Supreme Court New South Wales

• Medium Neutral Citation: The Owners Strata Plan 67202 -v- Laing O'Rourke (BMC) Limited [2011] NSWSC 939
• Hearing dates: 17 August 2011
• Decision date: 17 August 2011
• Jurisdiction: Equity Division - Technology and Construction List
• Before: Hammerschlag J

Decision

Summary judgment refused with costs

• Catchwords: TECHNOLOGY AND CONSTRUCTION - motion for summary dismissal of plaintiff's claim for breach of statutory warranty and negligence - s 18B of the Home Building Act 1989 (NSW) - statutory warranties as to quality of construction work - s 18E(1) of the Home Building Act 1989 (NSW) - proceedings for breach to be commenced within seven years of completion of work - ss 23(1), 24(1), 24(2) and 33 of the Consumer, Trader and Tenancy Tribunal Act 2001 (NSW) - Reg 11(1) of the Consumer, Trader and Tenancy Regulation 2009 (NSW) - s 14(1) of the Limitation Act 1969 (NSW) - whether Home Building Division application lodged with Consumer, Trader and Tenancy Tribunal a nullity such that proceedings statute-barred - held Holding Building Division application contains sufficient particulars - held proceedings also not nullified by failure to comply with regulations - held limitation issues should not be determined in advance of trial where insufficient is known of damage sustained - summary dismissal refused
• Legislation Cited: Home Building Act 1989 (NSW); Consumer, Trader and Tenancy Tribunal Act 2001 (NSW); Consumer, Trader and Tenancy Tribunal Regulation 2009 (NSW); Limitation Act 1969 (NSW)
• Cases Cited: Cyril Smith & Associates Pty Ltd v Owners-Strata Plan No. 64970 [2011] NSWCA 181; Wardley Australia Ltd v The State of Western Australia (1992) 175 CLR 514
• Category: Principal judgment
• Parties: The Owners Strata Plan 67202 - Plaintiff (Respondent); Laing O'Rourke (BMC) Limited - Defendant (Applicant)
• Representation: Counsel: F.C. Corsaro SC with F.G. Kalyk - Plaintiff (Respondent); S.A. Kerr SC - Defendant (Applicant); Solicitors: Turnbull Bowles Lawyers - Plaintiff (Respondent); Maddocks Lawyers - Defendant (Applicant)
• File Number(s): 2009/298884

EX TEMPORE Judgment

1 HIS HONOUR: The plaintiff is the Owners Corporation of a strata plan comprising a residential strata development at Hornsby, New South Wales ("the building"). The defendant is the builder which constructed the building.

2 The building was constructed between March 2001 and the end of December 2001.

3 Section 18B of the Home Building Act 1989 (NSW) ("the Act") implies warranties, as to the quality of the work, in favour of the plaintiff into the contract under which the defendant constructed the building.

4 Section 18E(1) of the Act provides, relevantly, that proceedings for breach of a statutory warranty must be commenced within seven years after completion of the work to which it relates.

5 Part 3A of the Act confers upon the Consumer, Trader and Tenancy Tribunal ("the Tribunal") jurisdiction to deal with claims for breach of statutory warranty up to $500,000.

6 Section 23(1) of Consumer, Trader and Tenancy Tribunal Act 2001 (NSW) ("the CTTT Act") provides as follows:

(1) If the parties in any Tribunal proceedings so agree, or if the Tribunal of its own motion or on the application of a party so directs, the proceedings are:

(a) to be transferred to a court (in accordance with the rules of that court) that has jurisdiction in the matter, and

(b) to continue before that court as if they had been instituted there.

7 Section 24(1) of the CTTT Act provides that a person may, in accordance with the Act under which the application is made, apply to the Tribunal to have a matter dealt with by the Tribunal.

8 Section 24(2) of the CTTT Act provides that

Despite the provisions of any other Act, an application to have a matter dealt with by the Tribunal must be made:

(a) in writing (or in such other form as may be prescribed by the regulations), and

(b) in accordance with the regulations.

9 Section 32 of the CTTT Act provides that:

(1) The Tribunal may, in any proceedings, make any amendments to any document (for example, an application) filed in connection with the proceedings that the Tribunal considers to be necessary in the interests of justice.

(2) Any such amendment may be made:

(a) at any stage of the proceedings, and

(b) on such terms as the Tribunal thinks fit,

but may only be made after notifying the party to whom the amendment relates.

(3) If a provision of this Act or the regulations is not complied with in relation to the commencement or conduct of proceedings, the failure to comply is to be treated as an irregularity and does not nullify the proceedings or any decision in the proceedings unless the Tribunal otherwise determines.

(4) The Tribunal may, however, in dealing with any such irregularity, wholly or partly set aside the proceedings or a decision in the proceedings.

10 Regulation 11(1) of the Consumer, Trader and Tenancy Tribunal Regulation 2009 (NSW) ("the Regulations") provides as follows:

(1) For the purposes of section 24 (2) of the Act, an application made to the Tribunal must contain the following particulars:

(a) the name and address of the applicant,

(b) the name and last known address of each other party,

(c) a description of the order or orders sought by the applicant,

(d) a concise statement containing particulars sufficient to enable each other party to know the nature of the claim or dispute,

(e) if an amount of money is claimed or in dispute, the amount claimed or disputed,

(f) if the application relates to a claim or dispute arising from the occupation of any premises - the address of those premises,

(g) if the applicant is a corporation - the applicant's ACN.

11 Section 14(1)(b) of the Limitation Act 1969 (NSW) ("the Limitation Act") provides the following:

An action on any of the following causes of action is not maintainable if brought after the expiration of a limitation period of six years running from the date on which the cause of action first accrues to the plaintiff or to a person through whom the plaintiff claims:

...

(b) a cause of action founded on tort, including a cause of action for damages for breach of statutory duty,

...

12 On 27 November 2008, the plaintiff lodged with the Tribunal a Home Building Division Application by which it applied to have a matter dealt with by the Tribunal.

13 The application is a printed standard form ("the form") with provision for the insertion of information.

14 Paragraph 14 of the form is as follows:

What is your dispute about?

This form will be sent to the other party. Therefore you must provide details so that the other party can understand the problem. For example, you could list the defect, its location and an estimate of the cost to repair eg leaks/roof/$5,000. Additional information may be attached to this application eg copy of rectification order.

15 The plaintiff inserted the following response:

This is a claim for defective works in the construction of the premises for breaches of the statutory warranties under the Home Building Act and Negligence.

16 Paragraph 15 of the form requires the applicant to specify what orders it wants and states that " You must include a dollar amount for the order(s) you want " . It identifies a number of different types of orders with boxes to be ticked as well as a box where "Other" may be ticked, with space for that other to be specified. One of the options is "An order to pay me the amount of $____". The plaintiff ticked this box and inserted the words "To be advised".

17 There is provision in the form for the insertion of a figure representing "Total value of claim". The plaintiff inserted the words "In excess of $50,000 but less than $500,000".

18 Beneath para 15 the following words appear: "The limit of jurisdiction of the Tribunal in this Division is $500,000 (If your claim is for more you may wish to seek legal advice)".

19 On 21 January 2009, the matter was first listed in the Tribunal for directions. There were a number of subsequent directions hearings and a site meeting. It became clear that the amount claimed by the plaintiff would exceed the jurisdictional limit of the Tribunal and on 26 October 2009, the proceedings were, under s 23(1) of the CTTT Act, transferred to this Court.

20 A Summons and Technology and Construction List Statement were filed on 29 January 2010. The Technology and Construction List Statement pleads breach of the warranties implied by s 18B of the Act and also pleads that the defendant owed to the plaintiff a duty of care, which it breached, not to carry out the work negligently.

21 In March 2010, the plaintiff provided a "Scott Schedule of alleged Defective Construction".

22 Section 1 of the Scott Schedule is entitled "Exterior Elevations". It comprises some 29 separate claims, one of which (para 1.0.1) is for "cracked render/waterproofing finishes" in respect of "whole of building generally". The description goes on to state, "Cracked skim-coating to Hebel panel (AAC) external wall skin allows water penetration into the external skin" and describes the cause of the defect as "Failure to construct in accordance with manufacturer's recommendations/instructions".

23 Under a sub-heading "Particulars Sought" the following appears:

1. When was defect first identified by Plaintiff

2 cracks identified in Gleeson Report of early 2003.

A multitude of individual cracks are identified in the Belmont Report of January 2007.

2. When was defect first notified to Defendant

Gleeson Report notified to LOR/BM on 27/02/2003.

I am not aware of the Belmont Report being published to LOR/BM

("LOR/BM" is a reference to the defendant)

24 Under a heading "Estimated rectification cost" the Scott Schedule provides as follows:

Allow rate of $65 per m 2 for membrane; $75 per m 2 new joint construction; $35 per m 2 for scaffold:

Less 33% on membrane & scaffold; mitigation for maintenance: less $35 per m 2

4750 m 2 @ $140 = $665,000

e/o 22.5% o/heads, profit $149,625

Subtotal $814,625

GST; 10% $ 81,462

Total $896,087

25 By Notice of Motion filed on 29 July 2011, the defendant moves for summary dismissal of the entirety of the plaintiff's claim for breach of statutory warranty and for dismissal of that part of the claim described above in the Scott Schedule on the basis that they are statute barred, in the case of the statutory warranty claims, by virtue of s 18E(1) of the Act, and in the case of the negligence claim, by virtue of s 14(1) of the Limitations Act.

26 As to the statutory warranty claims, the defendant puts that

a the work to which the plaintiff's claim relates was completed by 31 December 2001;

b under s 18E(1)(a) of the Act the plaintiff had to commence its proceedings by 31 December 2008;

c the application with the CTTT on 27 November 2008 was a nullity because it did not comply with paras 11(1)(d) and (e) of the Regulations respectively because the description of the claim provided fell short of being a concise statement containing particulars sufficient to enable the defendant to know the nature of the claim or dispute and the information did not sufficiently state the amount claimed or disputed; and

d these proceedings were thus not commenced before the cut-off date and are barred.

27 As to the claim in negligence, the defendant puts that:

a the plaintiff's cause of action became statute barred under s 14(1) of the Limitation Act six years after the defects complained of became manifest;

b the defects in the Scott Schedule described above became manifest no later than "27/02/2003" when they were identified in the "Gleeson Report";

c the six year period accordingly expired no later than 27 February 2009;

d as with the statutory warranty claims, the lodging with the Tribunal of the application on 27 November 2008 was ineffective to commence proceedings; and

e these proceedings were thus not commenced before the cut-off date and are barred.

28 The defendant drew the Court's attention to the recent decision of the Court of Appeal in Cyril Smith & Associates Pty Ltd v Owners-Strata Plan No 64970 [2011] NSWCA 181 and in particular to para 15 in which Basten JA (delivering the judgment of the Court) said:

If the superficial cracking should put the owner on notice of inquiry as to its cause and if reasonable inquiry would have revealed the cause, the underlying defect has become manifest, even though it did not in fact become known to the owner at that time.

29 At the outset, it is appropriate to observe that generally speaking, limitation issues should not be determined in an application such as the present one in advance of the trial, particularly where insufficient is known of the damage sustained by the plaintiff and of the circumstances in which it was sustained to justify a confident answer: Wardley Australia Ltd v The State of Western Australia (1992) 175 CLR 514 at 533.

30 It is also apt to refer to para 62 of Practice Note SC Eq 3 which provides that as a general rule, applications to strike out or for summary judgment will not be entertained in this list, and that while sometimes applications are appropriate, strictness should be expected in declining to entertain them.

31 The defendant's attack on both categories of claims fails at the first hurdle because the form contains sufficient particulars to enable the defendant to know the nature of each. As to quantum, the claim is one for unliquidated damages and precision is neither required nor feasible. Sufficient information as to quantum is provided including that the amount claimed is within the jurisdiction of the Tribunal.

32 But even if this were not the case, s 32(3) of the CTTT Act makes it clear that the proceedings are not nullified by a failure to comply with the regulations, unless the Tribunal has otherwise determined, which it has not.

33 There are added difficulties for the defendant in respect to the claim in negligence.

34 I am by no means satisfied that the material in evidence justifies, particularly at this stage, a conclusion, let alone a confident answer, that the underlying defects the subject of the claim had become manifest more than six years before 27 November 2008 or, indeed, before the Belmont Report of January 2007. Neither that Report nor the Gleeson Report were admitted into evidence in the application.

35 It is far from clear on the material now before the Court that reasonable enquiry by the plaintiff, in the knowledge of the two cracks manifest by 27 February 2003, would have revealed the cause of the underlying defect which resulted in the multitude of individual cracks identified in the Belmont Report.

36 Additionally, the present application proceeded on the footing that the amount claimed in the Scott Schedule related only to the defects described in para 1.0.1. A reading of the Scott Schedule makes it clear that this is not the case. The figure of $896,087 spans various defects in respect of which no challenge is made.

37 It follows that the application must be dismissed with costs.

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Decision last updated: 24 August 2011