Brookfield Multiplex Ltd v Owners Corporation Strata Plan 61288 and Anor

Brookfield Multiplex Ltd (Brookfield) appealed to the High Court of Australia from a decision of the New South Wales Court of Appeal concerning alleged defects in a residential building. The Owners Corporation Strata Plan 61288 (the Owners Corporation) and a number of individual owners of lots within the building brought proceedings against Brookfield, the original developer and builder, alleging breaches of contract and negligence in relation to the construction of the building. The dispute centred on alleged defects in the building's facade and waterproofing systems, which the Owners Corporation claimed had caused or would cause damage to the building.

The High Court was required to determine, among other things, whether the Owners Corporation had a cause of action against Brookfield for breach of a duty of care in tort for economic loss arising from latent defects in the building. Specifically, the Court considered the application of the principles established in *Bryan v Maloney* and *Astley v Austrust Ltd* to the facts of this case, particularly in light of the contractual relationship between the parties and the nature of the alleged loss. The Court also had to consider the scope of Brookfield's liability for defects that had not yet manifested as damage.

The High Court, by majority, held that the Owners Corporation did not have a cause of action in negligence against Brookfield for pure economic loss arising from latent defects in the building. The Court reasoned that the existence of a contractual relationship between the developer and the original purchaser, and the subsequent sale of lots to individual owners, did not, in itself, give rise to a duty of care in tort owed by the developer to the Owners Corporation or subsequent purchasers for pure economic loss. The Court distinguished the present case from *Bryan v Maloney*, finding that the statutory scheme of strata title ownership and the contractual framework governing the sale of lots did not support the imposition of such a duty. The Court affirmed that where a contract governs the relationship and the loss is economic, contractual remedies are generally to be pursued.

The appeal was allowed, and the orders of the New South Wales Court of Appeal were set aside.