Builder’s Liability for Commercial Buildings Clarified

The recent case of Brookfield Multiplex Ltd v Owners Corporation Strata Plan 61288 has big implications for commercial builders and commercial property owners. Read on to learn more about this prominent High Court case and its possible impact.

What Was the Case?

The case concerned a design and construct contract entered by the developer of a Brookfield Multiplex apartment complex. Investors purchased the apartments then leased them to a management group. An Owners Corporation was established, who held title on behalf of the investors. Defects in the building works were detected and the Owners Corporation sued the builders for negligence.

What Was the Ruling?

Justice Gageler, who presided over the case, ruled in favour of the commercial builders. The judge explained that new owners can negotiate the price and terms of their purchase, much like a person buying a used car, so they cannot be expected to have their purchase protected. This ruling was in line with existing property legislation.

What Does It Mean?

The High Court has set precedence that future commercial building owners cannot hold builders responsible for latent defects. This is good news for builders, as property defects can occur over time that have nothing to do with poor workmanship. The case also points to the importance of having clear contracts with detailed provisions concerning the allocation of risk for financial losses resulting from defective work. If you’re concerned about this, contact TPM Builders. As a reputable name in the Australian building industry, we pride ourselves on agreements which protect our commercial builders and clients. New owners should also take advantage of their right to request a building inspection and insist that any defects detected are rectified before purchase. The recent High Court ruling is a victory for Australia’s commercial builders, as it makes clear that their only duty of care is to the original purchasers of their properties. ©Image via Flickr by mikecogh