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Vendors Breathe Sigh of Relief

By - 5 Dec 2011

In a recent decision of the Weathertight Homes Tribunal, Keven Investments Ltd v Arthur & ORS, both claims against the vendors were dismissed.

First claim dismissed: that the vendors were developers

The vendors had arranged to have a home built for themselves on a property where they were also redeveloping commercial premises. This commercial element was found to be insufficient to conflate their role to that of a developer, rather than simply a land owner arranging to have a home built.

Second claim dismissed: breach of vendors' warranty

This is welcome confirmation that the warranty in the Eighth Edition of the ADLS standard agreement has been successfully redrafted. In contrast to interpretations of the onerous warranty in the Seventh Edition, vendors are no longer taken to have given a blanket warranty that building work completed during their ownership complies with the Building Code.

The Tribunal found that the essence of the warranty in its current form is that:

  • "they obtained the necessary resource and building consents for any work done that required such consents; and
  • they carried out the work in accordance with those consents; and
  • at the end of the job they obtained a Code Compliance Certificate."

Vendors who have had building work done may still be caught out if the work is:

  • not carried out in accordance with the building consent
  • proves to be defective causing damage.

If you have carried out building work, you should therefore always seek legal advice before selling your property.

Unfortunately for the claimants in Keven Investments Ltd v Arthur & ORS, their claim against the director of the insolvent building company also failed. There was no evidence of his personal involvement in the defective building work.

The Tribunal's decision in this case is under appeal to the High Court.


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