem is not the same as understanding its technical or legal significance. In many cases, expert investigation is required to determine whether the issue amounts to a breach of warranty. Accordingly, the relevant question is not when the claimant first noticed the defect, but when they became aware, or ought reasonably to have become aware, that it constituted a breach of warranty. This awareness will often arise only after the issue has been investigated and assessed by a suitably qualified consultant [58].
- awareness of minor or unrelated defects does not necessarily mean an applicant was aware (or ought reasonably to have been aware) of more serious defects that emerge later. The Court rejected the builder’s argument that any earlier knowledge of defects prevented reliance on the six-month extension. Instead, each alleged defect and its connection to a breach of warranty must be assessed individually [100].
In other words, it will be necessary to attend to the particular breaches of warranty, as manifested in particular deficiencies, in order to determine whether what was sued on was or ought to reasonably have been apparent earlier than the final six months.
