In WA, every home buiding contract is required by law to give owners an opportunity to mitigate their losses after practical completion of the home building works, by requiring builders to rectify defects which are specifically brought to the builder’s attention. However, this requirement is subject to time limitations. Specifically:

(a) the owner is required to notify the builder of the defects to be rectified within a certain period after practical completion; and

(b) the builder is required to complete the rectification works within a certain period after being notified of those defects (called the “defects liability period”).

Interestingly, not every owner is keen to exercise their rights during the defects liability period. Some owners choose not to get the builder back in to remedy defects because, for one reason or another, by the time the works are practically complete, they have lost all faith and confidence in their builder. Others lose their right to insist on rectification by the builder by failing to give timely notice of the defects requiring rectification.

This does not mean that such owners are left entirely without recourse against the builder in relation to the defects. An owner who has paid, or will need to pay, other contractors and tradesmen to remedy the defects, can sue the builder to recover those actual or notional expenses. They may not get the full amount, though, where the builder could have got the job done more cheaply, because in that case, the higher cost of rectification is taken to have resulted from the owner’s failure to mitigate their losses by exercising their rights during the defects liability period. On this basis, the owner who gets others to perform remedial works which the builder could have done itself, may only be awarded compensation in the amount that it would have cost the builder to remedy the defects, rather than the amount that the owner has actually paid or will have to pay for others to do it instead of the builder.

Related Havilah Legal service(s): Building & Construction Law