Home building warranties - limitation period

The New South Wales Court of Appeal has held in Vero Insurance Ltd v Kassem [2011] NSWCA 381 that in a claim for breaches of statutory warranties under the Home Building Act 1989 (NSW) (as it then was*), the limitation period commences on completion of the work to which the dispute relates, and not on the date of practical completion. Furthermore, the court confirmed in The Owners of Strata Plan 56587 v TMG Developments Pty Ltd [2007] NSWSC 1364 that a home warranty insurer can be subrogated to the eventual owner's rights for the purposes of a claim against the developer for breaches of statutory warranties. The Court considered, but did not determine, whether the insurer's failure to settle a claim over a period of several years was an unreasonable failure to mitigate its damage.

* The Home Building Amendment Act 2011 (NSW) shortened the limitation periods for structural and non-structural defects.