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