BIGCORP No.1: Overturning a few HOW Defect Claim Time Limits

The Owners – Strata Plan 57504 v Building Insurers' Guarantee Corporation (2008) NSWSC 1022

Quick Read

This 2008 NSW Supreme Court decision is the first in a trilogy of cases that were important to the evolution of building defects law in NSW. The dispute in a Surry Hills warehouse conversion strata title building about its defects covered a few issues including the validity of insurance policy time limits and whether an expert referee’s report should be changed by the Court. After comparing the policy to the Home Building Act 1989, the Court decided that the policy time limits were invalid and allowed the strata buildings defects claim. It also confirmed the referee’s findings except where the strata building conceded things. The decision was very important for all HIH insured strata buildings. But it was just the beginning, as it was followed by 2 more Court decisions about this strata building’s claim.

Implications

BIGCORP should have raised the extra legal issues earlier in the case since they were always potentially available arguments and it did not have a good explanation for the delay.
The prejudice to the strata building was too great since it had lost the opportunity to act differently, to allow the new BIGCORP legal issues.
Home Building Act 1989 insurance had to be [at the time] for 7 years from Completion.
As long as a claim was notified during policy coverage and with 6 months of defect awareness, an insurer could not avoid liability by relying on the 7 year time limit.
Insurance provisions restricting rights under the Home Building Act 1989 are invalid.

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Full Report & Case Details

This 2008 decision by the eNSW Supreme Court is about a dispute in a Surry Hills warehouse conversion strata title building about its defects claim against BIGCORP [the last resort government insurer for the failed HIH insurer] under the protections that existed under the Home Building Act 1989.

It’s also the first decision in a trilogy of cases for this determined stratum building.

BIGCORP had partly approved the strata building’s claim but disputed the balance of approximately $1.3M for defective timber hobs between balconies and the apartment interiors that allowed water to enter.

A referee had approved the rest of the claimed defects allowing the extra $1.3M but BIGCORP asked the Court to vary the findings on a few bases.

BIGCORP argued that the referee’s allowance for the cost of replacing the hobs was excessive because they were not the direct cause of water entry into apartments but rather, because it was the failure of the membrane junctions to the hobs. BIGCORP also said that there had been a separate agreement between it and the strata building about the value of some of the defect repair work which was lower than the referee had decided [so they should be reduced to the agreed amount].

It also argued that the claim was made out of time because even though it was made within 6 months from the end of the cover, it was more than 7 years after the completion of the building and, as a subsidiary argument, that the claims made by the strata building did not include the key defect that was in dispute [the timber balcony hobs].

The strata building argued that some of these new arguments were made too late [after they’d been aware of them for years], that BIGCORP should not be allowed to raise them and opposed all the others. It also argued that its claim was made within lawful time limits because the policy provisions were inconsistent with what the Home Building Act 1989 required.

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Keywords

#NSW #NSWSupremeCourt #defects #HOWinsurance #BIGCORP #2008 #HBA1989 #s18A #s92 #s99 #s103B #HBR1990 #r39A #r39F