On 24 August 2022, the NSW Supreme Court delivered its decision in The Owners – Strata Plan No 90018 v Parkview Constructions Pty Ltd [2022] NSWSC 1123.
Justice Stevenson confirmed that an owners corporation is entitled to add new defects to an existing claim for breaches of the statutory warranties under s 18B of the Home Building Act 1989 (NSW) (HBA), even if the 2-year warranty period for non-major defects or 6-year warranty period for major defects has expired.
We are currently acting for a number of owners corporations, developers and builders in proceedings concerning the HBA. As will be explained below, this decision could have far-reaching consequences for those involved in building defects proceedings.
Background
On 26 August 2016, The Owners – Strata Plan No. 90018 (Owners Corporation) commenced proceedings against the builder, Parkview Constructions Pty Ltd (Parkview), for breaches of the statutory warranties under the HBA. Over the course of the proceedings, further defects were discovered.
By Notice of Motion, the Owners Corporation sought to amend its claim to:
- add a claim for a breach of the statutory warranty under s 37 of the Design and Building Practitioners Act 2020 (NSW) (DBP Act);
- add claims concerning the external façade of the building, coatings on the inside face of glass windows in the building and stair pressurisation systems installed in the two towers and carpark of the building (together, New Defects) under ss 18C and 18D of the HBA; and
- remove the claim for some of the alleged defects in the common property.
(collectively, Claim)
The issue in the present proceedings was whether the claim for the New Defects invokes a new cause of action in respect of the statutory warranties under s 18B of the HBA.
Judgment
Are there separate causes of action for breaches of statutory warranties under s 18B of the HBA?
Justice Stevenson held there is not a separate cause of action for each defect that arises; each breach of the statutory warranties is the cause of action.
Therefore, the Owners Corporation was entitled to amend its Claim to include the New Defects because the defects were regarded as further particulars to the existing claim.
Will the amendment to the Claim be unduly prejudicial?
It was accepted that the inclusion of the New Defects would date back to the time when the proceedings were commenced, unless otherwise directed by the Court. Justice Stevenson held that there will always be some prejudice involved when considering events in the past. Nonetheless, he concluded that Parkview would not suffer any prejudice as they were equipped with expert evidence to deal with the claim.
Conclusion
This case is relevant to owners corporations who commenced legal proceedings for defects arising from breach of statutory warranties under the HBA, and later discover additional defects. As the case indicates, an owners corporation would be entitled to add the newly discovered defects to its claim, even if the warranty period has expired, subject to considerations of prejudice.
The contents of this publication are for reference purposes only. This publication does not constitute legal advice and should not be relied upon as legal advice. Specific legal advice should always be sought separately before taking any action based on this publication.
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Authors: Maysaa Parrino, Matt Armota & Ericka Pham
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