Frasers Central Park Land No 1 Pty Ltd v Frasers Central Park Equity No 1 Pty Ltd [2026] NSWSC 364

Andrew Hales  |  Oliver Sestakov  |  Clyde Welsh

Key takeouts

The NSW Supreme Court has confirmed that limitation defences based on questions of mixed fact and law will ordinarily be inappropriate for early, separate determination.

The practical implications for parties involved in complex, multi-party defect litigation are potentially significant. While parties relying on limitation periods may want the certainty provided by the separate and early determination of their limitation defences, the Court will usually be reluctant to determine the matter early except in the ‘clearest of cases’.

The onus is on the party requesting the determination of the separate question to prove the suitability of the matter for separate determination, and Rees J’s judgment in these proceedings provides guidance as to the matters about which the Court must be satisfied before it will order a separate question.

The Court emphasised that the hypothetical benefits of the early determination of a limitation defence are often illusory. The Court will not order that a separate question be heard merely because of the inconvenience a party faces due to its involvement in protracted litigation. Instead, the party requesting the early determination of an issue must establish the case management benefits it asserts before the Court will proceed.

Facts

These proceedings concern a large mixed-use development in Sydney known as ‘One Central Park’ which was completed in around 2014 to 2015.

Separately, the residential Owners Corporations and retail owners of the buildings in the development have brought 8 discrete proceedings seeking damages from the builder and developer for defective works.

During construction, the builder’s parent company, Watpac Ltd, provided a guarantee to the developer up to a specified cap, and the parties subsequently novated the building contract and the guarantee to the entities involved in these proceedings (respondents). The parent guarantee was terminated and replaced by a ‘guarantee and indemnity performance guarantee’ with a new cap on liability.

These proceedings were commenced in 2024. The builder contended that, as a matter of law, the ‘long-stop’ 10-year limitation contained in s 6.20(1) of the Environmental Planning and Assessment Act 1979 (NSW)and 6-year time limit in s 18E(1) of the Home Building Act 1989 (NSW) meant that the indemnity guarantee was unenforceable against the builder.

On the basis that all the facts pleaded by the respondents against the builder could be assumed and asserting that the claim against the builder would still fail at law (a process akin to the old ‘demurrer’), the builder sought to have the limitation defence dealt with as a separate question. This decision deals with that application.

Decision

The Court held that the use of the separate question procedure was inappropriate for these proceedings, and that the builder’s liability should be determined after the resolution of the 8 underlying proceedings for defective works (as would have happened in the ordinary course).

In coming to that view, the Court considered a wide range of matters, providing some guidance to industry and practitioners as to the matters the Court will consider when asked to determine an issue prior and separate to a final hearing on the merits. The Court found that:

• given the large sums involved (around $200 million), it was likely that the unsuccessful party in the separate question hearing would appeal the determination, so there was no guaranteed timesaving that would follow from the early determination of the limitation defence;
• if the underlying proceedings were determined in the builder’s, developer’s and respondents’ favour, then the separate question would never need to be determined, so the separate question application was premature;
• the separate question required the determination of complex factual and legal issues, on which the respondents may have wished to lead evidence and conduct discovery, which is usually a strong consideration against the use of the separate question procedure;
• limitation defences should only be determined in advance of final trial ‘in the clearest of cases’. Whether the limitation defence is made out will likely involve questions of mixed fact and law, which would require the parties to lead evidence, making the separate question procedure inappropriate in these proceedings;
• if the separate question were to proceed, the parties would be required to divert their resources from preparing for the main defect proceedings to litigating the separate question (which would ordinarily be dealt with after the resolution of the defect proceedings); and
• the separate question proposed by the builder was ambiguous, it was not clear what facts were to be assumed, and it was not clear to the Court that the resolution of the separate question would be binding on the developer, all of which indicated that the separate question should not be heard.

Taking each of those reasons together, the Court found that the hearing of the separate question should not proceed.at any error by the adjudicator in interpreting the payment claim, the contract or the settlement deed was not a jurisdictional error.