Most people would assume that if there are defects in your new building, the builder would be obliged to fix the defects.
Whilst it is true that the builder is legally obliged to fix defects under builder’s warranty (10 years in Victoria) there may be a very nasty exception for defects that are very costly to fix. This could leave a building owner in a situation where there is only a cosmetic fix or a nominal compensation for a major defect.
This has to do with a common law precedent Belgrove vs Eldridge which – in the interest of avoiding “economic waste” – stipulates that rectification work will only be ordered where it is necessary to achieve compliance and further that it is a reasonable course of action to adopt. In other words, where the cost of rectification is disproportionate to the benefit to be gained, the rectification will not be ordered.
A particular example is where, for instance, a Colorbond flat roof is specified but instead it is built in Zincalume. If there are no issues with town planning, it seems there is very little to be gained by removing air conditioners, lifting the roof and replacing roof sheets with Colorbond. A monetary compensation to the owner equivalent to the difference in cost between zinc and colour roof may seem appropriate.
Now consider a scenario where you have a competent builder who has in place and maintains a quality assurance system. Errors and mistakes can still occur, but the incidence and the severity of the rectification is likely to be lower and it could be said that the builder has exercised due skill and care as required by warranties.
I have no problem with such builder having the protection of Bellgrove vs Eldridge doctrine. However, there are two scenarios that go against this.
The first is the fact that quality supervision and the maintenance of a QA system is a costly item and there is a temptation to cut it back beyond the bone, relying instead on tradies on site “to do the right thing” even if some have been screwed on price. The money that should be spent on supervision and QA instead is banked as builder’s bonuses.
The second is that builders will often take on more work than they can comfortably carry out, thereby stretching ever further what scant supervision there is.
The result is that builders bank handsome profits whilst short-changing customers on delivery and quality. Worse, some do so knowing they can act in this way with impunity because of our inept and corrupt building control system. They know that if they truly blunder they may get escape ticket from Bellgrove vs Eldridge.
Australia is supposed to be a first world country, but we are building our buildings without mandatory QA systems and delivering third world results as demonstrated by slab heave, multi-storey cladding fiascos as well as poorly built, fire-vulnerable and leaking apartment buildings.
Having spent last 15 years dealing with building defects and disreputable things done by reputable builders, I would suggest the protection of Bellgrove vs Eldridge against building defects should only be available to the builder if the builder can demonstrate the QA system was applied in full compliance. In all other cases, it should be a matter of pull down and rebuild. Nothing works as well or as fast as when the builder has to pay for his or her own mistakes.