The Owners – Strata Plan No 97315 v Icon Co (NSW) Pty Ltd [2023] NSWSC 363

Andrew Hales |  Emily Miers

Key takeout

The NSW Supreme Court dismissed an application to vary or reject a referee’s report prepared in accordance with Uniform Civil Procedure Rules 2005 rule 20.14 in circumstances where the applicant asserted that the proper rectification methodology favoured by the referee failed to achieve contractual conformity.

Facts

On 14 June 2020 The Owners – Strata Plan No 97315 (owners) sued Icon Co (NSW) Pty Ltd (builder) alleging structural and non-structural defects in the Opal Tower at Sydney Olympic Park.  Amongst other issues, the owners claimed the builder was responsible for an alleged defect associated with how sunshades were affixed to the façade of the residential building.

On 14 July 2022 the court utilised Uniform Civil Procedure Rules 2005 (UCPR) rule 20.14 to refer the alleged sunshade defect to a referee.  The referee was ordered to determine the extent to which the builder was liable for the defect and if so, what the proper rectification methodology was.

At a hearing before the referee, the builder proposed a ‘C-bracket solution’ while the owners proposed a ‘hidden bracket solution‘ to rectify the sunshade defect.  The referee determined the ‘C-bracket solution’ was the proper rectification methodology.  Among other things, the referee made evaluative findings that certain sketches that were attached to the contract did not mandate that the sunshades could only be affixed to the building by invisible means.  The referee also made factual findings about the visibility of the ‘C-brackets’.

On 20 February 2023 the owners filed a notice of motion seeking orders under UCPR rule 20.24, including orders to the effect that the ‘hidden bracket solution’ is the proper rectification methodology.  The owners alleged that in accordance with the principles established by Bellgrove v Eldridge (1954) 90 CLR 613, the owners were entitled to recover damages to bring the work into ‘conformity’ with the statutory warranties implied into the design and construction contract by the Home Building Act 1989 (NSW).  The owners alleged that the ‘C-bracket solution’ would not bring the building work into conformity with the builder’s contractual obligations as external supporting brackets on the sunshades were not specified.

Decision

Darke J dismissed the owners’ application with costs.  His Honour held that the referee made no error of principle, and his findings of fact were clearly open to him.  It was therefore not appropriate to exercise discretion to reject or vary the referee’s report.

Darke J held it was appropriate for the referee to have regard to whether the proposed rectification work is necessary to produce conformity and was a reasonable course to adopt.  His Honour found that the drawings and sketches annexed to the contract were of an indicative nature only.  It was further noted that the drawings and sketches did not specify any detail of how the sunshades were to be affixed to the façade.  Counsel for the owners conceded that the sketches were marked ‘not for construction‘, while the builder highlighted the use of mandatory and prescriptive language at other parts of the project requirements but such language was absent in relation to the sunshade details.

In circumstances where the referee concluded that the drawings and sketches did not require the builder to affix the sunshades by a means that was not externally visible, his Honour found there was no error of principle or misconstruction of the contract in reaching that conclusion and as such the ‘C-bracket solution’ achieved contractual conformity and was the appropriate rectification methodology.

Appeal  

Darke J’s judgment was the subject of an application for leave to appeal by the owners. Our report on that application is available here.

MinterEllison acted for Icon Co (NSW) Pty Ltd in these proceedings.