Supreme Court New South Wales

• Medium Neutral Citation: The Owners Strata Plan 56963 v Australand [2011] NSWSC 710
• Hearing dates: 29/06/2011
• Decision date: 29 June 2011
• Jurisdiction: Equity Division - Commercial List
• Before: McDougall J

Decision

Judgment for first and third defendants with costs.

• Catchwords: PRACTICE - strike out application in respect of proceedings bought out of time - statutory interpretation - time limit in s109ZK of the Environmental Planning and Assessment Act 1979 - purposive approach - meaning of the terms 'building action' and 'building work'.
• Legislation Cited: Environmental Planning and Assessment Amendment Act 1997; Environmental Planning and Assessment Act 1979 (NSW); Home Building Act 1989 (NSW); Local Government Act 1993
• Category: Principal judgment
• Parties: The Owners Corporation of Strata Plan 56963 (Plaintiff); Australand Corporation (NSW) Pty Limited ACN 001 022 117 (First Defendant); Strata Schemes Management Corporation Pty Limited ACN 003 109 608 (Second Defendant); Australand Constructions Pty Limited ACN 002 061 332 (Third Defendant)
• Representation: Counsel: F C Corsaro SC / F G Kalyk (Plaintiff); S A Kerr SC (First and Third Defendants); T Gunn (Solicitor) (Second Defendant); Solicitors: George Vok (Plaintiff); Mallesons Stephen Jaques (First and Third Defendants); McCabe Terrill Lawyers Pty Limited (Second Defendant)
• File Number(s): 2011/87530

Judgment - ex tempore

1 HIS HONOUR: The first and third defendants (collectively "Australand") seek orders that the proceedings brought against them by the plaintiff ("the Owners Corporation") be dismissed or struck out. Australand assert that the proceedings against them are barred by the operation of s 109ZK of the Environmental Planning and Assessment Act 1979 (NSW) (the "EPA Act") as it stood at relevant times.

2 The Owners Corporation is the Owners Corporation of a strata development at Bondi Junction. It alleges that Australand (between them) were the developer, designer and builder of that development. It asserts that Australand owed the Owners Corporation a duty to take reasonable care in connection with development, design and construction of the building, in particular insofar as it included common property that would vest in the Owners Corporation on registration of the strata plan.

3 The Owners Corporation asserts that, in the breach of that alleged duty of care, the building was defective in three ways:

(1) there was no waterproofing, or such waterproofing as there was was defective, on the roof of the building;

(2) there was no waterproofing, or such waterproofing as there was was defective, for the balconies and doors to the apartments; and

(3) there was no waterproofing, or such waterproofing as there was was defective, to areas at or below ground level.

4 In addition, the Owners Corporation asserts that Australand was a developer for the purposes of the Home Building Act 1989 (NSW) and thus was bound by the statutory warranties set out in that Act. It asserts that the defects to which I have referred constituted, as well as breaches of the duty of care alleged, breaches the statutory warranties.

5 It is important to note that the only claim that the Owners Corporation presses against Australand is the claim asserted in negligence. The asserted liability for breaches of statutory warranty under the Home Building Act is a plank in the Owners Corporation's alternative case against the second defendant, its strata manager at the relevant time. At the risk of repetition: the Owners Corporation does not assert that Australand has any liability to it in respect of the alleged breaches of the statutory warranties.

6 The strata manager is not named as someone affected by Australand's Notice of Motion for summary dismissal or strike-out. It has not been heard in respect of the question argued, although clearly that question affects it because, if it is answered favourably to Australand and adversely to the Owners Corporation, there would be a foundation laid for the alternative case against the strata manager. I raised that matter at the commencement of the hearing of the Notice of Motion. The strata manager, by its solicitor, indicated that it would not seek to relitigate the issue with which I am presently concerned. That position was noted in the transcript.

7 Section 109ZK of the EPA Act provided, so far as is relevant and in the words then applicable:

(1) Despite any Act or law to the contrary:

(a) a building action may not be brought in relation to any building work more than 10 years after the date on which the relevant final occupation certificate is issued, and

(b) a subdivision action may not be brought in relation any subdivision work more than 10 years after:

(i) in the case of work completed before the relevant subdivision certificate is issued, the date on which the relevant subdivision certificate is issued, or

(ii) in the case of work completed after the relevant subdivision certificate is issued, the date on which the compliance certificate that certifies that the work has been completed is issued.

8 The expressions "building action" and "building work" were defined in s 109ZI. I set them out in the terms applicable at the relevant time:

building action means an action (including a counter-claim) for loss or damage arising out of or concerning defective building work.

building work includes the design, inspection and issuing of a Part 4A certificate or complying development certificate in respect of building work.

9 The expression "occupation certificate" is defined in s 4(1) of the EPA Act to mean "a certificate referred to in s 109C(1)(c)" of that Act. Section 109C(1) authorised the issue of what is called "Part 4A certificates." They included, by para (c), a certificate that authorises:

(i) the occupation and use of a new building, or

(ii) a change of building use for an existing building,

10 Section 109M(1) prohibited occupation and use of the whole or any part of a new building "unless an occupation certificate has been issued in relation to the building or part". It is common ground that s 109M(1) commenced on, and had effect from, 1 July 1998.

11 Prior to 1 July 1998, there was an effectively similar regime under a Regulation made pursuant to the Local Government Act 1993. Clauses 45 and 46 of that Regulation provided, so far as they are relevant, as follows:

Occupation prohibited pending issue of certificate of classification

45(1) A building or part of a building must not be occupied until a certificate of classification has been issued in respect of the building or part.

45(2) This clause does not apply to a class 1 or class 10 building or to a building for which approval to erect the building is not required.

Certificate of classification

46(1) If, after the commencement of this Regulation, approval is given to erect a building the council must on completion of the building, or if it approves the occupation of an uncompleted building, prepare a certificate of classification, in duplicate, in Form 1.

...

12 Clause 48 of the Regulation provided for staged completion and occupation. It read as follows:

Certificates for a building occupied in stages

48. If a certificate of classification has been issued for part of an uncompleted building and the council approves the occupation of a further part of the building it must:

(a) revoke that certificate; and

(b) issue a further certificate of classification, in accordance with clause 46, covering all parts of the building for which approval to occupy has been given by the council.

13 I set out above the definition of "building work" in s 109ZI of the EPA

Act. That section, and s 109ZK, were introduced by the Environmental Planning and Assessment Amendment Act 1997, which commenced on, and took effect from, 1 July 1998. It is also necessary to note that the EPA Act contained in s 4(1), a definition of "building work". Except insofar as the context or subject matter otherwise indicated or required, building work was defined in that section to mean "any physical activity involved in the erection of a building".

14 The evidence on the application shows that on 24 April 1998 the relevant local council, Waverley Council, issued a Certificate of Classification under the Local Government Act . The effect of that Certificate of Classification, bearing in mind cl 45 of the Regulation, was to permit occupation of the building in question.

15 Australand's case is that the claim against it is a "building action", as defined in s 109ZI, and that the action was commenced more than ten years after 24 April 1998. The latter point is incontestable: these proceedings were commenced when the Summons was filed on 18 March 2011.

16 The question is therefore whether this is a "building action". On and from 1 July 1998, the combined effect of the definition of "building work" in s 4(1) of the EPA Act and the definition of "building work" in s 109ZI is, I think, that building work means any physical activity involved in the erection of a building and includes the design of that building, and the other matters referred to in the extended definition in s 109ZI. That is to say, it includes the design "in respect of building work".

17 It seems to me to follow that the subject matter of the claim against Australand, at least insofar as it relates to the design and construction of the building, is "building work". As to construction: it is obviously enough physical activity involved in the erection of the building. It is thus within the definition in s 4(1) of the EPA Act. As to design: it is within the extended definition of building work in s 109ZI, being design in respect of the building work that was subsequently carried out.

18 The purpose of s 109ZK was to provide a "drop dead" date after which actions might not be brought if they fell within the definition of "building action". In other words, it seems to me, s 109ZK(1) looked forward, and not backwards. I thus do not think that it is appropriate to regard it as retrospective legislation. To the extent that any rights had accrued as at 1 July 1998, those rights continue to be enforceable. All that s 109ZK(1) did was impose a time limit for the enforcement of those rights.

19 It will be noted that the prohibition is based on the date of issue of "the relevant final occupation certificate". In context, that seems to me to mean the Occupation Certificate relevant to the building work in respect of which the building action is brought or sought to be brought. In other words, it seems to me, it recognises that there may be several occupation certificates, reflecting staged completion of building work.

20 Clause 49 of the Environmental Planning and Assessment (Savings and Transitional) Regulation 1998 in effect deems a certificate of classification under the Regulation to which I have referred to be a final occupation certificate:

49 Certificates of classification taken to be final occupation certificates

A certificate of classification granted under the Local Government (Approvals) Regulation 1993 is taken to be a final occupation certificate issued under Part 4A of the amended EP&A Act 1979.

21 The Savings and Transitional Regulation of which cl 49 forms part did not in terms limit the operation of cl 49. Viewed in the context of the overall statutory scheme, I think that the purpose of cl 49 was to ensure a seamless transition from the previous regime, which restricted occupation of buildings without certification, to the regime that commenced on 1 July 1998. There is thus nothing inconsistent, or of a retrospective nature, in taking account of cl 49, and a certificate of classification to which it refers, as relevant to the regime introduced by s 109ZK.

22 It follows from what I have said that, at least insofar as the Owners Corporation's claim relates to design and construction, it was commenced outside an applicable time period: namely, that imposed by s 109ZK. Does anything different follow because the breach of duty is also alleged in respect of Australand's capacity as "developer"?

23 On the face of the Amended List Statement, that allegation appears to be relevant primarily to attract the statutory warranties under the Home Building Act to the aspect of the Owners Corporation's case against the strata manager that asserts that, through the strata manager's alleged breach of contract or negligence, the Owners Corporation lost the benefit of those statutory warranties. However, the case of negligence also asserts that "in the development, design and construction of the building, and as result of the defects", Australand "failed to take reasonable care in the development, design and construction of the building".

24 It is not entirely clear how the allegation that the duty of care and breach extended to Australand's capacity as developer goes beyond the case alleged against it for breach of its duties as designer and builder. That is because the case alleged in respect of its capacity as developer is limited, as I have just indicated, by reference to the design and construction of the building. But even if I am wrong in that view of the intended meaning of the relevant paragraphs of the Amended List Statement, it seems to me nonetheless that if such work as Australand did as a developer had any causative significance, in terms of defects alleged, that could only be by way of responsibility to procure adequate design or adequate building. In the case of design, it is therefore again an allegation of a failure to procure an adequate design "in respect of the building work". In respect of the construction, it is an allegation of failure to provide proper performance of physical activities involved in the erection of the building.

25 For those reasons, it seems to me, there is nothing in the case, in so far as it is based on Australand's capacity as a developer, that could take the matter outside s 109ZK.

26 It follows from what I have said that the claim against the first and third defendants should be dismissed and that judgment should be entered in their favour.

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Decision last updated: 15 July 2011