The Owners Strata Plan 57504 v Building Insurers' Guarantee Corporation - [2008] NSWSC 1022

CITATION: The Owners Strata Plan 57504 v Building Insurers' Guarantee Corporation [2008] NSWSC 1022

HEARING DATE(S): 23/07/08 and 24/07/08

JUDGMENT DATE :
3 October 2008

JUDGMENT OF: McDougall J at 1

DECISION: See paras [169] to [173] of the judgment.

CATCHWORDS: INSURANCE – Home Building Act 1989 – statutory insurance – policy provided indemnity for loss where notification is made within six months of indemnified party becoming aware of such loss, but not after the expiry of the seven year period – whether policy complied with Act - successors in title entitled to benefits of statutory warranties. - DAMAGES – residential building contract – loss arising from construction not in accordance with contract, plans and specifications – rectification – remedial work must be necessary to produce conformity with the contract and reasonable in the circumstances. - PRACTICE – referee’s report – variation – referee’s findings should not be re-agitated in court where conclusion open to the referee on the evidence – whether referee forms an interim or tentative view and proposes to change that view, natural justice requires the parties be informed.

LEGISLATION CITED: Building Services Corporation Amendment Regulation 1997
Civil Procedure Act 2005
Home Building Act 1989
Local Government Act 1993
Home Building Regulation 1990
Strata Scheme Management Act 1996

CASES CITED: Bellgrove v Eldridge (1954) 90 CLR 613
Bryan v Maloney (1995) 182 CLR 609
Chocolate Factory Apartments v Westpoint Finance [2005] NSWSC 784
Dennis v Australian Broadcasting Corporation [2008] NSWCA 37
FAI General Insurance Co Ltd v Australia Hospital Care Pty Ltd (2001) 204 CLR 641
Gosford City Council v GIO General LTD (2003) 56 NSWLR 542
Kirkby v Coote [2006] QCA 61
Robinson v Harman (1848) 1 Exch 850
Ruxley Electronics and Construction Ltd v Forsyth [1996] 1 AC 344
State of Queensland v JL Holdings Pty Limited (1997) 189 CLR 146

PARTIES: The Owners - Strata Plan No. 57504 (Plaintiff)
Building Insurers' Guarantee Corporation (Defendant)

FILE NUMBER(S): SC 55043/06

COUNSEL: HJA Neal (Plaintiff)
TM Lynch / RA O'Keefe (Defendant)

SOLICITORS: Andreones Lawyers (Plaintiffs)
Mills Oakley Lawyers (Defendant)

IN THE SUPREME COURT
OF NEW SOUTH WALES
EQUITY DIVISION
TECHNOLOGY & CONSTRUCTION LIST

McDOUGALL J

3 October 2008

55043/06 THE OWNERS STRATA PLAN 57504 v BUILDING INSURERS’ GUARANTEE CORPORATION

JUDGMENT

HIS HONOUR:

Background

1 The plaintiff (the Owners Corporation) is the owners corporation of a strata title development at Redfern (the development). The defendant (the Guarantee Corporation) is a statutory corporation representing the Crown in right of the State of New South Wales. The Guarantee Corporation was created in substance for the purpose of administering claims against insolvent insurers that the State is required to meet pursuant to s 103I of the Home Building Act 1989 (HB Act).

2 The development was brought into being by the conversion of a warehouse into 111 residential lots and a small number of commercial lots. The conversion, which on any view included residential building work for the purposes of the HB Act, was carried out by a company known as…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

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Details

Case: [2008] NSWSC 1022
Decision Date: 3 October 2008

CaseChat Overview and Summary

The Owners Strata Plan 57504 was a plaintiff in a legal dispute against Building Insurers' Guarantee Corporation, which was heard in the Supreme Court of New South Wales. The matter involved claims under a statutory insurance policy provided under the Home Building Act 1989. The plaintiffs sought compensation for losses related to construction defects in a residential building. The primary legal issues revolved around whether the insurance policy complied with the statutory requirements, specifically the timing of notification of loss and the duration of coverage, and whether the successors in title to the property were entitled to the benefits of the statutory warranties.

The court examined the terms of the insurance policy, which stipulated that the policyholder must notify the insurer of any loss within six months of becoming aware of the loss, but not after the expiration of a seven-year period from the date of practical completion of the building. The plaintiffs argued that the policy did not comply with the statutory requirements and that they were entitled to compensation for the defects. The court needed to determine whether the policy complied with the Act and, if not, whether the plaintiffs were still entitled to benefits under the statutory warranties. Additionally, the court needed to consider the extent of the damages, specifically whether the rectification work was necessary and reasonable in the circumstances to conform with the contract and specifications.

The court found that the policy did not comply with the statutory requirements because it imposed a notification period that was inconsistent with the statutory provisions. However, the court held that the plaintiffs were still entitled to benefits under the statutory warranties because they were successors in title to the property. The court also determined that the damages for the rectification work were reasonable and necessary to conform with the contract and specifications. The reasoning involved a detailed analysis of the policy terms, the statutory provisions, and the evidence presented regarding the defects and the rectification work. The court concluded that the plaintiffs were entitled to compensation for the defects and the associated rectification work. The final orders were made in favour of the plaintiffs, awarding them compensation for the defects and the associated rectification work.

Orders