Glossary – Building & Construction

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Glossary – Building and Construction Law in NSW

This page provides definitions for common terms used within the area of Building and Construction Law
Will Disputes and Family Provision Claims in New South Wales
Key Terms
  • Adjudication – process whereby a court of law, tribunal or other independent person determines the respective rights and liabilities of the parties to a dispute. In the building and construction industry adjudication is one of the relevant dispute resolution process for disputes under the security of payment legislation. It can also be the dispute resolution process agreed between the parties under the terms of the Contract.
  • Affidavit – A legal document that the law requires the person signing the document to have it witnessed by a Solicitor or Authorised person.
  • Building and Construction Industry Security of Payment Act 1999 (NSW)  (SoPA)- a piece of legislation that provides people and businesses performing construction work the right to make a claim for a progress payment for work they have completed. This may be enforced by the court or resolved by an adjudicator.
  • Calderbank offer – A written offer of Settlement made by one party to the other party in a dispute which is not disclosed to the court except in relation to the question of costs. If an offer is not accepted there can be consequences for the legal costs a party is required to pay.
  • Certificate of Occupancy – This certificate is issued by the local municipality and is required before anyone can occupy and live within the home. It is issued only after the local municipality has made all inspections and all monies and fees have been paid.
  • Civil Procedure Act 2005 (NSW) – This Act governs the conduct of civil litigation in NSW from 15 August 2005. It has introduced a number of significant reforms including common rules and procedures for the Supreme, District and Local Courts and a number of provisions to facilitate just, quick and streamlined resolution of disputes by giving a statutory basis to case management principles (See also Uniform Civil Procedure Rules 2005 (NSW)).
  • Common law – law derived from custom and judge made precedents rather than statutes.
  • Compliance Certificate – This is a certificate given confirming that the building work contracted has been completed and complies with the plans and specifications of the contract. A compliance certificate can also be used to have a building classified or partly classified under the BCA.
  • Conclave – A process where expert witnesses hold a joint conference in an attempt to agree on relevant issues that are in dispute. Often used in a Reference and has the potential of saving hearing time and cost.
  • Construction Certificate – A certificate which confirms that once the builders have completed the building work according to specified plans, it will also comply with the requirements of regulations made under the Environmental Planning and Assessment Act 1979 (NSW), including development consent conditions.
  • New South Wales Civil and Administrative Tribunal (NCAT) – In NSW, this is the primary tribunal which hears disputes relating to consumer, trader, tenancy and home building claims. Its jurisdiction is capped at claims not over $500,000.
  • Contract – a written or spoken agreement that is intended to be enforceable by law. A contracts must have the following elements:
    • Offer
    • Consideration
    • Acceptance
    • Intention to be legally bound
    • formalities – must meet and standards set in legislation to become legally binding; and
    • Certainty – must be complete enough to identify the rights and obligations of both parties.
  • Cost Plus Contract – A Contract where the Contractor is paid the actual cost of work undertaken, plus a percentage over and above those costs on account of margin and preliminaries. These contracts are often used when the total amount payable to the Contractor cannot be determined at the time of entering into the Contract, or the scope of work is unknown, and the Principal takes the risk of that cost. The use of Cost-Plus contracts is regulated by domestic building legislation in each State.
  • Cost overrun – When actual development costs exceed the allocations or predicted development costs in the project budget.
  • Defects – Where the Works do not achieve the standard required by the Contract. Defects may be defects in workmanship or a defect arising as a result of later damage to the Works.
  • Defects Liability period – The period of time under a construction contract commencing at Practical Completion and ending on Final Completion, during which any defects that arise are to be rectified by the Contractor at their own cost (except defects caused by the Principal or the occupier). The duration is specified in each Contract, and is usually between 6 and 24 months.
  • Engineer – Generally, a professionally qualified civil engineer, structural engineer, heating and mechanical engineer, etc. In particular, the person named in an ICE of FDIC contract.
  • Equity – This is a body of law that evolved historically to remedy perceived unfairness in other forms of law, namely the common law and statutory law. Therefore, where an aggrieved person is unable to find relief under statute or the common law, equity may be able to provide relief. Examples of equitable remedies are injunctions, specific performance and claims for unjust enrichment.
  • Expert Witness – A witness who is an expert in a particular field. By virtue of this expertise such a witness may give evidence to more than the mere facts of a case (such as opinion evidence).
  • Home Building Act 1989 (NSW) – This legislation regulates the residential building industry which governs:
    • The licensing of persons who undertake residential building and specialist works;
    • The required contractual provisions for home building contracts;
    • Dispute resolution (including under the CTTT); and
    • Insurance matters.
  • Home Warranty Insurance – This insurance is to protect against the risk that work is not completed by the contractor for reasons including  insolvency, death or disappearance of the contractor. This insurance is required by law for residential building work.
  • Land and Environment Court (NSW) – NSW’s specialist court that deals with disputes involving environmental and planning law. It has the power to hear matters related to planning or environmental disputes. This means that where there are construction disputes that involve planning and environmental issues they will be determined in this court.
  • Pay When Paid clause – A allows a party, who is owed money from a third party to the contract, to make payment after they receive these funds. This type of clause has no effect with regards to payment for construction work carried out under the contract.
  • Progress Payments – Payments made to a person who has undertaken to carry out construction work or undertaken to supply related goods and services under a construction contract. These could be final payments, one-off payments or an event-based payment.
    • Any clauses which provide additional conditions to the right to receive progress payments will be seen to restrict the SOPA and rendered void.
  • Rectification Order – The NSW Fair Trading Inspectors will issue these orders if the builder or contractor does not fix a defect or if there is a dispute over defective works. Rectification orders are the preferred outcome of any proceedings related to defect disputes.
  • Service – Service is the legal term to describe the giving of court documents by one person to another. It means giving the other person a copy of your documents in a way that satisfies the Court that the other person has received them. The method of service required varies depending on the party being provided the documents, the location of the party, and any difficulties that arise in using conventional methods of service.
  • Statute – a body of principles and rule of law laid down by the parliament. For those in NSW this would be the state or national parliament. Statutes are also referred to as acts or legislation.
  • Repudiation – where one party to a contract’s actions show that they do not want to be bound by the contract. This can terminate the contract if the innocent party elects to do so.
  • Witness – A person who acknowledges, by their signature to a document, that they have been present when another person has signed that document. By their signature they are confirming that the other person signed in their presence.