By a combination of changes to the Home Building Act 1989 and two NSW Court of Appeal decisions, there's going to be some strata corporations that never get to use their rights to sue for statutory warranty breaches.
It's crazy. But, how did it happen?
First, Section 18E of the Home Building Act 1989 changed in October 2011 so that the warranty period for non-structural defects was reduced to 2 years from completion of work and proceedings for breaches have to be started by then.
Second, the NSW Supreme Court decided in Owners Corporation Strata Plan 64757 v MJA Group Pty Limited and Vero Insurance Ltd v Kassem that completion of work under the Home Building Act means the defective work itself and not all the construction work for the building; so that it could be a date before the end of the building work. In other words, it's possible that each defective part of the building will have different completion dates.
So, if a strata building has drainage defects (like in the Kassem Case) which are caused by work done early in the construction cycle, then the 2 year warranty period started long before the building was finished. And, since building construction, approval and strata registration can easily take close to or more than 2 years, that means that new strata corporations may find time limits have run out before they come into existence or very shortly afterwards (and often during the initial period).
It's just unbelievable that this situation has been created to further deny NSW strata owners fair rights to get defective buildings fixed. Judge Campbell's comment in the Kassem Case that this situation 'has the potential to create a difficulty for a purchaser of residential real estate' is an understatement.
I'd say this situation effectively prevents most new owners in strata buildings from suing over non-structural defects in NSW.
So, when will NSW strata owners get a fair go on building defects?
Francesco ...
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