Identifying Defects Early – Now Even More Relevant!

November, 2016

A recent decision of Justice Stevenson of the Supreme Court has reinforced the need to identify and include all claimed defects in court proceedings, even more so than used to be the case.

Various court decisions had previously made clear that suing on the underlying “cause of action”, or legal right, within time was the important issue, and that amending to add details of further defects at a later date did not mean that the defects added later were “out of time”.

However, the recent decision of Justice Stevenson in The Owners – Strata Plan 76841 v Ceerose Pty Ltd had to deal with defects being added with the extra complicating factor of Section 109ZK of the Environmental Planning Act 1979, and the 10 year “long stop” time bar for “building actions” it provides (in NSW).

The Owners Corporation in that case had sued the original builder under the statutory warranties within 7 years but, in the context of proceedings that had dragged on, had later (and more than 10 years after the Occupation Certificate been issued for the purposes of Section 109ZK) sought to add a “wholly new” Water Ingress Defect as well as some new items to Fire & BCA Defects.

In summary, the Court found that the proposed amendments to add the defects should not be allowed, as the Defendant would suffer prejudice due the late addition in being unable to cross claim against other liable parties, as those cross claims would be barred by Section 109ZK.

This reinforces that plaintiffs, and especially Owners Corporations with all the issues they face in obtaining access to all lots especially in large schemes, should take steps early to identify all defects present so that they avoid defendants seeking to block them being added later, and potentially suffering bars such as occurred in this case.

The decision may well be appealed, and thus overturned or amended, but the case reinforces the need to investigate and identify defects early on in defects claims.

Contact Mills Oakley

Ziv Ben-Arie | Partner
T: +61 2 8289 5854

Stephen Aroney | Partner
T: +61 2 8289 5818

Daren Curry | Partner
T: +61 2 8289 5817

Peter Meades | Partner
T: +61 2 8289 5889


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