BIGCORP No.3: Law Changes Didn’t Kill Off this Strata Defects Claim

Building Insurers’ Guarantee Corporation v The Owners – Strata Plan No. 57504 [2010] NSWCA 23

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 2010 NSW Court of Appeal decision is the third 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 involved an appeal by BIGCORP over the 2008 NSW Supreme Court’s decision to allow damages for the cost of replacing defective timber hobs and a new argument that changes to the Home Building Act 1989 in May 2009 applied retrospectively to void the strata building’s claim.  After a legally technical analysis, the NSW Court of Appeal decided that the law changes did not operate to end the strata buildings claim and that BIGCORP had not established that it was unreasonable to replace the hobs.  The decision reminds us that delayed legal claims are at risk from adverse law changes. Plus, this is also a rare Case Watch where we have to include legal extracts because of the technical legal issues involved.

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Implications

The key implications of this strata case are as follows.

• Home Building Act 1989 insurance covers the risk of loss from statutory warranty breaches.

• Proof of the defective work [under the statutory warranties] entitled the strata building to claim damages.

• But, if it was not reasonable to replace the hobs, the damages could be reduced.

• BIGCORP had to establish unreasonableness or mitigation obligations [acting to reduce its losses] by the strata building