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Under the common law in Australia, a landowner has the right to not have the physical support of that land removed by another person. In Queensland, s179 of the Property Law Act 1974 (Qld) extends this concept further, making it unlawful for any person to do anything on or below land which withdraws support from either:

1. another person’s land; or
2. any building, structure or erection that has been placed on or below another person’s land.

This means if, in the process of constructing something on one piece of land, a neighbouring property suffers subsidence, cracking or damage caused by a loss of support as a result of the building activity, the affected owner can sue the person who carried out that activity on the adjacent land and recover damages, or pursue a court injunction to stop the activity.

Liability under s179 is strict

Liability under s179 of the Property Law Act (Qld) is strict.

This means it does not require the affected owner to prove that the neighbouring builder or developer was careless or negligent or that this carelessness caused the loss of support for the land or building.

Even if, for example, a builder took all reasonable precautions and followed all reasonable guidelines to protect against damaging the neighbouring property during excavations, and damage still occurred, the builder (and the developer who authorised the builder to do the work), will be liable.

Put simply, all s179 requires in order to attract liability is:

1. ‘something’ was done on land by a person; and
2. that ‘something’ caused a withdrawal of support for the neighbouring land, or a building on that neighbouring land.

If damage is caused, what is recoverable?

If the damage to the neighbouring property can be rectified, the rectification cost will usually be recoverable, and this is usually the case even if the diminution in the value of the land caused by the damage is assessed as a lesser amount (provided the rectification work is necessary and reasonable).

If the damage to the neighbouring property cannot be rectified, the cost of demolition and full replacement will usually be recoverable (without discount for any ‘betterment’ in receiving new for old, particularly if the building damaged is a dwelling).

Whilst the law around ‘betterment’ is unsettled, courts are typically reluctant to discount damages for economic ‘betterment’ particularly if the damaged property was a dwelling and the owner had no intention of investing further in that property at the time of the damage.

Practical takeaways:

For builders:

1. consider the risk of damage occurring to neighbouring properties when tendering a project.
2. if the risk of damage to a neighbouring property is considered material but viewed as unlikely, price the risk/contingency.
3. if the risk of damage to a neighbouring property is material and viewed as likely, consider negotiating a transfer of that risk to the project owner, or seek to persuade the owner to reconsider a design of the works to one that lowers this risk.
4. do not leave the risk untreated or overlooked.

For developers:

1. conduct design due diligence (including geotechnical investigations) to ensure the risk of loss or damage to a neighbouring property is minimised.
2. if the builder is engaged on a Design and Construct basis, ensure the builder is obligated to carry out similar investigations (avoiding being drawn into protracted litigation with the neighbour is preferable to the alternative).
3. if the risk is material, reconsider any design that pushes the boundaries on this risk. It may prove costly later.
4. consider this risk in negotiations with the proposed builders and do not leave the risk overlooked.

Note: New South Wales does have a similar law contained in s177 of the Conveyancing Act 1919 (NSW) however care should be taken to not assume the position is identical to Queensland as there are important distinctions between them.

A copy of this article is available for download by clicking below:

The above constitutes general information only (current as at the date of issue – 5 March 2019) and is not to be relied upon as legal advice for any matter. Any party seeking to use information contained within this post should first seek specialised professional advice. Merlehan Group Pty Ltd and its personnel do not accept any liability for any errors or omissions in this post.

As most are already aware, the closing weeks of 2018 brought with them the commencement of a revised security of payment regime in Queensland in the form of the Building Industry Fairness (Security of Payment) Act 2017 (or, the BIF Act).

However, the impact of the revised regime has not been felt yet because the traditional Christmas shutdown period (22 December to 10 January, each year) which suspends time for processes/actions under the BIF Act followed shortly after the new laws commenced.

With that shutdown period coming to an end, the first round of payment claims under the BIF Act are just around the corner.

It is important to ensure that your business is properly prepared to manage the new and updated payment processes.

Practically, what do you need to do?

BIF Act checklist

It is important to note that the updates to the BIF Act apply to your existing construction contracts, so your existing contracts are not exempt.

Under the new BIF Act, every progress claim or written request for payment may constitute a payment claim under the BIF Act and should be treated as such by principals and head contractors – irrespective of whether they are marked as such.

So, if your existing processes rely on spotting a notation on an invoice or payment claim declaring that it is made under the legislation in order to trigger an internal assessment and legal response, that system needs to change immediately.

Here is a readiness checklist that will ensure that you are properly prepared to make and receive payment claims under the BIF Act:

1. Have you trained all staff on the new process under the BIF Act? Training should cover: the fact that payment claims no longer need need to bear any special notation, new final dates for delivery of payment schedules, the consequences of failing to provide payment schedules (i.e. a respondent to a payment claim will be liable to pay the entire amount claimed, with no ‘second chance’ response or ability to provide adjudication responses or defend any court proceedings bought) and the various new offences under the BIF Act and QBCC Act that could result in fines or imprisonment because of improper contract administration;
2. Have you reviewed your existing contract administration processes to to build in triggers and points of escalation to ensure contested payment claims are identified and responded to internally promptly, with appropriate resources?
3. Have you reviewed your existing accounts payable processes to build in exceptions to any lengthy payment processes your business adopts which may be inconsistent with BIF and the QBCC Act, so as to ensure compliance with payment timeframes?
4. Have you amended your existing contract suites to refer to the new legislation, provide compliant payment process and timeframes and take up the longest possible assessment timeframes for payment claims under the BIF?
5. Have you developed an internal procedure for resourcing and responding to disputed, material payment claims with internal and external assistance as required?
6. Do you ensure your registered office address (as notified to ASIC) is regularly checked for receipt of payment claims?(claimants are entitled to serve payment claims at this address, not just the address for receipt of claims noted in your construction contracts)

We have prepared a handout that can be provided to your internal contract administration teams to ensure that they are across the key details of the new legislation (click for PDF).

If you would benefit from assistance to review your current contracts, train your staff or review of your business processes to ensure pragmatic compliance measures are in place, email or call Nathan Chalmers [email protected]  (+61401641315)