Owners Corporation Strata Plan 80453 v David John Walsh

[2015] NSWSC 169

Supreme Court

New South Wales

• Amendment notes

Medium Neutral Citation:

Owners Corporation Strata Plan 80453 v David John Walsh [2015] NSWSC 169

Hearing dates:

25 February 2015

Date of orders:

25 February 2015

Decision date:

25 February 2015

Jurisdiction:

Equity Division

Before:

Rein J

Decision:

See [23] and [24]

Catchwords:

Assessment of damages; claim by owners corporation in respect of defects in the common property; exclusion of damages wholly within lots; exclusion of GST component.

Cases Cited:

Belgrove v Eldrige (1954) 90 CLR 613
Gagner Pty Ltd t/as Indochine Cafe v Canturi Corp Pty Ltd
Owners Corporation SP35042 v Seiwa Australia Pty Limited (2007) NSWCA 272

Category:

Costs

Parties:

Owners Corporation Strata Plan 80453 (plaintiff) David John Walsh (defendant)

Representation:

Counsel: P: F Hicks/ M Kloucek
D: D Walsh (litigant in person)

Solicitors: P: Sparke Helmore

File Number(s):

2011/00374915

Publication restriction:

nil

Judgment

1. The plaintiff corporation, for whom Mr Hicks together with Ms Koucek appears, is the owner of the common property forming part of a development known as The Promenade San Souci. The plaintiff claims that there are many defects in the property for which the defendants are responsible.

2. Mr Walsh, the first defendant, was the builder of the development and on 7 June 2013 Sackar J ordered that his defence be struck out and the following order was made:

“2. Judgment for the plaintiff against the first defendant in respect of the claims made in the summons and technology and construction list statement, with quantum of damages to be assessed".

3. Mr Walsh was also ordered to pay the plaintiff's costs.

4. It was agreed between the plaintiff and the second defendant that the entry of judgment and the assessment of damages would not affect the proceedings between the plaintiff and the second defendant Milano Investments Pty Limited which proceedings have been set down for hearing later this year.

5. The hearing of the assessment of damages was, in mid December last year, fixed for hearing today.

6. In support of its case the plaintiff relies on the reports of three experts: Mr Hamilton of Landley Consulting Group, Mr Murrow of AE and D and Mr Heymann of Heymann-Cohen Quantity Surveyors. Their reports are contained in exhibits D1 or D2.

7. The plaintiff also relies on two affidavits of Mr Kritharas, one of 13 May 2013 and one of 23 February 2013 which are now exhibit A and exhibit B.   

8. Mr Walsh appeared today in person to resist the plaintiff's claim.

9. According to the affidavits of Mr Kritharas, Mr Walsh was served with Mr Hamilton’s and Mr Murrow’s reports in 2012. Mr Heymann’s first report of 19 February 2013 was exhibited to Mr Kritharas’s affidavit of 15 May 2013 and Mr Heymann’s revised report of December 2013 was served in February 2014 (see para 11 of Mr Kritharas’s affidavit of 23 February 2015). Mr Walsh was informed in June 2013 that his defence had been struck out and that judgment had been entered against him with damages to be assessed. There is also evidence that Mr Kritharas visited Mr Walsh in February 2014 to discuss the consequence of Sackar J’s decision: see para 9 of Mr Kritharas’s affidavit of 23 February 2015 and BK 15 Tab 3.

10. It appears that Mr Walsh did not attend Court when today’s matter was fixed for hearing but he was informed by letter of 17 February that the matter will be proceeding today. Yesterday, Mr Walsh sent an e-mail advising that he would be attending today and that he required the plaintiff's experts to attend for cross-examine (see exhibit E).

11. The plaintiff did ensure, consequent upon Mr Walsh’s communication, that their three experts were available for cross-examination today and Mr Walsh cross-examined each of these three experts.

12. Much of Mr Walsh's cross-examination seemed to be directed to matters that involved a misunderstanding on his part of the task which the Court was required to undertake today; that is, to assess what rectification work would reasonably be required to repair the defects for which, by the judgment entered in June, Mr Walsh has been found liable and what the work to repair those defects would be estimated to cost: see Belgrove v Eldrige (1954) 90 CLR 613 at page 617 to 618.

13. Several of Mr Walsh's questions could be said to be directed to the first question but his cross-examination did nothing to undermine Mr Murrow's assessment of what work was required to make the building comply with the Building Code of Australia’s fire safety provisions and Mr Hamilton's assessment of the work required to ensure the building complied with the BCA’s other provisions. No questions were directed to Mr Heymann concerning his estimation of costs of the work identified by Mr Murrow and Mr Hamilton.

14. The reports of Mr Hamilton, Mr Murrow and Mr Heymann are very detailed and comprehensive. I am satisfied that they have been prepared with the objectivity demanded of experts by the code contained in schedule 7 and specified in UCPR Rule 31.23; which code was acknowledged by each of the experts.

15. I am satisfied that these reports establish what work is required on the building to rectify the many defects which are documented and the costs to repair those defects.

16. I am satisfied from exhibit C that the plaintiff is the owner of the common property although having regard to the fact that judgment was entered in its favour I think that probably was not a matter necessary to be proved today.

17. Mr Walsh did raise one matter which is relevant to the enquiry which the Court is now required to undertake. That is that some of the defects which have been identified by the experts are defects wholly within the lots of owners and therefore cannot be subject of claim by the Owners Corporation.

18. Mr Hicks responded to this concern by accepting that the Owners Corporation cannot claim for work that is attributable to defects that are wholly within particular units. He identified and read out specific items namely item 11 point 4 at page 67, item 6 point 4 at page 41, item 9 point 3 at page 52 and item 14 point 4 at page 88 and item 14 point 5 at page 89 of Mr Hamilton's report as being matters which he accepted could not be the subject of the claim. The total, he submitted, of those deductions was $7,907. 40. This amount was to be deducted from the estimate of Mr Heymann of $2.9 million without GST.

19. Mr Hicks contended that defects within the units that were as a result of defects extant in the common property and hence for which the Owners Corporation would be liable were properly the subject of a claim by the Owners Corporation since the lot owners would be entitled to claim recompense from the Owners Corporation for such damage to the lots. An example of this situation is found in Owners Corporation SP35042 v Seiwa Australia Pty Limited (2007) NSWCA 272. Mr Walsh did not dispute that this was so.

20. Mr Hicks quite properly also conceded that, in the light of the Court of Appeal's decision in Gagner Pty Ltd t/as Indochine Cafe v Canturi Corp Pty Ltd[2009] NSWCA 413 (16 December 2009) and the fact that the plaintiff is registered for GST purposes, the plaintiff could not recover GST. With those two alterations, the plaintiff's claim is reduced to $2,955,713.60.

21. Mr Walsh did not dispute that delineation of items which needed to be removed because they were the defects internal to the lot. He did not dispute the mathematical calculation advanced by Mr Hicks to which I have just referred.

22. Mr Walsh has neither by his cross-examination or by any submissions pointed to any reason why I should not accept the plaintiff's revised figure of $2.9 million based on the expert evidence which the plaintiff has presented as being a measure of damage arising out of the defects.

23. Accordingly, judgment should be entered against the first defendant, Mr Walsh, in the amount of $2,955,713.60.

24. It is appropriate that the costs should follow the event. I order Mr Walsh to pay, in addition to the costs order made previously in the proceedings, for him to pay the costs incurred by the plaintiff in this assessment of damages. Those costs are to be as agreed or assessed.

Amendments

08 May 2015 - Correction of file number

Decision last updated: 08 May 2015