Three Cautionary Cases on Rectification Orders: B & T, Jolley and Koundouris

By Farah Tan

Defective or non-compliant building work can have serious consequences. A failure to meet contractual requirements, building codes, standards or warranties can expose builders and other construction practitioners to both regulatory action and civil liability.

This topic will be divided into two newsletters.

In this newsletter, we examine three ACT cases that illustrate how regulatory and civil exposure can affect construction practitioners with respect to rectification orders (‘RO’). In the second part, we will look at the powers of the Construction Occupations Registrar (‘Registrar’) to issue ROs.

In summary, what does rectification orders mean for construction practitioners?

  • Defective work is not always a contractual issue as statutory obligations operate in the background.
  • Construction practitioners must understand:
    • the scope of statutory obligations to avoid receiving an RO from the Registrar. Noting, the builder or the nominee supervisor must respond to the Notice of Intention (NoI) to issue a RO at first instance,
    • the Registrar’s powers will affect defective works, and
    • the limitation periods and statutory warranties when dealing with defect claims.
  • It is prudent to maintain adequate records and compliance documentation;

The following three cases are:

  1. Jolley v Construction Occupations Registrar [2025] ACTSC 55
  2. B & T Constructions (ACT) Pty Ltd v Construction Occupations Registrar [2013] ACTSC 219
  3. Koundouris v Owners – Units Plan No 1917 (2017) 323 FLR 375; [2017] ACTCA 36

Accordingly, the regulatory discussion will focus on the ACT legislation, in particular, the Construction Occupations (Licensing) Act 2004 (ACT) (‘COLA’).

What is a rectification order?

A rectification order is a formal direction under the COLA requiring an entity to fix defective or incomplete construction work. Depending on the circumstances, the order can require the entity to:

  1. rectify specified work;
  2. demolish and rebuild a building or part of it; or
  3. start or complete specified construction work.

The Registrar may also require written information about what needs to be done under the order but need not specify how the work is to be undertaken. Notably, COLA does not require the entity to provide a detailed method for carrying out the work, provided the proposed approach complies with the Act.

Importantly, a RO cannot be issued without notice. Before issuing the order, the Registrar must first give the affected entity an NoI stating the Registrar’s intention to issue the order. This gives the builder or nominee supervisor an opportunity to respond to, and address, the defect identified in the NoI.

When can rectification orders be issued?

The Registrar can issue ROs where:

  1. the entity was first given notice and an opportunity to respond within the time stated in the notice that is not less than 5 working days after the notice was received;
  2. the entity provided the construction service in question;
  3. after considering the entity’s response, the Registrar is satisfied that the entity breached COLA or another applicable act; and
  4. the Registrar considers that an RO is appropriate.

Nominee supervisors could be personally liable for rectifying defects

Jolley v Construction Occupations Registrar

In this case, the central issue was whether a nominee supervisor could be personally liable for rectifying defects despite not personally performing the building work themselves and having acted only in a supervisory role.

Mr Jolley was appointed by Chase Building Group Pty Ltd (‘Chase’) as the nominated supervisor to supervise the Manhattan on the Park project. Chase “managed” the building work necessary to construct the building between 2012 and 2013 by hiring subcontractors to perform the work. At the time of building the Manhattan on the Park project, Chase and Mr Jolley held a Class A builder’s licence issued under COLA. When defects were found, Chase was already deregistered in 2016. The Owners Corporation reported the issue to the Registrar.

On 19 March 2020, the Registrar gave notice of intention to make a RO under COLA to Mr Jolley. On 18 March 2021, the Registrar issued a RO requiring him to rectify several defects associated with the building, noting the defective work became apparent after occupancy certificates were issued and after the corporate builder was deregistered after completing the building work. Those defects are:

  1. Balcony slab cracking defects;
  2. Balcony tiling defects;
  3. Delamination of balustrade glass panels;
  4. Loose balustrade cap railing;
  5. Basement cracking defects;
  6. Water ingress into internal spaces; and
  7. Compliance and fire safety concerns

Mr Jolley, in essence challenged the RO in three substantive hearings.

  • Firstly, as to whether the RO was invalid.
  • Secondly, whether the Registrar had the power to issue a RO to a nominee of a corporate licensee.
  • Thirdly, whether the Registrar’s decision should be confirmed, varied or set aside.

The ACT Supreme Court confirmed that the nominee supervisor is obliged to comply with the RO even where the work was carried out by contractors, and the company they worked for no longer exists and the nominee’s licence has since been suspended. This is because COLA explicitly contemplated that the responsibility to rectify defects extend beyond corporate licensees to natural persons serving as nominees. Notably, that someone has to take responsibility and accountability for the works done. Finally, the Court held that major building defects can still be fixed up to 10 years after the work is completed.

Why this matters for you

If you are a nominee supervisor, you can be held liable for the RO or the costs associated with rectifying the defects identified. This obligation extends up to 10 years after the project is completed. This highlights that you must check and oversee the works carefully and keep meticulous records of inspections, approvals and instructions.

Approved Plans Mean Approved Plans

B & T Constructions (ACT) Pty Ltd v Construction Occupations Registrar

In this case, the issue arises from the “defects” identified was not due to non-compliance with the safety and structural requirements, rather it was due to the building’s deviation from the approved building plans.

On 26 March 2027, B & T was contracted to build a structure in accordance with approved plans on land owned by a third party. A minor amendment to the approved plans was approved on 25 July 2007. At the time the Certificate of Completion of Building Work under the Building Act was obtained, the Certificate of Occupancy and Use under the Building Act was issued. B & T conceded that the building was constructed did not incorporate three items and was therefore, to some extent, not constructed in accordance with the approved plans.

The non-compliant items are:

  1. aluminium/stone façade cladding replaced with fibre/cement board or render/painted finish
  2. translucent glass inserts not constructed; and
  3. some balustrades were not designed.

As a result, the Registrar issued a RO requiring B & T to fix non-compliant work. B & T challenged the RO and the previous appeals to the ACT Civil and Administrative Tribunal (‘ACAT’) affirmed the registrar’s decision.

The Court held at that the B & T could have easily avoided the possibility of the registrar making a RO by having the variations from the approved plans required by B & T Developments be the subject of formal amendments approved by the certifier. In setting aside that part of the RO which required B & T to provide services approved by and for the use of unit owners “where necessary”, the Court held that it was vague and unenforceable.

Why this matters for you

This decision confirms that a builder’s obligation does not necessarily end with delivering a building that is safe and fit for purpose. If the building departs from the approved plans, a RO may be issued by the Registrar requiring the builder to bring the building into compliance. To limit your exposure, it is vital that any variations are approved by the certifier before any works can commence.

When Strata Bites Back

Koundouris v Owners – Units Plan No 1917 (2017)

In this case, the central issue was whether the scope and operation of statutory warranties implied into building contracts for sale of residential units under relevant ACT legislation, particularly in the context of building defects that persisted after construction and during subsequent repair works.

During the disputes between the parties and the construction phase, there were various changes in legislation which affected the interpretation of statutory warranties contained in Building Act 1972 (BA Act) (repealed) and Building Act 2004 (ACT). This contributed to part of the complexity of the case. By the time the owners decided to pursue a legal avenue, most of the statutory warranties for the works had expired. At this point, Mr Koundouris had begun to ignore the requests to fix the defective works.

Murrell CJ, Elkaim and Jagot JJ held that the primary judge’s conclusions were largely correct when regarding the builder was liable for the damages including interest in respect of breach of statutory warranties. Thus, the Court held the warranties applied retrospectively to both original and repair works carried out during the prescribed warranty period, ensuring protective objectives of the legislation remained intact. The phrase “has been or will be carried out” included both completed work and retrospective work under relevant contracts and warranties were breached for all work not completed to required standards.

The proper assessment of damages was limited to unit owners’ proportional liability for repairs to the common property rather than extending to the entire repair cost. Finally, the owners’ rights under the repealed Act did not affect the accrued rights under the Legislation Act 2001 (ACT).

Why this matters for you

If an issue arises from defective works, it is important to take action to rectify the items and ensure compliance with to safety and the works are fit for purpose and use. Delay in doing so could result in an order for damages with interest.

Suggested protective steps to take:

To help you protect your business against the liability imposed by the ACT, we suggest implementing certain steps. This includes the following mitigation measures:

  1. Do not ignore the NoI to issue a RO.
  2. Implement strict quality assurance processes to ensure you maintain precise and comprehensive tracking of building compliance throughout the project.
  3. Ensure that all variations to the approved building designs are accurately recorded in an appropriate database and is approved by the certifier before any work associated with the variation commences.
  4. Resolve the issues of defects privately and promptly before it reaches the Registrar.
  5. Maintain clear and accurate records of communication between parties.

For further assistance, we recommend reaching out to our experts here at Crisp Law.

Telephone: +61 2 8042 8701

Email: admin@crisplaw.com.au

References

B & T Constructions (ACT) Pty Ltd v Construction Occupations Registrar [2013] ACTSC 219

Building Act 1972 (ACT) s 58C

Building Act 2004 (ACT) s 88

Construction Occupations (Licensing) Act 2004 ss 27-38

Koundouris v Owners – Units Plan No 1917 (2017) 323 FLR 375; [2017] ACTCA 36

Jolley v Construction Occupations Registrar [2025] ACTSC 55

Legislation Act 2001 (ACT) s 84

Photo by John Cardamone on Unsplash

 

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