NSW building defects: Warranties, Duty of Care and Claims

Q: How long do I have to claim for defective building work in NSW?

Under s 18E of the Home Building Act 1989, warranty claims must be commenced within 6 years for a major defect and 2 years otherwise from completion, with a 6-month tail if apparent in the final 6 months. Section 14 of the Limitation Act 1969 allows 6 years from accrual, and s 6.20 of the EPA Act imposes a 10-year outer long-stop from completion.

Q: What is a major defect under the Home Building Act?

Section 18E(4) defines a major defect as one in a major element (load-bearing components, waterproofing, or fire safety systems) attributable to defective design, workmanship, materials, or NCC non-compliance that causes or is likely to cause inability to inhabit or use the building, destruction, or threat of collapse.

Q: Can a builder contract out of the statutory warranties?

No. Section 18G of the HBA makes void any agreement provision purporting to restrict or remove warranty rights. Separately, section 40 of the DBPA prohibits contracting out of the Part 4 statutory duty of care.

Q: Does the defects liability period in my contract limit my liability?

No. A contractual DLP is only an obligation and right to rectify within that timeframe. It does not displace the statutory warranties under s 18B, the s 37 statutory duty of care, or statutory limitation periods.

Q: Can I sue a builder I never had a contract with?

Yes. Section 37 of the DBPA imposes a duty of care to avoid economic loss owed to each owner and subsequent owner by anyone carrying out construction work (including building work, design, product supply, and substantive project control) regardless of contract.

Q: What did Pafburn decide about proportionate liability?

In Pafburn Pty Ltd v The Owners – Strata Plan No 84674 [2024] HCA 49, the High Court held that a developer and head contractor sued on the non-delegable duty under DBPA s 37 cannot rely on Civil Liability Act Part 4 proportionate liability to limit their liability by apportioning fault to subcontractors or consultants.

Q: Is it enough to list the defects in my claim?

No. Under The Owners – Strata Plan No 87060 v Loulach Developments Pty Ltd (No 2) [2021] NSWSC 1068, a claimant pleading breach of the DBPA s 37 duty must identify the specific risks the builder had to manage and the precautions it ought to have taken, defect by defect.

Q: How are defect damages calculated?

Under Bellgrove v Eldridge (1954) 90 CLR 613, damages are prima facie the reasonable cost of rectification necessary to produce conformity, provided that course is reasonable. If unreasonable, diminution in value applies. Section 48MA of the HBA also establishes rectification by the responsible party as the preferred outcome.

Q: Do I have to let the builder back to fix the defects?

Section 18BA(3)(b) of the HBA imposes a duty not to unreasonably refuse access to rectify, which courts and NCAT must take into account under s 18BA(5). Rectification by the responsible party is also the preferred outcome under s 48MA.

Q: What happens if the builder becomes insolvent?

Under HBA s 99(1), Home Building Compensation Fund insurance responds to insolvency, death, or disappearance of the contractor for non-completion or warranty breaches, subject to icare policy caps and statutory cover periods under s 103B.

John Merlo

3 hours ago

80 min read

Key Takeaways

Residential building work carries six statutory warranties implied by section 18B of the Home Building Act 1989, and section 18G makes void any provision purporting to restrict or remove them — a defects liability clause does not displace them.
The clocks usually decide the file: 6 years for a major defect and 2 years otherwise from completion under section 18E, a six-year period from accrual under section 14 of the Limitation Act 1969, and a 10-year long-stop from completion under section 6.20 of the Environmental Planning and Assessment Act 1979 (EPA Act) that does not extend either.
Section 37 of the Design and Building Practitioners Act 2020 reaches parties with no contract, including those with substantive control. After the Pafburn case, a developer or head contractor sued on that non-delegable duty — a duty that cannot be discharged by handing the work to someone else — is likely to face the claim without the benefit of proportionate liability, the rule that would otherwise cap each defendant's share to its own portion of the fault.
Identifying a defect is not proving a breach: the case of Loulach requires the specific risks the builder had to manage and the precautions it should have taken to be identified, defect by defect.

Introduction

A claim for building defects in NSW is decided less by the condition of the building than by four choices: which statute, which defendant, which clock, and which remedy.

Defective building work is a structural feature of the NSW built environment rather than an occasional misfortune, and it reaches every role in the industry. Owners and owners corporations need to know what is recoverable and from whom. Builders, developers and their directors carry exposure that can crystallise years after handover, sometimes personally. Subcontractors, designers and product suppliers now face claims from parties they never contracted with. Certifiers, superintendents and contracts administrators make decisions during construction that later determine whether a claim or a defence survives. Insurers price all of it.

The difficulty is that four regimes govern the same physical defect without having been designed as a system: the statutory warranties in Part 2C of the HBA, the statutory duty of care in Part 4 of the DBPA, the contract's own defects liability machinery, and the regulator's enforcement powers under the Residential Apartment Buildings (Compliance and Enforcement Powers) Act 2020 (RAB Act). Each has a different trigger, a different limitation clock, a different class of claimant and a different set of defences. This guide works through them in the order a real file demands — classify, sequence, then apply — and closes with three worked scenarios and the failures that most often destroy an otherwise good claim.

Note on the Building (Approvals and Practitioners) Act 2026 (NSW): the Act was assented to on 14 August 2026 as Act No 26 of 2026, having passed Parliament on 4 August 2026 and been notified in Government Gazette No. 342 of 21 August 2026. Some, but not all, of its provisions have commenced. Nothing in this guide treats uncommenced provisions as current law. The Act repeals and consolidates the Design and Building Practitioners Act 2020 and the Building and Development Certifiers Act 2018 (together with their regulations), and re-enacts the section 37 duty of care in substantially the same terms in Part 8, decoupling the definition of construction work from the definition of building work but otherwise carrying the duty across unchanged. It does not repeal the Home Building Act 1989, and the warranty and insurance provisions relied on throughout this guide are unaffected. The manufactured-homes provisions and Schedule 3 items [20] and [45] commenced on assent (14 August 2026); the balance commences on a day or days to be appointed by proclamation. The commencement position for the specific provision in issue should be confirmed against the Act and any commencement proclamation before acting.

Classify building defects before you pick a claim

Classification is not a preliminary formality; it selects the statute, the defendant, the clock and the forum in a single step. The four questions below should be answered before any advice on merits, because each one can close options that cannot later be reopened.

Work the four-question triage in order, because each answer narrows the next.

Is the work residential building work? If no, the HBA warranties, licensing and HBCF insurance drop out entirely, and you are left with the contract, the DBPA section 37 duty (where the work is within section 36), common law negligence and the Australian Consumer Law (ACL). If yes, all four regimes are potentially live.
Who did the defective element, and who controlled it? This identifies the defendants — the contracting builder, the developer and successors under sections 18C, 18D and 18B(2), and whoever had substantive control under section 36(1)(d), contract or no contract.
Which clock is tightest? Fix the completion date first, then run every applicable period from it: the 2-year and 6-year warranty periods (section 18E), the 6-year accrual period (Limitation Act section 14) and the 10-year long-stop (EPA Act section 6.20). The shortest live period governs the timetable.
Work order or money order? Section 48MA prefers rectification by the responsible party, so a money order needs a reason — insolvency, a cancelled licence, an undefinable scope, or a proven breakdown. Identify that reason before pleading for cash.

Three worked scenarios later in this guide run this path end to end, alongside the failures that most often sink an otherwise good claim.

Residential vs commercial — the fork that decides the statute

Whether the work is residential building work determines whether the HBA warranty regime, the licensing rules and the insurance scheme apply at all — and on ordinary commercial work, none of them do.

Section 18B implies the warranties into "every contract to do residential building work", and the warranties bind the holder of a contractor licence or a person required to hold a contractor licence before entering into a contract. That second limb matters: a contractor who should have been licensed and was not is still bound by the warranties, while section 10(1) simultaneously strips that contractor of its own remedies, providing it "is not entitled to damages or to enforce any other remedy in respect of a breach of the contract" and that the contract is unenforceable by it.

Purely commercial work sits outside that regime. It is governed by the contract, overlaid by the DBPA duty where the work falls within section 36, the general law of negligence, and the Australian Consumer Law where its tests are met. The practical consequence is that a defect in a commercial warehouse and an identical defect in a dwelling are different legal problems with different limitation periods and different defendants, and the analysis cannot be transplanted from one to the other.

Defect vs incomplete work vs design error vs maintenance

These four categories are routinely conflated in defect schedules, and the statutes treat them differently.

Incomplete work is not the same as defective work. Section 18E(1)(c) and (d) deal expressly with work that was never completed, starting the warranty period from termination, from the date work ceased, or from the date of the contract where work never commenced. On the insurance side, section 99(1)(a) treats "loss resulting from non-completion of the work" as a separate insured risk from breach of warranty, and section 103B(1) gives it a different cover period of not less than 12 months.

Design error engages a different set of parties. Under section 36(1)(b) of the DBPA, "the preparation of regulated designs and other designs for building work" is itself construction work, so a designer owes the section 37 duty directly. Under the HBA, section 18F(1) makes design instructions relevant in the opposite direction, as a potential defence for the builder who followed them.

Maintenance is where many claims fail on the facts. In a strata context section 106(1) of the Strata Schemes Management Act 2015 (SSMA) imposes on the owners corporation a duty to "properly maintain and keep in a state of good and serviceable repair the common property", which means deterioration attributable to the owners corporation's own non-compliance is not the builder's breach. Distinguishing original non-conformance from subsequent neglect is expert work, and it should be done before the claim is framed rather than in reply.

Contract, Home Building Act warranties, DBPA duty, negligence and ACL — five different actions

This is the point at which most defect analysis goes wrong, so the five actions are set out separately with what each requires and what each yields.

Action	Source	Who can bring it	What must be proved	Key limit
Breach of contract, including the DLP regime	The contract	Parties to the contract only	Breach of the express or implied term	6 years from accrual: Limitation Act s 14(1)(a)
Breach of statutory warranty	HBA s 18B, Part 2C	Contracting owner; successors (s 18D); non-contracting owners (s 18D(1A)); immediate successors to developers and owner-builders (s 18C); principal contractors against subcontractors (s 18B(2))	Breach of one of the six warranties; residential building work	6 years major defect / 2 years otherwise from completion: s 18E
Breach of statutory duty of care	DBPA s 37	Each owner and each subsequent owner of the land; owners corporations and associations (s 38)	Construction work within s 36(1); failure to exercise reasonable care; risk and precautions per Loulach	Limitation Act s 14; EPA Act s 6.20
Negligence at common law	General law	Party owed a duty on ordinary principles	Duty, breach, causation, damage, subject to the CLA	Limitation Act s 14(1)(b)
ACL consumer guarantees	ACL (Competition and Consumer Act 2010 (Cth), Sch 2) ss 60, 61, with the anti-exclusion rule in s 64	A person who acquired the goods or services as a "consumer" within ACL s 3	Failure of the guarantee engaged — services not rendered with due care and skill (s 60), or services and any product of them not reasonably fit for a purpose made known (s 61)	Consumer status under s 3; Limitation Act s 14 for the action itself; s 64A permits a confined liability cap for supplies not of a kind ordinarily acquired for personal, domestic or household use
Regulator power (not a cause of action)	RAB Act ss 9, 29, 33	Exercised by the Secretary, not by a claimant	Serious defect within s 3, or the relevant statutory opinion or belief	Directed at the developer; before an occupation certificate issues, for sections 9 and 29

Three distinctions carry most of the weight. First, the warranty regime is a contractual mechanism operating by implication, so it delivers contractual remedies but only for residential building work and only within the section 18E periods. Second, the section 37 duty is a statutory duty sounding in damages "as if the duty were a duty established by the common law" under section 37(3) of the DBPA, which is why the Civil Liability Act 2002 (CLA) applies to it through s 41(3) of that Act and why the Loulach pleading standard bites. Third, a contractual defects liability period is a right and obligation to return and rectify — it is not a limitation period and it does not measure liability. The regulator's powers are not a claim at all: they are directed at the developer and produce orders, not damages.

Section 41(1) of the DBPA confirms the actions stack rather than compete, providing that the Part's provisions "are in addition to duties, statutory warranties or other obligations imposed under the Home Building Act 1989, other Acts or the common law and do not limit" them. The ACL row warrants one clarification, because it is the action most often asserted loosely. The anti-exclusion rule is emphatic and its text is worth having exactly: under section 64, a term of a contract "is void to the extent that the term purports to exclude, restrict or modify, or has the effect of excluding, restricting or modifying" the application of the consumer guarantees Division, the exercise of a right conferred by it, or "any liability of a person for a failure to comply with a guarantee that applies under this Division to a supply of goods or services", with section 64(2) providing that a term is not taken to do so "unless the term does so expressly or is inconsistent with the provision". Section 64A then permits a confined limitation for supplies outside the personal, domestic or household category: for goods, a term is not void merely because it limits liability to replacement, repair, or the cost of either.

The two service guarantees are worth stating in their terms. Section 60 provides that where a person supplies, in trade or commerce, services to a consumer, there is a guarantee that the services will be rendered with due care and skill. Section 61(1) provides that where a consumer, expressly or by implication, makes known to the supplier any particular purpose for which the services are being acquired, there is a guarantee that the services, and any product resulting from them, will be reasonably fit for that purpose; and section 61(2) provides a corresponding guarantee where the consumer makes known the result they wish the services to achieve. Both guarantees are subject to the section 61(3) exception where the consumer does not rely, or it is unreasonable for the consumer to rely, on the supplier's skill or judgment.

The threshold question in every case is whether the claimant acquired the goods or services as a "consumer" within section 3. A person is a consumer if the amount paid or payable for the goods or services did not exceed the prescribed monetary threshold — $100,000 by regulation with effect from 1 July 2021, having been increased from the $40,000 base figure — or the goods or services were of a kind ordinarily acquired for personal, domestic or household use or consumption, or, for goods, they consisted of a vehicle or trailer acquired principally for use in transporting goods on public roads. That is where most construction ACL claims are actually won or lost, because commercial building work valued above $100,000 will ordinarily qualify as acquired by a consumer only if it is of a kind ordinarily acquired for personal, domestic or household use — which ordinary commercial construction is not.

Section 64A permits a confined limitation for supplies of a kind not ordinarily acquired for personal, domestic or household use or consumption. For services, section 64A(2) provides that a term limiting the supplier's liability to the supplying of the services again, or the payment of the cost of having the services supplied again, is not rendered void by section 64 — unless the consumer establishes that reliance on the term would not be fair and reasonable. The equivalent limitation for goods under section 64A(1) is to replacement, repair, or the cost of either.

Who can sue whom — owner, successor, owners corporation, lot owner, principal, subsequent purchaser

Standing under the two statutory regimes is broader than privity but not unlimited. Under the HBA: the contracting owner holds the warranties directly; a successor in title takes "the same rights as the person's predecessor in title" under section 18D(1); a non-contracting owner is entitled, "and is taken to have always been entitled", to the same rights as a party under section 18D(1A); and under section 18C an immediate successor in title to an owner-builder, a licence holder, a former holder or a developer takes the benefit as if that person had contracted with them, with section 18C(2) deeming work done on a developer's behalf to have been done by the developer. Section 18B(2) gives a principal contractor the mirror warranty against its subcontractor. The limit is section 18D(1B) and (2), which prevent a warranty already enforced for a particular deficiency being enforced again for that same deficiency.

Under the DBPA: section 37(2) owes the duty "to each owner of the land … and to each subsequent owner", and section 38 puts the owners corporation or association in the frame where it "bears the cost of rectifying defects", with its loss including "the reasonable costs of providing alternative accommodation where necessary".

Lot owners occupy the more awkward position, which is dealt with later in the strata section. A lot owner also has a distinct action against the owners corporation under section 106(5) of the SSMA to recover, as damages for breach of statutory duty, reasonably foreseeable loss caused by the owners corporation's failure to maintain common property — a claim that runs against the owners corporation rather than the builder, and which section 106(6) bars more than 6 years after the owner first becomes aware of the loss.

From discovery to a live claim: sequence, clocks and first moves

The first fortnight after discovery tends to determine what is available in year three. This section is the practical sequence: what to do immediately, which pathway to open, which clocks are already running, and where the claim should end up.

First moves after discovery — notice, access, insurer, and not making it worse

Give written notice, preserve access, notify the insurer, and document the defect before anyone touches it — because three separate provisions turn on documents that cannot be created retrospectively.

Section 18BA(3)(a) imposes a duty on the person having the benefit of the warranty to "make reasonable efforts to ensure that a person against whom the warranty can be enforced is given notice in writing of the breach within 6 months after the breach becomes apparent". Section 18BA(3)(b) imposes a duty not to unreasonably refuse the party in breach such access as it may reasonably require to rectify, and section 18BA(5) provides that where failure to comply with the access duty is established the court or tribunal "must take the failure into account" — mandatory, in contrast to the discretionary treatment of the other duties. Section 18BA(1) confirms that a breach of warranty is a breach of contract carrying a duty to mitigate, with the onus of establishing a failure to mitigate resting on the party alleging it.

The first-fortnight sequence. Photograph and date the defect before any remedial or investigative work disturbs it. Send written notice identifying the defect to every party against whom a warranty could be enforced, and diarise the section 18BA six-month date. Establish the completion date under section 3B or 3C and calculate both the section 18E dates and the section 6.20 long-stop date. Notify your own insurer and, if you are an owner, identify whether an HBCF policy exists. Offer or preserve access for inspection and rectification in writing, even if you have no intention of using the original builder — refusing access is a documented adverse finding under section 18BA(5), whereas offering it costs nothing. Do not engage a third party to rectify before the access question is resolved in correspondence, because the section 48MA rectification preference and the mitigation duty both point the other way.

If you are a homeowner and not a lawyer, three things matter more than the section numbers. First, write down the date the building was finished and the date you first noticed the problem, and keep any email, report or photo that fixes those dates — your right to claim runs out on a timetable measured from them. Second, tell the builder in writing what is wrong and give them a fair chance to inspect and fix it; refusing to let them back can reduce what you recover later. Third, get advice before the shorter time limits — as little as two years for non-major defects — pass, because once a limit expires the tribunal cannot help you no matter how clear the defect is.

Building Commission complaints, rectification orders, and when that path is a trap

Building Commission NSW operates a free complaint handling service for complaints about home building work under the HBA, covering houses and multi-unit dwellings as well as the quality of specialist trade work — electrical, plumbing and gas-fitting — in residential or commercial buildings. Its published guidance directs owners to attempt resolution with the builder first, and for a completed apartment building it indicates that complaints about defects affecting common property are best made by the owners corporation or its representative, with individual lot owners able to complain where the defect affects only their lot or where they cannot obtain a response from the owners corporation or strata manager.

The trap is temporal. The Commission's own guidance notes that where the statutory warranty period is nearing its end, an applicant should also lodge with NCAT to preserve rights under the legislation. That reflects section 48K(7): NCAT "does not have jurisdiction in respect of a building claim arising from a breach of a statutory warranty implied under Part 2C if the date on which the claim is lodged is after the end of the period within which proceedings … must be commenced". A complaint process is not a proceeding, and time spent in it is not time recovered. Where the section 18E date is inside twelve months, the complaint and the lodgement should run in parallel rather than in sequence.

The clocks — 2 years, 6 years, 6-month tail, discoverability, 10-year long-stop

Five clocks run on the same defect, from different triggers.

Clock	Length	Runs from	Source
Warranty — major defect	6 years	Completion	HBA s 18E(1)(b)
Warranty — other defect	2 years	Completion	HBA s 18E(1)(b)
Warranty tail	Further 6 months	End of the warranty period, where the breach became apparent in its last 6 months	HBA s 18E(1)(e)
Contract, tort and breach of statutory duty	6 years	Accrual of the cause of action	Limitation Act s 14(1)(a)–(b)
Long-stop	10 years	Completion, per s 6.20(2)	EPA Act s 6.20(1)

Four features deserve isolation. The warranty periods run from completion regardless of when the defect manifests, so a latent defect in construction works — a major defect first appearing in, say, year seven — falls outside the warranty regime entirely. The tail is knowledge-based: section 18E(1)(e) defines "becomes apparent" as when the person entitled to the benefit "first becomes aware (or ought reasonably to have become aware) of the breach", which makes the date of the earliest adverse expert report a document worth locating before it is produced against you. Section 18E(1A) extends the 2-year period where a building bond has been lodged under Part 11 of the SSMA, until 90 days after the end of the period for the final inspection report. And section 6.20(4) is explicit that the long-stop "has effect despite any other Act or law, but does not operate to extend any period of limitation under the Limitation Act 1969 or the Home Building Act 1989" — it is a ceiling only.

Section 18E(2) preserves one further avenue: a second claim for a different kind of deficiency, even where the same warranty has been enforced, provided the other deficiency existed at completion, the claimant neither knew nor could reasonably have been expected to know of it, and proceedings are brought within the section 18E(1) period.

NCAT, District Court, Supreme Court, or a documented work program

Forum follows quantum, cause of action and time. Section 48K(1) gives NCAT jurisdiction over "any building claim brought before it in accordance with this Part in which the amount claimed does not exceed $500,000 (or any other higher or lower figure prescribed by the regulations)", subject to the time bars in section 48K(3), (4), (6), (7) and (8). Section 48K(5) confirms that a claim is not excluded merely because it arises out of a contract that also involves the sale of land, and section 48K(9) gives the section effect despite clause 5 of Schedule 4 to the Civil and Administrative Tribunal Act 2013.

Section 48O gives NCAT a remedial range that matters to forum choice: it may order payment of money "whether by way of debt, damages or restitution", declare that an amount is not due or owing, or order a party to "do any specified work or perform any specified service or any obligation arising under this Act or the terms of any agreement", and under section 48O(2) it "can make an order even if it is not the order that the applicant asked for".

Claims above the monetary limit, and the DBPA duty of care claims that have shaped this area, have proceeded in the Supreme Court — both Pafburn and Loulach originated in the Technology and Construction List of the Equity Division. For matters that require formal court proceedings, our litigation lawyers can advise on the appropriate escalation pathway. The fourth option is not a forum at all. Where liability is not seriously in issue, the parties are solvent, access is available and the defect is capable of definition, a documented rectification work program with agreed scope, timing, inspection points and a mechanism for disputed items can deliver the outcome section 48MA describes as preferred, without the cost of proving it. That option narrows as the clocks close, which is why it belongs early in the sequence rather than late, and the same is true of the mediation and expert-determination routes canvassed in our overview of alternative dispute resolution in NSW — they work while the parties still have something to trade, which is rarely the case in the last month of a warranty period.

One jurisdictional point should be settled before the forum is chosen. NCAT's Part 3A jurisdiction depends on the claim being a "building claim" within section 48A, which requires the claim to arise from a supply of "building goods or services" — goods or services supplied for or in connection with the carrying out of residential building work or specialist work, by the person who contracts to do, or otherwise does, that work. Section 48A expressly captures claims arising "whether under a contract or not", and section 48A(2)(b) expressly includes a claim for compensation for breach of a Part 2C warranty. The consequence for a section 37 duty of care claim is set out in the duty of care section below. The broader question of which forum suits which dispute is dealt with in our guide to resolving a construction dispute in New South Wales.

The NSW statutes that govern defective building work

Four instruments do the work. This section maps each to its function so the detailed treatment in later sections has a frame.

The four instruments and the leading authority on each: the Home Building Act 1989 (warranties and completion); the Design and Building Practitioners Act 2020 (the section 37 duty, as construed in Pafburn Pty Limited v The Owners – Strata Plan No 84674 [2024] HCA 49 and The Owners – Strata Plan No 87060 v Loulach Developments Pty Ltd (No 2) [2021] NSWSC 1068, a proceeding brought against Loulach Development Pty Ltd as developer and Loulach Steel Pty Ltd as builder); the Residential Apartment Buildings (Compliance and Enforcement Powers) Act 2020; and the Building (Approvals and Practitioners) Act 2026, in partial operation.

Home Building Act 1989 — warranties, completion, successors in title

The HBA governs residential building work through licensing, the Part 2C warranties, the insurance scheme in Part 6, and the building claims jurisdiction in Part 3A. Its three structural pillars for defect purposes are the warranties themselves in section 18B, the completion rules that start the clocks, and the provisions that carry the warranties to parties outside the original contract.

Completion is defined in two places. For work generally, section 3B(2) provides that where the contract does not specify completion, it occurs at practical completion — the practical completion concept familiar from construction contracts — "which is when the work is completed except for any omissions or defects that do not prevent the work from being reasonably capable of being used for its intended purpose", and section 3B(3) supplies a presumption, absent an earlier established date, of the earliest provable of handover of possession, the contractor's last attendance on site other than to remedy a non-completion defect, or 18 months after an owner-builder permit issued. For a new building in a strata scheme requiring an occupation certificate, section 3C(2)(a) fixes completion at "the date of issue of an occupation certificate that authorises the occupation and use of the whole of the building", with section 3C(3) giving each of two or more separate buildings under one contract its own date.

Design and Building Practitioners Act 2020 s 37 after Pafburn

Part 4 of the DBPA created a duty that runs with the land rather than the contract. Section 37(1) imposes on a person who carries out construction work "a duty to exercise reasonable care to avoid economic loss caused by defects" in or related to the building and arising from that work; section 37(2) owes it to each owner and each subsequent owner; section 37(3) gives damages as if the duty were established by the common law; and section 37(4) confirms it applies whether or not the work was under a contract with anyone.

Three supporting provisions give the duty its force. Section 39: "a person who owes a duty of care under this Part is not entitled to delegate that duty." Section 40: no contract "made or entered into, or amended, after the commencement of this Part operates to annul, vary or exclude a provision of this Part." Section 41(3): "this Part is subject to the Civil Liability Act 2002." Pafburn is the decision that worked out what the combination of sections 37 and 39 means for proportionate liability, and it is treated in the duty of care section below.

RAB Act, Building Commission powers and the strata building bond

The RAB Act, which commenced on 1 September 2020, operates on Class 2 residential apartment buildings and is aimed at the construction phase rather than at compensation. Its three instruments are the prohibition order under section 9, which can block an occupation certificate and strata plan registration; the stop work order under section 29; and the building work rectification order under section 33. All three are directed at the developer, and their common trigger is the "serious defect" definition in section 3, which is broader than the HBA’s "major defect" because its first limb captures a failure to comply with "the performance requirements of the Building Code of Australia, the relevant Australian Standards or the relevant approved plans".

Alongside these sits the strata building bond in section 207 of the SSMA, which requires the developer to give the Secretary a security "before an application is made for an occupation certificate" for any part of the building, in an amount equal to "the prescribed percentage of the contract price for the building work", available under section 207(3) to fund rectification of defective work identified in a final report. Building Commission NSW guidance states the bond is 2 per cent of the building contract price, applying to residential apartment buildings of 4 storeys or higher where the contract was made on or after 1 January 2018.

Building (Approvals and Practitioners) Act 2026 — what is in force, what is not

The 2026 Act has been assented and is in partial operation, and the framework described in this guide is the one currently in force for the purposes it addresses.

What is verified: the Bill passed Parliament on 4 August 2026, was presented to the Governor on 13 August 2026, was assented to on 14 August 2026, became Act No 26 of 2026, and was notified in Government Gazette No. 342 of 21 August 2026. It was introduced in the Legislative Assembly on 6 May 2026 by Mr Anoulack Chanthivong.

What is verified as to operation: the NSW legislation website publishes the Act as the current version for 14 August 2026 to date, and records that some, but not all, of the provisions displayed in that version have commenced. The site also notes that the Act's amending provisions are subject to automatic repeal under section 30C of the Interpretation Act 1987 once the amendments have taken effect, which is the ordinary mechanism for a consolidating Act of this kind and means the amending provisions will not remain visible in the compilation indefinitely.

What is now settled as to content and operation. The Act consolidates the building approvals and practitioner-registration framework, renaming construction certificates as "building approvals" and occupation certificates as "completion approvals". Section 202 repeals the Design and Building Practitioners Act 2020, the Design and Building Practitioners Regulation 2021, the Building and Development Certifiers Act 2018 and its regulation, and the Environmental Planning and Assessment (Development Certification and Fire Safety) Regulation 2021. The Home Building Act 1989 is not repealed, so the Part 2C warranty regime, the section 18E clocks and the Part 6 insurance scheme continue to operate as described in this guide.

The section 37 duty of care is re-enacted in Part 8 of the 2026 Act in substantially the same terms as the DBPA. Three drafting changes matter. The definition of construction work is decoupled from the definition of building work, removing the impression that the duty is confined to residential work. The mechanism by which manufacturers and suppliers are drawn into the duty is made explicit, treating the manufacture or supply of a building product as construction work carried out in relation to a building where the product is used in that building. And the regulations may prescribe how the duty extends to prefabricated buildings, including whether it continues where a prefabricated building is relocated after completion. The 10-year long-stop and the Limitation Act 1969 continue to apply to the re-enacted duty.

As to commencement, the manufactured-homes provisions and Schedule 3 items [20] and [45] commenced on the date of assent (14 August 2026); the remaining provisions, including Part 8, commence on a day or days to be appointed by proclamation. Because the amending and repealing provisions take effect on proclamation, the practical question on any file spanning the transition is whether the particular provision relevant to that file has been proclaimed, and the answer must be taken from the commencement proclamations rather than from a general statement. The position should be confirmed directly before acting, with particular attention to whether the DBPA has been repealed and Part 8 commenced at the relevant date, because that determines whether a duty-of-care claim is framed under the DBPA or the 2026 Act.

Statutory warranties under the Home Building Act

The warranty regime is the primary route for residential defect claims and carries the shortest clocks. This section covers the warranties and the anti-exclusion rule, the two periods and their start dates, the procedural and standing provisions, and the licensing and insurance failures that reshape the claim.

Key provisions at a glance: the six warranties (s 18B), the anti-exclusion rule (s 18G), the completion rules that start the clocks (ss 3B, 3C), the two warranty periods and the tail (s 18E), the notice and access duties (s 18BA), the successor and non-contracting-owner provisions (ss 18C, 18D), and the licensing and insurance consequences (ss 10, 92).

The s 18B warranties and the no-contracting-out rule

Section 18B(1) implies six warranties into every contract to do residential building work, given by the holder of a contractor licence or a person required to hold one before contracting:

Para	Warranty
(a)	Work done with due care and skill and in accordance with the plans and specifications set out in the contract
(b)	Materials supplied by the holder good and suitable for the purpose for which they are used and, unless the contract states otherwise, new
(c)	Work done in accordance with, and complying with, the HBA "or any other law"
(d)	Work done with due diligence and within the time stipulated, or if none, within a reasonable time
(e)	Where the work is construction of, or alterations, additions, repair, renovation, decoration or protective treatment to, a dwelling — work resulting, to the extent of the work conducted, in a dwelling reasonably fit for occupation as a dwelling
(f)	Work and materials reasonably fit for a specified purpose or result, where the owner expressly makes that purpose or result known to the holder or a person with express or apparent authority to enter into or vary contractual arrangements, "so as to show that the owner relies on the holder's or person's skill and judgment"

These are distinct promises, not paraphrases of one another. Work executed precisely to a compliant drawing can still fail (e) or (f); work that is fit for occupation can still depart from the specification and fail (a). Section 18B(2) extends all six down the chain, implying them into a contract between a principal contractor and a subcontractor "for the subcontractor to do the work (or any part of the work) for the principal contractor", which is the mechanism by which a head contractor facing an owner's claim recovers against the trade that did the work.

Section 18G is the anti-exclusion rule and it is one sentence: "A provision of an agreement or other instrument that purports to restrict or remove the rights of a person in respect of any statutory warranty is void." The words "or other instrument" reach beyond the building contract to deeds of release, sale contracts and side agreements to the extent they purport to cut down warranty rights.

That raises the question of whether a settlement of a warranty dispute is caught, and the distinction is worth stating plainly. Section 18G is directed at provisions that operate on the warranty rights themselves — a term that reduces what the warranties would otherwise give, before any breach has been identified, is the paradigm case of a provision purporting to "restrict or remove" those rights, and it is void whatever instrument it appears in. A deed of settlement executed after a breach has occurred and been identified, under which the beneficiary releases that accrued claim for consideration, is doing something different in kind: it disposes of a claim rather than restricting a right.

Drafting is what separates the two, and the difference is practical. A release confined to identified defects, supported by consideration, entered into with the benefit of advice and expressed as a compromise of a specified dispute is on considerably firmer ground than a blanket release of "all claims under Part 2C", a release extending to defects not yet manifest, or a release bundled into a sale contract or variation as a condition of proceeding — each of which is difficult to distinguish from the instrument section 18G is aimed at. This guide states the distinction as a matter of principle rather than on authority, and the working assumption for anyone drafting a release intended to close out warranty exposure should be that section 18G will be argued against it.

Major defect vs other defect — six years and two years, and from when

Section 18E(1)(b) sets the periods: the warranty period is "6 years for a breach that results in a major defect in residential building work or 2 years in any other case", running from completion. Section 18E(1)(c) and (d) deal with incomplete work, starting the period from termination, from cessation of work, or from the date of the contract where work never commenced.

Section 18E(4) supplies the definitions. A major defect is a defect in a major element of a building attributable to defective design, defective or faulty workmanship, defective materials, or a failure to comply with the structural performance requirements of the National Construction Code, which causes or is likely to cause inability to inhabit or use the building or part of it for its intended purpose, its destruction, or a threat of collapse — with two further limbs for prescribed defects and for defects in a building product that is the subject of a building product use ban. A major element is an internal or external load-bearing component essential to the stability of the building or part of it, including foundations and footings, floors, walls, roofs, columns and beams, and also a fire safety system, waterproofing, or any other element prescribed as a major element.

The "from when" is where files are lost. Completion is determined by section 3B or, for new strata buildings, section 3C — see the completion rules under the Home Building Act above — and the practical effect is that on a strata project the occupation certificate date usually governs, while on a house the presumption in section 3B(3) may put completion earlier than the parties assume.

Notice, access, successors in title, and the already-enforced bar

Four procedural and standing rules shape the claim.

Notice. Section 18BA(3)(a) requires the beneficiary to make reasonable efforts to ensure written notice of the breach is given within 6 months after the breach becomes apparent, to a person against whom the warranty can be enforced.
Access. Section 18BA(3)(b) requires the beneficiary not to unreasonably refuse the party in breach such access as it may reasonably require to rectify, and section 18BA(5) makes a proven failure on the access duty a matter the court or tribunal "must take into account", with other failures discretionary.
Successors and non-contracting owners. Section 18D(1) gives a successor in title the same rights as its predecessor; section 18D(1A) gives a non-contracting owner the same rights as a party, retrospectively expressed; section 18C carries the benefit to immediate successors of owner-builders, licence holders, former holders and developers, with section 18C(2) deeming work done on a developer's behalf to have been done by the developer.
The already-enforced bar. Section 18D(1B) and (2) provide, subject to the regulations, that a warranty already enforced in relation to a particular deficiency cannot be enforced again in relation to that same deficiency. Section 18E(2) is the qualified exception, permitting a claim for a different kind of deficiency that existed at completion and was neither known nor reasonably knowable, within the section 18E(1) period.

Unlicensed or uninsured residential work — how it collapses the claim or the defence

Two provisions operate asymmetrically and both cut against the contractor.

Section 10(1) provides that a person who contracts to do residential building work while unlicensed, or under a contract that does not comply with the section 7 requirements, "is not entitled to damages or to enforce any other remedy in respect of a breach of the contract" and the contract "is unenforceable by the person who contracted to do the work" — while that person remains liable for its own breaches. The warranties still bind it, because section 18B(1) reaches "a person required to hold a contractor licence before entering into a contract".

Section 92(1) provides that a person must not do residential building work under a contract unless a complying contract of insurance is in force in the name under which the person contracted and a certificate of insurance has been provided to the other party. Section 92(2) applies both conditions to demanding or receiving any payment under the contract, including a deposit, "whether or not any work has commenced". Section 92(5) confirms that cover in force for the original work extends to rectification of that work. Section 92(3) exempts contracts where the price, or the reasonable market cost of labour and materials where the price is not known, does not exceed the prescribed amount, and section 92(4) aggregates prices across staged contracts between the same parties. The amount prescribed for the purposes of section 92(3) by the Home Building Regulation 2014 is $20,000 inclusive of GST. The aggregation rule in section 92(4) is what makes the threshold difficult to engineer around: splitting a $60,000 renovation into three $20,000 contracts with the same owner does not produce three exempt contracts, and a contractor who proceeds on that basis is exposed under section 92(1) and (2) as well as losing the benefit of section 10(1).

The statutory duty of care for construction work

Part 4 of the DBPA changed who can be sued and by whom. This section covers the class of duty-holders, what Pafburn decided about liability distribution, the pleading standard that governs the claim, and the limitation and forum questions.

Who owes it — builder, developer, supervisor, designer, person with substantive control

Anyone who carries out construction work owes the duty, and section 36(1) defines construction work in four limbs wide enough to reach designers, product suppliers and those merely exercising control.

The four limbs are: building work, which section 36(1) confirms "includes residential building work within the meaning of the Home Building Act 1989"; the preparation of regulated designs and other designs for building work; the manufacture or supply of a building product used for building work; and "supervising, coordinating, project managing or otherwise having substantive control over the carrying out" of any of that work. Section 36(4) confirms that a person carrying out construction work includes a manufacturer or supplier of a building product used for the work.

The fourth limb is the one that brings developers, project managers and individual supervisors into the frame, and it is drafted around function rather than title. In Pafburn the owners corporation pleaded that the developer supervised, co-ordinated, project managed and had substantive control over the head contractor's work and therefore itself carried out construction work; the appellants denied that characterisation but admitted the head contractor had carried out both building work and construction work. Whether a given developer, director or supervisor had substantive control is a factual question, and it is the live battleground in most section 37 pleadings. It is also a question answered from documents rather than from structure. Section 36(1)(d) is drafted disjunctively — supervising, coordinating, project managing or otherwise having substantive control — so a respondent can fall within the limb on any one of those descriptions, and "otherwise having substantive control" is a residual category that does not require the respondent to have held any formal role at all.

The indicia that decide the question are the ordinary records of the project: who engaged and directed the trades; who held and actually exercised the power to stop, sequence or vary the work; who chaired and minuted site and design meetings, and what they resolved; who gave instructions on the specific element now said to be defective; and whether the person's involvement went beyond the ordinary incidents of ownership, financing and approving payment claims. The corollary is a real defence for a respondent whose involvement was confined to funding, approving payments and receiving reports: it has an argument that it did not carry out construction work at all and so owes no duty, and that argument is won on the project records rather than on the corporate chart or the absence of a title. Both sides of that question should therefore be worked up from the documents at the outset, because a section 37 claim pleaded against a party that turns out to have had no control over the defective element fails at the first limb, and a respondent that assumes its role protected it often discovers otherwise in the site minutes.

Pafburn — duty to ensure reasonable care is taken, and proportionate liability

In Pafburn Pty Limited v The Owners – Strata Plan No 84674 [2024] HCA 49, a 4:3 majority of the High Court held that a developer and head building contractor sued for breach of the non-delegable section 37 duty could not rely on another person's failure to take reasonable care to limit their liability under Part 4 of the Civil Liability Act 2002. The appeal was dismissed with costs.

The question was framed as whether the developer or head contractor could "rely on the failure of another person to take reasonable care in carrying out construction work, or otherwise performing any function in relation to that work, to limit their liability under Part 4", and the answer was that "neither the developer nor the head building contractor can do so". The Court of Appeal had been right to strike out the paragraphs of the Response asserting the claim was apportionable and naming alleged concurrent wrongdoers — a list that had included the waterproofing subcontractors, the manufacturer, supplier and installer of the aluminium composite panels, the architect, the principal certifying authority and the local council.

The mechanism runs through two provisions of the Civil Liability Act relevant to NSW construction claims. Section 5Q(1) provides that liability in tort for breach of a non-delegable duty "is to be determined as if the liability were the vicarious liability of the defendant for the negligence of the person in connection with the performance of the work or task", and s 39(a) of the CLA provides that nothing in Part 4 prevents a person being held vicariously liable for a proportion of an apportionable claim for which another person is liable. The judgment records that liability for breach of a non-delegable duty is generally direct or personal rather than vicarious, because the person subject to the duty is taken to have breached it by not ensuring reasonable care was taken by the person performing the function — in both cases making that person "the insurer of some activity even when it is performed by another".

A separate carve-out has always applied on the warranty side. Section 34(3A) of the CLA provides that Part 4 "does not apply to a claim in an action for damages arising from a breach of statutory warranty under Part 2C of the Home Building Act 1989 and brought by a person having the benefit of the statutory warranty".

Where this lands commercially. The consequence of Pafburn is felt at mediation, not at judgment. Previously a developer or head contractor facing a strata defect claim could realistically argue its way down to a percentage and leave the owners corporation to pursue the certifier, the architect and an insolvent waterproofer for the balance. On the facts Pafburn addressed, that strategy is no longer available, and the well-capitalised or insured party at the top of the chain is likely to carry the claim and then recover downwards itself.

Two adjustments follow. For respondents, the value of contemporaneous records showing who did what, of enforceable back-to-back subcontract indemnities, and of live professional indemnity cover down the chain rises considerably — because the recovery exercise has moved from a defence run against the plaintiff to cross-claims run against your own trades and consultants, which is slower, dearer and dependent on their solvency. For claimants, naming the party with substantive control may now be more productive than assembling the widest possible respondent list. Neither adjustment removes the need to prove breach, which is where these claims are actually decided.

Pleading specific risks and precautions, not "there is a defect"

In The Owners – Strata Plan No 87060 v Loulach Developments Pty Ltd (No 2) [2021] NSWSC 1068 the Court held that a claimant alleging breach of the section 37 duty "must identify the specific risks that the builder was required to manage, and the precautions that should have been taken to manage those risks", and that "it is not sufficient simply to assert a defect".

The owners corporation had served a Scott Schedule identifying 451 defects and sought to plead that the defects themselves bespoke breach, its counsel submitting in substance that whoever did the defective work necessarily did it negligently because otherwise there would be no defect. The proceedings were brought against Loulach Development Pty Ltd as developer and Loulach Steel Pty Ltd as builder, although the judgment commonly refers to them collectively as "Loulach". Leave to amend was refused.

The reasoning is grounded in section 41(3) of the DBPA. Because Part 4 is subject to the CLA, s 5B of that Act applies, requiring assessment of foreseeability, the significance of the risk and what a reasonable person would have done — so a pleading must identify and articulate the risk of harm against which precautions are said to have been required. The judgment records the Second Reading Speech confirming that the DBPA removed the hurdle of establishing that a duty is owed, but that a claimant would still be "required to meet the other tests for negligence established under the common law and the Civil Liability Act 2002"; the Act "was not intended to provide a shortcut as to the manner by which a breach of such duty might be established".

The worked example in the judgment is worth carrying to every defect schedule. For an item alleging combustible aluminium composite panel cladding installed throughout the facades, where the builder's case would be that the architect selected the cladding, the Court asked what breach was actually alleged: failing to read the plans, failing to follow them, selecting the location of installation, installing it so as to convert acceptable cladding into unacceptable cladding, having a duty to choose different cladding, failing to ask questions, or a duty to commission a flammability report. Each is a different case on different evidence. The Court indicated the necessary specificity might be achieved by having the List Statement refer to the Scott Schedule and revising the Schedule to add columns identifying, for each defect, the relevant risk and "more importantly, exactly what the Owners Corporation contends Loulach should have done in relation to that risk".

Limitation, NCAT jurisdiction for the duty, and the EPA Act 10-year long-stop

Three temporal and forum points govern a section 37 claim.

Limitation. The note to section 41 states that actions under the Part "are subject to applicable limitation periods established under the Limitation Act 1969, and section 6.20 of the Environmental Planning and Assessment Act 1979 which relates to civil actions relating to certain work". Section 14(1) of the Limitation Act bars an action founded on contract, or on tort "including a cause of action for damages for breach of statutory duty", after six years "running from the date on which the cause of action first accrues to the plaintiff or to a person through whom the plaintiff claims". The trigger is accrual — the point at which the cause of action legally comes into existence — not completion, which is the substantive difference from section 18E. Because accrual rather than completion is the trigger, the date is contestable in a way the section 18E date is not, and the contest matters most on the claims where it is least convenient — latent defects in buildings handed over years earlier. Published commentary treats the six years as running from when the defect was discovered or ought reasonably to have been discovered, which is the claimant-favourable reading; the competing position, that a cause of action for economic loss accrues when the loss is first sustained irrespective of discovery, produces a materially earlier date on the same facts. The practical discipline does not depend on resolving that. Identify the earliest date on which a respondent could argue accrual occurred, treat it as the operative date, and diarise the six years from there; if the later date is ultimately correct, nothing has been lost, whereas the reverse error is not recoverable. Schedule 1, section 5 of the DBPA is also worth checking at the outset, because it is the provision by which the duty reaches construction work carried out from 11 June 2010, and it therefore sets the outer boundary of what can be claimed at all. The accrual date for a section 37 claim is not settled by binding authority, and the courts have accepted that it depends on how the economic loss is characterised — differing according to whether the loss is treated as first sustained on completion, on acquisition of a defective building, or on discoverability. Until the point is resolved on appeal, the earliest-arguable-date discipline set out above governs. One forward-looking check remains: whether the equivalent provision in the 2026 Act preserves Schedule 1, section 5's extension of the duty to work carried out from 11 June 2010 once the DBPA is repealed should be confirmed against the Act as in force at the relevant date.

Long-stop. Section 6.20(1) provides that a civil action for loss or damage "arising out of or in connection with defective building work or defective subdivision work cannot be brought more than 10 years after the date of completion of the work", with completion taken under section 6.20(2) to occur on the date an occupation certificate issues authorising occupation (or a compliance certificate where none is required), failing that the date a required inspection of the completed work was carried out by a certifier, and failing that the date the building or part was first occupied or used. Section 6.20(4) confirms it does not extend the Limitation Act or HBA periods.

Forum. Both Pafburn and Loulach proceeded in the Supreme Court, and the Technology and Construction List is where the section 37 jurisprudence has developed. Whether a section 37 claim can instead be brought in NCAT under Part 3A turns on the section 48A definition of "building claim", which does two things at once.

It is broad as to the basis of the claim. A building claim is a claim for the payment of a specified sum of money, the supply of specified services, relief from payment of a specified sum, the delivery, return or replacement of specified goods, or a combination of those, "that arises from a supply of building goods or services whether under a contract or not". Those last five words are why the absence of privity is not itself an obstacle to a section 37 claim reaching NCAT. Section 48A(2) also confirms the definition is not exhaustive and expressly includes a claim for compensation for loss arising from a breach of a Part 2C statutory warranty.

It is narrow as to subject matter and as to who supplied it. "Building goods or services" means goods or services supplied for or in connection with the carrying out of residential building work or specialist work, being goods or services supplied by the person who contracts to do, or otherwise does, that work, or supplied in prescribed circumstances to the person who contracts to do it.

Three consequences follow for a section 37 claim. Against the builder who did residential building work or specialist work, the claim is capable of being a building claim notwithstanding the absence of a contract with the claimant. Where the work is neither residential building work nor specialist work — as in the commercial warehouse scenario later in this guide — Part 3A is unavailable whatever the amount claimed. And against a respondent who did not itself do the work, such as a designer under section 36(1)(b) or a product manufacturer or supplier under section 36(1)(c) and section 36(4), the claim sits less comfortably within the definition, because the goods or services must be supplied by the person who contracts to do or otherwise does the work. Where the respondent list spans both categories, one Supreme Court proceeding is usually preferable to a split — and on most strata files the section 48K(1) limit of $500,000 disposes of the question before the definition needs to be argued.

Contractual defects liability and commercial work

On commercial work the contract does most of the running, and on residential work it does less than its drafting suggests. This section separates the two and identifies which clauses survive contact with statute.

Defects liability period is not the statutory warranty period

Expiry of a contractual defects liability period in a construction contract ends a contractual right to require return and rectification; it does not extinguish the section 18B warranties, the section 37 duty, or any limitation period.

The two mechanisms answer different questions. A DLP is a contractual allocation — typically a right for the principal to require the contractor to return and make good, and a corresponding right for the contractor to be allowed to do so before others are engaged at its cost. A warranty period under section 18E is a bar on commencing proceedings, and section 48K(7) makes it jurisdictional at NCAT. A contractor whose 12-month DLP has expired may owe no further contractual obligation to attend site and yet remain exposed to a major defect claim for the balance of the 6 years from completion, and to a section 37 claim beyond that subject to section 14 and section 6.20. The drafting choices that create or contain that exposure — the DLP mechanism itself, the making-good standard, security and its release, and any attempted limitation of liability — are dealt with more generally in our guide to construction contracts in NSW and their key terms and risks.

Where a live defect needs the contractual and statutory positions reconciled against the actual documents — completion date, licensing position, warranty classification and the DLP mechanics read together — that analysis is available through NSW building and construction law advice. It is materially cheaper to establish those four things now than to litigate them later.

Notice, superintendent, making-good and time bars in standard forms

Contractual defects machinery typically operates through a notice requirement, a certifying or directing role, a making-good obligation and a time bar, and each is a point of failure independent of the merits.

The notice provision determines whether a defect has been validly raised at all, and its form and timing requirements are usually conditions rather than aspirations. The superintendent or contract administrator's role determines who may direct rectification, on what standard, and whether a direction is a variation or an enforcement of the existing scope. The making-good obligation determines the standard to which work must be brought and whether rectified work attracts a fresh DLP. The time bar determines when the contractual right lapses.

Two cautions. First, a defect notified under the contract is not thereby notified for section 18BA purposes: that provision requires written notice "to a person against whom the warranty can be enforced", which on a multi-party project is not necessarily the party the contract nominates. Second, the contractual standard of making good may be lower than the section 18B standards, and where it is, satisfying the contract does not answer the warranty claim. The defects machinery differs between the Australian Standard forms, between editions of the same form, and between those forms and the residential and government forms, and most projects run on an amended version of a printed form. The four functions above — the notice requirement, the certifying or directing role, the making-good obligation and the time bar — should be located in the contract actually executed, in whatever numbering it uses; the amendments to the printed form are usually where the exposure sits. Where a defect is asserted as a reason to withhold or reduce payment, the contractual machinery also has to be read against the statutory payment regime, which is dealt with in our guide to security of payment laws and adjudication in New South Wales and, for the mechanics of asserting a defect-based set-off in time, in our note on payment claims and payment schedules in NSW.

Design risk, fitness for purpose, and passing defects down the chain

Design risk allocation determines who bears a defect that originates in the documents rather than the workmanship. Under the DBPA the question is partly answered by statute: section 36(1)(b) makes the preparation of designs construction work in its own right, so a designer owes the section 37 duty directly to each owner and subsequent owner, and section 39 prevents that duty being delegated.

Fitness for purpose — the contractor's obligation to deliver a result fit for the owner's stated purpose — is where contract and statute diverge most sharply on residential work. Section 18B(1)(f) implies a fitness warranty where the owner "expressly makes known" the particular purpose or desired result to the licence holder or to a person with express or apparent authority to enter into or vary contractual arrangements, "so as to show that the owner relies on the holder's or person's skill and judgment" — a warranty that arises from the communication rather than from the contract's risk allocation, and which section 18G prevents being contracted away.

Passing defects down the chain works differently under each regime. Contractually it depends on back-to-back drafting and on the subcontract's own notice and time-bar provisions being capable of being triggered in time. Under the HBA it is statutory: section 18B(2) implies the six warranties into the principal contractor–subcontractor contract, so the head contractor's recourse does not depend on the subcontract replicating them. In tort, section 5(1)(c) of the Law Reform (Miscellaneous Provisions) Act 1946 (LRMPA) allows a tortfeasor liable for damage to "recover contribution from any other tort-feasor who is, or would if sued have been, liable in respect of the same damage", in an amount that section 5(2) makes "such as may be found by the court to be just and equitable having regard to the extent of that person's responsibility for the damage", with power to exempt a person entirely or to direct a complete indemnity.

When the contract still matters after the HBA and s 37 are in play

The contract retains four functions that no statute performs, which is why it should never be set aside once the statutory claims are identified.

Clause type	Effectiveness	Limiting statute
DLP / rectification regime	Effective as a contractual right and obligation between the parties; does not cap or end liability	HBA s 18G where it purports to restrict warranty rights; DBPA s 40
Contractual time bars on defect notices	Effective as against contractual rights only	Does not affect HBA s 18E or Limitation Act s 14
Pass-down / back-to-back	Effective, and commercially important after Pafburn	Independent of HBA s 18B(2), which operates regardless
Limitation of liability / liability caps	Conditional	Void under HBA s 18G to the extent it restricts warranty rights; inoperative against Part 4 under DBPA s 40; void under ACL s 64 to the extent it excludes, restricts or modifies a consumer guarantee or liability for its breach, subject to the confined permission in s 64A for supplies not ordinarily acquired for personal, domestic or household use; CLA Part 4 proportionate liability available only where s 34(3A) and Pafburn do not exclude it; ACL unfair contract terms provisions may also apply where their tests are met
Arbitration clause	Void in contracts within HBA s 6	HBA s 7C
Clause creating an estate or interest in the land	Void to that extent, subject to the s 7D(3) charge exception	HBA s 7D(1)

The four surviving functions are: allocating design responsibility and the standard of the work as between the parties; providing the rectification mechanism that section 48MA identifies as the preferred outcome; holding security against defects and governing its release; and, through pass-down provisions, providing the recovery route that has become more valuable since Pafburn. A DLP clause is never the end of liability, and it should not be presented to a client as though it were. The ACL row deserves emphasis because it is the limit most often overlooked in commercial drafting. Section 18G has no application to commercial work, and the DBPA section 40 prohibition is confined to Part 4, so a party limiting its liability on a commercial project can reasonably think the field is clear. It is not: where the counterparty acquired as a consumer within ACL section 3, section 64 renders the term void to the extent it excludes, restricts or modifies the guarantees or liability for their breach, and section 64A permits only the confined forms of limitation it specifies. A cap drafted without reference to section 3 and section 64 is therefore drafted on an assumption that has not been tested.

If you are a subcontractor or a small builder on the receiving end, two claims can reach you that you did not see coming. The first is a warranty claim passed down the chain: section 18B(2) implies the six statutory warranties into your contract with the head contractor, so the head contractor's exposure to the owner can be recovered from you for the part of the work you did — whether or not your subcontract repeats those warranties. The second is a contribution or cross-claim after Pafburn: because the party at the top can no longer reduce its own share by pointing at everyone else, it now sues down the chain instead, and your position often lives or dies on your own records — who directed the work, what you were instructed to install, and what you flagged at the time. The practical response is the same on both fronts: keep site records, instructions and variations; confirm your own subcontracts and insurance are back-to-back with what you have taken on; and treat any notice of a defect as the moment to preserve evidence rather than the moment to concede.

Apartments, strata and regulator intervention

Apartment defect outcomes are frequently driven by standing, regulator leverage and funding rather than by the merits. This section covers each.

Common property vs lot property — who has standing

Standing follows the property boundary: the owners corporation controls claims affecting common property, while a lot owner's position depends on whether the defect affects their lot and on which cause of action is used.

Under the DBPA the position is expressly provided for. Section 38(1) and (2) deem an owners corporation or association to suffer economic loss where it "bears the cost of rectifying defects" that are the subject of a breach, with that loss including "the reasonable costs of providing alternative accommodation where necessary", and section 38(3) confirms this applies whether or not the corporation owned the land when the work was carried out. Independently, section 37(2) owes the duty to each owner and each subsequent owner of the land, which is the basis on which lot owners are within the class.

Under the SSMA the owners corporation carries a positive duty. Section 106(1) requires it to "properly maintain and keep in a state of good and serviceable repair the common property", and section 106(2) requires renewal or replacement of fixtures and fittings in common property. Section 106(4) permits deferral of compliance in relation to damage to common property while action is taken against an owner or another person, provided the deferral will not affect safety or access. Section 106(5) gives a lot owner a claim against the owners corporation, as damages for breach of statutory duty, for reasonably foreseeable loss caused by contravention — barred by section 106(6) more than 6 years after the owner first becomes aware of the loss.

On the regulator side, Building Commission NSW guidance indicates that complaints about defects affecting common property in a completed apartment building are best made by the owners corporation or its representative, with individual lot owners able to complain where the defect affects only their lot or where they cannot get a response from the owners corporation or strata manager.

RAB Act serious defects, occupation-certificate bans, stop-work and rectification orders

The RAB Act's three orders share the section 3 "serious defect" concept and are directed at the developer.

Serious defect under section 3 has two operative limbs. The first captures a defect in a building element attributable to a failure to comply with "the performance requirements of the Building Code of Australia, the relevant Australian Standards or the relevant approved plans" — non-compliance with approved plans alone is sufficient, which is broader than the HBA test. The second captures a defect attributable to defective design, defective or faulty workmanship or defective materials that "causes or is likely to cause— (A) the inability to inhabit or use the building … (B) the destruction … (C) a threat of collapse", with a third limb for defects prescribed by the regulations. "Approved plans" is defined by reference to plans and specifications issued with respect to a construction certificate or complying development certificate under the EPA Act, together with variations effected or approved under that Act.

Prohibition orders. Section 9(1) empowers the Secretary to prohibit the issue of an occupation certificate and, where relevant, registration of a strata plan, on grounds including under paragraph (c) that "the Secretary is satisfied that a serious defect in the building exists" and under paragraph (d) that a required section 207 building bond has not been given. Section 9(2) allows that satisfaction to be founded on an unrevoked building work rectification order or a relevant development control order. Section 9(6) provides that "an occupation certificate issued in contravention of a prohibition order is invalid", and section 9(7) makes it an offence for a principal certifier other than a council to issue one, with a maximum penalty of 1,000 penalty units for a body corporate or 200 penalty units in any other case.

Stop work orders. Section 29(1) allows the Secretary to order the developer to ensure building work stops where the Secretary is of the opinion the work is, or is likely to be, "carried out in a manner that could result in significant harm or loss to the public or occupiers or potential occupiers of the building … or significant damage to property". Such an order lapses on revocation, at the end of its term, or in any event 12 months after taking effect.

Building work rectification orders. Section 33(1) allows an order to be given to the developer where the Secretary has a reasonable belief that the work "was or is being carried out in a way that could result in a serious defect", or that a residential apartment building has a serious defect. Under section 33(2) the order may require specified work to be done or not done, or other action taken, "to eliminate, minimise or remediate the serious defect", and section 33(7) removes the need for EPA Act consent or approval to carry out work in compliance. Non-compliance with an order under section 29 or 33 attracts a maximum penalty of 3,000 penalty units for a body corporate, with daily penalties for continuing offences.

Strata building bond vs HBCF — why four storeys and above are different

The two financial backstops cover different buildings, different risks and different beneficiaries.

	Strata building bond	Home Building Compensation Fund cover
Source	SSMA s 207	HBA ss 92, 99, 103B
Applies to	Strata schemes; Building Commission NSW guidance states 4 storeys or higher, contract on or after 1 January 2018	Residential building work under contract where the contract price, or the reasonable market cost where the price is not known, exceeds $20,000 inclusive of GST (Home Building Regulation 2014)
Amount / limit	"The prescribed percentage of the contract price for the building work"; guidance states 2%	Cover periods set by s 103B; icare, which administers the scheme, applies a maximum liability cap of $340,000 per certificate in line with the Home Building Regulation 2014
Trigger	Defective building work identified in a final report under Part 11	Insolvency, death or disappearance of the contractor (s 99(1))
Beneficiary	Funds rectification up to the amount secured (s 207(3))	The person on whose behalf work is done and successors in title (s 99(1)(b)); non-contracting owners (s 99(2A))
Not covered	—	A developer on whose behalf work is done is not required to be insured (s 99(2)(a))
Timing	Given before an application is made for an occupation certificate (s 207(1))	Certificate provided before work and before any payment demanded (s 92(1)–(2))

The structural reason the two differ is that the bond is a construction-phase security against identified defects in a report, available whether or not anyone is insolvent, whereas HBCF cover is a last-resort response to the contractor being unavailable. Failure to give the bond carries a maximum penalty of 10,000 penalty units plus 200 penalty units for each day a continuing offence continues, and is separately a ground for a prohibition order under section 9(1)(d).

Owners corporation decisions and funding the claim before the clocks die

The recurring practical problem in strata defect claims is that the decision-making and funding cycle is slower than section 18E. An owners corporation typically needs an inspection, an expert report, legal advice, a resolution, and a funding mechanism before it can commence — and the 2-year period for non-major defects can expire inside that cycle.

Three provisions bear on the sequencing. Section 48K(7) makes the section 18E period jurisdictional at NCAT, so a resolution passed after the period has run does not restore the claim. Section 18E(1A) provides some relief where a building bond has been lodged, extending the 2-year period until 90 days after the end of the period for the final inspection report. And section 106(4) of the SSMA permits the owners corporation to defer compliance with its own repair duty while it takes action against a responsible person, provided safety and access are unaffected — which addresses the bind in which repairing the defect is said to destroy the evidence of it, though it does not licence indefinite inaction.

The disciplined approach is to fix the section 18E and section 6.20 dates at the point of first suspicion, work backwards to determine the last safe date for a resolution, and treat that date as the governing project milestone rather than the expert's availability. The funding mechanism itself is in section 81, and its structure explains the delay. Section 81(1) requires the owners corporation to determine the amounts to be levied as contributions to the administrative fund and the capital works fund "to raise the amounts estimated as needing to be credited to those funds", and section 81(2) requires that determination to be made "at the same meeting at which those estimated amounts are determined". Section 81(3) then requires it to levy each person liable. The provision that matters for a defects claim is section 81(4): if the owners corporation "is subsequently faced with other expenses it cannot at once meet from either fund, it must levy on each owner of a lot in the strata scheme a contribution to the administrative fund or capital works fund, determined at a general meeting of the owners corporation, in order to meet the expenses". Section 81(5) permits payment by regular periodic instalments where the owners corporation so determines.

Two consequences follow. Funding an investigation, an expert report and litigation is an expense of exactly the kind section 81(4) contemplates, and it requires a determination at a general meeting — which means notice periods, quorum and a meeting date, none of which compress well against a warranty period about to expire. And where instalments are permitted under section 81(5), the money arrives over time while the limitation date does not move, so the levy resolution needs to precede the expenditure commitment rather than follow it.

Two further constraints should be checked against the Act on any given file: the owners corporation's authority to commence and continue proceedings, and any restriction on the amount that may be spent on legal costs without a general-meeting resolution, each of which can bear on the timing of a defects claim as much as the levy machinery itself.

Insurance, insolvency and the empty-chair defendant

Defect claims are often won on liability and lost on recovery. This section covers the statutory insurance scheme, notification discipline, what happens when the builder is gone, and who is left to sue.

Home Building Compensation Fund — when it responds and when it does not

The statutory scheme responds to three events — insolvency, death or disappearance of the contractor — and not to a solvent contractor who simply refuses to rectify.

Section 99(1) requires a contract of insurance under section 92 to insure the person on whose behalf the work is done against "the risk of loss resulting from non-completion of the work because of the insolvency, death or disappearance of the contractor", and to insure that person and their successors in title against the risk of being unable, "because of the insolvency, death or disappearance of the contractor", either to have the contractor rectify a breach of statutory warranty or to recover compensation from it for the breach. Section 99(2A) extends the benefit to a non-contracting owner of the land, expressed as providing "and to have always provided" that benefit, irrespective of whether the policy says so.

Section 103B sets the cover periods and aligns them with the warranty periods: not less than 6 years after completion for loss arising from a major defect within the meaning of section 18E, not less than 2 years after completion for any other loss, and not less than 12 months for loss arising from non-completion, running from the failure to commence or the cessation of work. The alignment means an owner outside the section 18E period is generally also outside cover.

Two exclusions matter. Section 99(2)(a) provides that a developer on whose behalf residential building work is being done is not required to be insured. And section 92(3) exempts contracts below the prescribed threshold — $20,000 inclusive of GST under the Home Building Regulation 2014 — with section 92(4) aggregating staged contracts between the same parties.

The operational limits sit outside the Act. The scheme is administered by icare, which applies a maximum liability cap of $340,000 per certificate, a figure it attributes to the Home Building Regulation 2014 and explains as preventing the cost of insurance exceeding the risk amount insured. Cover is only available where the builder held a certificate of eligibility for work of that type and value at the relevant time, which is a matter between the builder and icare rather than something the owner controls, and an owner should therefore confirm at the outset that a certificate exists for the specific contract rather than assuming cover from the builder's licence.

Three practical points follow for an owner. First, confirm whether a certificate was issued for the contract before building a strategy around the Fund, because an uninsured contract above the threshold gives the owner a statutory contravention by the builder but not a policy to claim on. Second, the trigger events are events affecting the builder, not findings about the work: a documented defect is not a trigger, though documenting it early preserves the position if a trigger later occurs. Third, the section 103B cover periods track the section 18E warranty periods, so the claim window and the litigation window close at broadly the same time, and there is no separate, longer period in which to think about it. The scheme's operational detail — the current claim forms and lodgement channels, the evidentiary and authority-to-act requirements, and the maximum liability cap per certificate — is administered by icare and changes independently of the Act, so it should be confirmed against icare's current published material rather than assumed from this guide.

Notify the insurer early, even while still chasing the builder

Notification is a discipline rather than a legal conclusion, and it is worth separating from the merits for two reasons grounded in the Act.

First, the section 103B cover periods run from completion, not from the date the owner concludes the builder will not rectify. Time spent in negotiation with a solvent builder is time consumed from the same 6-year or 2-year window that governs the cover. Second, section 92(5) confirms that cover in force for the original work extends to rectification of that work, so notifying and pursuing rectification are not alternatives.

For contractors and consultants the parallel point concerns their own policies. Professional indemnity and other liability cover typically operates on notification conditions that are independent of whether liability is admitted or even likely, and section 22(1)(g) of the HBA makes failure to maintain professional indemnity insurance or a similar form of insurance for the period required under Part 6 a ground on which the Secretary must cancel a contractor licence. Notification conditions are terms of the particular policy and vary between insurers, products and policy years. This section states the statutory timing points only; the notification clause, the definition of a claim or circumstance, and any deeming provision should be read in the policy actually held.

Builder insolvent, disappeared, or licence suspended for a money order

Insolvency changes the licensing position as well as the recovery position, and both matter to a claimant deciding whom to pursue.

Section 22(1) requires the Secretary, subject to the regulations, to cancel a contractor licence authorising residential building work or specialist work where, among other grounds, the holder is a corporation that "has become the subject of a winding up order under the Corporations Act 2001" or has been voluntarily wound up, or has been "deregistered under Chapter 5A" of that Act. Section 22(2) permits cancellation where the holder, or a partner of a partnership holder, becomes bankrupt, applies to take the benefit of insolvency laws, compounds with creditors or assigns remuneration for their benefit. Section 22(5) requires the holder to notify the Secretary in writing within 7 days of becoming aware of certain of those events, with a maximum penalty of 1,000 penalty units for a corporation or 200 penalty units otherwise, and the note records that an offence against subsection (1) committed by a corporation is an executive liability offence attracting executive liability for a director or other person involved in the management of the corporation under s 137A of the HBA.

For the claimant, the practical consequences are that insolvency or disappearance is what activates the section 99(1) insured events; that section 99(3) treats the insolvency of any partner as the insolvency of the contractor where a partnership contracted; and that a cancelled licence does not extinguish the warranties, which under section 18B(1) bind a person required to hold a licence as well as a holder.

Professional indemnity, directors after Pafburn, and claims against the empty chair

The empty chair is the defect claim's defining problem: the party most responsible is often the least able to pay. Three statutory features shape who is left.

Individuals and directors. The section 37 duty attaches to any "person who carries out construction work", and section 36(1)(d) includes those "supervising, coordinating, project managing or otherwise having substantive control over" it. That is a functional test that can capture individuals, which is why the substantive control question in the duty of care section is contested. Section 22(2A) provides a separate licensing consequence for individuals, allowing cancellation where the holder was a director or person concerned in the management of a body corporate "when the body corporate became a Chapter 5 body corporate or within 6 months before that event".

Designers and product suppliers. Section 36(1)(b) and (c), with section 36(4), place designers and the manufacturers and suppliers of building products used for the work within the duty, which makes them respondents in their own right rather than merely parties to be blamed.

Contribution when the chair is empty. Section 5(1)(c) of the LRMPA allows contribution from another tortfeasor liable for the same damage, with s 5(2) fixing the amount as just and equitable having regard to the extent of that person's responsibility and permitting exemption or a complete indemnity. Section 5(1)(c) contains its own limit: no person may recover contribution "from any person entitled to be indemnified by that person in respect of the liability in respect of which the contribution is sought". Section 5(1)(a) confirms that judgment against one tortfeasor is not a bar to an action against another who would have been liable as a joint tortfeasor for the same damage. Contribution depends on the other party existing and being solvent, which is precisely what the empty chair is not — and it is not a substitute for the proportionate liability defence Pafburn addressed. That distinction is developed in the defences section below.

Proving the defect and quantifying the loss

Liability and amount are separate exercises with separate evidence. This section covers expert evidence, the choice between a work order and a money order, the measure of damages, and what sits beyond rectification cost.

Expert evidence that survives NCAT and the courts

Expert evidence in a claim about defective construction works has to do two jobs that are routinely collapsed into one: establish the physical non-conformance, and establish what the respondent should have done differently.

Loulach is the authority for the second requirement, and it is an evidentiary requirement as much as a pleading one. Because section 41(3) of the DBPA makes Part 4 subject to the CLA, s 5B of the CLA applies, so the evidence must support foreseeability, the significance of the risk and what a reasonable person in the respondent's position would have done. The Court's suggested remedy — adding columns to the Scott Schedule identifying, for each defect, the relevant risk and what the respondent should have done about that risk — is in substance an instruction about how the expert brief should be framed. A report that establishes 451 instances of non-conformance and is silent on precautions supports the first job and not the second.

On the warranty side the expert task is different, because section 18B(1) supplies the standards directly: conformance with the plans and specifications, suitability and newness of materials, compliance with the law, diligence and time, fitness for occupation, and fitness for a made-known purpose. The brief should ask which of those the work fails and why, rather than asking the general question whether the work is defective.

Two further evidentiary points are statutory. Section 18E(4) makes the major defect classification turn on expert characterisation of a major element and of the causal consequence, so the report must address it explicitly if the 6-year period is relied on. And section 18E(1)(e) makes the date the breach became apparent — actual or constructive awareness — a matter the earliest report will usually fix, whether or not the author intended to. The forum-specific rules then determine whether the report is usable at all. In court proceedings the governing instrument is the expert witness code of conduct in Schedule 7 to the Uniform Civil Procedure Rules 2005, made under rule 31.23. Clause 2 sets the framing obligation: an expert witness "is not an advocate for a party and has a paramount duty, overriding any duty to the party to the proceedings or other person retaining the expert witness, to assist the court impartially on matters relevant to the area of expertise of the witness". Clause 3(1) then prescribes the content, including an acknowledgement that the expert has read the code and agrees to be bound by it, the expert's qualifications, "the assumptions and material facts on which each opinion expressed in the report is based", the reasons and materials supporting each opinion, any question falling outside the expert's field of expertise, the examinations or tests relied on and who carried them out, the extent to which an opinion involves accepting another person's opinion, a declaration that all desirable inquiries have been made and no relevant matters withheld, any qualification without which the report may be incomplete or inaccurate, and whether an opinion is not concluded because of insufficient research or data. Clause 4 requires a supplementary report where the expert later changes opinion on a material matter, and clauses 5 and 6 govern conferences and joint reports, requiring the expert to exercise independent judgment and "not act on any instruction or request to withhold or avoid agreement".

Two points from the code bear directly on defect files. The requirement in clause 3(1)(d) to state assumptions and material facts is where reports relying on an owner's account of when a leak appeared become the document that fixes the section 18E(1)(e) date. And Schedule 7 now regulates generative artificial intelligence expressly: clause 3(2) provides that it "must not, without leave of the court, be used to generate the content of an expert's report", clause 3(3) requires a report to state that it was not so used where leave has not been sought or granted, and clause 3(4) imposes detailed disclosure obligations where leave has been granted, including identifying the program, date and version, and annexing the prompts, script or data provided. A report that is silent on the question is not compliant.

In NCAT, Procedural Direction 3 governs expert evidence and applies, among other proceedings, to Consumer and Commercial Division matters under the Home Building Act 1989 where the amount in dispute exceeds $30,000, to proceedings in which the Tribunal is bound by the rules of evidence, and to any other matter where the Tribunal directs that it apply. It imports a code of conduct to similar effect, and in proceedings not bound by the rules of evidence non-compliance is more likely to affect the weight given to the report than its admissibility. The current version and threshold of the applicable NCAT Procedural Direction, and any separate direction on the use of generative artificial intelligence, should be confirmed from ncat.nsw.gov.au, as the Tribunal's directions are amended from time to time and the scope and monetary threshold are set by the direction rather than by the Rules.

Work order vs money order — the s 48MA preference and when cash is the only rational remedy

Section 48MA provides that a court or tribunal determining a building claim involving an allegation of defective residential building work or specialist work by a party "is to have regard to the principle that rectification of the defective work by the responsible party is the preferred outcome". Section 48O gives NCAT the tools for either course: a money order under section 48O(1)(a) "whether by way of debt, damages or restitution", or a work order under section 48O(1)(c) requiring a party to "do any specified work or perform any specified service or any obligation arising under this Act or the terms of any agreement" — and under section 48O(2) the Tribunal "can make an order even if it is not the order that the applicant asked for".

The preference is reinforced by section 18BA. The duty not to unreasonably refuse reasonable access for rectification under section 18BA(3)(b) is the one whose breach section 18BA(5) says the court or tribunal "must take into account". An owner who refuses access and then claims the cost of engaging others faces both provisions at once.

There are situations in which a money order is the only workable remedy on the face of the statutory scheme — where the contractor is insolvent, deceased or has disappeared, which are the very events section 99(1) insures against; where the licence has been cancelled under section 22 so the party cannot lawfully contract to do the work; or where the scope has moved beyond what a work order can define. Beyond those, the statutory architecture points towards rectification, and a claimant seeking cash should be prepared to explain why. Loss of confidence in the builder sits between those two positions, and Tribunal-level NCAT decisions suggest it is neither sufficient on its own nor irrelevant. Those decisions provide guidance on the application of section 48MA on their particular facts, rather than binding authority. In Brooks v Gannon Constructions Pty Limited [2017] NSWCATCD 12 the homeowner's evidence that allowing the builder to return would make him sick to his stomach was held not to be sufficient reason to decline a rectification order — although the Tribunal declined to make one in any event, being satisfied on the builder's own evidence that it lacked the financial capacity to carry out the work. In Galdona v Peacock [2017] NSWCATAP 64 the Appeal Panel held that the member below should have considered section 48MA and had not, but upheld a compensation order because the member had found that the relationship between the parties had broken down, the builder had not acknowledged the poor standard of the work, and there were severe reservations about the builder's ability to rectify with due care and skill. In Steven Miller & Anor v Grosvenor Australia Pty Ltd [2017] NSWCATCD 42 the Tribunal ordered the builder to deliver an already-fabricated replacement glass sliding door, treating that outcome as consistent with the section 48MA preference for rectification, where no licence was required merely to supply the replacement item.

The pattern is that subjective reluctance carries little weight, while findings about capacity and conduct carry a great deal: an absence of licence for the work, financial inability to perform it, a demonstrated breakdown in the relationship, no acknowledgement that the work was substandard, and apparent incapacity to rectify with due care and skill are the matters that have supported departure from the preferred outcome. An owner seeking money should therefore be building evidence on those matters rather than on their own discomfort, and a builder seeking a work order should be addressing each of them directly.

Bellgrove v Eldridge, reasonableness and betterment

Damages for defective building work are measured prima facie by the reasonable cost of rectification, not by the difference in value between the building as built and as promised.

In Bellgrove v Eldridge [1954] HCA 36 the High Court held that the owner's "loss can, prima facie, be measured only by ascertaining the amount required to rectify the defects complained of and so give to her the equivalent of a building of her land which is substantially in accordance with the contract". The Court adopted the formulation that the measure is the difference between the contract price of the work contracted for and the cost of making the work conform, with the addition in most cases of profits or earnings lost by the breach. On the facts — foundations departing substantially from the specified concrete proportions, producing grave instability, with the weakness of the mortar making underpinning hazardous — an award assessed on the cost of demolition and reconstruction was upheld.

The qualification is the operative limit: "not only must the work undertaken be necessary to produce conformity, but that also, it must be a reasonable course to adopt". The Court's illustration is the answer to most betterment arguments: where a contract called for cement-rendered walls of second-hand bricks and the builder used new first-quality bricks, the owner would not recover the cost of demolishing and re-erecting in second-hand bricks, because that work would be unreasonable. Where remedial work is necessary to produce conformity but is not a reasonable method of dealing with the situation, "the true measure of the building owner's loss will be the diminution in value, if any, produced by the departure from the plans and specifications or by the defective workmanship or materials". Whether particular remedial work is necessary and reasonable is a question of fact.

One carve-out is expressly stated and it is frequently the answer in structural cases: the question whether demolition and re-erection is reasonable "does not arise when defective foundations seriously threaten the stability of a house and when the threat can be removed only by such a course". The Court also disposed of the objection that the owner might take the money and not rebuild, describing that circumstance as "quite immaterial and … but one variation of a feature which so often presents itself in the assessment of damages in cases where they must be assessed once and for all".

Consequential loss, alternative accommodation and diminution in value

Three heads sit alongside rectification cost, and each has an identifiable source.

Consequential loss. The Bellgrove formulation itself contemplates "the addition, in most cases, of the profits or earnings lost by the breach", so consequential loss is not a separate indulgence but part of the accepted measure where it is proved.

Alternative accommodation. Section 38(2) of the DBPA puts this beyond argument for the entities it covers: economic loss of an owners corporation or association "includes the reasonable costs of providing alternative accommodation where necessary".

Diminution in value. This is not an alternative the claimant may elect. On Bellgrove it becomes the measure where remedial work is necessary to produce conformity but is not a reasonable course to adopt — a defendant's argument in substance, and one that requires evidence of value rather than assertion.

Against all three sits the mitigation duty. Section 18BA(1) confirms that breach of a statutory warranty implied in a contract is a breach of contract and that a party suffering loss "has a duty to mitigate their loss", with "the onus of establishing a failure to mitigate loss" resting on the party alleging it. Section 18BA(2) extends the duty to any person having the benefit of the warranty or the same rights as a party.

Defending a defects claim

Defect defences in NSW are narrow, largely documentary, and mostly about time, standing and causation rather than about the quality of the work. This section sets out what is available and what is not.

Not a defect, not our work, not within time, no standing

The four threshold defences should be run before the merits, because each can dispose of items or of the whole claim.

Not a defect. Defect allegations often surface first in a payment schedule rather than in a pleading, and a respondent should be alert that the reasons given there will be read back against it later; the mechanics of that process, and of the adjudication that may follow, are covered in our explainer on how to win or survive a security of payment claim. In the defects claim itself, the claimant must identify which standard the work fails. Under section 18B(1) the standards are separate and specific, and work that conforms to the plans and specifications does not breach paragraph (a) merely because the outcome disappoints. Under section 37 the claimant must go further and satisfy the Loulach requirement to identify the risk and the precautions, which is the point at which asserted defects with no articulated precaution tend to fall away.

Not our work. Causation and attribution remain live. Section 37(1)(b) requires the defect to arise "from the construction work" the respondent carried out, and section 36(1) defines the categories, so a respondent whose scope did not include the element in question is outside the duty for that element even though section 39 prevents delegation of what was within scope.

Not within time. This is usually the strongest defence available. Section 18E bars commencement outside the 6-year or 2-year periods; section 48K(7) makes that jurisdictional at NCAT and section 48K(3), (4), (6) and (8) impose further 3-year and 10-year bars by claim type; section 14 of the Limitation Act bars contract and tort claims, including for breach of statutory duty, six years after accrual; and section 6.20(1) of the EPA Act imposes the 10-year outer limit from completion, with section 6.20(2) fixing the completion trigger.

No standing. The claimant must fall within a class the statute recognises: sections 18C and 18D for the warranties, section 37(2) and section 38 for the duty. Section 18D(1B) and (2) also bar a warranty already enforced for a particular deficiency being enforced again for that deficiency.

Design by others, owner-supplied materials, lack of maintenance, failure to mitigate

Four substantive defences, each with a documentary or evidentiary precondition.

Design by others and contrary instructions. Section 18F(1) provides two defences. The first is that the deficiencies arose from "instructions given by the person for whom the work was contracted to be done contrary to the advice of the defendant or person who did the work, being advice given in writing before the work was done". The second is reasonable reliance on written instructions given by an independent relevant professional acting for that person, "being instructions given in writing before the work was done or confirmed in writing after the work was done". Independence is restrictively defined: under section 18F(2) the professional must not be engaged by the defendant to provide any service or do any work in connection with the residential building work, and under section 18F(3) the professional is not independent if engaged on the defendant's recommendation or referral, or if the professional is, or was within 3 years before the instructions were given, a close associate of the defendant. Section 18F(4) defines relevant professional to include a person representing themselves to be an architect, registered design practitioner or registered principal design practitioner within the meaning of the DBPA, an engineer or a surveyor, or to have expert or specialised qualifications or knowledge in respect of residential building work.

Owner-supplied materials. Paragraph (b) of section 18B(1) warrants that "all materials supplied by the holder or person" will be good and suitable and, unless otherwise stated, new. On its terms the warranty attaches to the materials the contractor supplied, which is why the supply records matter.

Lack of maintenance. In strata, section 106(1) and (2) of the SSMA impose the maintenance and renewal duties on the owners corporation, so deterioration attributable to that failure is not the respondent's breach. This is an evidentiary contest about the condition history, and it is won with inspection records rather than submissions.

Failure to mitigate. Available under section 18BA(1) and (2), with the express caution that section 18BA(1) places "the onus of establishing a failure to mitigate loss … on the party alleging the failure".

The common thread is timing of documents. The section 18F defences require writing created before the work (or, for the second limb, confirmed after), which cannot be reconstructed. A verbal warning from a site supervisor, however sound, does not meet the section as drafted.

Access refused and the owner who will not have the builder back

This is the defence with the clearest statutory footing and the one most often left unpleaded.

Section 18BA(3)(b) imposes on the beneficiary a duty not to "unreasonably refuse a person who has breached the warranty such access to the residential building work concerned as that person may reasonably require for the purpose of or in connection with rectifying the breach". Section 18BA(5) then distinguishes it from the other duties: a failure to comply with a section 18BA duty is "a matter that the court or tribunal may take into account", but where "a failure to comply with the duty to allow reasonable access is established, the court or tribunal must take the failure into account".

Section 48MA points the same way, directing regard to the principle that "rectification of the defective work by the responsible party is the preferred outcome", and section 48O(1)(c) and (2) give NCAT power to make a work order even where the applicant sought money.

The practical defence therefore has three components: evidence of a genuine, documented offer of access with a defined scope and timing; evidence that the refusal was not reasonably based; and a submission directed at both section 18BA(5) and section 48MA. Where an owner declines to have the original builder back, the reasonableness of that position becomes the issue — and the correspondence generated in the first fortnight after discovery, discussed in the first-moves section above, usually decides it.

Cross-claims after Pafburn — contribution is not a proportionate-liability escape

These are different mechanisms with different effects, and conflating them overstates what is available to a respondent after Pafburn.

Proportionate liability caps the respondent's liability to the claimant. Section 34(1)(a) of the CLA defines an apportionable claim as "a claim for economic loss or damage to property in an action for damages … arising from a failure to take reasonable care, but not including any claim arising out of personal injury", and section 35(1)(a) limits a concurrent wrongdoer's liability to "an amount reflecting that proportion of the damage or loss claimed that the court considers just having regard to the extent of the defendant's responsibility". The claimant bears the shortfall. Two exclusions now dominate residential defect claims: section 34(3A) removes Part 2C warranty claims brought by a warranty beneficiary from the regime altogether, and Pafburn held that a developer and head contractor sued on the non-delegable section 37 duty could not use Part 4 to limit their liability by reference to another person's failure to take reasonable care.

Contribution does not cap anything as against the claimant. Section 5(1)(c) of the LRMPA allows a tortfeasor liable for damage to recover from another tortfeasor liable for the same damage, in an amount that s 5(2) makes just and equitable having regard to the extent of that person's responsibility, with power to exempt entirely or to order a complete indemnity. Section 5(1)(a) confirms that judgment against one tortfeasor does not bar an action against another. The respondent still faces the claimant for the whole, then bears the cost, delay and insolvency risk of recovering.

Running the cross-claim you now have to run. After Pafburn, the defence work in a strata defect claim shifts from the Response to the cross-claim, and the two require different preparation. A proportionate liability plea needed little more than the identification of other participants and an assertion about their responsibility. A contribution claim needs a pleadable case that each cross-defendant is liable for the same damage, evidence of what each of them actually did, and a cross-defendant capable of paying.

That changes what matters on the file years before a dispute. Scope records that show which trade performed which element, subcontract indemnities that are enforceable rather than aspirational, evidence that professional indemnity cover was in place and maintained, and — for respondents relying on the section 18F defences — advice and instructions reduced to writing before the work, all become the difference between a recoverable share and an unrecoverable one. It is also worth being candid with clients about the arithmetic: a contribution right against a deregistered company is worth what the company is worth, and section 5(1)(c)'s own proviso excludes contribution from a person the respondent is obliged to indemnify. Neither of those problems is solved at trial.

Failures that destroy claims, and three worked scenarios

The failures below are drawn from the provisions already covered, and the three scenarios show how classification, clocks and remedy interact. The scenarios are illustrative structures for analysis, not predictions of outcome.

The eight failures that destroy otherwise good defects claims

Not fixing the completion date first. Section 18E runs from completion, determined by section 3B or, for new strata buildings, section 3C(2)(a). The presumption in section 3B(3) can place completion earlier than the parties assume, and every other calculation depends on it.
Treating the warranty period as a general limitation period. Section 18E is one of five clocks. Section 14 of the Limitation Act runs from accrual, and section 6.20 of the EPA Act imposes a 10-year ceiling from completion which section 6.20(4) confirms does not extend either.
Running the regulator complaint instead of lodging. Section 48K(7) removes NCAT's jurisdiction once the section 18E period has ended, and Building Commission NSW guidance itself advises lodging with NCAT where the warranty period is near its end.
Pleading defects instead of breach. Loulach requires identification of the specific risks the builder had to manage and the precautions that should have been taken; a schedule of items, however long, does not supply that.
Missing the section 18BA notice and access steps. Section 18BA(3)(a) requires reasonable efforts to give written notice within 6 months of the breach becoming apparent; section 18BA(5) makes a proven failure on the access duty something the court or tribunal must take into account.
Rectifying before the access and evidence questions are resolved. Section 48MA identifies rectification by the responsible party as the preferred outcome, and section 18BA(1) imposes a mitigation duty — while the physical evidence of the defect is consumed by the repair.
Not classifying major defect versus other defect on the evidence. The difference between the 6-year and 2-year periods under section 18E(1)(b) turns on the section 18E(4) definitions, which require the expert to address the major element and the causal consequence expressly.
Assuming a defence exists because the owner made a poor decision. Section 18F requires that contrary advice was in writing and given before the work, or that instructions came from an independent relevant professional as defined in section 18F(2) to (4).

Class 1 house, leaking shower, year three

Facts assumed: a detached dwelling, residential building work under a contract with a licensed builder, occupation and completion three years earlier, a shower leaking into an adjoining room, no prior notice given.

Classification. Residential building work, so Part 2C applies. The candidate warranties are section 18B(1)(a) for departure from the plans and specifications and lack of due care and skill, (b) if the materials were unsuitable, (c) for non-compliance with the law, and (e) for fitness for occupation to the extent of the work conducted. The threshold question is whether the leak involves waterproofing, because section 18E(4) names waterproofing as a major element, which if the causal consequence in the definition is also satisfied would engage the 6-year period rather than the 2-year period.

Clocks. On a 2-year classification the period expired around year two, subject to the section 18E(1)(e) tail if the breach became apparent in the final 6 months. On a 6-year classification the claim is live, with roughly three years remaining. Section 6.20 is not yet in play. Completion is determined under section 3B, and the section 3B(3) presumption should be tested against handover and last-attendance records.

Sequence. Written notice under section 18BA(3)(a) immediately, with the six-month date diarised from when the leak became apparent. Offer access in writing. Obtain an expert report addressing the section 18E(4) classification expressly. Identify whether an HBCF policy exists, noting that under section 99(1) it responds to insolvency, death or disappearance rather than to refusal.

Remedy and forum. Quantum on ordinary principles is the reasonable cost of rectification under Bellgrove, subject to the necessary-and-reasonable qualification. If within the section 48K(1) limit and the section 18E period, NCAT is available, and section 48MA together with section 48O(1)(c) makes a work order a realistic outcome. The classification question is the one that decides whether there is a claim at all, and it is an evidentiary question rather than a legal one.

Class 2 building, waterproofing and fire, year seven

Facts assumed: a residential apartment building, occupation certificate issued seven years earlier, owners corporation now aware of waterproofing failures to common property and a cladding or fire safety system issue, developer and head contractor both still trading.

Classification. Warranty claims are the first casualty of the timeline: completion for a new strata building is the occupation certificate date under section 3C(2)(a), so even the 6-year major defect period under section 18E(1)(b) has expired, and section 48K(7) removes NCAT's jurisdiction over a Part 2C claim accordingly. The live route is section 37 of the DBPA, with the owners corporation relying on section 38(1) and (2) as the party bearing rectification costs and on section 38(3), which applies whether or not it owned the land when the work was carried out.

Defendants. The head contractor as a person who carried out building work; the developer if it supervised, coordinated, project managed or otherwise had substantive control within section 36(1)(d) — the pleading run in Pafburn; the designer under section 36(1)(b); and any manufacturer or supplier of a building product used for the work under section 36(1)(c) and section 36(4). Section 39 prevents any of them delegating the duty and section 40 prevents contracting out of the Part.

Clocks. Section 14 of the Limitation Act gives six years from accrual, and section 6.20(1) imposes the 10-year ceiling from completion, which on section 6.20(2)(a) is the occupation certificate date — leaving roughly three years of outer limit. Accrual is the contested question, addressed in the duty of care section above.

Liability distribution and proof. Section 34(3A) is irrelevant because there is no warranty claim, but Pafburn is directly relevant: on those facts a developer and head contractor could not use Part 4 to limit liability by reference to others' failures, so the respondents' route to sharing the loss is cross-claims for contribution under section 5 of the LRMPA. The claim must be pleaded and evidenced to the Loulach standard, defect by defect, with the risk and the precautions identified — the cladding example in that judgment is closely analogous.

Parallel levers. The RAB Act orders under sections 9 and 29 are directed at the construction phase and an occupation certificate has issued, so they are unlikely to assist; a section 33 building work rectification order is expressed to be available where the Secretary has a reasonable belief that "a residential apartment building has a serious defect", and is directed at the developer. Whether a bond was lodged under section 207 of the SSMA should be checked, both because of section 18E(1A) and because non-lodgement is itself a section 9(1)(d) ground. Funding and resolution timing should be worked backwards from the section 6.20 date, as set out in the strata section above.

Commercial warehouse, defective slab, DLP expired

Facts assumed: a commercial warehouse, no residential component, practical completion four years earlier, a 12-month defects liability period long expired, slab cracking and unevenness now affecting racking and operations.

Classification. This is the residential-versus-commercial fork set out earlier: the HBA warranty regime, licensing rules and HBCF do not apply to ordinary commercial building work, so section 18B, section 18E and section 48K are all unavailable. The available actions are breach of contract, the section 37 duty if the work falls within section 36 and the claimant is an owner of the land within section 37(2), negligence at common law, and the ACL where its tests are met.

The DLP point. Expiry of the 12-month period ended the contractual mechanism for requiring return and rectification. It did not end the contractual cause of action for breach, which under section 14(1)(a) of the Limitation Act runs six years from accrual, nor any section 37 claim, and section 6.20(1) sets the 10-year ceiling from completion determined under section 6.20(2). Any liability cap or exclusion in the contract needs testing against section 40 of the DBPA for the Part 4 claim, and against the ACL unfair contract terms provisions if their tests are met — noting that section 18G has no application because the work is not residential.

Liability distribution. Proportionate liability is more likely to remain available here than in the two residential scenarios: section 34(3A) is irrelevant with no warranty claim, and the Pafburn holding addressed a developer and head contractor sued on the non-delegable section 37 duty. Whether Part 4 is available on any given commercial configuration is the boundary discussed below under "Quantum", and it should not be assumed either way.

Quantum. Bellgrove governs: the reasonable cost of rectification, subject to the work being both necessary to produce conformity and a reasonable course to adopt, with diminution in value as the measure where it is not. Where a slab is involved, the Bellgrove carve-out for defective foundations that seriously threaten stability may be relevant if the evidence supports it, and the "profits or earnings lost by the breach" limb is likely to be significant given the operational impact. Section 48MA has no application outside residential and specialist work, so the statutory push towards a work order is absent and the claim is more naturally a damages claim. One caution on that liability-distribution point. Pafburn was decided on a residential strata configuration involving a developer and head contractor, and those were the circumstances before the High Court. Although the majority's reasoning turned on the non-delegable character of the section 37 duty and section 39, neither of which is confined to residential work, the High Court did not decide whether proportionate liability is unavailable in every section 37 claim regardless of the defendant's role or the project type. The prudent working assumption for a respondent on any section 37 claim, commercial or residential, is therefore that Part 4 may not be available, with the cross-claim prepared accordingly, while recognising that the broader application of Pafburn beyond its facts remains to be worked out in future cases. Proportionate liability remains available on the contract and common law negligence claims on ordinary principles.

Conclusion

Defective building work in NSW is governed by regimes that overlap without merging, and the discipline that produces good outcomes is doing the classification before the merits. The order that matters is the one this guide follows: establish whether the work is residential, identify which of the five actions is available and to whom, fix the completion date and calculate every clock, decide whether the regulator has any leverage left, and only then form a view on the defect itself.

The substantive positions are reasonably settled on the points that decide most files. The section 18B warranties cannot be contracted away because of section 18G, but they carry the shortest clocks — 6 years for a major defect and 2 years otherwise from completion. The section 37 duty reaches parties with no contract, cannot be delegated under section 39 or excluded under section 40, and after Pafburn a developer or head contractor sued on it is likely to face the claim without proportionate liability and to be left to cross-claims for contribution. Loulach means the claim must be pleaded and proved as a breach rather than as a list of defects. Bellgrove means the loss is the reasonable cost of rectification, subject to that course being a reasonable one, and section 48MA means rectification by the responsible party is the outcome the statute prefers.

For anyone holding a defect file, the practical message is narrow: the first fortnight buys or forfeits most of the available options, and the two dates that decide the file — completion, and when the breach became apparent — are cheaper to establish now than to argue about later.

If you have found a defect, the two dates that decide your options are the completion date and the date the breach became apparent — and both are far cheaper to establish now than to argue in year three. Our NSW building and construction lawyers work the four-question position on a defect file — which statute, which defendant, which clock and which remedy — and fix the limitation dates before a clock closes an option off. If you have received a defect claim, a cross-claim or a rectification order, the same analysis identifies which defences are still open and how long you have to run them. Contact Merlo Law to have your position assessed against the clocks while they are still in your favour.

FAQs

How long do I have to claim for defective building work in NSW?

For breach of statutory warranty, section 18E of the Home Building Act 1989 requires proceedings to be commenced within 6 years for a breach resulting in a major defect and 2 years in any other case, from completion of the work, with a further 6 months where the breach becomes apparent in the last 6 months of that period. Separately, section 14 of the Limitation Act 1969 gives six years from accrual for contract and tort claims including breach of statutory duty, and section 6.20 of the Environmental Planning and Assessment Act 1979 provides that a civil action for loss arising from defective building work "cannot be brought more than 10 years after the date of completion of the work", without extending the other periods.

What is a major defect under the Home Building Act?

Section 18E(4) defines a major defect as a defect in a major element attributable to defective design, defective or faulty workmanship, defective materials or a failure to comply with the structural performance requirements of the National Construction Code, which causes or is likely to cause inability to inhabit or use the building, its destruction, or a threat of collapse. A major element includes load-bearing components essential to stability — foundations and footings, floors, walls, roofs, columns and beams — and also a fire safety system and waterproofing.

Can a builder contract out of the statutory warranties?

No. Section 18G provides that a provision of an agreement or other instrument purporting to restrict or remove a person's rights in respect of any statutory warranty is void, and the reference to "other instrument" reaches beyond the building contract. Section 40 of the Design and Building Practitioners Act 2020 separately provides that no contract made, entered into or amended after commencement of Part 4 operates to annul, vary or exclude a provision of that Part.

Does the defects liability period in my contract limit my liability?

No. A defects liability period is a contractual right and obligation to return and rectify; it is not a limitation period. Expiry may end the contractual mechanism while leaving the section 18B warranties available for the section 18E period, a section 37 duty of care claim available subject to section 14 of the Limitation Act and section 6.20 of the EPA Act, and any liability cap exposed to section 18G on residential work and to section 40 for Part 4 claims.

Can I sue a builder I never had a contract with?

Section 37 of the DBPA imposes on a person who carries out construction work a duty to exercise reasonable care to avoid economic loss caused by defects, owed to each owner and each subsequent owner of the land, and section 37(4) confirms it is owed whether or not the work was carried out under a contract with anyone. Construction work under section 36(1) includes building work, the preparation of designs, the manufacture or supply of a building product used for the work, and supervising, coordinating, project managing or otherwise having substantive control over that work.

What did Pafburn decide about proportionate liability?

In Pafburn Pty Limited v The Owners – Strata Plan No 84674 [2024] HCA 49 the High Court held that a developer and head building contractor sued for breach of the non-delegable duty in sections 37 and 39 of the DBPA could not rely on another person's failure to take reasonable care to limit their liability under Part 4 of the CLA. The appeal was dismissed with costs. Separately, section 34(3A) of the CLA has always excluded Part 2C warranty claims brought by a warranty beneficiary from the apportionment regime.

Is it enough to list the defects in my claim?

No. In The Owners – Strata Plan No 87060 v Loulach Developments Pty Ltd (No 2) [2021] NSWSC 1068, a proceeding brought against Loulach Development Pty Ltd as developer and Loulach Steel Pty Ltd as builder, the Court held that a claimant alleging breach of the section 37 duty must identify the specific risks the builder was required to manage and the precautions that should have been taken to manage them, and that it is not sufficient simply to assert a defect.

How are defect damages calculated?

Under Bellgrove v Eldridge [1954] HCA 36 the measure is prima facie the amount required to rectify the defects so as to give the owner the equivalent of a building substantially in accordance with the contract, with the addition in most cases of profits or earnings lost by the breach. The remedial work must be both necessary to produce conformity and a reasonable course to adopt; where it is not reasonable, the measure becomes diminution in value. Section 48MA of the HBA also directs regard to the principle that rectification by the responsible party is the preferred outcome.

Do I have to let the builder back to fix the defects?

Section 18BA(3)(b) imposes a duty on the person having the benefit of the warranty not to unreasonably refuse the party in breach such access as it may reasonably require to rectify the breach, and section 18BA(5) provides that where a failure to comply with the access duty is established, the court or tribunal must take that failure into account. Section 48MA points the same way, and section 48O(2) allows NCAT to make an order even if it is not the order the applicant asked for.

What happens if the builder becomes insolvent?

Insurance under section 92 must, per section 99(1), cover loss from non-completion and the inability to have the contractor rectify a breach of statutory warranty or recover compensation for it, in each case "because of the insolvency, death or disappearance of the contractor". Section 103B(2) requires cover of not less than 6 years after completion for loss arising from a major defect and not less than 2 years for other loss. Section 99(2)(a) provides that a developer on whose behalf work is done is not required to be insured. Section 22 of the HBA also requires or permits cancellation of the contractor licence on winding up, deregistration or bankruptcy.

Who can bring a defect claim in a strata building?

Under the DBPA, section 37(2) owes the duty to each owner and subsequent owner, and section 38 deems an owners corporation or association to suffer economic loss where it bears the cost of rectifying defects, including the reasonable costs of alternative accommodation where necessary. Under the SSMA, section 106(1) obliges the owners corporation to maintain and repair common property, and section 106(5) allows a lot owner to recover reasonably foreseeable loss from the owners corporation for breach of that duty, barred by section 106(6) more than 6 years after the owner first becomes aware of the loss.

What can the regulator do about defects in an apartment building?

Under the RAB Act, which commenced on 1 September 2020, the Secretary may prohibit the issue of an occupation certificate and strata plan registration where satisfied a serious defect exists or a required building bond has not been given (section 9), order that building work stop where it could result in significant harm, loss or property damage (section 29), and give a building work rectification order requiring work to eliminate, minimise or remediate a serious defect (section 33). An occupation certificate issued in contravention of a prohibition order is invalid.

Where do I bring a defect claim?

Section 48K(1) gives NCAT jurisdiction over building claims where the amount claimed does not exceed $500,000, subject to time bars including section 48K(7), which removes jurisdiction if a Part 2C warranty claim is lodged after the section 18E period has ended. Section 48O allows NCAT to order money, to declare an amount not owing, or to order specified work. Claims above the limit and the DBPA duty of care claims that have shaped this area, including Pafburn and Loulach, have proceeded in the Supreme Court.

Is the Building (Approvals and Practitioners) Act 2026 in force?

The Act was assented to on 14 August 2026 as Act No 26 of 2026, having passed Parliament on 4 August 2026 and been notified in Government Gazette No. 342 of 21 August 2026. The NSW legislation website publishes it as the current version for 14 August 2026 to date and records that some, but not all, of its provisions have commenced. Partial commencement means the question on any given matter is not whether the Act is in force but whether the particular provision relevant to that matter is. Uncommenced provisions are not current law, and the commencement position, the extent of any repeal or amendment of the DBPA and HBA, and any transitional arrangements should be confirmed before acting.

This guide is general information about the law of New South Wales as at the date of publication. It is not legal advice and should not be relied on as a substitute for advice about your circumstances. Legislation and case law change, and the Building (Approvals and Practitioners) Act 2026 (NSW) was assented to on 14 August 2026 and is in partial operation, with the commencement position for any particular provision to be confirmed before acting. The worked scenarios are illustrative analytical structures and are not predictions of outcome.

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