Owners corporation sues Church, fails
An owners corporation recently sued a developer and the Archdiocese of Sydney (the Church) for breach of statutory warranties. The owners corporation alleged that it was an “immediate successor in title” to the Church, the holder of the freehold title in the land leased to the owners corporation, thereby a “deemed developer” within the meaning of part 2C of Home Building Act (the HBA), and accordingly, the owners corporation alleged that it was entitled to enforce the statutory warranties against the Church. The Court of Appeal in The Owners – Strata Plan No 91322 v Trustees of the Roman Catholic Church for the Archdiocese of Sydney  NSWCA 89 affirmed the lower court’s decision and held that the Owners Corporation was not entitled to sue the Church for breach of statutory warranties.
The trustees of the Church granted development rights to Spring Cove Developments (the Developer) to construct 16 luxury townhouses and apartments on a parcel of land in Manly.
The trustees of the Church sold the lots “off the plan”. The purchasers entered into a tripartite agreement with the trustees of the Church and the Developer which stipulated that upon the registration of the strata plan, the Church would sell its leasehold interest in the relevant lot to the purchaser. After the strata plan was registered, the Church agreed to lease the common property to the owners corporation for a term of 99 years.
The Owners Corporation discovered defects in the apartments and the common property, and sued the Developer and the Church for breach of statutory warranties.
The primary judge held:
At first instance, the primary judge held that because the owners corporation only held a leasehold interest in the land, it was not a “successor in title” within the meaning of section 18D of the HBA. Therefore, the owners corporation was not entitled to enforce the warranties against the Church to recover damages in respect of the defects.
The owners corporation appealed.
The Court of Appeal held:
At the appeal, the owners corporation argued, among other things primarily that upon registration of the strata plan, the common property was vested in the owners corporation pursuant to section 24 of the Strata Schemes Management Act, thereby inferring the notion of succession in title. This was rejected by the Court of Appeal. The Court of Appeal held that the owners corporation’s interest in the title was limited to the lease.
The Church furthermore submitted that the phrase “successor in title” is used in section 99 of the HBA, which concerns the obligation to obtain insurance, and that the transmission of the insurance (and benefit of the warranties) is the transmission of the owner’s title to the successor. Accordingly, the question of whether a party was a successor in title requires identification of the relevant title held by the first party at the time of the warranties (and insurance) and an assessment of whether the title passed to the second party. This was accepted by the Court of Appeal.
This case reminds of us of the importance in first identifying the relevant interest in a title before attempting to enforce the benefit of the statutory warranties against a developer or deemed developer, including the Church.
Author: Divya Chaddha and Jeffery Shi.
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Cubic Metre Pty Ltd v C & E Critharis Constructions Pty Ltd  NSWCATAP 130
Appeal allowed. APPEAL – costs - exercise of discretion to award costs under r 38(2) of the Civil and Administrative Tribunal Rules 2014 where proceedings are withdrawn – applicable principles.
Civil and Administrative Tribunal Act 2013; Civil and Administrative Tribunal Rules 2014; Home Building Act 2014.
Hanson v Metricon Homes Pty Ltd  NSWCATAP 133
1. Leave to appeal refused. APPEAL – home building – claim by builder for payment under contract – cross claim by owners for defects and delay –withdrawal of owners’ claim - whether denial of procedural fairness in not adjourning – whether failure to have regard to evidence. Civil and Administrative Tribunal Act 2013; Civil and Administrative Tribunal Rules 2014; Home Building Act 1989.
The Owners – Strata Plan 89041 v Galyan Pty Ltd  NSWSC 619
Defendants to pay plaintiff’s costs.
COSTS – party/party – general rule that costs follow the event – building dispute – allegedly defective building work – whole dispute referred to referee – referee’s report adopted – agreement that defendants pay plaintiff’s costs unless defendants can show it was unreasonable for plaintiff not to allow defendants to effect repairs.
BUILDING AND CONSTRUCTION – costs – whether it was unreasonable for plaintiff not to allow defendant back in to effect repairs. Home Building Act 1989 (NSW).
The Owners – Strata Plan No 91322 v Trustees of the Roman Catholic Church for the Archdiocese of Sydney  NSWCA 89
Grant leave to appeal, if required; dismiss the appeal; the appellant to pay the respondents’ costs.
LAND LAW – strata title – leasehold strata scheme – enforcement of statutory warranties – whether holder of a 99-year lease a “successor in title” under the Home Building Act 1989. District Court Act 1973 (NSW), s 127; Home Building Act 1989 (NSW), ss 3A 18B, 18C, 18D, 99(1)(b).
Sought After Investments Pty Ltd v Unicus Homes Pty Ltd  NSWSC 600
BUILDING AND CONSTRUCTION – payment claims under the Building and Construction Industry Security of Payment Act 1999 (NSW) – adjudication determination – whether multiple payment claims served in respect of one reference date – whether multiple supporting statements issued in respect of one payment claim – whether more than one supporting statement could be provided in respect of a single payment claim.
The Owners-Strata Plan 91349 v Hallmark Construction Pty Ltd  NSWSC 591
CIVIL PROCEDURE – Pleadings – Striking Out – whether form and content of pleadings defective – embarrassing pleadings – insufficient or inadequate particulars – whether reasonable cause of action disclosed.
Australian Consumer Law; Environmental Planning & Assessment Regulation 2000 (NSW); Home Building Act 1989 (NSW); Practice Note SC Eq 3 – Commercial List and Technology and Construction List.
Hanna v Kersten; Kersten v Hanna  NSWCATCD 26
Home Building - licence in one partner - identity of builder - misleading conduct - recovery of GST - jurisdiction - implied terms - statutory warranties - principles governing work order or money order - proportionality - quantum meruit - just and equitable where no insurance.
QBE Insurance (Australia) Ltd v Gjakovski  NSWDC 200
PROCEDURE – application to file an amended defence – significant delay – inadequate explanation for delay.
State Environmental Planning Policy (Infrastructure) Amendment (Water and Emergency Services Facilities) 2019 (2019-224) — published LW 31 May 2019
State Environmental Planning Policy (State and Regional Development) Amendment (Inland Rail—Narrabri to North Star Project) 2019 (2019-225) — published LW 31 May 2019
Christine Jones, Partner - Construction & Infrastructure (Dispute Resolution)
T: +61 2 8083 0477
Divya Chaddha, Associate
T: +61 2 8083 0457
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 newsletter is accurate at the date it is received or that it will continue to be accurate in the future.
Published by Christine Jones