Strata Plan 99576 v Central Construct Pty Ltd [2023] NSWSC 212

Andrew Hales  |  Max Ababio  |  Hannah Hurst

Key takeout

‘Project Intervene’ has been established by the NSW Government with the aim of providing ‘a way forward for owners corporations to have serious defects remediated’ by encouraging developers to enter into undertakings to perform defect remediation work.  This process, overseen by the Office of the Building Commissioner, may result in the Department of Customer Service using strong compliance powers under the Residential Apartment Buildings (Compliance and Enforcement Powers) Act 2020 (NSW) (RAB Act) to issue building work rectification orders.  

If court proceedings brought by an owners corporation and the Project Intervene process are both afoot, there is no legislative intention that the court proceedings should await the outcome of Project Intervene or should be stayed pending the conclusion of that process.

Facts

In August 2021, The Owners – Strata Plan 99576 (owners) commenced proceedings against Central Construct Pty Ltd (builder) and Gosford Water Views Pty Ltd (developer) in the Supreme Court of New South Wales.  The owners alleged that the building was seriously defective in various respects.

On 14 December 2022, the owners sent a letter to NSW Fair Trading seeking help as they had not been able to reach a satisfactory outcome with the builder and the developer.  Fair Trading allocated the matter for resolution through the ‘Project Intervene’ process.  

By notice of motion filed on 22 February 2023, the builder and the developer sought a 12-month stay of the court proceedings.

The owners argued that the stay should not be granted because:

• they have a right to prosecute the proceedings; and
• there are no reasons why the proceedings should be stayed in the hope that the process initiated under the RAB Act may, in some other way, bring about a satisfactory resolution of the problems with the building.

The builder and the developer submitted that there were at least five reasons in favour of granting the stay:

1. There was a prospect that all of the allegedly defective work the subject of the court proceedings may be rectified pursuant to a building work rectification order or an undertaking under the RAB Act.
2. There was a risk of inconsistent findings of fact in different courts about the same subject matter if there was an appeal to the Land and Environment Court pursuant to s 49 of the RAB Act.
3. Staying the proceedings aligns with one of the purposes of Project Intervene, which is to avoid costly and time-consuming litigation.
4. It was vexatious and oppressive for the owners to have initiated the Project Intervene process when proceedings are already well underway.
5. There would be considerable wastage of governmental resources if there was no stay. 

Decision

Darke J dismissed the stay application.  

His Honour noted that the prospect that the process under Project Intervene and the RAB Act may obviate the need for the proceedings, or bring about a narrowing of its scope, was too uncertain to warrant delaying the proceedings.  Further, even in the circumstances where orders were made and complied with for the performance of rectification works, the owners would have no facility under that process for any damages to be awarded by way of compensation.