Consumer rights under Statutory Warranties

17 July 2022 in Civil and Commercial Litigation and Law, Contract Lawyers

A brief history of Statutory Warranties

The doctrine of Freedom of Contract

This doctrine provides that parties are free to contract with other parties on any terms that they choose to agree without the interference of third parties, including the government. The doctrine of freedom of contract has existed for over a hundred years. In the case of Printing and Numerical Registering Company v Sampson 1875 (LR), Sir George Jeesl stated in his judgement “if there is one thing that more than another public policy requires it is that men of full age and competent understanding shall have the utmost liberty of contracting, and that their contracts when entered into freely and voluntarily shall be held sacred and shall be enforced by courts of justice.”

Legislation

The doctrine of freedom of contract has been modified by legislation over the last century in a range of ways, one of these mechanisms is via statutory warranties. Examples of non statutory warranty legislative change include

Obligations under the Work, Health and Safety Act 2011 (NSW).
The prohibition of misleading or deceptive acts as detailed in s18 of the Australian Consumer Law (found at schedule 2 of the Competition and Consumer Act 2010 (Cth). This has been upheld in the case of Brighton Australia Pty Ltd v Multiplex Construction Pty Ltd 2018 (VSC).

Statutory Warranty

The doctrine of freedom of contract has been modified by legislation, one of which is the introduction of statutory warranties. The most important legal significance of a statutory warranty is that it cannot be ignored or excluded by any form of agreement or contract.

From a civil litigation point of view this means that parties are entitled to commence legal proceedings for a breach of contract where statutory warranties are implied in a contract and those warranties have been breached.

This article has a brief summary of two of the most widely applied statutory warranties in Autstralia.

The Home Building Act 1989 (NSW)
Australian Consumer Law, found in schedule 2 of the Competition and Consumer Act 2010 (Cth).

There are other statutory warranties imposed by legislation, including the Sale of Goods Act 1923 (NSW) and Motor Dealers and Repairers Act 2013 (NSW).

Australian Consumer Law

Australian consumer law protects consumers and provides that goods must be of an acceptable quality. This applies even when the retailer or supplier does not offer a warranty or offers a limited warranty. Australian consumer law defines acceptable quality as fit for all purposes for which goods of that kind are commonly supplied, acceptable in appearance and finish, free from defects, safe and durable.

Guarantees relating to supply of goods are found at s51-59 of the Act and guarantees relating to the supply of services are found at s60-63. Section 64 sets out that these guarantees cannot be excluded by any contract.

Section 51 is a guarantee of title, meaning that upon purchase, the purchaser owns the product and no other party can make a claim to ownership. Section 66 relates to the supply of goods by description. Simply put the goods must match any description provided. Section 58 relates to repairs and spare parts and s60 guarantees the supplier of services has used due care and skill.

The Home Building Act

Section 18B of the Home Building Act 1989 (NSW) contains various statutory warranties that are implied in all contracts for the completion of residential building work. They relate to things such as the quality of work completed, defects, obligations to complete work with due diligence and within a reasonable time. Statutory warranties cannot be excluded by any form of agreement or contract and apply to all residential building work irrespective of the cost of the work being completed.

What is a defect?

In the context of statutory warranties, the nature of defects that result from a breach of a statutory warranty will determine how long a party has to take legal action in response to the breach. The Home Building Act 1989 (NSW) provides that a party can commence proceedings for the breach of a statutory warranty that results in a major defect within 6 years of the completion of the work to which it relates.

Section 18E(4) of the Act defines a major defect as “a defect in a major element of a building that is 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 (or any combination of these), and that causes or is likely to cause –

The inability to inhabit or use the building (or part of the building) for its intended purpose, or
The destruction of the building or any part of the building, or
A threat of collapse of the building or any part of the building,

Or is a defect of a kind that is prescribed by the regulations as a major defect, or the use of a building product (within the meaning of the Building Products (Safety) Act 2017) in contravention of that act.”

Importantly, the Supreme Court has found that the definition of a major defect should be interpreted broadly as upheld in Stevenson v Ashton 2019 (SWSC).

All other building defects are considered minor and the statutory warranty period is 2 years.

How can the BSM Civil Litigation Lawyers Help Me?

The civil litigation lawyers at Brander Smith McKnight can make a claim or commence legal proceedings for breaches of statutory warranties. We can advise on the appropriate legal steps when statutory warranties are implied in a contract and have been breached.
Our lawyers know the intricacies of the legal system and will ensure that time limits, choice of court or tribunal and other legal requirements are complied with.
Our lawyers are very strong negotiators and will advocate tirelessly for you.
We recognise that court proceedings can be an expensive process and work hard to find practical and commercially advantageous solutions including using alternative dispute resolution methods including mediation, conciliation, arbitration, adjudication and expert determination.
We have expertise in acting for home owners and consumers, home builders and suppliers of consumer goods and services.