Kred Pty Ltd v The Secretary of the Department of Customer Service

File Number(s): 2024/54007

Publication restriction: No

JUDGMENT

1. COMMISSIONER: These proceedings concern an appeal pursuant to s 49(1) of the Residential Apartment Buildings (Compliance and Enforcement Powers) Act 2020 (RAB Act) against the Building Works Rectification Order (BWRO) issued to the Applicant by a delegate of the Respondent on 11 January 2024 and modified on 28 May 2024 (Modified BWRO). The BWRO and the Modified BWRO is issued under s 33 of the RAB Act and requires the applicant to carry out rectification works at a residential apartment building ‘Arena North Apartments’ (Premises) at 75 Shortland Esplanade, Newcastle (Strata Plan 95192) (Land).

2. The Court has power to dispose of these proceedings under its Class 2 jurisdiction pursuant to s 18(l) of the Land and Environment Court Act 1979 (LEC Act).

Background

3. The Applicant is the developer in relation to building work involved in the erection of the premises. The developer was the registered proprietor of the Land prior to it becoming the subject of a strata subdivision which time the Owners- Strata Plan No. 95192 became the registered proprietor of the common property. I note that ‘developer’ is defined at s 4 of the RAB Act:

4 Meaning of “developer”

For the purposes of this Act, a developer, in relation to building work, means any of the following persons, but does not include any person excluded from this definition by the regulations—

(a) the person who contracted or arranged for, or facilitated or otherwise caused, (whether directly or indirectly) the building work to be carried out,

(b) if the building work is the erection or construction of a building or part of a building—the owner of the land on which the building work is carried out at the time the building work is carried out,

(c) the principal contractor for the building work within the meaning of the Environmental Planning and Assessment Act 1979,

(d) in relation to building work for a strata scheme—the developer of the strata scheme within the meaning of the Strata Schemes Management Act 2015,

(e) any other person prescribed by the regulations for the purposes of this definition.

4. The BWRO was issued by the Respondent on 11 January 2025 pursuant to s 33(1) of the RAB Act. The Modified BWRO was issued on 28 May 2024.

5. On 12 February 2025 the Applicant commenced the appeal proceedings, being within the time period specified in s 49(2) of the RAB Act.

6. The matter was listed for a conciliation conference by the Court on 17 July 2024 pursuant to s 34(1) of the Land and Environment Court Act 1979 (LEC Act). The conciliation conference was terminated on 5 September 2024. Following the termination of a conciliation conference on the matter was listed for hearing on 25 and 26 June 2025.

7. Prior to the commencement of the hearing, the parties reached agreement as to the terms of a decision in the proceedings that would be acceptable to the parties and requested that the matter be listed for a further s 34 conference. The Court granted this request, and the matter was listed for a s 34 conference on 25 June 2025, following which the hearing was vacated. I presided over the conciliation conference.

8. The decision agreed upon involves the substitution of the BWRO with a substituted building works rectification order (Substituted Order) which reflects the agreement of the parties.

9. The parties provided a signed s 34 agreement and supporting jurisdictional statement on 20 June 2025.

Jurisdictional conditions

10. To make orders in accordance with the parties’ agreement, I must be satisfied that the decision to make orders substituting the BWRO is a decision that the Court can make in the proper exercise of its functions (being the test applied by s 34(3) of the LEC Act). In making the orders to give effect to the agreement between the parties, I was not required to, and have not, made any merit assessment of the issues that were originally in dispute between the parties.

11. Section 39 of the LEC Act relevantly provides the Court with all the functions and discretions of the respondent when determining an appeal of the respondent’s decision.

12. In addition, s 49(3) of the RAB Act gives the Court broad powers on an appeal against a building work rectification order, as follows:

(3) On hearing an appeal, the Court may—

(a) revoke the building work rectification order, or

(b) modify the building work rectification order, or

(c) substitute for the building work rectification order any other order that the Secretary could have given, or

(d) find that the building work rectification order is sufficiently complied with, or

(e) make any order with respect to compliance with the building work rectification order as the Court thinks fit, or

(f) make any other order with respect to the building work rectification order as the Court thinks fit.

13. It is clear that the Court has power to substitute a BWRO: s 49(3)(c) of the RAB Act.

14. The parties agreement seeks to amend the BWRO with a modified order (the Substituted Order) that:

15. Amends Serious Defect Reference Numbers 1 and 2 so that the required rectification work is to "carry out the agreed scope of work in accordance with Appendix 5 "Defective Workmanship Schedule" of the Joint Expert Report in the proceedings dated 26 May 2025" by 180 days from 25 June 2025;

16. deletes Serious Defect Reference Number 3, 8, 9, 10, 13, 16, 17, 18, 19, 20, 21, 22, 23, 24, 25, 26, 27, 28, 29, 30, 31, 32, 33, 34, 35, 37, 40, 41, 43, 44, 45 and 46, because these items have been rectified; and

17. amends Serious Defect Reference Number 38 and 39 to extend the time to complete the rectification work.

18. I note that the Substituted Order maintains the amendments in the Modified BWRO and Serious Defect Reference Number 4, 5, 6, 7, 12, 14, 15, 36, 42 and 47 remain deleted.

19. The Substituted Order is founded on the findings of the Joint Expert report filed in the proceedings. The parties agree, and I accept, that the Substituted Order will resolve all matters the subject of the BWRO that that have not otherwise been remedied to date by the Applicant.

20. I am satisfied that it is appropriate to substitute the BWRO with the Substituted Order in the manner proposed by the parties on the basis that:

21. The applicant is the “developer” for the purposes of s 33(1) of the RAB Act and was able to be issued with the original BWRO and can similarly be issued with the Substituted Order.

22. The parties agree, and I accept, that the functions and discretions of the Secretary relevantly include the power to give an order pursuant to, Part 5 s 33(1) of the RAB Act to a developer in relation to building work (a building work rectification order) if the Secretary has a reasonable belief that -

(a) the building work was or is being carried out in a way that could result in a serious defect in a residential apartment building; or

(b) a residential apartment building has a serious defect

3. I accept that a reasonable belief is satisfied under s 33(1)(a) of the RAB. The parties agree, and I accept, that the BWRO, the Modified BWRO and Substituted Order relate to “building work” that was or is being carried out in a way that could result in a serious defect in a residential apartment building for the purposes of section 33(1)(a) of the RAB Act. The Substituted Order requires the applicant to carry out the works the subject of the original BWRO relating to identified serious defects.
4. The parties agree, and I accept, that pursuant to s 33(2) of the RAB Act a BWRO may, in relation to building work, require the developer to do one or more of the following to eliminate, minimise or remediate the serious defect -

(a) ensure specified building work is carried out or not carried out;

(b) take other action specified in the order

5. The parties agree that the applicant’s compliance with the Substituted Order will “eliminate, minimise or remediate the applicable serious defects” for the purposes of s 33(2) of the RAB Act. With the assistance of the expert report, I accept this submission.
6. The grant of liberty to apply is appropriate in circumstances where the applicant is not in control or occupation of the Premises, and compliance with the Substituted Order could be hindered by the applicant obtaining access to carry out the works the subject of the Substituted Order. To this end, I note the comments of Gray C in Eunomia Developments Pty Ltd v Secretary of the Department of Customer Service [2021] NSWLEC 1279 at [7] with reference to the decision of McLelland J in Phillips v Walsh (1990) 20 NSWLR 206 at 210.

Conclusion

18. As the parties’ decision is a decision that the Court could have made in the proper exercise of its functions, I am required under s 34(3) of the LEC Act to dispose of the proceedings in accordance with the parties’ decision.

Orders

19. The Court orders:

20. The appeal is upheld.

21. The Building Work Rectification Order dated 11 January 2025, as modified on 28 May 2024 is substituted for the order in Annexure A.

22. Liberty to apply on to the Court is granted on giving three days’ notice.

D Dickson

Commissioner of the Court

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Annexure A (412 KB, pdf)