Parkview Constructions Pty Ltd v The Owners – Strata Plan No 90018 [2023] NSWCA 66

Andrew Hales  |  Michelle Knight   |  Brigida Johns

Key takeout

• Where a proceeding is brought against a builder or developer for breach of statutory warranties under section 18B of the Home Building Act 1989 (NSW) (HB Act), the cause of action is for a single breach of contract.
• An application to amend a list statement to add new defects will not usually be a new cause of action.
• This has positive implications for homeowners when defects become apparent after the expiry of a limitation period while proceedings are already on foot for defective building work.

Facts

The Owners Corporation (owners) of a residential strata development in Haymarket commenced proceedings against Parkview Constructions Pty Ltd (builder) and The Quay Haymarket Pty Ltd (developer) for breach of the warranties in section 18B of the HB Act due to 85 alleged major and other defects.

The owners sought leave to amend their Technology and Construction List Statement in 2021 to include three additional defects.  Pursuant to s 65(2)(c) of the Civil Procedure Act 2005 (NSW), a plaintiff may amend an originating process with leave of the court after the expiry of a limitation period to add or substitute a new cause of action if the court is of the opinion it arises from the same or substantially the same facts as those giving rise to an existing cause of action.

The two issues before the primary judge were:  

• did the proposed amendments add a new cause of action which was statute barred under section 18E(1)(a)-(b) of the HB Act?
• if they did add a new cause of action, did it arise from the same or substantially the same facts as those giving rise to the existing causes of action?

The primary judge held that the proposed amendments were not a new cause of action (and therefore the second issue did not need to be decided). The builder and developer appealed the decision and the NSW Court of Appeal was tasked with determining the first issue only.

Decision

The NSW Court of Appeal dismissed the appeal and held that there is not a different cause of action for each defect said to have been caused by a breach of a statutory warranty. The owners’ amendments therefore did not introduce a new cause of action and could be permitted without resort to section 65(2)(c) of the Civil Procedure Act.

Where a successor in title sues a builder or developer for a breach of the statutory warranties in section 18B of the HB Act, even though the successor in title was not a party to the building contract the claim is best regarded as a claim for breach of the single contract which incorporates those warranties. The court held that, generally, an amendment to a list statement that introduces additional departures from the contract will not give rise to a new cause of action which would otherwise have been out of time, because the cause of action is for the breach of the same contract.

The court noted that this reasoning may not be applicable to cases where a plaintiff has brought proceedings within two years of completion of the work, but only for defects which were ‘major defects’, and then later sought to amend the list to include defects which were not major defects. However, the court did not decide this issue.