BIGCORP No.2: Pre Judgment Interest on Defects Damages & Costs

The Owners Strata Plan 57504 v Building Insurers' Guarantee Corporation [2008] NSWSC 1285

Quick Read

This 2008 NSW Supreme Court 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 covered whether or not the strata building was entitled to back dated interest on the cost of defect repairs and its legal costs. After reviewing relevant cases and the strata building’s position, the Court decided that the escalation of defects over time warranted interest on damages and that being out of pocket for paid costs was a real and significant detriment and ordered BIGCORP to pay both. The decision is a rare reminder that strata buildings [and others] can recover backdated interest on defect repair costs regardless of whether spent or not and legal costs they have paid.

Implications

Successful claimants can recover backdated [pre-judgment] interest on damages and legal costs in some circumstances.
The Screenco case decision [where interest was refused] was not comparable to this case.
The kind of building defects could get worse [escalate] so not having the damages prevented the strata building from performing repair work.

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Full Report & Case Details

This 2008 decision by the NSW Supreme Court is about a dispute in a Surry Hills warehouse conversion strata title building about 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 second decision in a trilogy of cases for this dogged stratum 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.

Earlier 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 strata building wanted interest on the unpaid part of its claim from that date, effectively claiming pre-judgment interest. It also asked for interest on its costs.

The strata building argued that interest was payable since it had been denied the use of that money since that time.

BIGCORP argued that the strata building was not entitled to interest since it had not paid to rectify any defects [apart from $60K in emergency repairs] and had suffered no loss resulting from not having the money earlier.

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Keywords

#NSW #NSWSupremeCourt #defects #HOWinsurance #BIGCORP #interest #2008