What limits apply to homeowners being able to recover for “latent defects” in building works constructed many years previously?

Consider the case of Mark Robert and Kellie Tyrrell who bought a home from Lisa McNab in 2002, a property which McNab itself had owned since 1997. McNab Constructions had built the house on the land for Lisa in 1998-99.
By 2013 – more than 10 years after the purchase and 15 years following the home’s construction – Mark and Kellie had discovered that some of the building works had not been approved and was non-compliant with code. They sued the former owner and the builder alleging a breach of “duty of care”.

In July 2013 the District Court at Toowoomba struck out the Statement of Claim on the basis that it did not disclose a cause of action. It allowed the homeowners to re-plead their case.

They appealed the lower court finding that the particulars of their “pure economic loss” claim, were insufficient in that they be required to show something of a part of the builder of in the nature of “concealing” a defect and also some “vulnerability” on their part.

The appeal judges recognised the potential duty owed by a home builder to subsequent owners for defects that might cause a diminution in value of the home when the defects become “manifest”.

They noted the many elements requisite for the establishment and breach of such duty, all of which must be included in the pleading.

These include the subsequent buyers’ actual reliance upon the skill of the former builder; or that the builder assumed responsibility for the building work to a subsequent purchaser.

It was also essential to plead that “the defects were not manifest or discoverable by reasonable inspection when they purchased the property” and that the loss they sustained was foreseeable.

The deficiencies in the pleading could not be remedied by providing of details in Particulars.

The decision to strike out the statement of claim, was upheld with the owners given the opportunity to re-plead their case.

Tyrrell & Anor v McNab Constructions Pty Ltd & Ors [2014] QCA 052 Fraser and Gotterson JJA and Daubney J 21/03/2014


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