Rialto Sports Pty Limited v Cancer Care Associates Pty Limited; CCA Estates Pty Limited; Davjul Holdings Pty Limited; Armmam Pty Limited

The Court of Appeal of New South Wales heard appeals from decisions of the District Court concerning disputes between Rialto Sports Pty Limited and Cancer Care Associates Pty Limited, CCA Estates Pty Limited, Davjul Holdings Pty Limited, and Armmam Pty Limited. The core of the dispute involved allegations of defective and incomplete building works, the construction of contractual covenants, and the effectiveness of an assignment of a chose in action.

The primary legal issues before the Court of Appeal were whether a vendor's covenant to construct a building in a proper and workmanlike manner constituted a "best endeavours" obligation, and if so, whether the vendor was liable for incomplete or defective work by the builder. The Court also considered whether such a good workmanship covenant merged upon completion of the sale, particularly in the absence of an express statement that it survived completion. Further issues included whether lot owners could claim damages for the rectification of common property, the validity of an assignment of a chose in action, and whether the claim was time-barred following the substitution of a plaintiff.

The Court of Appeal reasoned that the covenant to construct in a proper and workmanlike manner was not merely a "best endeavours" obligation and that it did not merge on completion, as its performance could not be fully investigated prior to completion and the occupation certificate was not determinative. The Court found that lot owners could claim damages for the infringement of their proprietary interest in common property. Regarding the assignment, the Court determined that the substitution of the plaintiff under the Uniform Civil Procedure Rules 2005 (NSW) placed the substituted plaintiff in the same position as the original party.

The Court allowed the appeals in part, setting aside the orders of the District Court. In lieu, the Court referred the matters to a referee for enquiry and report, with directions for the conduct of the reference, including the commencement date, the manner of proceedings, the evidence to be considered, and the timeline for the referee's report. The parties were made jointly liable for the referee's fees in the first instance, and costs were reserved.