The Owners - Strata Plan No 93543 v Zhang

[2021] NSWSC 277

Supreme Court

New South Wales

Medium Neutral Citation:	The Owners – Strata Plan No 93543 v Zhang [2021] NSWSC 277
Hearing dates:	22 March 2021
Date of orders:	22 March 2021
Decision date:	22 March 2021
Jurisdiction:	Equity - Technology and Construction List
Before:	Stevenson J
Decision:	Leave to withdraw admissions refused
Catchwords:	PRACTICE AND PROCEDURE – application to withdraw admissions – admission in List Response that plaintiff owners corporation was entitled to benefit of statutory warranties – further admissions that defendant entered into a contract with the builder of the strata development and that the builder entered into contracts with contractors on behalf of defendant – application to withdraw admissions made on first day of a 5 day hearing – where admissions said to have been made as a result of an error by counsel then briefed and by present solicitor – where withdrawal of admissions would cause plaintiff to seek to investigate further facts hitherto admitted and result in vacation of hearing dates
Legislation Cited:	Home Building Act 1999 (NSW)
Cases Cited:	Ace Woollahra Pty Ltd v Owners - Strata Plan 61424 (2010) 77 NSWLR 613; [2010] NSWCA 101
Category:	Procedural rulings
Parties:	The Owners – Strata Plan No 93543 (Plaintiff) Hui Zhang (Defendant)
Representation:	Counsel: A G Rogers (Plaintiff) P Moorehouse with J Tsang (Defendant) Solicitors: Alexander Richards Lawyers (Plaintiff) Marando Solicitors (Defendant)
File Number(s):	2018/382960

Judgment

1. The plaintiff is the Owners Corporation of a 20-unit residential strata development at Cabramatta.

2. Immediately prior to registration of the strata plan on 16 June 2016, the defendant, Mr Zhang, was the owner of the property on which the complex is now built.

3. The Owners Corporation alleges that there are defects in the building and that Mr Zhang, as the builder and/or developer of the complex, is liable to compensate it for that defective work by reason of the statutory warranties specified in ss 18C and 18D of the Home Building Act 1999 (NSW).

4. On 28 August 2020, the proceedings were set down for hearing for five days commencing on 22 March 2021.

5. By notice of motion filed on Sunday 21 March 2021, the day before the hearing, Mr Zhang sought to withdraw admissions made by him in his List Response that:

1. he entered into building contracts with various contractors in connection with the residential building work on the subject land;

2. a company, ZH International Pty Ltd, of which he was a director and shareholder and which is now in liquidation, entered into contracts on his behalf with contractors in relation to that residential building work; and

3. the Owners Corporation is entitled to the benefit of the statutory warranties.

6. I dealt with the application at the outset of the hearing and refused to grant Mr Zhang leave to withdraw these admissions.

7. These are my reasons.

8. Mr Zhang accepts that, by reason of the provisions of s 3A of the Home Building Act, and in the events that have happened, he was the developer of the project. He contends that ZH International was the builder.

9. As to the admissions that Mr Zhang, and ZH International on Mr Zhang’s behalf, entered into building contracts with contractors in connection with relevant residential building work, Mr Zhang contends that this admission is contrary to the facts, and was made as a result of the combined error of his former counsel while preparing the Response, and of his current solicitor in not detecting the error.

10. In that regard, his solicitor, Mr Marando, deposed that “it has always been my client’s instructions that he was not the builder on the project”.

11. It is true that there may be a tension between the admissions made and:

1. a statement in the List Response that an issue in the proceedings is whether Mr Zhang was in fact the builder; and

2. assertions that Mr Zhang (inadmissibly) sought to make in his affidavit.

12. It is also true that, in his opening written submissions, Mr Rogers, who appears for the Owners Corporation, did not, in terms, rely on admissions and acknowledged that:

“As one reads the evidence led by [Mr Zhang] it will be suggested that the builder was in fact ZH International Pty Ltd, a company controlled by [Mr Zhang].

That matter remains a live issue which will need to be tested in the course of the proceedings.”

13. However, on Mr Zhang’s application to withdraw the admissions, Mr Rogers submitted:

“The inevitable consequence of the withdrawal of the admissions will be an adjournment.

The [Owners Corporation] would be entitled to investigate the following matters:

(i) whether, in fact, [Mr Zhang] ever had a contract with ZH International;

(ii) whether there are facts indicative that [Mr Zhang] [1] was, in fact, the builder;

(iii) whether it should now seek leave to proceed against ZH International notwithstanding that that company is in liquidation.

1. Mr Rogers’ submission actually referred to “the plaintiff” which was clearly an error.

14. I accepted that to meet the withdrawal of the admissions, it would be reasonable for the Owners Corporation to explore these matters, and that, to do so, the hearing dates would have to be vacated.

15. I found that matter to be decisive.

16. At present, a further 5-day hearing date may not be available until later this year, and perhaps not until next year. I concluded it would be profoundly unjust to the Owners Corporation to vacate the hearing dates in these circumstances.

17. As to the admission that the Owners Corporation was entitled to the statutory warranties, Mr Moorehouse, who appeared with Mr Tsang for Mr Zhang, submitted that this admission was made in error as, notwithstanding the fact that Mr Zhang was the developer of the project, he was not liable to the Owners Corporation under the statutory warranties because:

1. as a matter of law and on the proper construction of ss 3A and 18C of the Home Building Act:

1. Mr Zhang could only be liable under the statutory warranties if he was a “developer in relation to that residential building work” for the purpose of s 3A(1);

2. he could only be such a developer if the work was done on his behalf for the purpose of s 18C(2); and

3. notwithstanding the provisions of ss 3A(1) and 3A(1A) of the Act, work could only have been done on his behalf if it was done pursuant to a contractual relationship; [2] and

2. as a matter of fact, ZH International was the builder and there was no contractual relationship between Mr Zhang and ZH International.

   2. Adopting the manner in which the previous version of s 3A was construed in Ace Woollahra Pty Ltd v Owners - Strata Plan 61424 (2010) 77 NSWLR 613; [2010] NSWCA 101.

18. Mr Rogers accepted he could deal with the statutory construction point (which he described as being “meritless”) but stated that, in order to deal with the factual matter referred to at [17(b)], the Owners Corporation would need to investigate the factual propositions inherent in Mr Moorehouse’s submission, including whether there was a contractual relationship between Mr Zhang and ZH International.

19. Mr Rogers said, and I accepted, that the Owners Corporation had not hitherto needed to investigate these matters because Mr Zhang had admitted the Owners Corporation was entitled to rely upon the statutory warranties.

20. Once again, withdrawal of the admissions would have required that the proceedings be adjourned.

21. I was not prepared to impose that consequence on the Owners Corporation.

22. It is for these reasons that I refused to grant Mr Zhang leave to withdraw the admissions.

23. To the extent that Mr Zhang now finds himself in a position of disadvantage, that is entirely a consequence of the manner in which the matter has been prepared on his behalf.

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Endnotes

Decision last updated: 24 March 2021