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Residential Focus: Beware the paper breach

12 June 2024

15 min read

#Property, Planning & Development

Published by:

Brandon Thai, Vishwa Shah

Residential Focus: Beware the paper breach

In Metricon Homes Pty Ltd as trustee for Metricon Homes Unit Trust v Lipari [2024] NSWSC 566 the Court considered the appropriate measure of damages in a claim for defects, where the primary defect had no associated damage.

The owner alleged that a slab, which did not comply with AS2870, should be demolished and rebuilt at a cost of approximately $800,000. The owner alleged that there were 11 non-compliances with AS2870 which collectively caused a risk of the slab failing.

The owner had paid an additional amount of $5,850 for an H1 class slab, on top of the cost of the “M” class slab which was included in the contract price.

Although the builder and the design engineer accepted that the slab was non-compliant with AS2870 in certain respects, they disputed the extent of the non-compliance and the loss suffered.

The Court found that, while the slab was not compliant with the AS2870, the strength of that slab had not been affected in any meaningful way, nor had the non-compliances caused any visible damage to the house. The only non-compliances that were established were those conceded by the builder and engineer. The Court found that these non-compliances (even combined) had no practical effect on the performance of the slab, as evidenced by its actual performance.

Accordingly, the owner was not entitled to damages representing the reasonable cost of demolition and rebuild.

Despite the findings on the strength of the slab, the Court found that the owner had successfully established her contract claim regarding the slab’s non-compliance with AS2870.  As the slab did not meet all the requirements for either an “M” or “H1” class slab under AS 2870, the Court considered that the owner was entitled to reliance damages for the full cost of the slab itself, being $55,020.40.

The award of reliance damages is a manifestation of the general rule at common law that where a party sustains a loss by reason of a breach of contract, he or she is, so far as money can do it, to be placed in the same situation, with respect to damages, as if the contract had been performed… (the owner) bargained for, and did not receive, a slab of a particular type. The amount that she paid for the bargained-for slab reflects the loss suffered by the failure to provide a slab of that type.

The decision reflects the importance of demonstrating actual damage and not merely paper non-compliance, a difference which can have significant bearing on the damages result.

Authors: Christine Jones & Brandon Thai

In the media

Industry experts propose changes to National Construction Code
Engineers Australia is advocating for changes to the National Construction Code to address the primary cause of defects in Australian apartments and commercial buildings: water leaks. These leaks account for 80 to 90 per cent of defects, costing building owners and insurance companies up to $3 billion annually (11 June 2024).  Read more here.

Real estate agents weigh profits against prices as property market finds yet another gear
Property price growth across the country is, again, shifting up a gear, and it's unclear when the market will cool. The pace of quarterly growth continued to tick higher in May, with property data firm CoreLogic reporting values up 1.9 per cent, from a recent low of 1.1 per cent, during the three months to January. The latest Bureau of Statistics figures show the mean price of residential dwellings rose by $14,300 to $959,300 in the March quarter (12 June 2024).  Read more here.

Retirement communities could ease housing shortage while improving outcomes for older Australians, peak body says
Over 55s lifestyle resorts could be part of the solution to the nation's housing crisis by freeing up more properties for families, according to the nation's peak retirement living body. Retirement communities have seen a significant increase in popularity, as the population ages, and people start to downsize (11 June 2024).  Read more here.

Plugging the talent gap in Australia’s construction sector in focus
The importance of plugging the talent gap across Australia’s construction sector to put a dent in the country’s housing crisis took centre stage at Sydney Build 2024, writes Maricel Cavestany, Regional Manager Oceania and Isaac Ryan, Policy and Public Affairs Manager at the Chartered Institute of Building (CIOB) (7 June 2024).  Read more here.

Construction leaders to help tackle homelessness crisis
As the housing and homelessness crisis continues to impact communities across the nation, the annual Vinnies CEO Sleepout is rallying business leaders from various industries to raise awareness and funds in support of homelessness services. Among the participants this year are prominent figures from the construction sector, who will be swapping their beds for cardboard boxes on 20 June 2024 (4 June 2024).  Read more here.

Construction sector emerges as top draw for Australian workers
The annual Randstad Employer Brand Research, an independent survey of over 6,000 Australian workers, has revealed a significant shift in the most attractive sectors for employment in 2024.
Construction, transport and logistics have emerged as the top draws, with 54 per cent of respondents identifying each as the most appealing industry to work in. Within the construction sector, CPB Contractors, Ventia, and UGL have been recognised as the most attractive employers (4 June 2024).  Read more here.

In practice and courts

Housing completion targets
The NSW Government has released 5-year housing completion targets for 43 councils across Greater Sydney, Illawarra-Shoalhaven, Central Coast, Lower Hunter and Greater Newcastle and 1 target for regional NSW. The 5-year targets respond to the NSW Government's commitment under the National Housing Accord to deliver 377,000 new well-located homes across the state by 2029. Local, State, and Federal Governments are all signatories to the National Housing Accord and are working together to respond to the national housing crisis (1 June 2024). Read more here. Read how the targets were set here.

Have your say – NSW waste levy review
The New South Wales Environment Protection Authority is seeking your feedback on the operation of the NSW waste levy, its primary instrument for reducing waste to landfill and promoting resource recovery. Read the Issues paper reviewing the NSW waste levy here. Provide your feedback here.

Residential building and construction services business in court
The Fair Work Ombudsman has commenced legal action against the operator of a residential building and construction services business in south-west Sydney. Facing court is Humza Moussa, who operated Xteria Designs in Leppington. The regulator investigated after receiving a request for assistance from a young worker Mr Moussa employed on a casual basis as a labourer between November 2021 and January 2022 (11 June 2024). Read more here.


Future Workforce discussion paper for FF24
The Australian construction industry is increasingly unable to deliver the infrastructure projects that are needed, when they are needed and for an affordable price. The gap between the available workforce and the workforce needed is growing while productivity growth stagnates and costs increase. This is a matter of national importance that requires a coordinated national response (4 June 2024). Read the report here. Read the article discussing the report here.

Building the Future: Navigating Challenges and Opportunities for Quantity Surveyors and Contract Administrators
In an industry as dynamic as construction, staying ahead means understanding the trends, challenges, and opportunities that shape our professions. Payapps has conducted an extensive survey across Australia, New Zealand, and beyond (5 June 2024). Access the report here. Read the article discussing the findings of the report here.


Togias v State of New South Wales [2024] NSWSC 703
LAND LAW – Co-ownership – second defendant has recently become the registered proprietor of certain residential real property occupied by the plaintiff and her former de facto partner – the second defendant has acquired title to the property consequent upon orders under the Criminal Assets Recovery Act 1990 against the plaintiff’s former de facto partner – the Court of Appeal has declared that the plaintiff has a 25% interest in the property and the second defendant holds the other 75% – the second defendant now seeks to sell the property – the second defendant was found in a previous judgment to have an immediate right to possession of the property against the plaintiff, a co-owner in equity, who is also a tenant at will of the second defendant – judgment for possession has been entered in favour of the second defendant against the plaintiff and writ for possession stayed pending the taking of accounts between the plaintiff and the second defendant – whether there can be a set-off against the plaintiff’s charge for her payments of rates, charges and mortgage instalments during her occupation, a notional occupation fee in respect of the balance of the interests that she does not own in equity in the property
Uniform Civil Procedure Rules, r 31.46

Owners of Strata Plan 4015 v Mizrachi [2024] NSWLEC 1304
TREES (DISPUTES BETWEEN NEIGHBOURS) – high hedges – bamboo – view obstruction severe – sunlight obstruction – balance between redemption of ocean views and privacy – pruning ordered Environmental Planning and Assessment Act 1979 ; Trees (Disputes Between Neighbours) Act 2006, ss 614A14B14C14D14E14F, Pt 2A ; Trees (Disputes between Neighbours) Regulation 2019, s 4

Purser v Purser (No 2) [2024] NSWSC 700
LAND LAW – co-ownership – severance of joint tenancy – where co-owners have not formally severed joint tenancy – where co-owners’ respective shares of the Property not determined – whether joint tenancy severed unilaterally by deed or by course of conduct
Conveyancing Act 1919 (NSW), ss 122466G ; Real Property Act 1900 (NSW), s 97

The Owners Strata Plan 99960 v SPS Building Contractors Pty Ltd [2024] NSWSC 687
BUILDING AND CONSTRUCTION – Home Building Act 1989 – residential building work – statutory warranties – defendant constructed development of 45 townhouses – extent of defects – whether damage to lot property or common property – scope of rectification works
Home Building Act 1989 (NSW), ss 18B18D18E ; Strata Schemes Development Act 2015 (NSW), ss 469 ; Strata Schemes Management Act 2015 (NSW), s 122 ; Uniform Civil Procedure Rules 2005 (NSW), r 28.2

Fam v Assassin Pert Control Pty Ltd t/as Assassin Pest Control [2024] NSWCATAP 106
APPEALS – errors other than questions of law – no question of principle
Australian Consumer Law, s 18 ; Civil and Administrative Tribunal Act 2013 (NSW), s 80; cl 12 of Sch 4 ; Civil and Administrative Tribunal Rules 2014 (NSW), r 35(4)(c) ; Competition and Consumer Act 2010 (Cth), Sch 2 ; Home Building Act 1989 (NSW), s 48O ; Property and Stock Agents Act 2002 (NSW), s 52

Hiperia Holdings Pty Limited v Sghabi;; Sghabi v Hiperia Holdings Pty Limited [2024] NSWCATAP 105
HOME BUILDING – successor in title engaged contractor to complete residential building work of another builder – no liability for contractor where no inference drawn on available evidence that contractor had installed defective windows – no breach of statutory warranty where consequential loss arising from water penetration not caused by contractor’s work – contingency provision allowable in building defects claim.
APPEAL – error on a question of law in relation to some findings of defective work – inadequacy of reasons – substituted findings of Appeal Panel.
Civil and Administrative Tribunal Act 2013 (NSW) ; Civil and Administrative Tribunal Rules 2014 ; Home Building Act 1989 (NSW)

Jesiolowski v Department of Customer Service: Building Commission NSW [2024] NSWCATOD 72
PROFESSIONS AND TRADES – refusal of qualified supervisor certificate – disconnection and reconnection of fixed electrical equipment – administrative review of decision – scope of work.
Administrative Decisions Review Act 1997 (NSW) ; Civil and Administrative Tribunal Act 2013 (NSW) ; Home Building Act 1989 (NSW) ; Home Building Regulation 2014 (NSW)

Kazzi v KR Properties Global Pty Ltd t/as AK Properties Group [2024] NSWCA 143
TORTS – negligence – duty of care – statutory extension – breach of duty by nominated supervisor of works – nominated supervisor directed construction otherwise than in accordance with the approved plans – failure by builder to carry out works in a proper and workman-like manner
NEGLIGENCE – assessment of damages – Hungerfords interest – whether the negligence of the nominated supervisor of building works caused the respondents to incur interest on their borrowings – where the delay in completion of the works resulted from multiple conjunctive causal factors
Civil Procedure Act 2005 (NSW), ss 64100 ; Design and Building Practitioners Act 2020 (NSW) , ss 363741 ; Environmental Planning and Assessment Act 1979, ss 76A96 ; Home Building Act 1989 (NSW), ss 18B(1)53(1) ; Uniform Civil Procedure Rules 2005 (NSW), r 36.16(3A)

The Owners Strata Plan 98726 v Elite Realty Development Pty Ltd (No 3) [2024] NSWSC 673
BUILDING AND CONSTRUCTION – contract – damages – defects – judgment earlier entered against builder with damages to be assessed – assessment of damages
Home Building Act 1989 (NSW)

Mangano v Amescorp Pty Ltd [2024] NSWDC 195
CIVIL LAW – principal judgment – Home Building contract – implied warranties – alleged defects – damages – Liability of sole director of builder – “Nominated supervisor” within the meaning of the Home Building Act 1989 – “Construction work” within the meaning of the Design and Building Practitioners Act 2020 – duty of care – breach of duty – loss
Design and Building Practitioners Act 2020 ss 3637 ; Home Building Act 1989 ss 53180

Mustapha v Commissioner for Fair Trading [2024] NSWCATAD 150
PROFESSIONS AND TRADES – whether Applicant is disqualified under sections 20(1)(c) and 33A of Home Building Act 1989 (NSW) – whether offence involving honesty should be ignored under section 33A(2) of Home Building Act 1989 (NSW) – whether Applicant is a fit and proper person to hold contractor licence under sections 20(1)(a) and 20(1A) of Home Building Act 1989 (NSW)
Administrative Decisions Review Act 1997 (NSW) ; Civil and Administrative Tribunal Act 2013 (NSW) ; Home Building Act 1989 (NSW) ; Home Building Regulation 2014 (NSW)

Lexi Development Australia Pty Ltd v Commissioner for Fair Trading [2024] NSWCATOD 69
ADMINISTRATIVE REVIEW – licencing – licence cancelled – jurisdiction of Tribunal to review cancellation decision – whether respondent refused to amend licence or restore licence – whether reviewable decision
Civil and Administrative Tribunal Act 2013 ; Administrative Decisions Review Act 1997 ; Home Building Act 1989 ; Licensing and Registration (Uniform Procedures) Act 2002


Government Bills

National Parks and Heritage Legislation Amendment Bill 2024 – introduced LA 15 May 2024, passed LA 4 June 2024, introduced LC for concurrence 5 June 2024

Residential (Land Lease) Communities Amendment Bill 2024 – introduced LA 14 May 2024, amended in LA 5 June 2024, passed LA 5 June 2024, introduced LC for concurrence 6 June 2024

Non-Government Bills

Environmental Planning and Assessment Amendment (Disallowance of Transport Oriented Development SEPP) Bill 2024 – introduced LC 5 June 2024 

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:

Brandon Thai, Vishwa Shah

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