The Owners - Strata Plan No 66595 v Suncorp Metway Insurance Ltd and B S and J H Bailey Pty Ltd

The case involves the Owners of Strata Plan No 66595, who have brought a claim against Suncorp Metway Insurance Ltd and B S and J H Bailey Pty Ltd, a builder. The dispute revolves around the construction of a building that has suffered from foundation movement, resulting in cracks and other structural issues. The Owners are seeking compensation for the defects under statutory warranties provided by the Home Building Act, as well as common law claims for breach of contract and negligence against the builder.

The central legal issues before the court were whether the foundation movement and resulting structural issues were due to a defect, and if so, whether these defects were covered by the statutory warranties. The court had to determine the extent of the required rectification and assess the application of the Australian Standard AS 2870 in categorising crack widths. Additionally, the court examined whether the use of concrete pier footings and strip beam footings, as well as skin friction and structural stabilisation methods, complied with building standards.

In its reasoning, the court concluded that the foundation movement and resulting structural issues constituted defects under the statutory warranties. The court found that the crack widths exceeded the permissible limits set out in AS 2870. The court also determined that the construction methods, including the use of concrete pier footings and strip beam footings, as well as the skin friction and structural stabilisation techniques employed, did not meet the required standards. Consequently, the court found in favour of the Owners, holding that the builder was liable for the defects and that the insurance company was responsible for covering the rectification costs under the statutory warranties. The court ordered that the matter be listed for directions to establish a timetable for evidence or an agreement on the quantum of damages, taking into account the extent of the rectification required.