Owners SP 92450 v JKN Para 1 Pty Limited

The appeal before the Court of Appeal of New South Wales concerned a dispute between Owners SP 92450 (the appellant) and JKN Para 1 Pty Limited and Toplace Pty Limited (the respondents) regarding alleged breaches of statutory warranties in relation to building works. The core of the dispute centred on whether the external walls of the building complied with the performance requirements of the Building Code of Australia (BCA), specifically concerning non-combustibility. The appellant conceded that the cladding did not comply with the "deemed-to-satisfy" provisions of the BCA and that no "alternative solution" had been prepared prior to the issue of the construction certificate.

The legal issues before the court included whether the respondents had breached the statutory warranty implied by s 18B(1)(c) of the *Home Building Act 1989* (NSW), which requires building work to be carried out with due care and skill and in accordance with the requirements of the Building Code of Australia. The court also had to determine the appropriate measure of damages, specifically whether the Owners Corporation's loss should be assessed as the reasonable cost of removing the non-compliant cladding and replacing it with compliant, non-combustible material. The court considered the evidentiary onus on the defendants to prove that reinstatement damages would be unreasonable.

The Court of Appeal found that the respondents had breached the statutory warranty under s 18B(1)(c) of the *Home Building Act 1989* (NSW). The court reasoned that the performance requirements of the BCA, mandating non-combustible external walls, had not been met by the installed cladding. The absence of a compliant "deemed-to-satisfy" solution or an approved "alternative solution" prior to construction meant the building work did not comply with the BCA. Consequently, the court allowed the appeal, setting aside previous answers to separate questions and directing that the Owners Corporation's loss be assessed as the reasonable cost of removing the cladding and replacing it with non-combustible material. The court also ordered the respondents to pay the appellant's costs of the appeal and the determination of the separate questions in the court below.