Australia: Court of Appeal Clarifies Scope of Statutory Warranties

Ace Woollahra Pty Limited v The Owners-Strata Plan 61424 & Anor [2010] NSWCA 101
Last Updated: 18 June 2010
Article by Stephen George


In this case, the New South Wales Court of Appeal decided unanimously that an owner which was not a successor in title to a party to the original building contract (or to an owner-builder or developer who did residential building work other than under a contract) was not entitled to enforce statutory warranties against the original builder.

The facts

The appellant builder ('the builder') completed the construction of 38 strata titled aged person units under a building contract with Wallis Street Developments Limited ('Wallis'). Wallis was not the registered proprietor of the land on which the building work took place but it had entered into a joint venture agreement with the registered proprietor, PRC Limited.

When construction work was completed all of the apartment dwellings were owned by PRC Limited. On 15 December 1999, the strata plan for the property was registered and the common property vested in the respondent to the appeal, The Owners- Strata Plan 61424 ('the owner').

The owner then sought to enforce statutory warranties, implied in the building contract by s18B of the Home Building Act 1989 (NSW) ('HB Act') against the builder in respect of defective work.

Section 18D of the HB Act provides that a person who is the successor in title to a person entitled to the benefit of a statutory warranty is entitled to the same rights as the person's predecessor in title, in respect of the statutory warranty.

The arguments

It was common ground between the parties that the owner was not a successor in title to Wallis.

The owner said that this did not matter and,on a purposive construction of s18D of the HB Act, it was entitled to the benefit of statutory warranties against the builder. It placed some reliance upon s99 of the HB Act which provides, relevantly, that a domestic building warranty policy must insure 'a person on whose behalf work is being done' against the risk of loss from breach of statutory warranties. The owner argued that the work in this case was done on behalf of PRC Limited and that it could be inferred from s99 of the HB Act that PRC Limited and its successors in title (including the owner) were entitled to enforce the statutory warranties.

The builder argued that the proprietor was not a successor in title to Wallis and thus simply could not bring itself within the language of s18D of the HB Act. Accordingly, said the builder, the owner was not entitled to enforce the statutory warranties against it.

The decision at first instance

The primary judge noted that the owner had to 'find a bridge' from Wallis, the contracting party, to PRC Limited, the first registered owner, to take advantage of the statutory warranties and that, for this purpose, the owner had relied on s99 of the HB Act.

His Honour took the view that the scheme of the HB Act favoured the owner's position: that is, that the circumstances which entitle a person to the benefit of a statutory warranty under s18D are satisfied when the work is done on behalf of that person within the meaning of s99 of the HB Act which, he said, was not intended to be a technical expression but which raised a factual enquiry.

The decision of the court of appeal

Sackville AJA, with whom Tobias JA and McColl JA agreed, overturned the judgement below and held that the owner was not entitled to enforce statutory warranties against the builder.

His Honour rejected what he described as the 'dubious assumption' that the expression 'on whose behalf the work is being done' in s99 of the HB Act embraced persons who were not parties to a building contract. Whilst acknowledging that the expression is capable of many different meanings, he found that there were 'good reasons' for confining it in this context to the case where residential building work was undertaken by one party on a contractual basis for another party.

His Honour noted that, even if this view was wrong, it was 'a large step' to move from the proposition that a contractor's insurance policy must insure a person on whose behalf residential building work was being done (even if not a party to the building contract), to the proposition that scope of the words 'person entitled to the benefit of a statutory warranty' in s18D of the HB Act must be similarly extended.

The structure of Part 2C of the HB Act, he held, was such that a person was entitled to the benefit of a statutory warranty for the purposes of s18D 'only if s18B or s18C so provides'. Section 18B provides that certain warranties are to be implied into every contract to do residential building work and thus entitles the party contracting with the builder to enforce the warranties. Section 18C creates what His Honour described as a 'deemed contract' where residential building work is done without a contract in place or, if there is a contract, a developer is not a party to it. A contract is ,'deemed to exist between the person who has done the work or the developer (as the case may be) and the immediate successor in title to that person or the developer'. Section 18D then extends the benefit of the statutory warranties implied in the building contract (s18B) or included in the deemed contract (s18C), to a successor in title of the person originally entitled to the benefit of those warranties.


The decision provides a useful clarification as to the parties who are entitled to the benefit of statutory warranties. Whilst there have been some changes to the relevant legislation since the events which gave rise to the proceedings (principally, the introduction of the last resort insurance scheme), the form of sections 18B to 18D has not altered materially and it is likely Sackville AJA's reasoning would apply equally to those provisions in their present form.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

Some comments from our readers…
“The articles are extremely timely and highly applicable”
“I often find critical information not available elsewhere”
“As in-house counsel, Mondaq’s service is of great value”

Mondaq Advice Centre (MACs)
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Check to state you have read and
agree to our Terms and Conditions

Terms & Conditions and Privacy Statement (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

Use of

You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.


Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.


Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.

Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

If you do not want us to provide your name and email address you may opt out by clicking here .

If you do not wish to receive any future announcements of products and services offered by Mondaq by clicking here .

Information Collection and Use

We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to with “no disclosure” in the subject heading

Mondaq News Alerts

In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.


A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

Log Files

We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.


This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

Surveys & Contests

From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.


If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.


This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to

Correcting/Updating Personal Information

If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to

Notification of Changes

If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

How to contact Mondaq

You can contact us with comments or queries at

If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at and we will use commercially reasonable efforts to determine and correct the problem promptly.