BIGCORP No.3: Law Changes Didn’t Kill Off this Strata Defects Claim

Building Insurers’ Guarantee Corporation v The Owners – Strata Plan No. 57504 [2010] NSWCA 23

Quick Read

This 2010 NSW Court of Appeal decision is the second in a trilogy of cases that were important to the evolution of building defects law in NSW. This part of the dispute in a Surry Hills warehouse conversion strata title building about its defects involved an appeal by BIGCORP over the 2008 NSW Supreme Court’s decision to allow damages for the cost of replacing defective timber hobs and a new argument that changes to the Home Building Act 1989 in May 2009 applied retrospectively to void the strata building’s claim. After a legally technical analysis, the NSW Court of Appeal decided that the law changes did not operate to end the strata buildings claim and that BIGCORP had not established that it was unreasonable to replace the hobs. The decision reminds us that delayed legal claims are at risk from adverse law changes. Plus, this is also a rare Case Watch where we have to include legal extracts because of the technical legal issues involved.

Implications

Home Building Act 1989 insurance covers the risk of loss from statutory warranty breaches.
Proof of the defective work [under the statutory warranties] entitled the strata building to claim damages.
But, if it was not reasonable to replace the hobs, the damages could be reduced.
BIGCORP had to establish unreasonableness or mitigation obligations [acting to reduce its losses] by the strata building.

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Full Report & Case Details

This 2010 decision by the NSW Court of Appeal is about a dispute in a Surry Hills warehouse conversion strata title building involving its defects claim against BIGCORP [the last resort government insurer for the failed HIH insurer] under the protections that existed under the Home Building Act 1989.

It’s also the third decision in a trilogy of cases for this strata building.

BIGCORP had partly approved the strata building’s claim but disputed the balance of approximately $1.3M for defective timber hobs between balconies and the apartment interiors that allowed water to enter.

In 2008 the NSW Supreme Court decided that the strata building’s defect claim should be mostly approved for a total of $1.93M in repair costs calculated as at 4 March 2008. The NSW Supreme Court also ordered that BIGCORP pay interest on the unpaid damages and on the strata building’s paid legal costs.

BIGCORP paid the damages and interest but appealed the decision about the defective hobs, arguing that they were not defective to the extent that they needed replicating.

Plus, in May 2009 [between lodging the appeal and the hearing] the Home Building Act 1989 was changed to add s 103BA, Sch 4, Cl 83 and Sch 4, Cl 84 that reduced building owners’ rights under insurance policies involving BIGCORP [effectively cutting off unresolved insurance claims].

If the new provision applied to this case, then the strata building’s insurance claim was void and it would have to repay the damages and costs.

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Keywords

#NSW #NSWCourtofAppeal #defects #HOWinsurance #BIGCORP #2010 #HBA1989 #s103BA #sch4cl83 #sch4cl84