Sydney Strata Corporation Survives First Challenge to Defect Claim

The NSW Supreme Court recently considered an application by a builder to summarily dismiss a defect claim before the case got seriously underway.

Fortunately, the Court didn’t dismiss the claim so the case can now proceed.

But, how and why did this happen?  Well the story goes something like this.

The strata corporation relates to buildings in Hornsby, NSW that were built between March and December 2001 by Laing O'Rourke and have defects.  In February 2003 cracks were discovered in the buildings and reported by two different consultants to the strata corporation.

It wasn’t until 27  November 2008 that legal action began in the NSW Consumer Trader & Tenancy Tribunal in which claims were made for Home Building Act breaches and negligent construction.  During 2009 it became clear that the claims were for more than $500,000 so the legal action was transferred to the NSW Supreme Court and updated court documents were filed on 29 January 2010.

At that stage the builder learned of the February 2003 reports of cracking and said that the strata corporation was out of time to sue it relying on the Cyril Smith case decided in July 2011. 

The builder argued that –

• The Home Building Act gives strata corporations 7 years from building completion to start legal action
• Under negligence laws strata corporations have 6 years from when defects are ‘manifest’ to start legal action
• So the strata corporation had to start action by 31 December 2008 (under the Home Building Act) or 27 February 2009 (in negligence)
• It’s CTTT action was not effective because it had simply described its claim as ‘for defective work in the construction of the premises
• Since the properly detailed Supreme Court claim was not filed until January 2010 it was out of time on both bases

Fortunately for the strata corporation the NSW Supreme Court did not agree with the builder.

Firstly, the Court said that it’s not generally appropriate to dismiss actions at preliminary stages for these reasons (rather than at a full hearing) and it should take a strict approach on things.

Secondly, the Court said the CTTT claim was adequate to start the legal actions and did not need the more detailed Supreme Court action.

Thirdly, the Court said that there was not enough evidence to be convinced that the defects had actually become ‘manifest’ (in the legal sense) more than 6 years earlier.

And finally, the Court said that the strata corporations claim included more than just cracking defects so it could proceed on the other matters regardless of the builder’s argument.

That doesn’t mean the argument about time limits has gone away completely and it’s likely the builder will argue it again at the hearing on at least some of the defects.  But, Strata Scheme 67202 has overcome a strategic challenges and can now run its defects case.  Well done!

The case reference is The Owners Strata Plan 67202 v Laing O’Rourke (BMC) Limited [2011] NSWSC 939 if you want to read the decision. 

Francesco Andreone

Building Quality Issues make Front Page News

In last week’s Australian Financial Review (7 April 2011) Ben Hurley reported about the perennial issue of the poor quality of high density building construction and defect claims about those buildings in an article called “The Lows of High Rise”.

A variety of strata experts and groups are quoted in the article which makes the following interesting points –

• Government often fails to include or recognise strata schemes in legal initiatives (like Queensland flood relief)
• Owners in some larger strata schemes are paying for community infrastructure (like road, street lighting and drains) without getting rate relief
• Many owners don’t understand the shortcomings of strata ownership
• Building certification has let strata owners down badly over the last decade
• Consumer protections for building quality for free standing home owners don’t apply in many buildings over 3 storeys where Home Owners Warranty does not exist
• Strata schemes are losing more cases (or finding more builders going into liquidation)
• Strata owners need to co-operate to get good outcomes when building defects occur

All these things are true and worth reminding everyone about.

But, it’s about time the critical issue of building defects makes the front page (and I hope it continues to do so) so that awareness increases and changes are made to improve consumer protections.

I’ve been involved in making defect claims for a long time and seen owner’s rights get watered down and eroded.  It’s wrong and I’m committed to trying to improve  outcomes on building quality issues for owners.

After all, when people spend hundreds of thousands of dollars (or more) for a new apartment they are entitled to expect and get a properly constructed building, for the building to comply with all building controls and standards and to be able to use their apartment in comfort, safety and securely.

So, see you in your defect free apartment and strata scheme soon.

Francesco … 

Calling all Village Idiots .. the NSW CTTT is Recruiting

It's fair to say that in any dispute at least one of the parties will be unhappy.  And, when you add the lawyers and managers in strata disputes there might even be two or three unhappy parties.


But, what if everyone is unhappy?  Maybe there's a bigger problem than the dispute and the parties ...


A forum on Jimmy Thomson's Flatchat about  poor decision making at the NSW Consumer Trader and Tenancy Tribunal has brought this sad situation into sharp focus.


Some of the many comments on the forum include -

• "Would we ever purchase a strata property again in NSW ?  No."  
• "A formal complaint to the Chairperson of the CTTT was dismissed by stating that he is acting "as a private citizen."
• "Living in NSW strata is a nightmare where you have many obligations but no rights and certainly no assurance of assistance and fair justice from the "regulatory body", the CTTT."

Pretty heavy stuff when you compare it too the glowing comments in the CTTT Annual Report about it's performance.


It appears that many people have found their experience at the CTTT less than satisfying.  Citing examples of overly technical decisions making, not applying the rules (or by-laws), long delays, accepting disputed facts, applying personal bias, and simply lacking common sense.


It's easy to criticise but, I think that in this case, it's warranted.  


The CTTT needs to make sensible decisions that are explained to the disputants so that they accept the ruling, respect the process and will abide by the decision. 
Funnily thought, the unhappiness has gone so far that you can get an anti-CTTT t-shirt too proclaiming the low quality of it's decision makers.  get yours here.

Maybe it's just a few ratbags complaining?  But, in my long dealings with strata disputes, I have to say that it's hard to find too many people who are praising the CTTT.  If you're out there post on the blog ... please!


But, right or wrong there's something serious that needs fixing when the specialist dispute process for strata stakeholders in NSW reaches this level of consumer unhappiness.


So, see you complaining in the strata tribunal soon.




Francesco ...

Can’t Sleep - Why Not Watch Strata Cases Online ???

For many years Judge Judy (now Judge Marilyn Milian) and the Peoples Court have been a TV hit (no matter how bad some of the parties and cases are).

Well move over Peoples Court … and make way for Strata Court!

In Florida, where I’ve already blogged about a few adventurous initiatives, they’re televising legal submissions in their Supreme Court including strata cases.

Here’s a link to the closing arguments in Susan Cohn versus The Grand Condominium Association presented on 11 February 2011 by Eric M Glazer Esq., Daniel S Rosenbaum Esq. and H Hugh McConnell Esq.


Ms. Cohn and The Grand Condominium Association are involved in a dispute over the condominium's method of electing its board of directors and the constitutionality of a state law dealing with the election of condominium officers. The trial court ruled the law was unconstitutional as applied in this case and the Court of Appeal also found the law unconstitutional.

Despite all the jokes I could make about televised US Court hearings, it’s actually fantastic that we can see real legal issues being debated and the laws being interpreted and re-interpreted in this way. 

This is the kind of transparency that will actually bring about effective changes … since the abstraction of disputes into legal concepts and litigious process is too artificial for real people, in real places, in real situations.

So, see you in Court on your computer screen or TV soon.

Francesco …

Strata Garbage leads to Jail Time

I sometimes wonder how to balance by-law or rule enforcement in strata schemes with common-sense as it’s very very hard to do.

On the one hand, it’s important to enforce by-law and rules so that the things that matter to owners lifestyles and the necessary compromises of strata living are supported by everyone rather than ignored.

But on the other hand it is difficult because it needs on the spot and constant attention, it requires owners, resident and executive support and the rules cannot always be applied strictly against every person in every situation.

Getting it right is, therefore, always a challenge and we can get it more right or wrong every time.

But, what I do know is that Ronald Castellano in Florida went too far when after a dispute about his neighbour putting his garbage bin out too early he threatened to grab his gun and show them "who's boss".

See the short article about the incident at wpbf.com.

Francesco ….