The Owners – Strata Plan No 93543 v Zhang (No 3) [2025] NSWSC 571

Andrew Hales  |  Luke Sundercombe  |  Ersen Ahmet

Key takeouts

The NSW Supreme Court has considered the completion date mechanism under section 3C(3) of the Home Building Act 1989 (NSW) (HBA), which provides for separate completion dates to apply for separate buildings constructed as part of a staged development under the same contract. The limitation periods for breach of the statutory warranties run in relation to each building by reference to when each building was completed. The Court has found that where buildings cannot be used wholly independently of one another they cannot be ‘separate buildings’ with different dates of completion under the HBA.

Facts

The Plaintiff (owners corporation) owned the common property within a staged development comprising two 4-storey apartment buildings of 20 units split evenly over blocks A & B, common areas and a basement carpark. The defendant, Zhang, was the developer.

The owners corporation commenced proceedings for breach of the statutory warranties in section 18B of the HBA within 2 years of the date of the final occupation certificate, but not within 2 years of the interim occupation certificate. The interim occupation certificate excluded units 1 and 10 and ‘external works’. Units 1 and 10 were in block A and the Court construed ‘external works’ to mean all external works including the roofs, facades and pedestrian access ways of the blocks.

The developer contended that block A and block B should treated as separate buildings with separate completion dates. The developer contended that because the proceedings were commenced more than 2 years after the date of the interim occupation certificate, the proceedings were commenced after the expiry of the statutory warranty period for non-‘major defects’ in block B.

Section 3C(3) of the HBA provides for separate completion dates for buildings constructed under the same contract where a building is ‘separate’ if ‘it is reasonably capable of being used and occupied separately from any other building’.

The questions before the Court were:

• whether section 3C(3) of the HBA applied such that separate limitation periods ran for block A and block B, ie whether blocks A & B are separate buildings; and
• whether the interim occupation certificate that covered block B could start the clock on statutory warranty periods under the HBA.

Decision

The Court determined that block A could not be wholly occupied separately from block B because:

• block B comprises units 11 to 20, which the Court considered made it clearly related to units 1 to 10 in block A; and
• the underground car park holds the allotted car spaces for all 20 units but can only be accessed via a lift in block A, or a shared courtyard between the blocks. Thus, the Court found that the ‘whole use’ of block B depends on block A.

Consequently, the Court determined that section 3C(3) did not apply. Instead completion was to be assessed in accordance with section 3C(2), being the date of issue of an occupation certificate for which authorised ‘the occupation and use of the whole of the building’.

The court found both blocks formed part of the same building and shared the same date of completion for the purpose of the HBA, being the date the final occupation certificate for the development was issued. On this basis, the Court held that the owners corporation had commenced proceedings in time.

The Court also briefly addressed the alternative scenario where block B was separate from block A. Here the Court found that even in this scenario, the interim occupation certificate would not operate to start the clock on the statutory warranty period under the HBA.

The interim occupation certificate was expressed to be in respect of ‘Whole [building work] – Excluding Unit 1 & 10 and external works‘. However, in assessing the requirements for an interim occupation certificate, the Court identified that such certificates only authorise a person to commence occupation or use of a ‘partially completed new building‘. If block B was a separate building, it would not have been ‘partially completed’, but instead fully completed. This would mean that an interim occupation certificate was not capable of validly authorising the occupation and use of the ‘whole’ of the building pursuant to the Environmental Planning and Assessment Act 1979 (NSW) and consequently could not be a valid occupation certificate for the purposes of section 3C(2) of the HBA.