The building sector is looking at a decade of litigation for poor construction, warns a commercial litigator.
In recent years, multiple high-profile building failures have been uncovered with the quality of building increasingly coming into question. These concerns are supported by two studies of defects in apartment buildings that found that in excess of 70 per cent of apartment buildings in Victoria, New South Wales and Queensland had defects.
An analysis by Equity Economics, titled The cost of apartment building defects, estimates the cost to building owners and State, Territory and Federal Governments of addressing the structural and safety defects in these buildings will approximate $6.2 billion ($5.2-$7.2 billion).
Insurance claims have spiked as a result of building defects and as well as increases in insurance.
Bartier Perry partner, Robert Kalde, says a backlog of claims means the industry can expect a legal hangover after the construction boom of recent years.
“Given the current backlog and pace of litigation I think you are looking at 10 years minimum,” said Mr Kalde.
“Downturns or slow downs in the sector have historically seen an uptick in litigation. Given the recent publicity around issues such as cladding and build quality, we’re seeing the industry facing a rush in litigants who are keen to assert their position in court.”
Mr Kalde said many developers and builders needed to look at where potential claims might come from and to prepare for how they will respond.
“It may grate with some developers, but mediation or early settlement are options that always should be considered over lengthy litigation. There will be instances though where they will feel they must defend their position in court. The trick is knowing which path to take.”
He said the industry approach to litigation was driven by practical commercial outcomes.
“Builders like building fences, not people who sit on them, so we look to provide advice that is directional and commercial, rather than a recital of the law.”