Justice David Hammerschlag of the NSW Supreme Court has indicated that he will subject cases alleging defective construction to “intensive case management”.

As recently reported in Australian Financial Review, Justice Hammerschlag proposed several measures to facilitate quicker resolution of building defect claims to deal with the large number of cases pending between owners corporations, builders and developers. These measures include requiring parties to have a single expert, referring parts of cases for inquiry and reports from referees, early mediation and early hearings. Click here to view the article.

Why are these measures being proposed?

Concerns have been expressed within the construction industry, state government and judiciary in NSW as to the volume of lawsuits which residential apartment owners have filed against developers and builders.  The lawsuits are generally complex, involving multiple parties and claims with varying proportions of liability; a wide range of alleged defects/breaches of the Home Building Act statutory warranties; and often commenced at or near the end of the statutory limitation period (being 6 years after the completion of the work for structural defects and 2 years after the completion of the work for other defects, for contracts entered into before 1 February 2012 a 7 year limitation period applies).  Resolution of these lawsuits is taking up increasing time and resources (not only of the parties but also of the court or tribunal), and potentially wasting costs which would otherwise be better spent on rectification (if the alleged breach is substantiated and rectification is necessary and reasonable to overcome that breach).

What does this mean for builders and developers?

Parties involved in residential building defects claims, which are either commenced in or transferred to the Supreme Court of NSW, will be required to consider and implement practical measures to speed up the resolution of such claims.   The measures include: having a single expert inquire and report on the alleged defects/breaches of statutory warranties; referring the whole or part of the claim to an appropriately qualified referee for inquiry and report; participating in mediation at an early stage of the proceedings; and seeking an early hearing on key threshold questions (judgment on which, for example, may enable the parties to seek to resolve the balance of the claim).