Australia: Residential focus - 27 July 2016

Last Updated: 31 July 2016
Article by Christine Jones and Daniella Ivanoska
Most Read Contributor in Australia, September 2017

The Owners - Strata Plan No 84741 v Nazero Constructions Pty Limited & Ors [2016] NSWSC 832; The Owners - Strata Plan No 84741 v Nazero Constructions Pty Limited & Ors (Costs) [2016] NSWSC 965

The Owners Corporation (the OC) commenced proceedings against the builder and the developer regarding alleged defects. The defects were found to be established and judgement was entered against the builder. The findings did not bind the developer.

The developer cross claimed against the guarantor under the construction contract. The guarantor claimed that the developer had released him from any liability under the terms of a deed resolving a payment dispute under the construction contract, whereby the parties (as opposed to the Parties) released each other from all claims under the contract whether known or unknown at the time of signing the deed. There was a 'carve out' from that release for the builder's obligations under the defects liability period (DLP) or under the Home Building Act 1989 (HBA).

On the application of the guarantor, orders were made that questions (to be precisely formulated by the parties) be determined separately and before any other questions in the proceedings. At the hearing three questions, which had been formulated by the parties and subject of prior orders, were reduced by consent to a single question:

On the proper construction of the Deed... is the (guarantor)... released from any liability to the (developer)... under the "Construction Contract; Formal Instrument of Agreement"...

The separate question was answered in the negative, having regard to the language used and the context in which the expression "the parties" appeared in the Deed, noting that if it had been intended to include the guarantor in the release the expression "the parties and the Guarantor" would have been used, as in other instances in the deed.

Whilst the release had a consequence for the guarantor in that he could no longer be called upon to guarantee the performance of the builder's obligations under the contract, he remained liable in respect of the builder's continuing obligations under the DLP and the HBA which were carved out of the release.

The OC and the developer sought that the guarantor pay their costs in relation to the determination of the separate questions. The guarantor accepted that the developer was entitled to a costs order, however argued that it should be reduced by 50% to reflect the consensual reduction of the separate questions. In relation to the OC's costs, the guarantor submitted that the OC chose to participate and therefore should cover its own costs.

The developer submitted that the guarantor was the moving party who sought the separate determination of the issues and therefore should pay any costs spent on the preparation of answers to all the questions, including those vacated.

The Court ordered the guarantor to pay the costs, following the decision in Pavlovic v Universal Music Australia Pty Ltd (No 2) [2016] NSWCA 31, where it was determined that the costs in respect of the determination of separate questions ordered pursuant to r 28.2 of the UCPR are to be dealt with in the same way as general costs of the proceedings – that the costs follow the event.

The Court noted:

  • When parties embark on the process under (the UCPR) of seeking the determination of separate questions, they must anticipate that the Court will exercise caution in relation to the making of such an order and may require additional work and consultation in deciding upon the efficacy of the process.
  • The parties should also be aware that even though they may take part in a process of formulating separate questions, the Court may decide that it may be prudent to decline to answer the presented questions because it is inappropriate to do so.
  • These are all steps the costs for which an unsuccessful party may be at risk of bearing.

In the media

Moderating Housing Finance

The latest housing finance figures released today by the Australian Bureau of Statistics (ABS) confirm a moderating housing market (11 July 2016) Moderating Housing Finance.

Australia's construction sector roared back to life in June

Almost out of nowhere, Australia's construction sector is back, expanding strongly in June, according to the latest Performance of Construction Index (PCI) released by the Ai Group earlier today. The PCI jumped to 53.2, up 6.5 points (06 July 2016)

Master Builders: Building Approvals Data Confirms Softening Housing Market

The May 2016 building approval data are consistent with the view that the new housing market is at its peak and is set to slow down. The total number of dwelling units approved will see a solid pipeline of work for the remainder of the 2016 calendar year (04 July 2016) Building Approvals Data Confirms Softening Housing Market.


Fair Trading Cracks Down on Unlicensed Builder

NSW Fair Trading has recently prosecuted an unlicensed Epping carpenter after it was discovered that he was undertaking residential building work without a licence (11 July 2016) Fair Trading Cracks Down on Unlicensed Builder.

Riverwood urban renewal demonstrates the value of private public partnerships

The announcement by the Minister for Social Housing Brad Hazzard that the Riverwood social housing estate will be renewed with a mix of private, social and affordable housing demonstrates the value of Private Public Partnerships, says the Urban Taskforce (06 July 2016) Riverwood urban renewal demonstrates the value of private public partnerships.

Rising up: Sydney to increase number and height of CBD buildings

A plan to increase the number and height of buildings in the heart of Sydney is on the table.

The City of Sydney's new Central Sydney Planning Strategy includes plans to increase building height restrictions for pockets of the CBD to encourage intensified development of tall buildings (1 July 2016)


Australian Bureau of Statistics

13 July 2016 - Building Activity, Australia, Mar 2016 (cat no. 8752.0)

13 July 2016 - Construction Activity: Chain Volume Measures, Australia, Mar 2016 (cat no. 8782.0.65.001).

Practice and courts

New Safety Standards

AS 1735.1:2016 - Lifts, escalators and moving walks - General requirements

AS/NZS 62841.2.14:2016 - Electric motor-operated hand-held tools, transportable tools and lawn and garden machinery - Safety - Particular requirements for hand-held planers.

Consultation: GRESB Infrastructure Assessment

The GRESB Infrastructure Assessment, which offers a new global benchmark for the environmental, social and governance performance of infrastructure assets. Results will be published in October, 2016.

Announcements, Draft Policies and Plans released 2016

NSW BPB: OLG issues advice to all certifiers about swimming pools

The following advice from the Office of Local Government is issued in response to recent enquiries about out-of-ground pool walls and the application in NSW of clause 2.5.3 of AS1926.1 2012 (11 July 2016) OLG issues advice to all certifiers about swimming pools.

NSN BPB: National building surveying qualifications recognised for accreditation

The Building Professionals Board now recognises more building surveying qualifications for accreditation as a certifier (08 July 2016) National building surveying qualifications recognised for accreditation.

Loose-fill asbestos insulation

NSW Fair Trading will provide financial assistance and support to affected homeowners and tenants, but you must register by 1 August 2016.

Simplified NSW Housing Code – Draft Changes On Exhibition

The Department of Planning and Environment is exhibiting draft changes to the NSW Housing Code and inviting council submissions by 12 August 2016 Simplified Housing Code.


The Owners of Strata Plan 76888 v Walker Group Constructions Pty Ltd (No 2) [2016] NSWSC 943

COSTS – where proceedings commenced in CTTT and transferred to this Court and plaintiff obtains judgment for less than $500,000 – whether commencement and continuation of proceedings in this Court was warranted (UCPR r 42.34) – whether costs should follow the event of the plaintiff's success (UCPR r 42.1)

Stevenson & Stevenson v Kearns & Kearns t/as DA & SA Kearns Carpentry & Building [2016] NSWCATAP 151

APPEAL AND APPLICATION FOR LEAVE TO APPEAL – Civil and Administrative Tribunal – Error of Law – Failure to make necessary findings of fact – Findings made without evidence

The Owners - Strata Plan No 84741 v Nazero Constructions Pty Limited & Ors (Costs) [2016] NSWSC 965

COSTS – where separate questions ordered – where number of questions reduced to a single question at hearing – whether successful parties should have their costs – whether successful parties' costs should be reduced by reason of the reduction in the number of questions to be determined

SEPARATE QUESTIONS – expectation that the Court will be cautious – need for precise formulation of questions and agreed facts – prospect that the Court may decline to answer questions if inappropriate to do so

Lauer v Comer (No 2) [2016] NSWCATAP 158

Home Building Act – s 94(1A) – quantum meruit not just and equitable

Smith v Andrew Hands t/as Perfect Timber Flooring [2016] NSWCATAP 161

APPLICATION FOR LEAVE TO APPEAL – Appellant failed to demonstrate foundation for grant of leave to appeal

Bonita v Shen [2016] NSWCATAP 159

Rule 38 Costs of proceedings in the Consumer and Commercial Division- Validity of rule 38, no requirement to establish special circumstances, general discretion to award costs, factors to be considered, when evidence of amount of costs required, Assessment of costs- applicable legislation, proceedings commenced prior to 1 July 2015, Discretion to award costs- review on appeal

This publication does not deal with every important topic or change in law and is not intended to be relied upon as a substitute for legal or other advice that may be relevant to the reader's specific circumstances. If you have found this publication of interest and would like to know more or wish to obtain legal advice relevant to your circumstances please contact one of the named individuals listed.

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Christine Jones
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