Builders and designers of commercial properties are currently in an advantageous position in the law. So far, courts have declined to hold them liable for claims by subsequent owners for latent defects following the decision of the High Court in Woolcock.1
Courts have taken the view that commercial building owners can protect themselves by using professional advisers, boilerplate clauses and insurance. Unsophisticated home owners, on the other hand, are still able to sue builders, designers and subcontractors.
Recovery against subcontractors for latent defects in a commercial property is also fraught with difficulties for the same reason.
Currently a commercial building owner will only have a claim against a builder where the builder's negligence results in personal injury or property damage. However, where the builder or the designer's work causes a latent defect, the law is complex and in dire need of untangling.
On 18 June 2014, the High Court will hear a challenge to the NSW Court of Appeal's decision to allow a claim by the body corporate of a commercial building against a builder for defective workmanship.2
The decision affirms the trend in Australian cases towards liability which had been arrested by the High Court's decision in Woolcock. The fact that Australia's senior Courts have been unable to draw the line with certainty reflects the complexity of this area of the law.
The High Court's decision could be significant for builders, designers, subcontractors, and owners of commercial premises. Depending on the outcome, it could affect a building owner's right of redress where building works were carried out negligently.
A decision is likely to be handed down by the end of the year.
Footnotes
1Woolcock Street Investments v CDG Pty
Ltd [2004] HCA 16
2Owners - Strata Plan No 61288 v Brookfield
Australia Investments Ltd ([2013] NSWCA 317)
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