The Owners – Strata Plan No 90018 v Parkview Constructions Pty Ltd [2022] NSWSC 1123

Andrew Hales  |   Michelle Knight  |  Jaime Parker

Key takeout

The Supreme Court has clarified that separate causes of action will not arise for each defect that constitutes a breach of a statutory warranty under s 18B of the Home Building Act 1989 (NSW) (HBA).

Facts

The plaintiff is the owners corporation of a strata title development in Haymarket (owners corporation) and the first defendant, Parkview Constructions Pty Ltd (builder), designed and constructed the development.

The owners corporation sought to amend its List Statement to add claims concerning new defects to an existing claim for breach of the statutory warranties in s18B of the HBA.

The builder opposed the amendment on the basis that the introduction of each new defect would give rise to a new cause of action. This raised the question of whether the ‘Onerati principle’ applies to proceedings for a breach of a s18B statutory warranty brought by a successor in title under ss18C and 18D of the HBA.

The Onerati principle was articulated in Onerati v Phillips Constructions Pty Ltd (in liq) (1989) 16 NSWLR 730 and provided that there is one cause of action for breach of contract upon a breach of a promise such as to carry out building work in a good and workmanlike manner. There cannot be a number of causes of action according to particular defects or classes of defects resulting from the breach. The owners corporation accepted that the Onerati principle applied as between a homeowner and builder who have a common law contract but not where the party is an owners corporation who is not a party to the contract but whose rights derive from ss18C and 18D of the HBA.

Decision

The court granted the owners leave to file and serve an amended List Statement.

In 2006, the HBA was amended to include ss18D(2) and 18E(2) to displace the Onerati principle and allow a person to bring proceedings to recover with respect to several but distinct deficiencies arising from breach of the same statutory warranty, provided certain requirements are met. Stevenson J noted that the implication in doing so was that if those requirements were not met, the Onerati principle would continue to apply.

Stevenson J considered the wording of ss18D(2) and 18E(2) and found that those sections contemplate separate enforcement of one or more of the statutory warranties such that there are six separate causes of action corresponding to each of the six statutory warranties.

However, there is nothing in the words of the HBA that compels the conclusion that there is a separate cause of action for each defect constituting a breach of one or more of the statutory warranties. If separate causes of action were to arise for each defect, there would be ‘alarming consequences’ including the potential for multiple proceedings perhaps in different jurisdictions, which was unlikely intended by parliament. Therefore the owners corporation’s proposed amendment to include a claim under the HBA in relation to the new defects had the effect of amending its existing cause or causes of action and did not have the effect of introducing a new cause of action.