By Christopher Kerin and James Qian -
Snapshot
- The High Court’s recent decision in Brookfield Multiplex Ltd v Owners Corporation Strata Plan 61288 & Anor [2014] HCA 36 has curtailed the rights of apartment owners to sue builders in negligence
- From 1 December 2014, it is anticipated that the vast majority of new apartment owners suffering lot and common property building defects will in effect have only two years to sue builders and developers due to the latest round of amendments to the Home Building Act 1989
- Practitioners will need to act rapidly on behalf of clients so they do not fall foul of limitation periods
On 8 October, the High Court handed down its decision in Brookfield Multiplex Ltd v Owners Corporation Strata Plan 61288 & Anor [2014] HCA 36, which curtails the rights of apartment owners to sue builders in negligence. The case involved a long-running dispute between the appellant builder, Brookfield, and the respondent owners corporation with respect to building defects in the common property of a commercial building, The Mantra Chatswood Hotel, which was run as a serviced apartment business.
First instance
At first instance in the NSW Supreme Court in The Owners – Strata Plan No. 61288 v Brookfield Australia Investments Ltd [2012] NSWSC 1219, McDougall J held that Brookfield did not owe a duty of care to the owners corporation to take reasonable care to avoid a reasonably foreseeable economic loss to the owners corporation in having to make good the consequences of latent defects in the common property caused by the building’s defective design and/or construction.
His Honour held there was no reason for a tortious duty of care where Brookfield and the developer had negotiated contractual rights comprehensively (at [90]). Further, his Honour refused to identify or impose a ‘novel duty of care’ between Brookfield and the owners corporation (at [91]).
His Honour also stated that to rule in favour of the owners corporation would result in the court encroaching into an area in which the legislature did not wish to venture. The statutory warranty provisions in Part 2C of the Home Building Act 1989, which specifically apply to residential building works, expressly excluded non-residential building works such as in this case (at [94]).
