High Court refuses Strata Building Defects Negligence Claims
Brookfield Multiplex Ltd v. Owners Corporation Strata Plan 61288 & Anor [2014] HCA 36
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.
Quick Read
This High Court decision is about the legal obligations of the builder of the serviced apartment strata complex The Chelsea at Chatswood to the strata corporation to ensure there were no latent [hidden] defects that were structural, created dangers or made apartments uninhabitable. The primary issue was whether there was a duty under negligence law to exercise reasonable care in the construction of the building to avoid causing pure economic loss resulting from the defects in the common property. A secondary issue was whether there might be a separate duty in negligence owed to the developer rather than the strata corporation. After detailed consideration of negligence law and its application to this particular building, the High Court decided that because of the semi-commercial character of the development [for investor owners], there was no obligations under negligence principles. This is an extremely important strata decision as it was made by the High Court [so binds all other Australian Courts and Tribunals], excludes most building defect claims under negligence principles, but leaves open a slim possibility of a successful claim in different circumstances.
Implications
The key implications of this strata case are as follows.
Damages for the cost of fixing building defects are pure economic loss rather than loss for physical damage.
A builder’s duty of care for economic loss [defects] is therefore more limited.