ARTICLE
9 August 2017

Corporate shield not enough to protect sole director of building company in a building dispute

CG
Coleman Greig Lawyers

Contributor

Coleman Greig is a leading law firm in Sydney, focusing on empowering clients through legal services and value-adding initiatives. With over 95 years of experience, we cater to a wide range of clients from individuals to multinational enterprises. Our flexible work environment and commitment to innovation ensure the best service for our clients. We integrate with the community and strive for excellence in all aspects of our work.
Corporate shield doesn't provide builders or directors with a complete indemnity, for misleading and deceptive conduct.
Australia Real Estate and Construction

In a recent case, two owners of a residential home in Canberra won more than $380,000 in damages after suing a builder, its director and a seller over building defects.

Some of the defects identified in the home were:

  • Rising damp caused by faulty installation of a vapour barrier;
  • A balcony that directed water into the house;
  • Roof faults that allowed water in;
  • Cracked concrete in the garage;
  • An indoor staircase that had steps of varying heights and lengths; and,
  • Poor plastering and painting (including the use of low quality paint).

The house was so defective that an alternative builder recommended that the "preferable and safer option [was] that the property be demolished and rebuilt due to potential additional structural deficiencies such as the lack of reinforcement in the foundations and concrete slabs."

When the owners of the property approached the builder for repairs to the defects, the builder denied being the builder but rather a supplier of material and contractors.

The owners sued the builder for breach of statutory warranties over the quality of the work and build, as well as misleading and deceptive conduct. They also sued the sole director of the builder personally for misleading and deceptive conduct.

The owners were ultimately successful and were awarded judgement in a total sum of $386,210, exclusive of legal costs.

Builders need to be wary of both explicit and implicit representations they make to home owners on behalf of their company as the corporate shield doesn't provide them with a complete indemnity, including but not limited to conduct that is considered misleading and deceptive.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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