Strata Plan 99576 v Central Construct Pty Ltd

[2023] NSWSC 212

Supreme Court

New South Wales

Medium Neutral Citation:

Strata Plan 99576 v Central Construct Pty Ltd [2023] NSWSC 212

Hearing dates:

10 March 2023

Date of orders:

10 March 2023

Decision date:

10 March 2023

Jurisdiction:

Equity

Before:

Darke J

Decision:

Application for stay of proceedings refused.

Catchwords:

CIVIL PROCEDURE – application for stay of proceedings – where defective building works the subject of the proceedings are also the subject of an investigation process under the Residential Apartment Buildings (Compliance and Enforcement Powers) Act 2020 (NSW) (“the Act”) – where the investigation process may ultimately result in the making of orders against the defendants to carry out building rectification work – whether it is appropriate for the Court to order a stay of the proceedings to effectively allow the investigation process under the Act to proceed to a conclusion – stay refused

Legislation Cited:

Civil Procedure Act 2005 (NSW), s 67

Residential Apartment Buildings (Compliance and Enforcement Powers) Act 2020 (NSW), Pt 5

Category:

Procedural rulings

Parties:

Strata Plan 99576 (Plaintiff/Respondent)
Central Construct Pty Ltd (First Defendant/First Applicant)
Gosford Water Views Pty Ltd (Second Defendant/Second Applicant)

Representation:

Counsel:
Mr F Corsaro SC (Plaintiff/Respondent)
Mr B Le Plastrier (Defendants/Applicants)

Solicitors:
Chambers Russell Lawyers (Plaintiff/Respondent)
Norton Rose Fulbright (Defendant/Applicants)

File Number(s):

2021/240577

Publication restriction:

None

Judgment – EX TEMPORE (REVISED)

1. These proceedings for damages were commenced in the Technology and Construction List by the plaintiff, an Owners Corporation, against the defendants, who are alleged to be the builder and developer of the relevant strata development. The plaintiff alleges that the building work was seriously defective in various respects, and that it failed to comply with the Building Code of Australia. The proceedings were commenced in August 2021.

2. By a Notice of Motion filed on 22 February 2023, the first and second defendants seek a stay of the proceedings until 23 February 2024. The 12 month stay is sought pursuant to either the Court’s inherent power to make such an order, or pursuant to s 67 of the Civil Procedure Act 2005 (NSW). The motion is supported by the affidavit of Alexander Whiteside, solicitor, sworn on 22 February 2023 and the exhibit to that affidavit.

3. In brief, the stay is sought in circumstances where the work the subject of the proceedings has become the subject of an investigation under the Residential Apartment Buildings (Compliance and Enforcement Powers) Act 2020 (NSW) (“the Act”), and there is thus a concurrent or parallel process underway that deals with the subject matter of the proceedings and which may ultimately result in the making of orders under the Act against the defendants to carry out building rectification work.

4. The stay is opposed by the plaintiff. The plaintiff relies upon the affidavit of Jan Muysken, the Chairperson of the strata committee, affirmed on 7 March 2023. In short, the plaintiff contends that in circumstances where it has regularly invoked the jurisdiction of this Court to enforce its legal rights, it has a prima facie right to prosecute the proceedings, and there is no reason why the proceedings should be stayed in the hope that the process that has commenced under the Act may, in some other way, bring about a satisfactory resolution of the problems with the building.

5. The evidence shows that on 14 December 2022, Mr Muysken, on behalf of the strata committee, sent a letter to the Department of Fair Trading about the problems with the building, and the committee’s inability to reach a satisfactory outcome, including through the present proceedings. The letter concluded with the following: “Any help you can provide would be greatly appreciated.” It appears that there were then some further communications between Mr Muysken and the Department in December 2022, including about the provision of certain information.

6. On 24 January 2023, Mr Muysken received a letter from the Department of Fair Trading in which it was stated that the Department would inform Mr Muysken of what it proposed to do but that at the present time was unable to provide a timeframe for when the matter would be finalised. On 2 February 2023, the Department sent a letter to Mr Muysken and others which included the following:

As you would be aware, this matter is now being handled by Project Intervene, an initiative of the Office of the Building Commissioner.

Project Intervene aims to help Owners Corporations find resolution by improving the process and timeframes to have serious defects in your apartment building remediated by the developer or builder.

7. The letter went on to state that Sedgwick Australia had been engaged to assist with the “triage and inspection” of the building.

8. It appears that Project Intervene has been established by the New South Wales Government with the aim of providing what is described as “a way forward for owners corporations to have serious defects remediated.” The relevant website states that the Department of Fair Trading can enforce rectification by using strong compliance powers under the Act. One of the stated benefits of Project Intervene is that there would be “no costly and time-consuming litigation with low prospects of success”.

9. On 17 February 2023, the Department sent an email (apparently not to the plaintiff or representatives of the plaintiff) which included a description of the process then underway. The email included the following:

The first step in this process is for a triage investigation to be conducted on your building. Ordinarily, we would expect the following steps to occur:

1.   We may need to seek documentation about the building…

2.   Sedgwick Australia has been engaged as the program managers by the Department to triage and investigate if serious defects exist...

...

4.   Following the inspection, Departmental Officers will seek comment from the developer on the preliminary findings.

5.   Departmental Officers may give directions or seek undertakings, issue building work rectification orders or other compliance action including further comprehensive inspections...

6.   The developer may propose entering into an undertaking agreeing to remediate the serious defects.

7.   Where no offer of an undertaking is made a final building work rectification order will be issued to the developer, with a copy provided to the owners corporation…

10. Rectification orders which may be made under the Act are provided for in Part 5 of the Act. The principal power to order rectification work appears in s 33 of the Act. I note that s 43 of the Act provides:

(1) A building work rectification order must be considered by the Civil and Administrative Tribunal for the purposes of determining a building claim under Part 3A of the Home Building Act 1989 and by any other court in proceedings relating to the building work the subject of the order, if the order is brought to the attention of the Tribunal or the court in the proceedings.

(2)   Nothing in this section binds the Tribunal or court.

11. Part 5 also contains provisions dealing with natural justice requirements in respect of such orders, and appeals that may be taken in respect of such orders. Section 49 provides that a developer who is given a building work rectification order may appeal to the Land and Environment Court against the order.

12. The defendants submitted that there were at least five reasons in favour of the granting of the stay that is sought. These are:

1. that there is a prospect that all of the allegedly defective work the subject of the proceedings may be rectified either by the defendants pursuant to a building work rectification order (or pursuant to an undertaking given), or otherwise by the Secretary pursuant to s 42 of the Act;

2. that there is a risk of inconsistent findings of fact in different courts about the same subject matters, in particular in the event that there was an appeal to the Land and Environment Court pursuant to s 49 of the Act;

3. that staying the proceedings would be consistent with one of the stated purposes of Project Intervene, namely to avoid costly and time-consuming litigation;

4. it was prima facie vexatious and oppressive for the plaintiff to have initiated the Project Intervene process when these proceedings were already well underway, such that there would be no unfairness in requiring that the plaintiff “be bound to finish what it started”; and

5. that in the absence of a stay there may be considerable wastage of governmental resources in connection with the Project Intervene process.

13. I have considered all of those matters, both individually and cumulatively, but I am not persuaded that those reasons render it appropriate for the Court to order a stay of these proceedings to effectively allow the process under the Act to first proceed to a conclusion.

14. It seems to me that the outcome of the process under the Act is attended with great uncertainty. Moreover, even if orders were ultimately made and complied with, there is no facility under that process for any damages to be awarded by way of compensation to the plaintiff. Not only is the overall outcome of the process quite uncertain, the time for completion of the process is itself most uncertain, particularly when regard is had to the possibility of legal proceedings arising out of that process, whether that be in the nature of an appeal to the Land and Environment Court or an administrative law challenge to decisions made under the Act.

15. I note that s 43 of the Act, which I have quoted above, contemplates that court proceedings may be determined even if orders under the Act have been made. Whilst that provision does not of course preclude this Court from exercising the power to stay proceedings before it in appropriate circumstances, the provision suggests to me that there is no legislative intention that court proceedings should await the outcome of processes under the Act or should be stayed pending the conclusion of such processes.

16. I do accept that there is a risk of inconsistent findings in different courts if the process under the Act leads to court proceedings. That risk could not be described as fanciful, but I do not think that it is a risk of such a magnitude that it should impinge upon the plaintiff’s prima facie right to seek to vindicate its legal rights in this Court. That is to say, I do not think that that factor warrants the proceedings in this Court being delayed on that account. That seems to me to be so even if, in a practical sense, the actions of the plaintiff can be seen as the cause of the commencement of the investigation and ensuing process under the Act, and I note that the plaintiff appears, from the evidence of Mr Muysken, at least content to let that process continue.

17. I should state, however, that whilst I regard the plaintiff as in practical terms the cause of the commencement of the investigation and ensuing process under the Act, I do not accept that insofar as it communicated with the Department of Fair Trading the plaintiff acted in a relevantly vexatious or oppressive way. I reach that conclusion even though the conduct could have and in fact has led to the situation where parallel processes exist dealing largely or almost wholly with the same subject matter.

18. The defendants have not pointed to any particular prejudice that they would suffer were a stay not granted, although I think that the very existence of the parallel processes is likely to cause some prejudice to the defendants. I have taken that into account.

19. It seems to me that the prospect that the process under the Act may obviate the need for these proceedings, or bring about a narrowing of its scope, is too uncertain to warrant delaying these proceedings. That is especially so when the timeframe for the other process is, as I have said, itself so uncertain. Having regard, as I must, to the overriding purpose referred to in s 56 of the Civil Procedure Act, and also the dictates of justice referred to in s 58 of that Act, I do not see this as an appropriate situation to order a stay of the proceedings as sought by the defendants.

20. Accordingly, the defendants’ Notice of Motion filed on 22 February 2023 will be dismissed, and I will order that the first and second defendants pay the plaintiff’s costs of the Notice of Motion.

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Decision last updated: 13 March 2023