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

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

GoStrata’s CaseWatch is a short, sharp and easy-to-understand review of important and interesting Court and Tribunal decisions affecting Australian strata title stakeholders.

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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.

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Implications

The key implications of this strata case are as follows.

• 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.