The Owners - Strata Plan 87003 v Raysons Constructions Pty Ltd

[2025] NSWSC 66

Supreme Court

New South Wales

• Amendment notes

Medium Neutral Citation:

The Owners – Strata Plan 87003 v Raysons Constructions Pty Ltd [2025] NSWSC 66

Hearing dates:

7 February 2025; supplementary submissions and materials 11, 21 and 24 February 2025

Decision date:

25 February 2025

Jurisdiction:

Common Law

Before:

Leeming JA

Decision:

1. Grant leave to appeal.

2. Appeal allowed.

3. Set aside the orders made by an Appeal Panel of NCAT on 20 June 2024.

4. Note that the effect of the above orders is that the internal appeal brought by Raysons Constructions Pty Ltd remains undetermined by NCAT.

5. Raysons Constructions Pty Ltd to pay the Owners Corporation’s costs of its proceedings in this Court.

6. Exhibit C will be the annotated table of similarities and differences between the matters known to the Owners Corporation in the first 5½ years contrasted with the claims advanced in the points of claim, including annexures, emailed to my chambers on 11 February 2025.

7. The exhibits may be returned.

Catchwords:

APPEAL — question of law — Civil and Administrative Tribunal — proceedings for breach of statutory warranties implied by Home Building Act 1989 (NSW) in residential building work — six year warranty period — Owners Corporation commenced proceedings four months after expiry of six year period — whether proceeding commenced in time — Senior Member found Owners Corporation commenced within further six month period authorised by s 18E(1)(e) because breaches only became apparent in last six months of warranty period — internal appeal — Appeal Panel overturned findings of fact and found proceedings not commenced in time — whether inconsistency on the face of Senior Member’s reasons was a slip — whether Appeal Panel’s construction of reasons involved error of law

BUILDING AND CONSTRUCTION — residential building work — Home Building Act 1989 (NSW), s 18E — construction of provision authorising commencement of proceedings in six months after expiry of six year warranty period — whether plaintiff bears onus of establishing facts so as to fall within s 18E(1)(e) — nature of awareness needed to be established in order to fall within section — significance of commencement of proceedings being jurisdictional

Legislation Cited:

Building Products (Safety) Act 2017 (NSW),

Building Services Corporation Act 1989 (NSW)

Building Services Corporation Legislation Amendment Act 1996 (NSW)

Civil and Administrative Tribunal Act 2013 (NSW), ss 80, 83

Corporations Act 2001 (Cth), s 440D

Design and Building Practitioners Act 2020 (NSW)

Home Building Act 1989 (NSW), ss 18B, 18BA, 18C, 18D, 18E, 48K, 48MA, 48O, ss 103BA, 103BB

Home Building Amendment Act 2008 (NSW).

Home Building Amendment Act 2011 (NSW)

Home Building Amendment Act 2014 (NSW)

Home Building Amendment (Statutory Warranties) Act 2006 (NSW)

Limitation Act 1969 (NSW), ss 60F, 60I

Strata Schemes Management Act 1996 (NSW), s 80D

Strata Schemes Management Act 2015 (NSW), s 103

Supreme Court Act 1970 (NSW), s 31

Uniform Civil Procedure Rules 2005 (NSW), r 36.16

Cases Cited:

Accounting Systems 2000 (Developments) Pty Ltd v CCH Australia Ltd (1993) 42 FCR 470

Acuthan v Coates (1986) 6 NSWLR 472

Alta Vale Residential Pty Ltd v The Owners – Strata Plan No 95693 [2024] NSWCATAP 212

Australian Broadcasting Corporation v Chau Chak Wing (2019) 271 FCR 632; [2019] FCAFC 125

Australian Iron & Steel Ltd v Hoogland (1962) 108 CLR 471; [1962] HCA 13

Bailey v Owners Corporation of Strata Plan 62666 [2011] NSWCA 293

Boensch v Pascoe (2019) 268 CLR 593; [2019] HCA 49

Boyle v Director of Public Prosecutions (Cth) [2024] SASCA 73; 332 IR 205

BP v State of New South Wales [2019] NSWCA 223

Briggs v Gleeds [2015] Ch 212; [2014] EWHC 1178 (Ch)

Chartbrook Ltd v Persimmon Homes Ltd [2009] AC 1101; [2009] UKHL 38

Chugg v Pacific Dunlop Ltd (1990) 170 CLR 249; [1990] HCA 41

Coal & Allied Operations Pty Ltd v Crossley (2023) 112 NSWLR 130; [2023] NSWCA 182

Collector of Customs v Agfa-Gevaert Ltd (1996) 186 CLR 389; [1996] HCA 36

Commonwealth v Mewett (1997) 191 CLR 471; [1997] HCA 29

Commonwealth v Verwayen (1990) 170 CLR 394; [1990] HCA 39

Conquer v Boot [1928] 2 KB 336

Croc’s Franchising Pty Ltd v Alamdo Holdings Pty Ltd [2023] NSWCA 256

Currie v Dempsey (1967) 69 SR (NSW) 116

Cyril Smith & Associates Pty Ltd v The Owners – Strata Plan No 64970 [2011] NSWCA 181

David Grant & Co Pty Ltd v Westpac Banking Corporation (1995) 184 CLR 265; [1995] HCA 43

Director of Public Prosecutions (Nauru) v Fowler (1984) 154 CLR 627; [1984] HCA 48

Director-General of the Department of Environment and Climate Change v Taylor [2007] NSWLEC 530

Donohoe v Albulario [2025] NSWSC 9

Dowling v Bowie (1952) 86 CLR 136; [1952] HCA 63

Environment Protection Authority v Grafil Pty Ltd; Environment Protection Authority v Mackenzie (2019) 101 NSWLR 245; [2019] NSWCCA 174

Fitzgerald v Masters (1956) 95 CLR 420; [1956] HCA 53

Haertsch v Whiteway (2020) 102 NSWLR 386; [2020] NSWCA 133

Hazeltine Corporation v International Computers Ltd [1980] FSR 521

Honeywood as executrix of the estate of the late Neville Honeywood v Munnings (2006) 67 NSWLR 466; [2006] NSWCA 215

Imbree v Chief Commissioner of State Revenue [2024] NSWCATAP 158

James Adam Pty Ltd v Fobeza Pty Ltd (2020) 103 NSWLR 850; [2020] NSWCA 311

Jandson Pty Ltd v James [2021] NSWCATAP 274

John Fairfax Publications Pty Ltd v Rivkin [2003] HCA 50; 201 ALR 77

Kalls Enterprises Pty Ltd (in liq) v Baloglow [2007] NSWCA 191; 63 ACSR 557

Kostas v HIA Insurance Services Pty Ltd (2010) 241 CLR 390; [2010] HCA 32

Kramer v Stone (2023) 112 NSWLR 564; [2023] NSWCA 270

McHugh Holdings Pty Ltd v Newtown Colonial Hotel Pty Ltd (2008) 73 NSWLR 53; [2008] NSWSC 542

National Starch and Chemical Pty Ltd v Nelson [1998] NSWCA 155

Onerati v Phillips Constructions Pty Ltd (1989) 16 NSWLR 730

Parkview Constructions v Owners – Strata Plan No 90018 [2023] NSWCA 66

Pullen v Gutteridge Haskins & Davey Pty Ltd [1993] 1 VR 27

Raysons Constructions Pty Ltd v The Owners Strata Plan No 87003 [2024] NSWCATAP 113

Reid v Commonwealth Bank of Australia (2022) 109 NSWLR 149; [2022] NSWCA 134

Ryan v Commissioner of Police, NSW Police Force (2022) 290 FCR 369; [2022] FCAFC 36

S & G Homes Pty Ltd t/as Pavilion Homes v Owen [2015] NSWCATAP 190

Seymour Whyte Constructions Pty Ltd v Ostwald Bros Pty Ltd (in liq) (2019) 99 NSWLR 317; [2019] NSWCA 11

Sydney Seaplanes Pty Ltd v Page (2021) 106 NSWLR 1; [2021] NSWCA 204

Tatham v Huxtable (1950) 81 CLR 639; [1950] HCA 56

Tre Cavalli Pty Ltd v The Berry Rural Co Operative Society Ltd [2013] NSWCA 235

Trentelman v The Owners – Strata Plan No 76700 (2021) 106 NSWLR 227; [2021] NSWCA 242

Unique Commercial Group Pty Ltd v Cusumano [2024] NSWCATAP 204

Vautin v BY Winddown, Inc (formerly Bertram Yachts) (No 4) [2018] FCA 426; 362 ALR 702

Vines v Djordjevitch (1955) 91 CLR 512; [1955] HCA 19

Wilson v Chan & Naylor Parramatta Pty Ltd (2020) 103 NSWLR 140; [2020] NSWCA 213

Zhong v Guan [2024] NSWCA 300

Texts Cited:

M Aronson, “Unreasonableness and Error of Law” (2001) 24(2) UNSWLJ 315

Building Code of Australia

M Gleeson, “Statutory Interpretation” (Justice Hill Memorial Lecture, 11 March 2009)

P Herzfeld and T Prince, Interpretation (Thomson Reuters, 3rd ed, 2024)

R J Lazarus, “The (Non)Finality of Supreme Court Opinions” (2014) 128 Harvard Law Review 540

A O’Callaghan, PCO Standard (version 1, 9 May 2023)

F Pollock, Principles of Contract (Stevens & Sons, 7th ed, 1902)

J Stone, Evidence: Its History and Policies (revised by W Wells, Butterworths, 1991)

Category:

Principal judgment

Parties:

The Owners – Strata Plan 87003 (Plaintiff)
Raysons Constructions Pty Ltd (Defendant)

Representation:

Counsel:
F Corsaro SC, P Horobin (Plaintiff)
G Carolan (Defendant)

Solicitors:
Chambers Russell Lawyers (Plaintiff)
Ray Wehbe & Co Solicitors (Defendant)

File Number(s):

2024/00265127

Publication restriction:

Nil

 Decision under appeal 

Court or tribunal:

New South Wales Civil and Administrative Tribunal

Jurisdiction:

Appeal Panel

Citation:

[2024] NSWCATAP 113

Date of Decision:

20 June 2024

Before:

S Thode (Principal Member), D Fairlie (Senior Member)

File Number(s):

2023/00257814

JUDGMENT

1. LEEMING JA: The plaintiff Owners Corporation owns the common property in a residential apartment building in Meadowbank. It commenced proceedings in the Civil and Administrative Tribunal of New South Wales (NCAT) on 26 November 2020 against the developer Wekan Pty Ltd and the builder Raysons Constructions Pty Ltd. A certificate of completion had issued on 15 July 2014, slightly more than six years earlier. Despite the passage of time, the Owners Corporation maintained that Wekan and Raysons were liable to compensate it in respect of what it claimed were major defects in the common property, principally manifested by cracks in the concrete and the seepage and pooling of water.

2. Prior to the hearing, external management had been appointed to Wekan, which accordingly had the benefit of a stay pursuant to s 440D of the Corporations Act 2001 (Cth). The entirety of the subsequent proceedings in NCAT and in this Court have involved only the Owners Corporation and Raysons.

3. The Owners Corporation sued on the “statutory warranties” implied by s 18B of the Home Building Act 1989 (NSW). A claim based on the Design and Building Practitioners Act 2020 (NSW) was not pressed. Originally the Owners Corporation had sought damages, but by the time of its closing written submissions before the Senior Member, its preference was for a work order pursuant to s 48O(1)(c) of the Home Building Act 1989 (NSW).

4. There was no issue that:

1. the “warranty period” specified by s 18E(1) was six years expiring on 15 July 2020 for a breach that resulted in a major defect in residential building work;

2. only if the alleged breach of warranty had become “apparent” within the last six months of the warranty period (ie January – July 2020) was the Owners Corporation entitled to bring proceedings as it had done within a further period of 6 months after the expiry of the warranty period, and

3. even then, only if and to the extent that the alleged breaches of warranty on which the Owners Corporation sued had resulted in “major defects” within the meaning of s 18E(1)(b) and (4) could the claim have been brought within time (because the Owners Corporation was well outside the two year period for commencing proceedings for breaches which did not result in a “major defect”).

5. Following a two day hearing, NCAT constituted by a Senior Member by decision dated 14 July 2023 found that some but not all of the Owners Corporation’s claims were made out and in due course made a rectification order. The decision is not published on CaseLaw; a “further amended” document of 257 paragraphs dated 24 November 2023 is the only version provided to me. The decision does not disclose what changes were made on either of the occasions it was amended. I was told from the Bar table that they were matters of detail concerning the particular breaches of warranty found by the Senior Member to have been made out, and that they did not affect the portion of his reasons which was the subject of the present appeal.

6. Raysons appealed to an Appeal Panel of NCAT pursuant to s 80 of the Civil and Administrative Tribunal Act 2013 (NSW). In fact, it did so before orders were made. That would be irregular unless the position relating to internal appeals in NCAT is different from the position in the case of a court, for it is axiomatic that appeals lie from orders and not from reasons: see BP v State of New South Wales [2019] NSWCA 223 at [11]-[12] and Kramer v Stone (2023) 112 NSWLR 564; [2023] NSWCA 270 at [259] and the cases there cited. But nothing turns on that. An amended appeal filed after orders had been made at first instance challenged by ground 1 the conclusion that the Owners Corporation’s proceedings had been brought within time. Ground 2 was directed to the onus of proof in relation to the extension of the statutory warranty period. The remaining grounds 3-7 challenged what appeared to be the large majority of the Senior Member’s findings of major defects.

7. The Appeal Panel upheld the appeal: Raysons Constructions Pty Ltd v The Owners Strata Plan No 87003 [2024] NSWCATAP 113. It only addressed ground 1 explicitly, although the reasoning proceeds on the basis that the Owners Corporation bore the onus of establishing that it came within s 18E(1)(e) and (f). It concluded that the Owners Corporation had not brought the proceedings within time, such that NCAT lacked jurisdiction.

8. Although the reasons of the Appeal Panel correctly proceeded on the basis that success on ground 1 would require the appeal to be allowed and the proceedings brought by the Owners Corporation dismissed, there is no consideration of whether it should address the other grounds of appeal, despite their having been fully argued. That is contrary to the approach taken by other Appeal Panels. For example in Imbree v Chief Commissioner of State Revenue [2024] NSWCATAP 158 at [46] and Alta Vale Residential Pty Ltd v The Owners – Strata Plan No 95693 [2024] NSWCATAP 212 at [42] the Appeal Panel considered non-dispositive grounds which had been argued in case it turned out that its decision was found to be wrong, so as to avoid or at least minimise the need for a remitted hearing. That is the approach applicable to courts: Boensch v Pascoe (2019) 268 CLR 593; [2019] HCA 49 at [8] and [101]. Against this, as will be seen below, the conclusion on ground 1 went to jurisdiction, and (although the Appeal Panel did not in terms rely upon this) there is some force in the proposition that NCAT should not be determining any aspect of a dispute which is not within its jurisdiction, even contingently on the basis that it might be wrong in its conclusion that it lacked jurisdiction. But even so there must have been every reason to think that, given the history of the litigation (four days of hearings, lay and expert evidence, with a substantial rectification order set aside by a decision solely based on the conclusion that the Owners Corporation was out of time, made some four years after proceedings had commenced), the decision of the Appeal Panel dismissing for want of jurisdiction a claim which had previously been upheld both on that point and on the merits would not resolve the controversy. The consequence of the course adopted by the Appeal Panel is the almost certain need for a further hearing in the event that it be wrong on the construction of a provision as to which there was no authority.

9. Not unexpectedly, the Owners Corporation has appealed to this Court pursuant to s 83 of the Civil and Administrative Tribunal Act. The further appeal is by way of leave and confined to questions of law. It has been heard by me, sitting in the Common Law Division, exercising the powers of a Judge of this Court pursuant to s 31(3) of the Supreme Court Act 1970 (NSW). There is no notice of contention. Nor is there a contingent cross-appeal concerning grounds 2-7 of Raysons’ appeal, although the parties exchanged written and oral submissions on the question of onus. At the conclusion of a hearing which occupied most of a day, counsel for Raysons stated that in the event that the appeal were allowed in whole or in part, his client wished to renew the grounds of appeal which the Appeal Panel had not determined. Ordinarily, it will be appropriate for a respondent to an appeal who wishes to maintain a decision in its favour based on grounds not determined by the lower court or tribunal to file a notice of contention: see for example Reid v Commonwealth Bank of Australia (2022) 109 NSWLR 149; [2022] NSWCA 134 at [9]. But the present situation is unusual because of the limited scope of the appeal to this Court. Raysons had exercised its right to seek leave to expand its appeal to the Appeal Panel to questions of fact or mixed questions of fact and law. That was a broader jurisdiction than that available in this Court, and hence at least in large measure a notice of contention raising the balance of its internal appeal was not available to Raysons.

10. As will be seen below, there are aspects of NCAT’s decisions which must have been disillusioning to both sides in addition to the four years’ delay mentioned above. The first instance decision is replete with patent typographical errors, many of which were noted by the Appeal Panel, on which nothing ordinarily would turn, save perhaps for the possibility that they might support the proposition which is hotly in dispute as to whether the dispositive paragraphs on s 18E also contain a serious error and are not to be read literally. It is clear enough that if they are read literally, they are nonsensical, and at least in large measure the reasons given by the Appeal Panel for granting leave and making further findings of fact turn upon its view that the Senior Member’s reasons bore their nonsensical literal meaning.

11. It is regrettable that a large issue before me is whether the reasons of the Senior Member mean what they say, which is how they were construed by the Appeal Panel. From time to time errors will be made in the reasons for decisions of courts and tribunals, and there may be difficulties in applying to correct them once orders have been pronounced and rights of appeal arise: Tre Cavalli Pty Ltd v The Berry Rural Co Operative Society Ltd [2013] NSWCA 235 at [55]. But in the present case, no orders were made until months afterwards, and the reasons were amended twice. It is regrettable that (as I understand the position) no application was made to the Senior Member to clarify whether there had been a slip in the dispositive paragraph of his reasons. As Mason P noted in National Starch and Chemical Pty Ltd v Nelson [1998] NSWCA 155, there are occasions when such an application can avoid appellate review with all the concomitant expense and delay.

12. On the Owners Corporation’s submission, the Appeal Panel decision repeatedly misapprehended the findings made by the Senior Member, on the dispositive issue, leading to complaints that there were no adequate reasons or that the reasoning was legally unreasonable.

13. The appeal to this Court is not an appeal on all issues. It is an appeal confined to questions of law. That limited jurisdiction permits a determination of the legal meaning of s 18E(1), and whether the Senior Member’s reasons are to be read literally or whether they contain a slip, and thus whether the Appeal Panel erred in law in giving them their literal meaning. But as will become apparent in light of the evidentiary matters addressed below, much of the parties’ dispute is factual, and outside the scope of this appeal.

Background

14. The contract between Wekan and Raysons was not in evidence in this Court. It is unclear whether it was tendered in NCAT, although it is plain from an index which was tendered that large amounts of the evidence before NCAT were not tendered by either side in this Court. But it was common ground that it was a contract to do residential building work, which therefore engaged Part 2C of the Home Building Act. Section 18B(1) imported six warranties into the contract. The points of claim alleged that all six were imported, and relied on them all, without once deigning to identify any particular warranty said to have been breached leading to loss or damage constituted by any particular claimed defect. The points of claim particularised a series of alleged defective items of work, including “Water emanating beneath sliding doors”, “water penetration emanating from head of glass sliding door”, “moisture damage to timber sliding doors” and a further 25 items. The remaining particulars seem intended to cast the net as widely as possible.

15. The points of claim do not stand alone. They were preceded by a lengthy report of 211 pages obtained by the Owners Corporation and served on Raysons in June 2020, shortly before the expiry of the 6 year warranty period (the RHM Report). It identifies various defects, by reference to each unit and other area in the building. It includes photographs, an expression of the cause of the defect, and an articulation by reference to the particular statutory warranties in s 18B of the breaches.

An example – unit 28

16. By way of example, the RHM Report identifies two defects in the common property near unit 28. The first (item 28.1) is described as follows:

Bedroom 2: Instructed by occupant of previous water penetration emanating from beneath fixed aluminium-framed window on northern wall during significant storm event in early February 2020.

17. The author of the report noted that he was “[u]nable to conclusively establish cause of the internal water penetration during inspection” but suggested it was most likely attributable to “[d]eficiency with the window assembly” or “[t]he external perimeter of the window assembly may not be adequately sealed” or “[d]eficiency with the courtyard waterproofing provisions”. The report stated that there was a breach of the warranty to perform work with due care and skill “in failing to construct and waterproof external wall and window opening in a manner that withstands water penetration”, and a breach of the warranty to perform work that complies with the Home Building Act by reference to Performance Requirement FP1.4 of the Building Code of Australia, which stipulated that “a roof and external wall (including openings around windows and doors) must prevent the penetration of water that could cause (a) [u]nhealthy or dangerous conditions, or a loss of amenity for occupants; and (b) [u]ndue dampness or deterioration of building elements”. The report identifies that steps will need to be taken to investigate further and rectify the defect.

18. The second item (28.2) was “[c]orrosion is developing at base of steel door jamb on northern side”. This portion of the report likewise identifies the cause, the breaches and the rectification work required or recommended. At some stage, the Owners Corporation abandoned its claim for item 28.2, most probably (I infer) on the basis that it was not a breach of warranty which resulted in a major defect.

The nature of the Owners Corporation’s claim

19. The Owners Corporation was not a party to the contract between Wekan and Raysons. Indeed, it was not in existence when the contract was made. However, it held the common property in the strata scheme in the manner described in Trentelman v The Owners – Strata Plan No 76700 (2021) 106 NSWLR 227; [2021] NSWCA 242 at [187]-[188] and became a successor in title to Wekan. Section 18D(1) of the Home Building Act provides that “[a] person who is a successor in title to a person entitled to the benefit of a statutory warranty under this Act is entitled to the same rights as the person’s predecessor in title in respect of the statutory warranty”. There is a qualification to that deeming in s 18D(2) which warrants reproduction because it bears on one of the ultimate questions of construction:

(2) This section does not give a successor in title or non-contracting owner of land any right to enforce a statutory warranty in proceedings in relation to a deficiency in work or materials if the warranty has already been enforced in relation to that particular deficiency, except as provided by the regulations.

20. It will be seen that the qualification in subsection (2) proceeds on the basis that, for the purpose of determining the effect of merger or res judicata or something analogous to those doctrines, one looks at the enforcement of a statutory warranty in relation to a “particular deficiency”. I shall return to this.

21. The Owners Corporation only commenced proceedings six years and some four months after the building had been completed, relying on the six month “window” in s 18E(1)(e). Raysons pleaded that the Owners Corporation was out of time, and tendered a bundle of documents produced pursuant to a summons issued at the request of the Owners Corporation seeking “All documents in respect of repair or rectification work undertaken at the property by or at the instigation of Raysons Constructions Pty Ltd … between 15 July 2014 and 30 April 2021”.

Further evidence relating to unit 28

22. The earliest document in that bundle on which reliance was placed was an email dated 1 November 2014 to Raysons copied to the strata manager, from two occupants of unit 28, who complained about two series of gouges in the entrance, a loose handrail, an incomplete kitchen sink seal, a scratch on a wardrobe door, a chipped tile in the bathroom, and, relevantly for present purposes:

Balcony:

After heavy rain, rainwater does not drain efficiently down the drainage hole. Takes hours to completely drain. On one occasion the rainwater came right up to both doors leading onto the balcony from the living room and main bedroom. Water level on the balcony was 3-4 cm in depth.

23. Although no mention was made of it in either of the NCAT decisions, the email exchange then referred to camera investigations undertaken by plumbers in 2014. A report was evidently obtained and copied to Raysons by email dated 28 February 2019 stating:

“Camera inspected to find pipework to be full of water.

Water jetted and cleared blockage.

Camera inspected once pipework was cleared and found that the agg drainage line is blocking the path of water to flow clearly. This is a big issue as it WILL keep on over flowing within unit 28 balcony …

24. The following emails suggest that Raysons thereafter engaged plumbing contractors to attend to the issue.

25. As will be seen, there is a question whether what was known concerning the potential of the balcony of unit 28 not to drain efficiently deprived the Owners Corporation of an ability to sue within the additional six month “window” after the conclusion of the warranty period for breaches of statutory warranties resulting in major defects.

26. I shall pass over the balance of that bundle, just as I have passed over the large majority of the RHM Report.

The time for commencing proceedings for breach of the statutory warranties

27. Subsections 48K(1), (2) and (7) of the Home Building Act provide:

48K Jurisdiction of Tribunal in relation to building claims

(1) The Tribunal has jurisdiction to hear and determine any building claim brought before it in accordance with this Part in which the amount claimed does not exceed $500,000 (or any other higher or lower figure prescribed by the regulations).

(2) The Tribunal has jurisdiction to hear and determine any building claim whether or not the matter to which the claim relates arose before or after the commencement of this Division, except as provided by this section.

…

(7) The Tribunal does not have jurisdiction in respect of a building claim arising from a breach of a statutory warranty implied under Part 2C if the date on which the claim is lodged is after the end of the period within which proceedings for a breach of the statutory warranty must be commenced (as provided by section 18E).

28. The effect of s 48K is tolerably clear. It cuts through the questions of construction which can arise when proceedings are commenced contrary to a time limitation (as evidenced by, for example, David Grant & Co Pty Ltd v Westpac Banking Corporation (1995) 184 CLR 265 at 277; [1995] HCA 43), and makes it plain that the lodging of a claim under Part 2C must be within the time specified in s 18E, in default of which NCAT lacks jurisdiction. Decisions of the Appeal Panel of NCAT have repeatedly so held: see for example S & G Homes Pty Ltd t/as Pavilion Homes v Owen [2015] NSWCATAP 190 at [53]; Jandson Pty Ltd v James [2021] NSWCATAP 274 at [118] and Unique Commercial Group Pty Ltd v Cusumano [2024] NSWCATAP 204 at [8].

29. Section 18BA makes it clear that the nature of the cause of action remains one of breach of contract, notwithstanding that the claim is based on a term that is implied by statute, and is brought by a non-party whose entitlement to sue as if it had contracted with the builder is also a product of statute. Thus the Owners Corporation, taking advantage of the deeming provision in s 18D(1), has sued Raysons for breach of the statutory warranties implied in the contract between Raysons and Wekan. But as was said in Parkview Constructions v Owners – Strata Plan No 90018 [2023] NSWCA 66 at [49]:

none of those statutory modifications of the contractual position at general law detracts from the claim brought by the Owners Corporation being one for breach of contract. That is clear enough in part because it is suing on the statutory “warranties”, which are “implied in every contract to do residential building work”, and also because of the opening words of s 18BA(1): “Breach of a statutory warranty implied in a contract constitutes a breach of the contract”.

30. The onus rests with the Owners Corporation to establish the elements of its cause of action: Currie v Dempsey (1967) 69 SR (NSW) 116 at 125. Insofar as the Owners Corporation sought damages, the onus lay on it to establish that the breach of contract caused compensable loss. Insofar as the Owners Corporation sought a rectification order pursuant to s 48O(1)(c), it was necessary to establish that such an order is appropriate. In this respect, s 48MA alters the position which would obtain for breach of contract at general law, where unless damages were shown not to be an adequate remedy, equitable relief would be refused. Section 48MA imposes an obligation upon both courts and tribunals determining building claims involving an allegation of defective residential building work to have regard to “the principle that rectification of the defective work by the responsible party is the preferred outcome”.

Section 18E

31. Section 18E relevantly provides as follows:

18E Proceedings for breach of warranty

(1) Proceedings for a breach of a statutory warranty must be commenced in accordance with the following provisions—

(a) proceedings must be commenced before the end of the warranty period for the breach,

(b) the warranty period is 6 years for a breach that results in a major defect in residential building work or 2 years in any other case,

(c) the warranty period starts on completion of the work to which it relates (but this does not prevent proceedings from being commenced before completion of the work),

(d) if the work is not completed, the warranty period starts on …,

(e) if the breach of warranty becomes apparent within the last 6 months of the warranty period, proceedings may be commenced within a further 6 months after the end of the warranty period,

(f) a breach of warranty becomes apparent when any person entitled to the benefit of the warranty first becomes aware (or ought reasonably to have become aware) of the breach.

(1A) … [this deals with the case where a building bond has been lodged]

(1B) …

(2) The fact that a person entitled to the benefit of a statutory warranty specified in paragraph (a), (b), (c), (e) or (f) of section 18B has enforced the warranty in relation to a particular deficiency in the work does not prevent the person from enforcing the same warranty for a deficiency of a different kind in the work (the other deficiency) if—

(a) the other deficiency was in existence when the work to which the warranty relates was completed, and

(b) the person did not know, and could not reasonably be expected to have known, of the existence of the other deficiency when the warranty was previously enforced, and

(c) the proceedings to enforce the warranty in relation to the other deficiency are brought within the period referred to in subsection (1).

32. Subsection (3) authorises regulations which prescribe defects to be a “major defect”. Subsection (4) defines “major element” to include load-bearing components and waterproofing, and “major defect” to include a defect in a major element that is attributable to defective design, defective or faulty workmanship, defective materials, or a failure to comply with the structural performance requirements of the National Construction Code (or any combination of these) which causes, or is likely to cause inter alia the inability to inhabit or use the building (or part of the building) for its intended purpose.

Legislative history of s 18E

33. Section 18E has had a complicated history. A different form of the section was introduced into the Building Services Corporation Act 1989 (NSW) by the Building Services Corporation Legislation Amendment Act 1996 (NSW) (the same amending statute also changed the name of the Act to the Home Building Act 1989 (NSW)). Section 18E in the form it originally took specified a period of seven years, and had no provisions analogous to s 18E(1)(e) and (f) concerning breaches of warranty which first become apparent towards the end of the period.

34. Ten years later, the Home Building Amendment (Statutory Warranties) Act 2006 (NSW) inserted s 18E(2), which was a response to the decision of the Court of Appeal in Honeywood as executrix of the estate of the late Neville Honeywood v Munnings (2006) 67 NSWLR 466; [2006] NSWCA 215. There were further minor changes to subsection (2) in 2008 by the Home Building Amendment Act 2008 (NSW). Most of this is summarised in Parkview Constructions at [81]-[84]. It is clear that the new s 18E(2) (and similar provisions such as s 18D(2)) were directed to overturning Honeywood v Munnings and abrogating a res judicata defence where there had already been a determination on a cause of action based on a statutory warranty.

35. The Home Building Amendment Act 2011 (NSW) replaced s 18E(1) with a provision substantially similar to the current s 18E(1), including the additional six month period to commence proceedings where the breach of warranty first became apparent at the conclusion of the warranty period. The legislation in that form referred to “structural defect” rather than “major defect”. The Home Building Amendment Act 2014 (NSW) inserted the current terminology of “major defect in residential building work” and the definitions in s 18E(4) of “major defect” and “major element”. Finally, there were minor amendments effected by the Strata Schemes Management Act 2015 (NSW) and the Building Products (Safety) Act 2017 (NSW), on which no party maintained that anything turned.

36. I was taken to the second reading speech in 2006 which made amendments to ss 18D and 18E to overturn the result in Honeywood v Munnings. The stated purpose of those amendments was to confer a benefit upon consumers. However, the amendments which are most material for present purposes are those made five years later by the Home Building Amendment Act 2011, replacing the seven year period with a six year period subject to an entitlement to commence up to six months later in the cases where the loss first became apparent in the last six months. The legislation illustrates the limitations accompanying a characterisation of legislation as “beneficial” or “remedial”. The effect of the 2011 Act was to reduce the time period for commencing proceedings on the statutory warranties, from seven years to an absolute maximum of six years and six months. To that extent it was the opposite of beneficial legislation; rather it reduced the rights of homeowners and owners corporations.

37. The legislation brought with it a regime to ameliorate the potential harshness of damage which manifested at so close to the end of the limitation period that it would be difficult or impossible to commence proceedings. To my mind, not much turns on whether that aspect of the new regime is regarded as a “beneficial” or “remedial” component of a new provision whose overall effect was adverse to the interests of homeowners and owners corporations.

38. No mention was made as the bill passed through the chambers of the additional six month period for which s 18E(1)(e) made provision. In the Legislative Council, mention was made of cognate provisions concerning the compulsory insurance applicable to residential building. It was said that:

Since 1 July 2010, the mandatory home warranty insurance scheme established by the Act has been underwritten by the Government through the New South Wales Self Insurance Corporation—an arm of New South Wales Treasury.

Between 1997 and July 2010, a number of private insurers provided home warranty insurance policies to builders consistent with the Act’s requirements. These insurers wrote home warranty insurance policies on the basis that they were insuring the residential building work for a fixed period of time. Generally, the time period covered by a home warranty insurance policy is six years and six months.

However, as a result of a 2008 Supreme Court ruling and subsequent amendments to the Act in 2009, there is potential for a claim against home warranty insurance to be made at any time. In effect, this means that insurers face the real risk of unending liability for home warranty insurance claims.

…

It has never been the intention of the home warranty insurance scheme for builders to be indefinitely liable for problems with their work. Neither should insurers be endlessly on risk for claims against policies. This is neither practical nor sensible.

If the proposed amendments to the Act are not made to help rectify this issue, the home building industry in this State faces yet another major problem.

To address this situation and avoid this possibility, the bill includes a number of amendments to the Act’s home warranty insurance provisions. First, the bill clarifies that claims for a loss must be lodged within the period of insurance, except in cases where the loss becomes apparent in the last six months of the insurance period – in which case an additional six month claim period is allowed.

39. The cognate provisions to which the Minister with carriage of the bill in the Legislative Council referred were ss 103BA and 103BB. Section 103BA applied only to policies for home warranty insurance entered into between 1 May 1997 and 1 July 2002. Such policies responded only if a claim was made during the period of insurance. Subsections (2) and (3) provided:

(2) A loss that becomes apparent in the last 6 months of the period of insurance has an extended claim period, which permits a claim in respect of the loss to be made within 6 months after the loss becomes apparent. There is no extended claim period for a loss that arises from non-completion of work.

(3) For the purposes of this section and section 103BB, a loss becomes apparent when a beneficiary under the contract of insurance first becomes aware (or ought reasonably to have become aware) of the loss.

40. Section 103BB applied to policies issued on or after 1 July 2002, and subsection (2) provided:

(2) A loss that becomes apparent in the last 6 months of the period of insurance has an extended claim period, which permits a claim in respect of the loss to be made within 6 months after the loss becomes apparent. There is no extended claim period for a loss that arises from non-completion of work.

41. The balance of the section addresses the case where a loss has become apparent but an insured event has not occurred so a claim cannot be made.

42. The explanatory memorandum sheds no light on the provisions.

The principles concerning limitation statutes are inapplicable

43. Both sides exchanged submissions on authorities concerning limitation statutes. The Owners Corporation said that by reference to Bailey v Owners Corporation of Strata Plan 62666 [2011] NSWCA 293 all aspects of onus rested with the builder who was contending that the proceedings had been commenced out of time. Raysons maintained that once it had squarely flagged that the limitation period was in issue, the onus then shifted to the plaintiff to make good an exception to the six year limitation period, in accordance with Pullen v Gutteridge Haskins & Davey Pty Ltd [1993] 1 VR 27. Raysons said that it had clearly asserted in its points of defence that the proceedings were time-barred, that having raised that issue, it was incumbent upon the Owners Corporation to establish that it was within the additional six month window granted by s 18E(1), and that in order to do that, the Owners Corporation had to demonstrate that what it complained of was unknown to it prior to the six months before the expiration of the six year period (T39).

43. Those submissions were not directed to the right issue. The starting point is that s 18E(1)(e) is not a traditional limitation period – which is to say, a time period applicable to an existing cause of action which, if pleaded, may bar the remedy. Nor is it a limitation period in the unusual sense of the Limitation Act 1969 (NSW), which not only bars the remedy but extinguishes the right. Instead, as s 48K(7) makes plain, the commencement of proceedings for a breach of a statutory warranty before the end of the warranty period for the breach is an essential element of the Tribunal’s jurisdiction. The distinction between limitation statutes and statutes going to jurisdiction was stated by Gummow and Kirby JJ in Commonwealth v Mewett (1997) 191 CLR 471 at 534; [1997] HCA 29:

… a statutory bar, at least in the case of a statute of limitations in the traditional form, does not go to the jurisdiction of the court to entertain the claim but to the remedy available and hence to the defences which may be pleaded.

45. Another way of making this point is that compliance with s 18E(1)(e) is a matter of which the Tribunal must be satisfied in any event, irrespective of the stance taken by the defendant, whereas (as Commonwealth v Verwayen (1990) 170 CLR 394; [1990] HCA 39 illustrates) only if a defendant relies upon a statute of limitations is there any consequence. The distinctions are explained by Windeyer J in Australian Iron & Steel Ltd v Hoogland (1962) 108 CLR 471 at 488; [1962] HCA 13 and by Bell P in Sydney Seaplanes Pty Ltd v Page (2021) 106 NSWLR 1; [2021] NSWCA 204 at [68].

Textual considerations

46. The following matters emerge from the text of s 18E.

47. First, the primary obligation imposed by s 18E(1)(a) is that proceedings must be commenced before the end of the warranty period for the breach.

48. Secondly, for work such as the present which purports to have been completed, the warranty period commences from that date, and it is unnecessary to consider the case where work has not been completed.

49. Thirdly, special provision is made in subsections (1A) and (1B) for cases where a building bond has been lodged. It was not suggested that those provisions bore upon the issues in this appeal.

50. Fourthly, s 18E(1)(b) provides that the duration of the warranty period is affected by the character of the damage resulting from the breach: six years if the damage amounts to a “major defect in residential building work”, otherwise two years. As was noted in Parkview Constructions at [92], it strains traditional notions of a cause of action to regard a plaintiff who complains of one major defect and one which is not a major defect as having only a single cause of action, because of the availability of different limitation periods.

51. Fifthly, paragraph (e) explicitly authorises the commencement of proceedings after the end of the warranty period in one specific class of case, namely, “if the breach of warranty becomes apparent within the last 6 months of the warranty period”. In accordance with ordinary principles of statutory construction, the general rule in s 18E(1)(a) and (b) is to be read as being subject to the specific qualification in s 18E(1)(e): see the authorities collected and applied by Basten AJA in Croc’s Franchising Pty Ltd v Alamdo Holdings Pty Ltd [2023] NSWCA 256 at [219]-[227].

52. Sixthly, the additional six month “window” available pursuant to paragraph (e) is applicable both to breaches which result in major defects and to breaches which do not result in major defects.

53. Seventhly, the words “first becomes aware” proceed on the basis that by the time proceedings are commenced suing on the statutory warranty, the plaintiff is aware of the breach, and involve an inquiry into when that awareness was acquired. In particular, the word “first” entails a negative – that until the concluding six months of the warranty period, none of the persons whose states of mind matter was aware of the breach of warranty.

54. Eighthly, the concept of a breach of warranty “becoming apparent” resonates with other concepts applicable where limitation periods are extended, such as a plaintiff being “unaware” of various matters for the purposes of ss 60F and 60I of the Limitation Act 1969 (NSW). However, it is defined for present purposes in s 18E(1)(f), in a manner which is quite compressed and warrants careful unpacking. It involves two limbs. On its face, it asks whether “any” person entitled to the benefit of the warranty has either (i) become aware or (ii) ought reasonably to have become aware of the breach; plainly enough, actual awareness is sufficient to disentitle a plaintiff. But a plaintiff also cannot obtain the benefit of the provision if notwithstanding actual unawareness the plaintiff ought objectively to have been aware. That is to say, there is both a subjective and an objective element to the test, and either will be disentitling. There are three elements in applying the paragraph:

1. identifying the various persons who may be entitled to the benefit of the warranty;

2. identifying what is meant, in its application to the particular residential building, by the compressed conclusion of awareness of the breach; and

3. asking whether in relation to each person entitled to the benefit of the warranty the subjective or objective awareness occurred earlier than the six month period at the end of the warranty period.

Awareness of the breach

55. Central to the issues arising in this appeal is what is connoted by “becomes aware (or ought reasonably to have become aware) of the breach”. Contrary to the way in which the claim was pleaded and indeed much of the discourse in this area, but as emphasised in oral submissions by Mr Corsaro who appeared in this Court but not in NCAT, it is essential to distinguish between a defect (or equivalently a deficiency) and a breach of warranty.

56. A defect or deficiency is manifested in the structure of the building. A breach of warranty is a conclusion involving one or more of the statutory warranties implied by s 18B (read with ss 18C and/or 18D) concerning the way in which the building was designed or constructed.

57. That is to say, a defect or deficiency is a physical thing (or the absence of a physical thing). A breach of warranty is a legal conclusion about the way in which residential building work has been performed (or not performed).

58. It does not follow from an awareness of a defect that there is an awareness of a breach of warranty. The fact that there are cracks in a slab may be a consequence of a failure to do the work with due care and skill, or it may be a consequence of subsidence following underground tunnelling or mining. The fact that water may collect in a carpark or a veranda of the structure may be a consequence of a failure to perform the work with due diligence, or it may be a consequence of an exceptional rain event which it would never have been anticipated the building would have to sustain. In many cases, depending upon the nature of the defect, the inference that there has been a breach of warranty may more or less readily be drawn, but all will depend upon the particular facts. Sometimes further investigation of a patent defect may be necessary in order to determine that there has been a breach of a statutory warranty. These points were made in a similar context by Derrington J in Vautin v BY Winddown, Inc (formerly Bertram Yachts) (No 4) [2018] FCA 426; 362 ALR 702 at [256] and [262] in respect of statutory guarantees:

It must be kept steadily in mind that the “relevant failure” referred to in the definition of “rejection period” is not solely the existence or manifestation of the defect in the goods. The failure is the failure of the goods to comply with the statutory guarantee. Whilst in many cases the existence of an apparent defect will have the consequence that it can be easily discerned that a guarantee has not been complied with, that will not always be the case. A good may contain some form of defect although it may not render it unfit for any disclosed purpose. Further, whilst the consequences of a defect in goods may become manifest, it may not be immediately apparent that the manifestation is of a defect as opposed to some other issue. It may take some time before a consumer might be able to ascertain that the cause of a problem with the goods is the failure of a supplier to comply with a statutory guarantee.

…

Knowledge of the defect in the goods or even the cause of the defect is not necessarily sufficient. The relevant question focuses upon the failure of the goods to meet the terms of the statutory guarantee and when that non-compliance becomes apparent.

59. The points of claim paid scant attention to the distinction between a defect and a breach of statutory warranty. It may be that in that respect they were no different from many or most pleadings in cases of this nature, and it may also be that in many or most cases there will not be any great scope for confusion. However where as here the satisfaction of s 18E(1)(e) is a central and threshold issue, it will be vital in order to apply the statute to distinguish between a breach of statutory warranty and a defect.

Effect of earlier enforcement of warranties in relation to particular deficiencies

60. Subsection 18E(2) draws a distinction between the enforcement of a statutory warranty in relation to a “particular deficiency” in the past, and the enforcement of the same statutory warranty in relation to a “deficiency of a different kind in the work” in circumstances where the latter is in existence at the time of the first enforcement but is unknown to, and could not reasonably be expected to have been known to, the plaintiff. That provision was directed to overturning the principles recognised in Onerati v Phillips Constructions Pty Ltd (1989) 16 NSWLR 730 and Honeywood v Munnings about the preclusive effect of res judicata and merger of a previous decision enforcing a warranty. In Honeywood v Munnings, Handley JA writing for the Court of Appeal confirmed that at common law the knowledge or lack of knowledge on the part of the plaintiff was irrelevant, with time running from the breach: at [6]-[21]. The subsection does not address the simpler case where the latter deficiency was not in existence at the time the statutory warranty was first enforced in relation to the first deficiency. Instead it proceeds implicitly on the basis that a plaintiff would be able to sue a second time because the relevant damage had not been sustained at the time of the first proceedings. As Handley JA had said at [15], a second action for a later breach of the same contract was not barred “because in such a case there are breaches at different times and separate causes of action”. But s 18E(2) qualifies what was held in Honeywood v Munnings, permitting a plaintiff to sue even if the deficiency had been in existence at the time of the earlier enforcement, so long as the plaintiff did not know and ought not reasonably to have known of the other deficiency, and so long as the plaintiff sued in time.

Onus

61. In addition to relying on Bailey, the Owners Corporation invoked the beneficial nature of the Home Building Act generally and s 18E in particular, maintaining that the legislation should be construed “so as to give the fullest relief which the fair meaning of its language will allow”: Accounting Systems 2000 (Developments) Pty Ltd v CCH Australia Ltd (1993) 42 FCR 470 at 503. I do not agree. The general principle is not in doubt. However, it is far from clear that s 18E(1) is to be regarded as remedial or beneficial legislation, having regard to the reduction in time for proceedings to be commenced from 7 years to at most 6½ years. (I shall pass over the question of the character of an amending provision which cuts back upon a remedial provision, not because it is without interest, but because no submissions were directed to it.) And even if it were, it is not the case that every leeway of choice in the construction of s 18E(1)(e) and (f) is to be resolved in favour of the person suing for breach of a statutory warranty.

62. I respectfully agree with what is said in P Herzfeld and T Prince, Interpretation (Thomson Reuters, 3^rd ed, 2024) at para [10.300]:

Further, not every provision within a generally remedial or beneficial Act has a remedial or beneficial purpose: it is necessary to focus on the purpose of the particular provision and, if it is neither remedial nor beneficial, the principle presently under discussion does not apply. An exception or limitation to a beneficial provision does not necessarily require a liberal or beneficial interpretation. And even if the purpose of a provision is beneficial, that may be a proposition stated at too general a level to assist in determining how or to what extent that purpose is pursued by a particular provision. [Citations omitted, original emphasis]

63. I turn then to the question of the purpose of the provisions in s 18E in order to apply these principles. The general purpose of s 18E is clear. It is important for home owners, developers, builders and their insurers that there be a measure of certainty. A regime of compulsory insurance is in place for residential building contracts, but no differently from most consumer items, the statutory warranty period is not unlimited. The policy choice made by the Legislature is to identify two year and six year periods from completion of the residential building, with the longer period being confined to cases where the damage amounts to a “major defect”. These things are self-evident on the face of the provision, dovetail with the provisions dealing with compulsory insurance especially s 103BB, and were prominent in what was said on behalf of the government when the 2011 amendments were passing through the parliamentary chambers.

64. The particular purpose of the qualification to the general rule in s 18E(1)(a) made by (e) and (f) is also tolerably clear. A time limitation of two or six years will produce injustice, and potentially capricious outcomes, in circumstances where the manifestation of a breach of warranty first occurs at the end of the period. The injustice comes about because of the inevitable delay between first becoming aware of a breach of warranty and the bringing of proceedings. In many or most cases it will be necessary for an owners corporation to pass a resolution at a general meeting: see former s 80D of the Strata Schemes Management Act 1996 (NSW) and (differently worded) current s 103 of the Strata Schemes Management Act 2015 (NSW).

65. To that end, in circumstances where the requisite knowledge of the breach of warranty first accrues in the last six months of the warranty period, the statute permits an additional six months within which proceedings may be commenced. That is to say, in those specific circumstances, statute creates an exception to what would otherwise be a six or two year period within which proceedings must be commenced.

66. The application of the principles invoked by the Owners Corporation to those purposes says very little about what meaning is to be given to the test of subjective and objective awareness of breaches of statutory duty. Contrary to the submissions advanced by the Owners Corporation, it cannot be right to construe the moderately elaborate language of s 18E(1)(e) and (f) on the basis that every leeway of constructional choice should be exercised in favour of a plaintiff. The approach to remedial legislation on which the Owners Corporation relies is merely a particular case of the more general principle that all legislation is to be construed purposively: Sydney Seaplanes Pty Ltd v Page at [97]; Ryan v Commissioner of Police, NSW Police Force (2022) 290 FCR 369; [2022] FCAFC 36 at [110]; Boyle v Director of Public Prosecutions (Cth) [2024] SASCA 73; 332 IR 205 at [82] and [231]. But it is perfectly clear that every taxing provision in a taxation act is not read broadly, and every exemption is not read narrowly, notwithstanding that the purpose of the legislation is to raise revenue. That is because, as Chief Justice Gleeson once explained extrajudicially, the purpose of a taxation act is not to raise revenue by every means possible, but in accordance with a detailed and complex plan of fiscal policy: M Gleeson, “Statutory Interpretation” (Justice Hill Memorial Lecture, 11 March 2009), p 12. Similarly, the purpose of s 18E(1)(e) is not to benefit homeowners unconditionally, but instead to strike a balance between homeowners, builders and their insurers so as to provide a general rule that proceedings must be commenced within six years of completion, with an additional six month window in a particular class of case where the entitlement to sue first became or ought to have become apparent in the last six months of that six year period, in light of the fact that the inflexible application of a fixed limitation period will lead to harsh or capricious results. That purpose does not entail that the plaintiff does not bear the onus of establishing an entitlement to the additional six months within which to commence proceedings. Indeed, the purpose says nothing about onus.

67. Raysons made two additional submissions concerning onus. The first was to contend that the six month period commencing six years after the conclusion of the “end of the warranty period” was an “indulgence” afforded by the statute, as to which the plaintiff bore the onus. The second was that it was for the plaintiff to make out all elements of its case, including all elements of the jurisdiction which it sought to invoke. I agree with both submissions.

68. The first accords with what was said by Dixon CJ (with whom Fullagar and Kitto JJ agreed) in Dowling v Bowie (1952) 86 CLR 136 at 139-140; [1952] HCA 63, referring to:

the common law doctrine that where a statute having defined the grounds of some liability it imposes proceeds to introduce by some distinct provision a matter of exception or excuse, it lies upon the party seeking to avail himself of the exception or excuse to prove the facts which bring his case within it. … A qualification or exception to a general principle of liability may express an exculpation excuse or justification or ground of defeasance which assumes the existence of the facts upon which the general rule of liability is based and depends on additional facts of a special kind. If that is the effect of the statutory provisions, considerations of substance may warrant the conclusion that the party relying on the qualification or exception must show that he comes within it.

69. Substantially the same point was made in Vines v Djordjevitch (1955) 91 CLR 512 at 519; [1955] HCA 19. Two qualifications may be noted. The first is that the Chief Justice’s references to “the common law doctrine” and “the common law rule” are to be understood as references to statutory construction: see Chugg v Pacific Dunlop Ltd (1990) 170 CLR 249 at 257; [1990] HCA 41. The second is that the task of statutory construction is in fact somewhat more complicated than what emerges from the passage extracted above. That is because it is quite possible for Parliament to enact a complex provision in which one side bears the onus on all sub-issues. The reasons in Dowling and Vines are alert to this in passages which I have not reproduced. In some cases, this can give rise to highly contestable questions of construction; see for example J Stone, Evidence: Its History and Policies (revised by W Wells, Butterworths, 1991), p 699 (“it is frequently a matter of some refinement to decide where the burden is placed”); see also Environment Protection Authority v Grafil Pty Ltd; Environment Protection Authority v Mackenzie (2019) 101 NSWLR 245; [2019] NSWCCA 174 at [221]-[228]. But at least in respect of the question of onus s 18E(1) is quite straightforward to construe. The obligation to commence proceedings before the end of the warranty period in paragraph (a) is qualified by a “distinct provision” in paragraph (e) by way of “exception or excuse” which turns on additional facts, namely, awareness of the breach first occurring in the last six months of the warranty period. It is for the plaintiff, if it wishes to escape from the confines of the general rule in paragraph (a), to establish that it falls within the indulgence granted by paragraph (e). That conclusion is confirmed by the consideration (to which Raysons also referred in paragraphs 32 and 33 of its submissions in this Court) that it would be invidious for a defendant to bear the onus of negating the absence of subjective awareness of any breach of statutory warranty by the plaintiff, that being something which was peculiarly within the plaintiff’s knowledge.

69. Further to the above, s 18E(1) is to be read with s 48K(7) which makes commencing within time jurisdictional. Macfarlan JA agreed with my reasoning in Wilson v Chan & Naylor Parramatta Pty Ltd (2020) 103 NSWLR 140; [2020] NSWCA 213 at [14] that “as was explained in Gaynor v Attorney General (NSW), NCAT is under a duty to satisfy itself whether a claim made to it is within its limited authority: see at [22], [100], [131]. That duty carries with it authority to determine, either positively or negatively, whether it has jurisdiction to determine a claim.” That means that irrespective of the stance taken by the parties, NCAT must be satisfied of its own jurisdiction before making any of the orders sought by the plaintiff. For practical purposes, the moving party in NCAT who commences more than six years after the completion of residential building work can only obtain any of the orders it seeks if NCAT is persuaded of the matters in s 18E(1)(e).

70. For all those reasons, the onus rested with the Owners Corporation, as the party seeking to avail itself of s 18E(1)(e), to establish the facts entitling it to do so. Ground 3 of the appeal challenged reasoning which was “necessarily implicit” in the Appeal Panel’s conclusion, and thus is within the scope of this Court’s jurisdiction: see Donohoe v Albulario [2025] NSWSC 9 at [32], applying Kostas v HIA Insurance Services Pty Ltd (2010) 241 CLR 390; [2010] HCA 32 at [69] and [90]-[91]. It follows that ground 3 of the Owners Corporation’s appeal must be dismissed.

The effect of knowledge of other defects

The uncontested documentary background

72. A great deal of the Owner Corporation’s oral submissions concerned the conclusions drawn by the Senior Member and the Appeal Panel from documents tendered by Raysons which pointed to complaints about defects in the building in the first 5½ years after completion.

73. The Owners Corporation’s case was that only on receipt of the RHM Report did it become apparent that it had a claim for breach of statutory warranty. Because the RHM Report was received in June 2020 – within the last six months of the warranty period – it could commence in accordance with s 18E(1)(e).

74. Raysons contended that in light of the awareness of defects in the building reflected in those documents, NCAT should have found that the Owners Corporation was neither first aware, nor ought to have been first aware, of the breaches of statutory warranties in the last six months of the warranty period.

75. The primary documents were in evidence, and they were summarised in some detail by the Senior Member at [19]-[27]. Those paragraphs are reproduced below, with (numerous) typographical errors corrected (the only error which matters for present purposes is that when referring in [23] and [26] to the Storm Damage Inspection Report dated 17 June 2016, the Senior Member twice referred to it as a Storm Water Damage Inspection Report, dated 17 June 2018; it will be seen in due course that that seems to have caused the Appeal Panel to consider there were two such reports, one in 2016 and a second in 2018).

19. First, a complaint about the balcony drainage of unit 28 on 1 November 2014.

20. This was an email from the owners of Unit 28 to the Builder and copied to the strata manager of the Owners Corporation relevantly stating:

Balcony

After heavy rain, rainwater does not drain efficiently down the drainage hole. Takes hours to completely drain. On one occasion the rainwater came right up to both doors leading onto the balcony from the living room and main bedroom. Water level on the balcony was 3-4 cm in depth.

21. Secondly, an email from the strata manager of the Owners Corporation to the Builder dated 11 December 2014 relevantly stating:

The tenant in Lot 40 (Owned by Wekan) reported calcium leaks effecting his car park. We had our handyman go out and do a quick check of the car park to see how many where effected [sic in original email]. He reported the following:

“Leaks penetrating around and down plumbing pipes.

Calcium leaks to – Carspace 28, Carspace 40, Carspace 40 Disabled, Visitors near Carspace 25.

Carspace 36 – slight water drip from pipe and calcium Carspace 36- slight water drip from pipe

Carspace 35 – crack in wall and ceiling. Signs of water penetration.

Large crack in carpark B2 ceiling has been repaired but not painted.

Western wall both levels wet.”

Could someone please have a look at these issues and resolve them as required.

22. Thirdly, an email from the Strata Committee to the strata manager dated 17 May 2015 stating:

Unit 13 has mentioned that their unit have experienced storm damages i.e. leaking, damp and mouldy wall and wet carpet. They have been trying to contact David from Raysons via email and mobile with no luck. In addition to this, they also mentioned that their defects since settlement have not been fixed either.

We have provided contact details for blinds and cedar aluminium for them to contact.

Could you please liaise with David and assist Shan from Unit 13? Shan is Cc’ed in this email and her contact number is …

23. Fourthly, a site meeting that was held on 16 June 2016 to carry out an inspection on three roof areas as requested by the strata manager and the Executive Committee of the Owners Corporation. In attendance were representatives of the Builder, the Executive Committee along with the owners or occupiers of units 1, 3, 25 and 40. A Storm Damage Inspection Report was subsequently prepared by the Builder and dated 17 June 2016. The report concludes:

Whilst there is no conclusive evidence we are treating the damage to units 1 & 3 as a building defect at this stage, although there is only water ingress during heavy storm periods

Rectification works will be carried out to units 1 & 3 once we confirm the problem is resolved

All damage to units 12, 25 & 40 have been found to be a result of storm damage.

The following actions have been agreed on site –

To reduce the likelihood of future blockages Mr Cheung has asked that we quote to supply and install UV resistant guard to all roof downpipes.

Also to confirm that all downpipes are clear of debris Mr Cheung has asked that we provide a quote to undertake a camera inspection to all roof downpipes, to identify any blockages not visible during our inspection this afternoon.

We note that there is some damage to the ceilings of units 12, 25 & 40 as a result of storm damage. Raysons will provide a quote to rectify the damage caused to these ceilings.

I will endeavour to submit these quotes by the 23^rd June.

24. Fifthly, the complaints of water entry to Unit 3 from the owners to the strata manager copied to the Builder in the period February 2018 to June 2018. I note in particular that the email of 25 February 2018 states:

Despite your many attempts to rectify and resolve water ingress in our main bedroom once again water is dripping and leaking in the same area of our ceiling where it joins the external wall.

25. Sixthly, the email of the Builder of 20 March 2019 recording complaints about corroding door frames in unit 29. That email relevantly states:

We have been contacted by unit 29 ...

Apparently the door frame is corroding and I believe her tiles are lifting inside the unit.

26. Seventhly, the Storm Damage Inspection Report subsequently prepared by the Builder and dated 17 June 2016 referred to above. I infer that the report was sent to (and was prepared on the instructions of) the Owners Corporation, noting that the Secretary of the Executive Committee was present at the site meeting on 16 June 2016.

27. Eighthly, the email of the strata manager to Ms Monica Irawan of 10 January 2020 stating:

Fresyssinet was engaged by David Wehbe – [Raysons] Constructions.

So therefore Fresyssinet would not go back to investigate unless David Wehbe spoke with them which he did.

On their letter dated the 23/08/2020 for the Upper Basement & Ground Floor Crack investigation it was in their opinion, the shortening shrinkage cracks identified and observed (incl. previously repaired cracks) do not affect the structural

Adequacy or serviceability of the structure.

Now in regards to their recommendation for durability purposes, the repair be undertaken to these cracks (incl. previously repaired cracks.) I have attached an email from David Wehbe. It is in his opinion it is their responsibly [sic] to finish the job.

The main concern the Committee had was it structural and base on the opinion from Fresyssinet it does not affect the structural Adequacy or serviceability of the structure.

The parties’ submissions as to the effect of earlier complaints upon the awareness of the Owners Corporation of breaches of statutory warranties

76. Raysons did not contend before me that there were other matters known to the Owners Corporation in the first 5½ years after completion which bore upon its awareness of breaches of warranty. So far as I can see, at all stages in this litigation, Raysons has contended that the awareness derived from the matters in the paragraphs reproduced above excluded the Owners Corporation from making out an entitlement to bring proceedings pursuant to s 18E(1)(e) in the six month window after the end of the six year warranty period.

77. The Senior Member accepted the Owners Corporation’s submission, while the Appeal Panel set aside that finding and upheld Raysons’ submission. On further appeal, the Owners Corporation maintains by grounds 1 and 2 that the Appeal Panel was wrong to conclude there was no jurisdiction and erred in construing the test in s 18E(1)(e).

78. There are also two unusual and unfortunate disputes bearing upon this issue. The first turns on a large textual discrepancy in the dispositive findings expressed by the Senior Member at first instance at [35]-[37]. The second turns on a sustained mis-statement of the primary findings by the Appeal Panel. I shall return to the details, to the extent that it is necessary and appropriate to do so in this appeal on questions of law.

79. However, those discrepancies which complicate the application of s 18E to the facts of this case need not delay my addressing the questions of law concerning the construction of s 18E(1) which were at the forefront of this appeal. The analysis of the parties’ submissions on those issues can safely proceed on the assumption that the Owners Corporation had learned before the final six months of the warranty period that there had been some defects in the concrete structure (including cracking in the car park leading to water penetration). The parties were at issue as to the consequence of that knowledge.

80. The Owners Corporation maintained that knowledge of a particular defect in the first 5½ years of the warranty period did not stand in the way of its being able to avail itself of the additional six months in s 18E(1)(e) in respect of breaches of warranty which resulted in other defects in the building. This was illustrated by the following (extreme) example:

Assume for the moment I have a bathroom tile which comes unstuck on the wall of my apartment in a 300 apartment development. I report it to the owners corporation, who I say has an obligation to stick it back on. Five years and 364 days later the slab collapses and the podium supporting the building falls. [If the previous knowledge of the tile displaced the entitlement to rely on s 18E(1)(e), then] I don’t get the time to put on the claim, because there was a defect, I’m aware of the defect, and I’m barred [because there is a] unified cause of action. That’s the logical absurdity.

81. The Owners Corporation submitted that any notion, associated with Onerati v Phillips Constructions Pty Ltd, that there was a single cause of action, had been displaced by the regime with its differing limitation periods and beneficial purpose in affording an additional six months to commence proceedings.

82. On the other hand, Raysons sought to uphold the reasoning of the Appeal Panel that knowledge of various defects in the first 5½ years was fatal to the Owners Corporation being able to bring itself within s 18E(1)(e) in order to bring proceedings for breach of statutory warranties in respect of other defects.

Consideration

83. It will be clearest if I start with the construction of s 18E, then give examples of its operation, before providing my reasons.

84. If there is an actual defect or deficiency which not only becomes apparent in the first 18 months or 5½ years following completion but which also is rectified, such that no one is aware of any other breach of statutory warranty resulting in a further defect or deficiency and there is no longer any proper basis to consider that there has been a breach of statutory warranty resulting in a further defect or deficiency, then a plaintiff will not for that reason be disentitled from commencing proceedings in the additional six months provided for by s 18E(1)(e) if some claim for breach of warranty first becomes apparent in the last six months of the warranty period. Importantly, the premise of the proposition in the previous sentence is not merely that the first defect has been rectified. It is that following investigation and rectification, no one is aware and there is no basis to consider that the breach of warranty has extended to further defects, even ones that are not immediately manifest.

85. The propositions in the previous paragraph are quite complex. That is because the tests in s 18E(1)(e) and (f) are quite complex. Their application in respect of particular facts is apt to be less complex, at least in many cases. But this appeal is confined to questions of law, which means that broadly speaking the application of the statute to contested facts is outside its scope. Because it is awkward merely to write in terms of abstract propositions, it will be helpful to provide an example.

86. Suppose that, a year after completion of a residential building, cracks appear in concrete in the carpark, and after moderate rainfall it is apparent that water has intruded into the ceiling cavity of a lot facing the southern boundary of a building. Timely investigations establish that the cracks are entirely superficial and in no way affect the structural properties of the concrete. On the other hand, timely investigations also show that there is a design flaw in all of the awnings on the southern wall of the building, leading to water inflows during ordinary rain accompanied by a southerly wind which in turn are apt to damage the ceiling. Suppose that filler is applied to the cracks in the concrete, and the ceiling as well as the awning of the affected unit are replaced, but nothing is done in relation to the identical awnings on other south-facing walls of the building. Suppose then that 5¾ years after completion, further cracks appear in the carpark, which this time are found to affect the structural integrity of the building, and also that there is found to be water damage to the ceiling of another south-facing apartment.

87. On those facts, there had been a breach of the warranty to perform work which prevented the penetration of water that could cause undue dampness or deterioration of building elements (such as the ceiling), contrary to Performance Requirement FP1.4 of the Building Code of Australia (the provision mentioned above which is found in the RHM Report). It was clear to the owners corporation from the investigations which had taken place a year after completion that the breach was as to the design of the awning, and affected all awnings on the southern external wall of the building. Even if subjectively no one entitled to enforce the statutory warranties appreciated that the problem arose for all awnings on the southern wall, anyone who sought to sue for the water damage incurred after 5¾ years would not be entitled to the six month additional period under s 18E(1)(e). That is because the owners corporation ought reasonably to have become aware of the breach which extended to all south facing awnings years beforehand. On the facts of this example, the actual knowledge of the defect involving one awning and one ceiling entailed at least objective awareness that all south-facing awnings manifested the same breach of statutory warranty.

88. On the other hand, on the facts hypothesised above, there was nothing about the original cracks in the concrete in the carpark which would actually have led the owners corporation to be aware that there was a structural deficiency in the concrete which manifested itself after 5¾ years. Nor was there anything about the original cracks which ought to have led to the owners corporation reasonably becoming aware of that breach at any earlier time. In those circumstances, it would not be disentitled from availing itself of the additional six month period in s 18E(1)(e) to bring proceedings because of its knowledge of the earlier cracking.

89. The same distinction may be seen in the more extreme examples mentioned during the hearing. Mr Corsaro’s example of one bathroom tile becoming unstuck and being repaired but not disentitling an owners corporation from relying on the six month additional window if the slab collapsed after 5 years and 364 days is an obvious case where the investigation and rectification of the tile did not lead either to disentitling subjective or objective knowledge of the breach in respect of the slab.

90. In the course of the hearing, I then added a further fact to that example:

HIS HONOUR: Let me twist it this way. Everything you say happens, but add this to it. The tile comes off the wall and Joe Blow [or] anyone who knows anything about sticking tiles onto concrete, can say “Mate, they’ve used the wrong sort of concrete. They’ve used super sandy concrete, which is only useful in [very dry] territories. It should not be used in semi temperate zones like Sydney. That whole building’s a nightmare”. At that stage you know merely from the tile dropping off that there’s been a failure to use reasonable care and skill [and that] you’ve breached a whole lot of these statutory warranties [by] all the concrete [throughout] the building.

91. That modified example posits that the investigation of the tile revealed that the wrong concrete had been used throughout the building, which was a breach of statutory warranty resulting in defects which were not confined to the particular tile, but extended throughout the building. In those circumstances, the owners corporation would be disentitled from using the six month window in s 18E(1)(e) because it knew or at least ought reasonably to have known of the breach earlier than the final six months of the warranty period.

92. A further point should be made about the earlier example concerning the awnings and the carpark concrete. It is that the inability to commence proceedings in the additional six month window after the six year warranty period in respect of the defectively designed awnings does not prevent the commencement of proceedings in the six month window based on the breach of statutory warranties in respect of the carpark concrete.

93. That may be obvious, but it is as well in light of the Appeal Panel’s reasons to explain the textual basis for it. The Appeal Panel had said at [50]:

The correct enquiry is whether, in this case, the owners corporation first became aware of a breach of statutory warranty within the last six months of the warranty period. If the owners corporation had been aware of a breach of statutory warranty prior to the last six months of the six year period, the owners corporation was not entitled to file the application after the expiration of the six year limitation period set out in s18E, or specifically, the Tribunal does not have jurisdiction in respect of applications filed after 14 July 2020.

94. Similarly, Raysons advanced the following submission:

… having been made aware of issues with the slab in 2014 there apparently was no investigation of those issues by the owners corporation until sometime after the proceedings were commenced when Mr Joannides produced the report that he relied upon. So, in our submission, consistent with what your Honour found in Parkview, breaches of the warranties associated with the construction of the slab all arise out of the same set of statutory warranties that apparently were relied upon in relation to other alleged breaches in relation to doors, windows and so on and so forth, and they should have all been parcelled in the same claim and there is no basis for asserting that there was any different breach which would give rise to any alternative cause of action.

144. An important aspect of the reasoning of the Appeal Panel was the conclusion that the “defects as first identified in 2014” were the same as those prosecuted in the points of claim. The Appeal Panel said at [64]-[65]:

The same defects as first identified in 2014, were prosecuted by the owners corporation in its points of claim signed by its solicitor on 26 November 2020. We are of the view that the defects listed in the claim form are, except in some very minor respects, identical to, in nature, those defects the owner’s corporation had been aware of for six years prior. The nature of the defects identified in 2014 related to water ingress to units, through balcony doors, walls, windows and through calcification of cracks in the car park slabs.

The same comment can be made about the table handed up by the owners corporation at the commencement of the second day of the hearing of the appeal which sought to highlight some defects which were said to have only been identified in 2020, and were not known by the owners corporation in 2014. In the Appeal Panel’s view, these defects as particularised, were simply further manifestations of water ingress and slab cracking and not defects of a different kind of work. For this reason we also do not consider it necessary to consider, notwithstanding the submission of counsel for the owners corporation, s18B(2) of the HB Act, except to note that the provision only applies where there is “a deficiency for a different kind of work”.

145. After reproducing the list of defects in the points of claim, the Appeal Panel wrote at [67]-[69]:

With the exception of electrical defects particularised in (hh) to (ll), (and it is not apparent from the Decision that these issues were pressed by the owners corporation as major defects), the nature of the defects were identified by the owners corporation in 2014. As water ingress progressed and was left unchecked, it caused more corrosion to an increased number of units, resulting from the same breaches of statutory warranty that the owners corporation became aware of in 2014 as found by the Tribunal at [35] of the written reasons for decision.

Water ingress is classified as a “major defect” within the meaning of the legislation. The defects were globally identified by the expert Mr Le, in the RHM report of 14 July 2021 as follows: “in failing to ensure the building exterior was water proofed sufficiently to prevent the penetration of water into the building interior, an unsatisfactory standard of workmanship has been executed”. The fact that water had penetrated the building interior was known to the owners corporation and it did not require an expert opinion to alert the owners to breaches of statutory warranty particularly in circumstances where the owners corporation had the builder, or a related entity, return to the premises to rectify defects between 2016 and 2020.

For the purpose of calculating the limitation period, knowledge of the water ingress was sufficient to trigger an obligation to investigate defects and to ascertain all breaches of statutory warranty before the expiration of the six year period.

146. I have concluded that there are two distinct errors in those conclusions. The first is that this approach to fact-finding could only be reached if there were a grant of leave, and that grant of leave was driven by a literal reading of [35] which I have concluded was incorrect in point of law. The same erroneous approach may be seen in [67] where once again reliance is placed on the literal meaning of [35].

Cyril Smith

147. In order to make good the proposition in the concluding paragraph that for the purpose of “calculating the limitation period”, knowledge of the water ingress was sufficient to trigger an obligation to investigate and ascertain all breaches of statutory warranty before the expiration of six years, the Appeal Panel relied on what was said in Cyril Smith & Associates Pty Ltd v The Owners – Strata Plan No 64970 [2011] NSWCA 181 concerning the accrual of a cause of action in negligence. The Appeal Panel said at [72] that:

the same principles apply to an owners corporation pursuing a cause of action under statutory warranty. Having identified a series of defects, it was incumbent upon the owners corporation to investigate the water ingress problem and as long as there was awareness of a breach within the six year defect limitation period, the defence under s18E(1)(e) could not be triggered.

148. The Owners Corporation said that this was quite wrong:

One relates to the accrual of a cause of action. We have here a fixed time period which doesn’t depend on accrual of a cause of action or knowledge.

149. Raysons maintained that what was said in Cyril Smith was applicable at least by close analogy:

In my submission, that feeds into how s 18E(1)(f) should be read because we say, in a very similar way, the owners corporation was aware of issues or defects as early as 2014 in respect of the very items that they relied upon as being major defects after the expiry of the limitation period. They were put on notice that these were problems. The issues became apparent to them within the words used in the section, and it was incumbent upon them to take steps to investigate what were the cause of these problems. So to pick up the wording in the section, they “ought reasonably to have become aware of the breach”. That’s the purpose, that’s the utility in the decision in Cyril Smith.

150. I would accept the Owners Corporation’s submission. There is a fundamental difference between a claim under s 18E(1)(e) and one for negligence. Damage is the gist of an action in tort. But claims for breach of contract operate differently, hence the reasoning in Conquer v Boot [1928] 2 KB 336 and Honeywood v Munnings that a plaintiff may be shut out of enforcing a breach of warranty which resulted in damage of which the plaintiff could never have been aware merely because it has obtained a judgment on the contract in respect of a breach resulting in a different defect. The harshness of that result led to the intervention of statute. Now that a plaintiff’s claim is controlled by s 18E, the commencement of the warranty period does not turn upon the accrual of a cause of action, but on completion of the work. All of that makes it dangerous to rely by way of analogy on the reasoning in an action for negligence. And in any event, the only relevant time period for the purposes of this litigation is whether or not the Owners Corporation is entitled to the benefit of the additional six months specified in s 18E(1)(e). Further, reference to a “duty to investigate” is unhelpful and may have distracted the Appeal Panel from the statutory question, which extended to whether, in light of what was known from the first 5½ years, the breaches of statutory warranty in the points of claim ought to have been apparent (relevantly) prior to receipt of the RHM report.

151. Most fundamentally, it was wrong to proceed on the basis that “as long as there was awareness of a breach within the six year defect limitation period, the defence under s18E(1)(e) could not be triggered”. Putting to one side that the relevant awareness is in respect of a period of 5½ rather than six years, and s 18E(1)(e) is not a defence but an entitlement to sue, both of which may be presumed to be mere slips, I do not accept for the reasons already given that awareness of “a” breach of statutory warranty in the 5½ year period was disentitling in respect of any other breach of statutory warranty.

Onerati

152. After reiterating the fact that the Owners Corporation had observed many examples of staining and water ingress, the Appeal Panel continued at [74]:

It was incumbent upon the owners corporation to show that the deficiencies complained of in 2014, were different to the defects claimed in the pleadings of 2020. This was not achieved, and the owners corporation has not shown that the Onerati v Phillips principle is not applicable here. The decision in Onerati v Phillips Constructions Pty Ltd (in liq) (1989) 16 NSWLR 730 at 746 (Onerati), that ‘there is but one cause of action for breach of a contract founded upon breach of a promise such as to carry out the work in a good and workmanlike manner’ has the effect that once judgment has been obtained, a successor in title can no longer enforce the warranty. The relevant consideration in these proceedings is that the owners corporation could have commenced proceedings within the six year period and added particulars as and when they became known through the use of expert opinion, but it was not open to the owners corporation to wait until November 2020 before commencing proceedings. In Honeywood v Munnings Honeywood as Executrix of Honeywood v Murray [2006] NSWCA 215; (2006) 67 NSWLR 466 at 470 [13] - [18] and in Bardon v Occhiuto Enterprises [2016] NSWCATAP 191 at [31] - [32], the Court and the Appeal Panel applied the ratio of Onerati to confirm that there was not a series of causes of action in respect of different defects or classes of defects.

153. Much of that reasoning has been overtaken by statute. The “Onerati v Phillips principle” formerly had the effect that once a judgment was obtained, the warranty could no longer be enforced. That has not been the law since the enactment of s 18D(2) and 18E(2), a point made in paragraphs [36]-[38] of the Owners Corporation’s submission in chief, which Raysons did not dispute, and which is plainly correct. Further, as noted in Parkview Constructions at [92], the different time periods for “major defects” and other defects strain the conventional notion of there being a single cause of action.

Awareness of breaches of statutory warranty as opposed to awareness of defects

154. The Appeal Panel then turned to the Owners Corporation’s awareness, saying at [76]:

The test as to whether the owners corporation was “aware” must be both subjective and objective. There is the actual knowledge of the owners corporation as found by the Tribunal in [18] to [27]. The second limb is the objective test of what could not reasonably be expected to have been known. In order to succeed we are of the view that the owners corporation ought to have led evidence that the defects pleaded in 2020 were different to those noticed in 2014 and that the defects now particularised could not reasonable have been manifest in 2014. The owners corporation, however, did not do so.

155. This paragraph evidently proceeds on the basis, with which I respectfully agree, that the onus rested upon the Owners Corporation to establish the facts permitting it to commence in accordance with s 18E(1)(e). However, it refers repeatedly to knowledge of defects, as opposed to knowledge (more precisely, awareness) of breaches of statutory warranties. These are quite different, as the Senior Member, with respect correctly, had been at pains to point out.

156. The Appeal Panel concluded at [77]:

We conclude that the defects, the subject of the claim, were or reasonably could have been expected to have been known by the owners corporation when they first investigated the water ingress issues and the slab issues. We are satisfied that the Tribunal’s finding, that the awareness of defects could not give rise to awareness of breaches of statutory warranties, was made in error. This ground of appeal succeeds. The result must be that the owners corporation is unable to maintain its claim and the orders made below must be set aside, and the application dismissed.

157. The first sentence refers to defects, rather than breaches of warranty. The second sentence reflects the way the Appeal Panel read [35] of the Senior Member’s reasons, which I have concluded discloses error of law.

Leave

158. The Appeal Panel then addressed the question of leave. It stated at [81]-[82]:

For the reasons above we are satisfied that inconsistent findings at [35] and [37] of the decisions amount to an error of fact, in that the facts correctly applied could not have led the Tribunal to find that s18E had been enlivened. We are therefore satisfied that the builder has suffered a substantial miscarriage of justice in that the builder was prevented from reliance on the six year limitation period as a complete defence to the application.

We are satisfied that the appellant may have suffered a substantial miscarriage of justice because the decision of the Tribunal was against the weight of the evidence and internally inconsistent. In those circumstances we grant leave to appeal and set aside the orders below and in lieu thereof dismiss the application.

159. Those paragraphs make it plain that the perceived inconsistency between [35] and [37] went directly to the grant of leave. That was an error of law, because the Tribunal read gave [35] its literal meaning, which is not its legal meaning.

Conclusion and orders

160. In light of the foregoing, I can explain the outcome of the appeal concisely.

161. The Owners Corporation sought leave to appeal on the following eight grounds:

1. The Appeal Panel erred in finding that the Tribunal did not have jurisdiction to determine the plaintiff’s application.

2. The Appeal Panel erred in construing the test for an Owners Corporation’s knowledge for the purposes of s 18E(1)(e) of the Home Building Act 1989 (NSW).

3. The Appeal Panel erred in reversing the evidentiary onus in relation to s 18E(1)(e) whilst not expressly determining Ground 2 of the amended grounds of appeal.

4. The Appeal Panel failed to correctly apply clause 12 of Schedule 4 to the Civil and Administrative Tribunal Act 2013 (NSW) in granting leave to the defendant to challenge questions of fact.

5. The Appeal Panel erred in failing to engage with, or in the alternative, failing to provide adequate reasons for its decision with respect to, the plaintiff’s case.

6. The Appeal Panel erred in its redetermination of the substantive issues in dispute by taking into account irrelevant considerations, including in respect of matters going to when the plaintiff would have suffered damages in an action in tort.

7. The Appeal Panel erred in its redetermination of the substantive issues in dispute by making findings, in the absence of evidence, as to the steps that a reasonable person in the plaintiff’s position ought to have taken.

8. The Appeal Panel’s redetermination of the substantive issues in dispute was in all the circumstances legally unreasonable.

162. This is a clear case for the grant of leave. The appeal raises questions of principle, including questions of construction concerning s 18E(1)(e) and (f) which are of general application. I did not understand Raysons to submit to the contrary.

163. Ground 3 is not made out. Although it is correct that the Appeal Panel did not explicitly, but only implicitly, determine the question of onus, it correctly proceeded on the basis that the onus rests on the Owners Corporation as moving party to establish the facts which enable it to fall within the additional six month window to sue pursuant to s 18E(1)(e).

164. However, grounds 1, 2 and 4 are made out. In large part, that is because I have concluded that the Appeal Panel was wrong to proceed on the basis that the reference in [35] of the Senior Member’s reasons to “breaches of s 18B warranties” bore its literal meaning thereby giving rise to inconsistency and something which was nonsensical and, in Rayson’s words, “inexplicable in anyone’s terms”. I have concluded that there was a slip and the Senior Member is to be understood as referring to a defect or deficiency, in contrast to a breach of statutory warranty, being the very distinction he drew in the immediately following paragraphs. That reasoning was prominent in the conclusion of the Appeal Panel that the Owners Corporation did not engage s 18E(1)(e), and in the decision to grant leave to challenge questions of fact.

165. A further basis for upholding grounds 1 and 2 is that the Appeal Panel proceeded on the basis that awareness of any breach of warranty was sufficient to disentitle reliance on s 18E(1)(e), even if the resultant defect had been rectified and even if the subsequent breach was unrelated to the defect originally manifested. However, it will also be clear from the above that I have not accepted the Owners Corporation’s submission that so long as the manifested defect is different from what was known to a plaintiff in the first 5½ years, it will not be disentitled from falling within s 18E(1)(e). Instead, it is necessary to consider the entirety of the knowledge obtained in the first 5½ year period, and then determine whether nonetheless a plaintiff was not aware and ought not reasonably have been aware of the breaches of statutory warranty which it seeks to advance in proceedings commenced after the six year warranty period but within the six month window for which s 18E(1)(e) makes provision. To the extent that the Appeal Panel undertook that exercise, its findings were vitiated by the errors described above.

166. The Owners Corporation’s written submissions in support of its proposed appeal developed only the first four of those proposed grounds. Raysons responded in the same fashion, and the Owners Corporation’s written submissions in reply were likewise confined to the first four grounds.

167. During the Owners Corporation’s oral submissions, this was explained as follows:

That’s why your Honour finds in the summons part of the grounds, and they’re there for the sake of making sure that they’re covered, is a lack of reasoning in relation to the determination, there’s a reasoning issue. But I don’t think your Honour will actually come to that in due course because I think the errors are much more basic than that.

168. I do not think it is necessary or appropriate to address grounds 5-8, which were not addressed at all in the Owners Corporation’s written submissions, and which were downplayed in oral address, any more than has already occurred. I have nonetheless identified the submissions, and addressed views on the factual difficulties which are apparent in the reasons of the Appeal Panel, because it may assist the parties to narrow or resolve their dispute in circumstances where it is clear, having regard to the limited jurisdiction of this Court, and the failure by the Appeal Panel to address grounds 3-7 of the appeal to it, that the dispute must return to NCAT. Another way of putting this is that there is no utility in my seeking to address whether undoubted errors of fact answer the pejorative characterisations of unreasonable or inadequate reasons or irrelevant considerations or absence of evidence, especially in circumstances where those grounds were not fully developed or pressed.

169. In large measure, the Owners Corporation has been successful in this Court. Costs should follow the event. If either side wishes to be heard further as to the exercise of the costs discretion, application may be made within the period specified in r 36.16 of the Uniform Civil Procedure Rules 2005 (NSW).

170. Regrettable though it is, the limited scope of appellate jurisdiction granted to this Court does not permit me to do what continues to divide the parties, which is to determine whether such awareness as the Owners Corporation had prior to January 2020 meant that it was, or ought reasonably to have been aware of, some or all of the breaches of statutory warranty in respect of which it did not commence proceedings until the six month “window” after the conclusion of the six year warranty period, seeking to fall within s 18E(1)(e). That involves findings of fact which cannot be made not least because this Court does not have before it all of the evidence bearing upon it (including the statements of lot owners and the cross-examination of the experts). It includes the quintessentially factual dispute summarised in Exhibit C as to the distinctions between the defects emerging in the first 5½ years and the breaches of statutory warranty pleaded in the points of claim.

171. Further, Raysons is entitled to the determination of its application for leave to appeal on grounds 3-7 of its internal appeal. The effect of this Court’s orders will be that the entirety of its internal appeal will be before the Appeal Panel of NCAT to be determined, save for questions of construction of s 18E (including onus) which are determined by the judgment of this Court. I share Basten AJA’s view that no order for remitter is necessary; that is the simple consequence of this Court setting aside the dispositive orders of the Appeal Panel: Donohoe v Albulario at [45].

168. I cannot conclude without making an obvious observation. Putting to one side legal costs, the dispute between the parties is in relatively small compass. Much of the material adduced before NCAT was not tendered in this Court, and so I am poorly placed to express a view about the work which is involved. Even so, it would not surprise me if each side’s legal costs to date exceeded the amount at stake. Those legal costs will only grow following the outcome of this further appeal. So too will the distraction of decision-makers in the Owners Corporation, Raysons and its insurer, all of whom must have better things to do with their time, while the litigation continues. There is a great deal to be said for the parties making every effort to compromise their dispute without the need to spend further time and money, much of which will be irrecoverable, in relitigating the issues.

169. I make the following orders:

1. Grant leave to appeal.

2. Appeal allowed.

3. Set aside the orders made by an Appeal Panel of NCAT on 20 June 2024.

4. Note that the effect of the above orders is that the internal appeal brought by Raysons Constructions Pty Ltd remains undetermined by NCAT.

5. Raysons Constructions Pty Ltd to pay the Owners Corporation’s costs of its proceedings in this Court.

6. Exhibit C will be the annotated table of similarities and differences between the matters known to the Owners Corporation in the first 5½ years contrasted with the claims advanced in the points of claim, including annexures, emailed to my chambers on 11 February 2025.

7. The exhibits may be returned.

**********

Amendments

30 September 2025 - - [17] – inserted “and doors”

[35] – changed from “18E(3) and (4)” to “18E(4)”

[54] – inserted “and”

[69] – changed “reasoning” to “reasons”

[75] – changed “once” to “one”

[75] – moved “[sic in original email]” to after “effected”

[75] – deleted parenthesis in “resolved)”

[75] – inserted “[sic]” after “responsibly”

[94] – inserted full stop after “cause of action””

[107] – inserted “[sic]” after “in some case”

[113] – replaced “breach” with “breaches”

Decision last updated: 30 September 2025