The Owners of Strata Plan 76888 v Walker Group Constructions Pty Ltd [2016] NSWSC 541

Significance

When considering a referee's award of damages for breach of statutory warranties under the Home Building Act 1989 (NSW) as a result of non-compliance with the Building Code of Australia (BCA), a referee may award the aggrieved party additional damages to reflect the possibility that alternative solutions capable of achieving compliance with the BCA may not be accepted by the certifying authority.

Read on for the rest of the analysis by Imogen Bailey.

Facts

The Owners – Strata Plan 76888 (Owner's Corporation), brought proceedings against the defendant, Walker Group Constructions Pty Ltd (Builder), for a breach of statutory warranties implied under the Home Building Act 1989 (NSW) (Act). The allegations included that works did not comply with the BCA, and the proceedings were referred to a referee for determination.

In relation to the alleged waterproofing and fire defects, the referee's report adopted certain alternative solutions which had arisen as a result of expert evidence. The referee assessed the reasonable cost of rectifying these defects on the basis of the alternative solutions proposed. The referee also included in his assessment of damages a sum of $22,000 to take into account the possibility that some of the alternative solutions might not be accepted by the relevant certifying authorities.

The Owner's Corporation sought an order from the court that the report be adopted, except in relation to the waterproofing and fire safety defects. The Owner's Corporation submitted that the alternatives solutions did not achieve contractual conformity and also took issue with the referee's assessment of additional damages. The Builder sought to have the report adopted.

Decision

Meagher JA found in favour of the Builder and ordered that the report, including the contested parts, be adopted. His Honour's opinion was that the proposed alternative solutions for rectification which had been agreed on by expert witnesses would, if undertaken, achieve compliance with the required standards and satisfy the Owner's Corporation's entitlement to contractual conformity.

In relation to the assessment of additional damages, his Honour agreed that the Owner's Corporation would not be put in the same position, with respect to damages, as if the contract had been performed if there was a realistic possibility that any solution might not be accepted by the relevant certifying authority and additional damages was appropriate to compensate the Owner's Corporation for that potential loss. Despite there being no evidence to support the referee's assessment of additional damages, his Honour noted that the Builder had not taken issue with the award of $22,000 in additional damages and included this amount in judgement against the Builder.