On 10 October 2012 Justice McDougall of the NSW Supreme Court handed down another decision making life difficult for apartment buildings with defects.
The decision, Owners Corporation Strata Plan 61288 v Brookfield Multiplex  NSWSC 1219 (which followed on from Justice McDougall’s earlier decision in Owners Corporation Strata Plan 72535 v Brookfield Multiplex  NSWSC 712 handed down on 29 June 2012) will have a significant impact on owners corporations in the ACT which are above three stories and suffer from building defects.
This decision involved a serviced apartment development in Chatswood which was not covered by the Home Building Act and therefore could not rely upon the statutory warranties provided by the Home Building Act.
In short, Justice McDougall indicated that the fact that the owners corporation could not rely upon the statutory warranties under the Home Building Act to sue the builder would not prevent him from finding that the builder (Brookfield Multiplex) did not owe the owners corporation a duty of care when constructing the building.
This decision therefore has the following impact:
1. Owners corporations cannot sue builders in negligence for poor workmanship; and
2. Consequently, owners corporations who do not have the benefit of statutory warranties under the Home Building Act will have no ability to sue builders for poor workmanship generally in completing building work.
While this is of concern in NSW, particularly for owners corporations who are, for example, serviced apartments or for whom the limitation period for statutory warranties has expired, it should be of even more concern for owners corporations in the ACT.
The reason for this is that whereas in NSW statutory warranties are provided under the Home Building Act no matter how high the building, in the ACT statutory warranties only apply under the Building Act to buildings of three (3) stories or less (not including carparking).
Given the paucity of decisions in this area in the ACT, this NSW decision whilst not binding, will be very persuasive for any court or tribunal in the ACT.
This means that in the ACT, if this decision is not overturned on appeal, buildings of more than three (3) stories (not including carparking), will probably not be able sue builders for either negligence or breach of statutory warranties and will remain without remedy in the court system for loss or damage arising from poor workmanship.
Posted by Chris Kerin