The Owners of Strata Plan 93357 v Bloc (ACT) Pty Ltd [2024] NSWSC 239

Andrew Hales  |  Emily Miers

Key takeouts

• The Supreme Court of New South Wales will not dismiss a case where claims are alleged to be barred by statutory limitation periods unless it is an unequivocally clear situation.

• Caution was required in the face of document discrepancies and a complex factual background that cast doubt on the definitive completion status of the construction work, indicating that the claim did not warrant a hasty dismissal.

• A plaintiff claiming damages for breach of the Home Building Act for ‘major defects’ will be required to plead why each of the defects is a ‘major defect’ by reference to the defined elements set out in the Act in order for the defendant to understand the case it is required to meet.

Facts

The Owners Corporation of a 72 apartment residential development in Newcastle commenced proceedings against Bloc (ACT) Pty Ltd (builder) under the Home Building Act 1989 (NSW) (HB Act) and the Design and Building Practitioners Act 2020 (NSW) (DBP Act) in respect of alleged defects in the building.

The builder sought to have the Owners Corporation’s HB Act claim struck out or dismissed summarily on the basis that it was commenced beyond the time permitted under section 18E(1)(b)-(c) of the HB Act, ie after six years from the date of the ‘completion of the work’.  

The builder also complained about the inadequate way the Owners Corporation had pleaded its HB Act claim that there were ‘major defects’ in the building, ie to broadly assert that ‘Each of the Defects is a major defect as defined pursuant to s 18(4) of the [Home Building Act]’.

The builder also sought to have the Owners Corporation’s DBP Act duty of care claim struck out on the basis that the Owners Corporation be given an opportunity to replead that claim.

It is well established by section 3C of the HB Act that ‘completion’ of residential building work involving the construction of a new building in a strata scheme will be achieved on ‘the date of issue of an occupation certificate that authorises the occupation and use of the whole of the building’.

An interim occupation certificate was issued for the building on 8 December 2016, which was over six years before the start of the proceedings. That certificate, at first glance, appeared to authorise the occupation and use of the entire building, which, if accurate, would mean the proceedings were commenced too late. The certificate explicitly referred to ’72 residential apartments’ and confirmed the building’s suitability for occupation for its classification under the Building Code of Australia. Additionally, it noted that a fire safety certificate had been issued for the building, referencing the current fire safety schedule dated 18 December 2015, which referred to ’71 residential apartments’.  This discrepancy stemmed from a modified construction certificate issued on 29 April 2016, which allowed for an increase from 71 to 72 apartments. However it gave rise to inconsistencies in the scope of the interim occupation certificate when considering ‘completion’ under section 3C of the HB Act.

The pivotal issue for judicial consideration was whether the interim occupation certificate should be interpreted to authorise the occupation of the ‘whole of the building’, meaning all 72 of the constructed apartments, or only the 71 apartments as listed in the fire safety schedule.

Decision

The Court refused to strike out the HB Act claim.  Justice Stevenson held that the matter was not straightforward and largely hinged on the context in which the interim occupation certificate, fire safety schedule and fire safety certificate were issued, particularly how the fire safety schedule from 2015, mentioning 71 apartments, was connected to the fire safety certificate issued a year later and after the modified construction certificate for 72 apartments was issued.

Justice Stevenson relied on the statement of Mason CJ and Dawson, Gaudron and McHugh JJ in Wardley Australia Limited v Western Australia (1992) 175 CLR 514 that ‘we regard it as undesirable that limitation questions of the kind under consideration should be decided in interlocutory proceedings in advance of the hearing of the action, except in the clearest of cases‘.  Justice Stevenson did not perceive the matter of whether the HB Act claim was statute-barred to fall within the ‘clearest of cases’ that would justify a summary dismissal.  This reasoning alone was enough to reject the builder’s request to strike out the HB Act claim on the grounds of it being out of time.

In relation to the way the HB Act claim was pleaded, Justice Stevenson  held that this ‘inevitably invites a request for particularisation as to how the alleged defects could be characterised as being “major”’.  Justice Stevenson held that the more appropriate approach is to identify for each alleged defect how it is said that the defects come within the defined elements as set out in the HB Act.

In relation to the DBP Act claim, Justice Stevenson noted that the parties agreed the Owners Corporation should compile a ‘Loulach schedule’ setting out the risks the defendant was allegedly required to manage, and the steps the defendant should have taken to manage those risks.