Artboard 1Icons/Ionic/Social/social-pinterest

Residential Focus

05 June 2019

#Property & Real Estate

Christine Jones

Published by Christine Jones

Residential Focus

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 [2019] 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 facts

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.

To receive Residential Focus direct to your inbox each fortnight, please click here

In the media

CEFC to fund $360 million Collector wind farm
Clean Energy Finance Corporation (CEFC) has secured more than $180 million of debt funding for its new Collector Wind Farm, that’s set to deliver more than two-gigawatts of energy across regional Australia (30 May 2019).  More...

Australian plumbing benefits from grant boost
Master Plumbers Australia and New Zealand is one of the 15 industry associations that will receive an Australian Federal Government grant, providing its members with a trusted digital advisory service (30 May 2019).  More...

Falling business investment, building approvals point to deepening economic slowdown
Australia's first quarter economic growth looks like being anemic after far weaker than expected private business investment data is released (30 May 2019).  More...

HIA: Slowdown in home building spreads to rest of the economy
“The slowdown in housing activity continued in April with a 0.6 per cent fall in building approvals,” stated HIA’s Chief Economist, Tim Reardon. The downturn in building activity is now evident in other economic data including today’s data on capital expenditure. CAPEX fell 1.6 per cent in the March 2019 quarter due to significant falls in expenditure on new buildings (30 May 2019).  More...

RICS: The case for a global fire safety standard
Questions are now being raised about whether it's time to establish a global set of fire safety standards for built environment professionals and what a standardisation of this scale would look like in practice (30 May 2019).  More...

Protecting buildings near seismic faults
Researchers at the Centre for Built Infrastructure Research (CBIR) have found an innovative and inexpensive solution to protect buildings against fault rupture (17 May 2019).  More...

Engineers test potential for night energy production
While solar panels have been around for some time, engineers are now experimenting with rooftop panels that could create electricity at night, offering the potential to produce renewable energy without the sun (17 May 2019).  More...

Statement regarding Sydney Morning Herald article on Landcom complaints at Macquarie Park
SafeWork NSW would like to assure the community that safety issues raised by Landcom in 2017 have no relationship at all to the tragic events that occurred at the Macquarie Park construction site recently. SafeWork’s investigation into that incident is going (26 May 2019).  More...

Greater Sydney Housing Supply Forecast: 191,550 new homes by 2023
Construction of 191,550 new homes in Greater Sydney is forecast in the next five years, a 22 per cent increase, or an extra 34,300 new homes, with Parramatta anticipated to become home to a vast majority of them (23 May 2019).  More...

Almost 200,000 new homes in Sydney by 2023 - but not evenly spread
Forecasting shows about 192,000 homes are expected to be built over the next five years. That figure is an increase from a record 185,000 five-year forecast made three years ago (16 May 2019).  More...

Five year housing supply forecast released
Sydney’s latest five-year housing supply forecast, released today, anticipates a solid pipeline of construction to support the NSW Government’s record investment in transport, infrastructure and public spaces (16 May 2019).  More...

Published

Australian Bureau of Statistics
30/05/2019 Building Approvals, Australia, Apr 2019 (cat no. 8731.0)
22/05/2019 Construction Work Done, Australia, Preliminary, Mar 2019 (cat no. 8755.0)

Opinion: Cladding calamity
by Phil Dwyer May 30th, 2019
The devastation being inflicted on innocent persons in Australia relating to the cladding issue is nothing short of a devastating blow to apartment home owners and is the direct result of building industry mismanagement by the Governments who financially benefit from the very being of our industry and its importance to our nations fiscal security.  More...

Practice and courts

ABCB: Project outcome: Short-term accommodation and use of Class 2 & 3 buildings
Outcomes of ABCB project on short-term accommodation and the use of Class 2 & 3 buildings (23 May 2019).  More...

AIBS: Draft Standards open for comment
There are several Standards currently open for comment. Of particular interest are:
AS 1735.12 - Facilities for persons with disabilities for lifts. Closes 17th May
AS/NZS 4671 - Steel for the reinforcement of concrete. Closes 31st May
AS 4420.1 - Windows, external glazed, timber and composite doors.  Closes 11th June 2019
This page can be accessed by clicking here. Comments direct to Standards Australia is here consultation page.  

GBCA Important Deadlines - Green Star certification for your project
Many project teams have timelines set around major events. To support this, these guidelines below (based on typical time frames), which specify the deadlines you’ll need to meet in order to have your project certified in time for key milestones in 2019. Deadlines are till 4 November 2019.  More...

NSW Fair Trading: Amendment to the Environmental Planning and Assessment Regulation 2000 - bush fire prone land
The amendment will allow a person to obtain a complying development certificate or a construction certificate for building work that complies with AS 3959-2009 and any other requirements under the EP&A Regulation. The RFS website has more information. The Planning and Environment website has more details on the Building Code of Australia (May 2019). 

New dates for Environmental Planning & Assessment Act updates
Councils, certifiers and other industry practitioners have more time to implement some of the recent EP&A Act updates. Changes affect new provisions for building and subdivision certification, Local Strategic Planning Statements for councils in the Greater Sydney Region and Community Participation Plans.

Cases

Cubic Metre Pty Ltd v C & E Critharis Constructions Pty Ltd [2019] 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 [2019] 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 [2019] 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 [2019] 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 [2019] 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 [2019] 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 [2019] 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 [2019] NSWDC 200
PROCEDURE – application to file an amended defence – significant delay – inadequate explanation for delay.

Legislation

NSW

Environmental Planning Instruments

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

Contacts:
Christine Jones, Partner - Construction & Infrastructure (Dispute Resolution)
T: +61 2 8083 0477
E: Christine.Jones@holdingredlich.com

Divya Chaddha, Associate
T: +61 2 8083 0457
E: Divya.Chaddha@holdingredlich.com

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 newsletter is accurate at the date it is received or that it will continue to be accurate in the future.

Christine Jones

Published by Christine Jones

Share this