When does Completion Actually Occur?
The definition of “completion date” has been widely litigated. Consequently, s 3B was inserted into the Home Building Act 1989 (the “Act”). Pursuant to s 3B of the Act, the completion date of residential building works occurs:
- when the work is complete within the meaning of the contract; or
- on practical completion.
With this definition inserted, one would think it is sufficiently clear when the completion date occurred. However, this is not the case. For example, it could be argued that practical completion never occurred because the:
- builder suspended works or terminated the contract; or
- owner obtained an interim occupation certificate and never granted the builder subsequent access to the dwelling to complete the practical completion stage.
Whatever the case, it is interesting that the insertion of s 3B of the Act has not reduced the number of disputes surrounding this definition. This can be exemplified by the recent case of Owners SP 69050 v Glenzeil Pty Ltd  NSWCTTT 17 .
In this case, the Owners filed an application against Glenzeil claiming damages for breach of the statutory warranties. Nevertheless, Glenzeil defended the application by claiming the Owners were out of time to bring an action against them as the application was allegedly filed more than 7 years after the defective works had been completed (the “Defence”). In particular, the Defence claimed the works had been completed well before the practical completion of the entire project and therefore, more than 7 years ago.
Notwithstanding the actual defective works being completed more than 7 years ago, it was held that a builder cannot divide the building works into different elements so that each building work has its own completion date (unless of course there are separate contracts dividing up the works.)Consequently, it was held that the definition of building works in a contract means all of the building works together and therefore the Owners were successful in demonstrating that the application was within time.
In light of s 3B of the Act, it is important to ensure that:
- you have a contract;
- the definition of “completion date” is well defined in the contract;
- you keep all of your documents, such as the certificate of practical completion, for at least 7 years; and
- you issue the certificate of practical completion before you commence working on the defects and omissions.
This article is not legal advice and should not be relied upon as legal advice. All articles found on this website are intended to provide informative information, nevertheless, in many instances legislation and case law has been simplified and/or paraphrased. If you would like personal legal advice based on your current circumstances, you should contact MurdockCheng Legal Practice for a free consultation.