Residential Focus

Licence to add defects

A recent decision of the NSW Supreme Court has revisited the Onerati principle post section 18E(2), in a successor in title context.

In The Owners – Strata Plan No 90018 v Parkview Constructions Pty Ltd [2022] NSWSC 1123, an owners corporation brought proceedings in the NSW Supreme Court against the builder and developer for 85 defects referable to a breach of one or more statutory warranties. Subsequently, it sought to amend its claim to add:

a claim against the builder for breach of the statutory duty under section 37 of the Design and Building Practitioners Act 2020
further defects to the breach of statutory warranty claim.

The builder opposed the application to add the further defects to the statutory warranty claim on the basis that:

each new defect represented a new cause of action
each new cause of action was in pursuit of further claim for a breach of the statutory warranties
the limitation period for bringing a claim pursuant to the statutory warranties had passed, since the commencement of the proceedings.

Essentially, the contest was between whether the amendments to the statutory warranty claim were to introduce new causes of action and therefore time-barred, or, formed part of the same cause of action and would date back to the commencement of the proceedings.

Issues

Three issues were identified for determination:

whether individual defects that breach the statutory warranties constitute separate causes of action
whether the so-called Onerati principle would prevent the additional defects from being added in proceedings for breach of a section 18B statutory warranty brought by a successor in title under sections 18C and 18D
whether each of the six statutory warranties under section 18B(1) represents six possible causes of action, or whether they should be considered as one collective right (meaning a claim for a breach of any of the warranties would constitute a breach of section 18B(1) as a whole and therefore constitute a single cause of action).

The Onerati principle, derived from Onerati v Phillips Constructions Pty Limited (In Liq) (1989) 16 NSWLR, holds that there is one cause of action for breach of a contractual promise to carry out works in a good and workmanlike manner, such that judgment in one proceedings will bar subsequent proceedings for different defects, even if those defects were not apparent at the time of the first proceedings.

In November 2006, following a similar controversy in Honeywood v Munnings [2006] NSWCA 215, where Onerati was followed in a Home Building Act (HBA) context, Parliament sought to displace the Onerati principle, in limited circumstances, by inserting (inter alia) section 18E(2) into the HBA via the Home Building Amendment (Statutory Warranties) Bill 2006.

Section 18E(2) provides that where a person has enforced a statutory warranty under section 18B(1) in relation to a particular deficiency, it is not prevented from enforcing the same warranty in relation to a different deficiency in the same work, provided:

the other deficiency was in existence when the work to which the warranty relates was completed
the person did not know, and could not reasonably be expected to have known, of the existence of the other deficiency when the warranty was previously enforced.
the proceedings to enforce the warranty in relation to the other deficiency were brought within the relevant limitation period.

Decision

The Court held:

separate causes of action for breaches of the statutory warranties created by section 18B of the HBA do not arise each time there is a defect that constitutes a breach of such warranties
for each of the six statutory warranties created by section 18B of the HBA, there are either single causes of action available to a party entitled by reason of sections 18C and 18D of the HBA to enforce such warranties or, perhaps, but one cause of action for a breach of the statutory warranties taken together
subject to the specific exceptions created by sections 18D(2) and 18E(2) of the HBA, the Onerati principle does apply to claims for breach of those statutory warranties.

The effect of the above was to allow the amendments to the statutory warranty claim, notwithstanding the limitation period had passed, after the proceedings were commenced, but before the motion was filed.

Authors: Christine Jones & Daniel Fane

In the media

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In practice and courts

Australian Construction Achievement Award
Now in its 26th year, the ACAA black tie dinner will be hosted in Melbourne at the Crown Palladium Wednesday 3 May 2023 in conjuncture with the Future Construction Summit 2023 (FCON 2023). Entries close 30 November 2022. Make a submission here.

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Some gutters and downpipes requirements have a new home in the ABCB Housing Provisions. 2022 has been a wet year for many parts of the country, showing us how important working gutters and downpipes are for a roof’s drainage system. Equally as important is knowing what requirements are new, or have changed in NCC 2022. Read more here.

Cases

The Owners–Strata Plan No 90189 v Parkview Constructions Pty Ltd [2022] NSWSC 1382
EVIDENCE – application for advance ruling – section 192A, Evidence Act 1995 (NSW) – builder seeks ruling that expert reports are inadmissible as irrelevant – case law review and principles regarding advance rulings at [40]–[50] – premature to make rulings sought where builder yet to serve evidence and trial date not allocated.
Design and Building Practitioners Act 2020 (NSW); Evidence Act 1995 (NSW); Home Building Act 1989 (NSW); Uniform Civil Procedure Rules 2005 (NSW).

The Owners – Strata Plan No 90018 v Parkview Constructions Pty Ltd [2022] NSWSC 1123
PRACTICE AND PROCEDURE – proposed amendment to Technology and Construction List Statement – whether amendment will introduce new causes of action under the Home Building Act 1989 (NSW).
BUILDING AND CONSTRUCTION – residential building work – whether separate causes of action for each breach of the statutory warranties under the Home Building Act 1989 (NSW) – whether single cause of action for all breaches of those statutory warranties or for each individual statutory warranty – application of Onerati principle.

Kaye v The Owners – Strata Plan No 4350 [2022] NSWSC 1386
LAND LAW – strata title – common property – two by–laws to obtain rights to exclusive use and enjoyment of common property – first proposal offered repairs and maintenance – second proposal offered monetary compensation – other lot owners concerned about noise, loss of privacy, lack of compensation, floodgates for applications – whether refusal of first proposal unreasonable under Strata Schemes Management Act 2015 (NSW), s 149(1) – Tribunal not required to weigh interests in determining whether refusal unreasonable – other lot owners entitled to have regard to own interests and rely on experience and beliefs.
LAND LAW – strata title – Strata Schemes Management Act 2015 (NSW), s 149(2) – s 149(2) considerations addressed to whether to order making of by–law – proponents’ rights and expectations not to be weighed against other lot owners’ interests.
COSTS – party/party – appeal from NCAT Appeal Panel – finding of special circumstances – no mandatory considerations – unsuccessful appeal and fact of legal representation permissible considerations – finding of complexity – Tribunal’s power to award costs absent special circumstances – Civil and Administrative Tribunal Act 2013 (NSW), ss 35, 60 – Civil and Administrative Tribunal Rules 2014 (NSW), rr 38 and 38A.
Civil and Administrative Tribunal Act 2013 (NSW); Civil Procedure Act 2005 (NSW); Strata Schemes Management Act 2015 (NSW); Supreme Court Act 1970 (NSW).

Onslow v Cullen (No 2) [2022] NSWSC 1363
COSTS – party/party – appeals – Suitors’ Fund – application for certificate granted.
Home Building Act 1989 (NSW); Suitors’ Fund Act 1951 (NSW).

Dixonbuilding Pty Ltd v Everhard Industries Pty Ltd [2022] NSWDC 464
CIVIL PROCEDURE – summary judgment – whether defendant demonstrates the existence of a triable issue – whether there is no real question to be tried – whether the ultimate outcome turns upon the resolution of disputed issue or issues of fact
CIVIL PROCEDURE – pleadings – striking out – no reasonable defence – whether the defence is so obviously untenable that it cannot possibly succeed
Civil Liability Act 2002 (NSW); Home Building Act 1989 (NSW); Uniform Civil Procedure Rules 2005 (NSW).

Boulus Constructions Pty Ltd v Warrumbungle Shire Council [2022] NSWSC 1368
BUILDING AND CONSTRUCTION – where no valid development consent or construction certificate in relation to building works – whether defence of illegality available in relation to claim for breach of statutory duty under s 37 of the Design and Building Practitioners Act 2020 (NSW) – whether managing director and project site supervisor of builder capable of being persons for the purposes of s 37 of that Act.
PRACTICE AND PROCEDURE – whether cross–claimant should have leave to amend Cross–Claim List Statement – where cross–claimant seeks to introduce claim for breach of statutory duty under s 37 of the Design and Building Practitioners Act 2020 (NSW) – whether leave should be refused because of availability of defence of illegality – whether amendment should be disallowed against proposed individual cross–defendants because they are not persons for the purposes of s 37 of that Act – whether amendment should be disallowed on the basis of prejudice to the proposed cross–defendants.
Civil Liability Act 2002 (NSW); Corporations Act 2001 (Cth); Design and Building Practitioners Act 2020 (NSW); Environmental Planning and Assessment Act 1979 (NSW); Interpretation Act 1987 (NSW).

No 1 Victoria Dragons Pty Ltd v AEN Developments Pty Ltd [2022] NSWSC 1345
CONTRACTS – construction – interpretation – interpretation of a clause in a nomination deed for the development of a residential apartment building – where the clause provided for a specific mix of one, two and three bedroom apartments but included a proviso that the mix “may be varied pursuant to” statutory and council requirements – whether the inclusion of studio apartments was a variation falling within that proviso.

Krolczyk v Winner t/as J Winner Building Services [2022] NSWCA 196
BUILDING AND CONSTRUCTION – defective work – duty to mitigate loss – whether appellants acted reasonably to mitigate loss.
Civil Procedure Act 2005 (NSW); Civil and Administrative Tribunal Act 2013 (NSW); Civil and Administrative Tribunal Rules 2014 (NSW); Design and Building Practitioners Act 2020 (NSW); Home Building Act 1989 (NSW); Uniform Civil Procedure Rules 2005 (NSW).

Wood v Commissioner for Fair Trading [2022] NSWCATOD 114
HOME Building Act – whether evidence establishes a wide range of building construction work experience – whether experience relevant industry experience – individual contractor licence – general building work – whether evidence that work performed can be verified by witnesses who are not supervisors – supervision level of experience required for licence.
Administrative Decisions Review Act 1997 (NSW); Civil and Administrative Tribunal Act 2013 (NSW); Home Building Act 1989 (NSW).

Hoare v Taylormade Residential Pty Ltd [2022] NSWSC 1359
APPEALS – appeal from NSW Civil and Administrative Tribunal (“NCAT”) to Supreme Court – whether Appeal Panel costs decision should be set aside – where underlying NCAT proceedings resolved by consent orders.
Civil and Administrative Tribunal Act 2013 (NSW); Civil and Administrative Tribunal Rules 2013 (NSW); Home Building Act 1989 (NSW).

Legislation

New South Wales

Bills

Government
Building and Other Fair Trading Legislation Amendment Bill 2022
Property Tax (First Home Buyer Choice) Bill 2022
Wingecarribee Local Environmental Plan 2010 (Amendment No 64) – published LW 23 September 2022

Disclaimer
The information in this publication is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavour to provide accurate and timely information, we do not guarantee that the information in this article is accurate at the date it is received or that it will continue to be accurate in the future.

Published by:

Christine Jones

Daniel Fane

Residential Focus

Licence to add defects

Issues

Decision

In the media

In practice and courts

Cases

Legislation

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Key Contacts

Christine Jones

Residential Focus

Licence to add defects

Issues

Decision

In the media

In practice and courts

Cases

Legislation

Share this

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