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Can a Builder’s failure to provide occupation certificate be a breach of contract?

The recent NSW Supreme Court decision in ACN 057 690 034 (Owner) v Mick Wykrota (Builder) saw the Builder in hot water after they failed to produce an occupation certificate.

Background

In November 2010, the parties entered into a contract for alterations and additions to the Owner’s residence situated on the Hume Highway in Lansvale (Contract) (Premises). The Contract included a term that the Builder would, upon completion of the building work, do all things necessary to obtain a certificate of occupation so that the plaintiff could occupy the premises [1].

Between 2010 and 2012 the Owner upheld their obligations under the Contract and paid the agreed price of $806,300.

From 2012 onwards, the Owner made numerous requests to the Builder for the necessary certifications to have the Premises certified for occupation. The Builder failed to do so.

In 2017 the Owners commenced proceedings against the Builder for breach of contract. In the absence of the occupation certificate the owners claimed damages for the loss of rent, being unable to occupy the premises other than for its existing purpose, being unable to resell the premises and being unable to further develop the premises.

Decision

The Court found in favour of the Owners, holding that it was the Builder’s contractual obligation to do all things necessary to obtain a certificate of occupation. The Builder’s failure to do so was a breach of contract and the Builder was liable to pay the Owner $244,896.85 in damages [2].

Take Away

The obligation to produce the occupation certificate can be a contract-specific issue.  This case emphasises the need to be fully aware of the obligations within a contract prior to entering into it. This includes reviewing the contract carefully as the obligations on the builder to what documentation and material is required to be produced under the contract, and what documentation is required for a builder to reach practical completion.  The failure to do so can be a costly exercise.

If you have any questions regarding your obligations and contracts, please do not hesitate to contact Morrissey Law + Advisory.

 

[1] https://www.caselaw.nsw.gov.au/decision/5c7ca5e4e4b0196eea404d15
[2] Ibid

Disclaimer: This publication by Morrissey Law & Advisory is for general information and commentary only and should not be considered or relied upon as legal advice. Formal legal advice should be sought in relation to any matters or transactions that may arise in relation with communication.