Australia: Residential Focus - 14 December 2016

Allianz Australia Insurance Limited v Dinov [2016] NSWDC 342

The defendants had each signed a deed of indemnity (the Deeds) by which they each agreed to indemnify the home warranty insurer (the Plaintiff) for all loss, damage, costs, charges or other liabilities arising under a policy of home warranty insurance issued in 2002 in respect of work carried out by Great Wall Constructions Pty Ltd (Great Wall) at Lilyfield.

In 2009, the successors in title to the Lilyfield property claimed under the policy. By that time, Great Wall had been deregistered. The Plaintiff accepted liability under the policy for part of the claim and entered into terms of settlement with the successors in title for a third party builder to undertake the accepted remedial works. Relying on the Deeds, the Plaintiff demanded payment from each of the Defendants for the costs incurred. The Defendants failed to pay the amounts claimed by the Plaintiff. The Plaintiff claimed damages for breach of the indemnity provisions in the Deeds. The Defendants denied liability and claimed that the Plaintiff's claim was statute barred by virtue of section 109ZK(1) of the Environmental Planning and Assessment Act 1979 (NSW) (the Act).

The issue for determination by the Court was whether the claim by the Plaintiff was within the meaning of 'building action' as provided in section 109ZK(1) and therefore statute barred by section 109ZK(1)(a) of the Act.

The Plaintiff submitted that the action did not fall within the meaning of "building action." In construing the definition of "building action," the Plaintiff relied on the Explanatory Note in Part 4C of the Act which provided that the 10 year limitation period for liability is "designed to address the law concerning latent defects in which the current limitation period begins to run only when the defect becomes apparent."

The Plaintiff submitted that the aim of Part 4C of the Act was to provide protection for building professionals who actually designed or undertook the building work, and that the Defendants did not do any of the building work and were therefore unable to successfully rely on section 109ZK(1) of the Act.

The Defendants submitted that the words "arising out of or concerning defective building work" are general words and should be interpreted widely. The Defendants also argued that Part 4C of the Act is remedial, and should therefore be construed with a broad purpose and liberal interpretation. Whilst the Defendants accepted that the definition of "building action" must be limited in some way, they believed that the approach in Australian Rail Track Corporation Ltd v Leighton Contractors Pty Ltd [2003] VSC 189 should be adopted, being that section 109ZK will not apply to an outside party who has suffered loss or damage as a result of defective building work in "only an accidental, incidental or indirect sense." The Defendants submitted that the damage claimed by the Plaintiff was only "one step removed from the defendants' obligation to indemnify under the Deeds" and therefore fell within section 109ZK of the Act.

The Court examined the history and context of the provision before reaching the conclusion that section 109ZK(1) did not prevent the claim by the Plaintiff. It was the Court's view that the present action related to a breach of the indemnification obligation in the Deeds signed by the Defendants. The Court was not completely satisfied with the approach in Australian Rail Track Corporation Ltd, and suggested that a better approach would be to undertake a characterisation of the cause of action in question under consideration. In undertaking a characterisation of the cause of action, the Court asked the following two questions: is the cause of action for loss or damage arising out of defective building work, or is the cause of action for damages for failure to meet a legal (such as contractual) obligation which is only indirectly related to defective building work? The present action was found to fall within the latter.

In the media

Fall in building approvals a wake-up call
The worst housing approvals numbers in two years should serve as a wake-up call to governments on the need to fix housing markets and planning systems, according to the Property Council (30 November 2016). More...

Longest housing boom in NSW history
NSW is in the midst of the longest housing construction boom in its history, according to Australian Bureau of Statistics data. Data released today shows 74,577 homes were approved in the 12 months to October 2016. This is a record 33rd consecutive month with a yearly approval figure of more than 50,000 (30 November 2016). More...

Safety blitz targets demolition sites
WorkSafe inspectors have begun a month-long blitz targeting dangerous and sub-standard demolition work. Inspectors expect to visit more than 800 demolition and construction sites across the state to ensure work is carried out as safely as possible (23 November 2016)
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Empowering consumers with complaints data
NSW Fair Trading's Complaints Register October data was released today with liquidated homebuilders, Huxley Homes topping the list. NSW Fair Trading Commissioner, Rod Stowe, said empowering consumers with this information gives businesses strong incentive to improve their business practices (24 November 2016). More...

Compliance blitz hits Parramatta River building sites with over $127,000 in fines
Over 50 per cent of sites inspected during a month-long compliance blitz were not managing their environmental controls adequately leading to fines totalling more than $127,000 for developers along the Parramatta River (24 November 2016). More...

184,300 homes over five years with new infrastructure
A strong NSW economy and new public transport links have opened the way for an expected 184,300 new dwellings over the next five years – easily surpassing previous records (21 November 2016). More...


NSW BPB November enews
Our e-news is a regular digest of work by the Board, legislative updates, events, training and consultation opportunities (30 November 2016). More...

Practice and courts

GBCA: new Green Star certification process
A new streamlined process for the registration of applications for Green Star certification is effective 1 December 2016, and freshened up the Green Star Certification Agreement. Clauses and processes have been clarified, particularly, the appointment of Applicant Agents and Change of Ownership process and Limitation of Trustee Liability clause. The Agreement remains substantially the same (16 November 2016). More...

ABCB's 2017 NCC Information Seminars Registrations Now Open
Registrations are NOW OPEN for the Australian Building Codes Board's (ABCB) 2017 NCC Information Seminars. The series will include presentations from the ABCB, Standards Australia and local Building Control Administrations.

Senate Inquiry Update
Non-conforming building products
Status: Accepting Submissions; Date Referred: 11 October 2016; Submissions Closed: 01 December 2016; Reporting Date: 25 May 2017.

Announcements, Draft Policies and Plans released 2016

NSW BPB: Independent reviewers of E1 CPD activities
The Building Professionals Board has approved subject matter experts to independently review proposed continuing professional development (CPD) activities for swimming pool certifiers (30 November 2016). More...

NSW BPB: Government responds to independent swimming pool barrier review
On 24 November 2016 the NSW Government released its response to the independent review of swimming pool barrier legislation by Mr Michael Lambert. More...

NSW BPB: E1 Swimming pool certification - additional training provider approved
The Building Professionals Board has approved Building UpSkills to deliver a training course for prospective E1 swimming pool certifiers (28 November 2016). More...


Cleary v Pavier (No 2) [2016] NSWCATAP 262
COSTS – Appeal Panel – Home Building – no questions of law – application for costs – dismissed.

Markunsky v Zammit t/a Zammit Quality Constructions [2016] NSWCATAP 253
COSTS –– exercise of the discretion to award costs under cl.20 of the Consumer, Trader and Tenancy Tribunal Regulation 2009 (NSW) — application of the "compensatory principle" in proceedings where there are multiple issues and each party enjoys a measure of success
COSTS ––whether "special circumstances" under s.60 of the Civil and Administrative Tribunal Act 2013 (NSW) established.

Place v Department of Finance, Services and Innovation [2016] NSWCATAD 278
GOVERNMENT INFORMATION -- access application -- building certifier's response to complaint – whether to be released – personal factors.

Tsui v Commissioner for Fair Trading [2016] NSWCATOD 143
ADMINISTRATIVE REVIEW – Home Building Act – endorsed contractor licence – general building category – relevant industry experience.

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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