The Endless Battle:
The High Cost of Dispute Resolution in Off-the-Plan Purchases

June 4, 2024

Off the Plan Potential Problem #13: Dispute Resolution

off the plan dispute resolution

What Happened?

In 2020, Emily and Jack Carter invested in a luxurious apartment in the Horizon Heights, an off-the-plan project by Horizon Developments Pty Ltd. The couple was excited about their new home, which promised high-end finishes and modern amenities. However, upon moving in late 2022, they discovered numerous defects, including water leaks, faulty electrical wiring, and cracks in the walls. The Carters reported these issues to the developer, expecting prompt rectifications. Instead, they encountered delays, excuses, and eventually, outright denial of responsibility.

Participant Behavior

Frustrated by the developer’s inaction, the Carters decided to take legal action. Horizon Developments attempted to downplay the severity of the defects and blamed them on “normal settling” of the building. The developer’s evasive behavior only fueled the Carters’ determination to seek justice and proper repairs. They engaged legal counsel and prepared for a protracted legal battle.

See CM Law’s Ultimate List of 50 Potential Off-the-Plan Problems.

Legal Process

In early 2023, the Carters filed a lawsuit against Horizon Developments in the Supreme Court of New South Wales. The case revolved around whether the developer had breached the statutory warranties under the Home Building Act 1989 (NSW) and failed to deliver a property free from major defects. The Carters’ legal team provided extensive evidence, including expert testimonies from building inspectors and contractors who confirmed the defects were due to poor workmanship and substandard materials.

The court proceedings were complex and time-consuming, involving detailed examinations of the building’s construction, testimonies from various experts, and thorough reviews of the communication between the Carters and the developer. Horizon Developments maintained their stance that the issues were minor and within acceptable limits, further prolonging the dispute.

Numbers and Dollar Values

The Carters estimated the cost of repairs at $100,000. This included fixing the water leaks, rewiring the faulty electrical systems, and repairing the structural cracks. Additionally, the prolonged legal battle added significant legal fees, which amounted to approximately $50,000. The total financial burden was $150,000, a substantial amount for the couple, who had already invested heavily in their new home.

Conclusion of the Court Case

In November 2023, the court ruled in favor of the Carters, finding that Horizon Developments had indeed breached the statutory warranties and failed to address the significant defects. The court ordered the developer to pay $150,000 to cover the cost of repairs and the Carters’ legal fees. This ruling was a significant victory for the Carters but also highlighted the high cost and lengthy process of resolving such disputes.

Lessons Learned

  1. Detailed Inspections: Conduct thorough inspections and engage independent building inspectors before finalizing the purchase.
    2. Legal Preparedness: Be prepared for potential disputes and understand your legal rights under the Home Building Act 1989 (NSW).
    3. Documentation: Keep detailed records of all communications with the developer and any issues that arise.
    4. Financial Buffer: Plan for potential legal costs and repair expenses as part of your investment strategy. 

References and Sources

1. Carter v. Horizon Developments Pty Ltd [2023] NSW SC.
2. Home Building Act 1989 (NSW) guidelines and cases (2023).

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