A Strata Corporation Win on Building Defects

Despite recent trends, not every NSW strata corporation is losing their building defects case against developers and builders.


The Star of the Sea is a luxury residential strata complex at Terrigal on NSW's central coast which suffered from building defects.  After fixing some things the builder wouldn't deal with planter box leaks, balcony waterproofing and window and door leaks; so the strata corporation started legal action.


Unsurprisingly the builder and developer contested their claims.  Saying that because the strata owners rented out their apartments for holiday accommodation when they didn't use them, they had lost the legal benefit of the Home Building Act warranties protecting consumers.  It was a clever legal issue that had never been decided by the NSW Supreme Court.


So, before the case was finalised the strata corporation, builder and developer agreed to have that decided by the NSW Supreme Court.  The Court also dealt with the complementary issues about whether the builder and developer owed the strata corporation duties of care in negligence outside the Home Building Act.


And the NSW Supreme Court decided that the Home Building Act applied and the strata corporation had the benefit of the statutory warranties.  In deciding that it said that -

• the relevant time to determine the character of building work was at the time of contracting
• later actions and events would not change things unless it involved further residential building work
• the statutory warranties did not (and could not) come and go
• the residential character of building work and the statutory warranties applied to the whole of the building (not just parts of it)
• the decision about the character of building was based on objective assessments
• the owners were not involved an a collective enterprise such as to end the Home Building Act protections

The NSW Supreme Court also decided that the builder and developer did not owe duties of care in negligence - largely because the Home Building Act applied to provide adequate protections for the owners corporation - which will have wider implications for strata buildings that do not have Home Building Act protections or are out of time for claims.


You can read the judgment here - Owners Corporation Strata Plan 72535 v Brookfield [2012] NSWSC 712


Although this strata corporation still has to fight the case about the extent and cost of the defects and repairs (and it may need to resist appeals by the builder) at least it knows it has the protection of the Home Building Act and can recover damages for the defects against the builder and the developer.


It's a great result for one of my consulting clients and I thank them for agreeing to disclose the details.


Francesco ...