Newsletter - March 2008

As matters of general interest:
1. According to the Real Estate Institute of Australia, the main challenges facing the
residential market over the next year or so are low levels of home loan affordability,
more interest rate rises, and fallout from the problems with the American property
market; and

2. The New South Wales government is aiming to introduce a range of planning
reforms with a view to reducing “red tape” associated with home building
applications (believe it when we see it).
This latest newsletter raises 2 topics of legal interest, being the principles of “existing use”
rights of landowners, and the drafting of warranties of “fitness for purpose” in building
contracts.

1. EXISTING USE RIGHTS:-
Forget everything you thought you knew about existing use rights. New rules apply
from 29 March 2007.
Since the introduction of the Amending Regulation on 29 March 2007, once a zoning
regulation prohibits a specified use of land, existing use rights principles allow the
landowner to generally continue using the land as they have done. However, if the
use is to be changed then it may no longer be changed to “another” use prohibited
by the zoning regulations.It should be noted that these amendments do not affect
any applications for development consent regarding an existing use made before the
commencement of the Amending Regulation.
Additionally, it should be noted that under the principles outlined in recent case law, it is
well settled that the scope of existing uses is not determined by zoning regulations, but by
a detailed examination of the facts of each case. In other words, a broad interpretation is
required as to that use, often in favour of the landowner.

2. CONTRACTUAL WARRANTIES:-
An issue that Courts often deal with in building disputes is determining whether warranties
of “fitness for purpose” of building materials and works in building contracts are to be
restricted. That issue arose in the recent case of Barton & Anor v Stiff [2006] VSC 307.
In that case, the Court dealt with a dispute over fitness of certain materials which the owner
believed were not fit for their intended purpose and did not cater for unusual conditions in
the soil.
The Court held that the owner, and not the contractor, assumed the risk of “actual” on site
conditions. The Court in commenting on these warranties in that case held that: ” …it is not
a statement as to the content of the objective standard of reasonable fitness. Nor does it
mean that the warranty of fitness for purpose is not absolute. It means that the absolute
warranty of fitness for purpose relates to the purpose as properly identified. …As
the presence of salty groundwater at the land was “highly unusual”, the failure of the bricks
for this reason does not constitute a breach of those warranties...”.
The decision in Barton underlines the importance to both landowners and builders
that drafting and consideration of a warranty clause as to fitness of purpose of
building materials and works requires careful thought. It should also clearly cater
for conditions of the property and also define the boundaries of that purpose.

Left to right: David Allchin (Bale Boshev, Hamilton), Garry McLachlan (Business & Development,
Wyong Council), Peter Bale (Bale Boshev, Hamilton), and Simon Maxwell (Bale Boshev, Toronto)

For those that did not attend the HIA golf day at Toukley a great time was had by all. We look
forward to meeting you at the next HIA golf day if you can make it. Bale Boshev were proud
sponsors of the 18th hole at Toukley. The Bale Boshev team were glorious in defeat.

If any of you or your clients believe you need assistance with any of these or related building
matters, you may contact me at the Hamilton Office of Bale Boshev Lawyers.

For more information about Bale Boshev Lawyers and our services you can access our
website at www.blaw.com.au
Yours faithfully,
David Allchin
BALE BOSHEV LAWYERS