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Oxford (NSW) Pty Ltd v KR Properties Global Pty Ltd trading as AK Properties Group ABN 62 971 068 965 - [2023] NSWSC 881 - NSWSC 2023 case summary — Zoe
I published my principal judgment on 6 April 2023. [1] I published a further judgment on 21 June 2023. [2]
I shall use the same abbreviations here.
An issue in the proceedings was whether the Owners were entitled to Hungerfords v Walker [3] damages arising from the interest they incurred on borrowings as a result of the works not being completed by the date of practical completion under the Contract: 4 July 2017. The Owners claimed such damages against both the Builder and Mr Kazzi.
In the principal judgment, I held that the Owners were entitled to such interest against the Builder from 20 March 2019. [4]
However, I did not deal with the Owners' claim for Hungerfords damages against Mr Kazzi.
After the principal judgment was delivered, the Owners raised this point and invited me to reconsider it.
In that regard, in my second judgment I said:
"[9] It is true that I did not, in terms, address the Owners' Hungerfords interest claim against Mr Kazzi. But that was because I did not accept that the Owners had succeeded in establishing their case against Mr Kazzi under the Design and Building Practitioners Act 2020 (NSW) ("the DBP Act"). I dealt with that issue at [J327] to [J352].
[10] I rejected that claim on the basis that the Owners had not clearly developed submissions as to how Mr Kazzi's alleged breach of the statutory duty created by s 37 of the DBP Act arose. [5]
[11] I also rejected the Owners' claim on the basis that, based on the evidence of Mr Mahedy, the architect that designed the Building, the Owners had not proved what component of the expenses they had incurred related to the cost of rectifying the Builder's defective work, as opposed to completing the work that the Builder failed to complete. [6]
[12] As the Builder has pointed out, it is not sufficient in a claim under the DBP Act for a claimant simply to assert a defect and allege that the relevant person was liable for failing to ensure the defect was not present. [7]
[13] Rather, as the Builder has submitted, a claimant must persuade the Court that the relevant defendant failed to take the precautions that a reasonable person in his or her position would have taken and must prove 'how it is said' that the defendant was negligent. [8]
[14] I found that the Owners had not established these matters. No cause to consider Hungerfords interest against Mr Kazzi arose for consideration."
However, as the Owners have now pointed out, in expressing those views I overlooked the fact that, during the hearing, it was accepted on behalf of Mr Kazzi that he had been in breach of his duty under s 37 of the Design and Building Practitioners Act 2020 (NSW) ("the DBP Act") in relation to the defective works that I described in the principal judgment as "Boundary Encroachments" [9] and "Concrete Strength". [10]
Thus, in closing submissions Mr Lynch SC and Ms Cameron, for the Builder and Mr Kazzi, submitted, in relation to the Owners' claim against Mr Kazzi under the DBP Act:
"Other than in respect of a departure from usual practice in not
(1) obtaining slump test for concrete; and
(2) not undertaking 'check surveys' in respect of construction plans,
the elements of negligence have not been proved. Mr Kazzi submits that not only do those matters need to be specifically pleaded, which they were not, they must also be specifically proved. Here, they have not been proved."
Further, in closing oral submissions, I had this exchange with Mr Lynch:
"… As we have said, a breach of a relevant duty is not established merely by the existence of defects. We accept in our submissions that there was a breach of duty in relation to the failure to check that the delivered concrete for the slabs matched specification, and we accept that the failure to ensure that check surveys for the alignment of formwork was another failure.
HIS HONOUR: Is that the encroachment?
LYNCH: Yes. We're describing the same thing, your Honour. The formwork fell slightly initially over Mr Mahedy's property, and then subsequently back over on Mr [Kazzi's] property, and a check survey before the concrete poured in those walls would have established that.
…
LYNCH: The supervisor - the person undertaking the construction work - is not required to be there, for example, all working hours every day. That's why we accept that there is a requirement to take reasonable care in relation to batch testing concrete deliveries, and the surveys, and those duties were breached. But the others do not follow."
In the principal judgment, I found that the Owners had not proved what damage they had incurred in rectifying those two defects.
In the principal judgment I also said: [11]
"As the Owners pointed out, many of the defects in the work that I have identified were the consequence of the Builder's failure to carry out the building works in accordance with the construction certificate plans and specifications. The Builder accepted that it had acted in breach of its duty of care in relation to the boundary encroachments defect [12] and the concrete strength issue. [13] "
What I did not record was that, not only had the Builder admitted a breach of its duty in respect of those two defects, but, as I have set out, so had Mr Kazzi.
The precautions necessary to be taken by the Builder in relation to Boundary Encroachments and Concrete Strength were the subject of this evidence from Mr Mahedy:
"When constructing a building which extends up to the property boundaries, it is standard industry practice to obtain a check survey of formwork prior to pouring the concrete for each slab to ensure that the formwork is located entirely within the property boundaries.
…
When constructing a Class 2 building, it is standard industry practice for the builder to engage a consultant to undertake concrete batch testing at the time of the concrete pour. Concrete batch testing involves:
(a) slump testing - which measures the consistency of fresh concrete, and which reveals whether excess water has been added to the concrete (which decreases its strength); and
(b) taking samples of the poured concrete in steel canisters which are then subjected to compressive strength testing at 7, 14, 21 and 28 days. This is done to confirm that it is safe to strip the formwork supporting the slab, and to ensure that the concrete is the strength specified by the structural engineer before the slab is loaded."
Each of these matters was developed in the Owners' closing submissions.
Mr Kazzi's admission of his breach of duty necessarily carried with it an admission that he had not caused the Builder to take these steps, and thus an admission of "how it is said" [14] that he was negligent.
The evidence revealed what the consequences were of Mr Kazzi's admitted breaches of his duty under s 37 of the DBP Act.
That evidence was summarised in a schedule attached to Mr Horowitz's submissions of 5 July 2023. A copy of that schedule is attached to these reasons. It was submitted on behalf of Mr Kazzi that the schedule should be "disregarded" because it was "not provided during the hearing". But the schedule does no more than summarise evidence that was adduced at the hearing.
The evidence summarised in the schedule shows that the work necessary to rectify the Concrete Strength defect commenced on 17 July 2019 and was not complete until 1 December 2019.
As to the Boundary Encroachments defect, the evidence summarised in the schedule shows that the necessary work commenced on 30 May 2019 with demolition of the western pergolas encroaching on the Council land fronting Noble Street and was not concluded until an easement from Mr Kazzi over his land to the north was registered in July 2020. Mr Mahedy gave evidence that although practical completion of the building works occurred in late 2019, he was unable to register the strata plan or obtain an occupation certificate for the development until mid-2020, because of the encroachment over Mr Kazzi's property. [15]
Thus, the Owners were correct to submit that those defects alone caused the Owners to continue to incur interest on their borrowings beyond the date of practical completion, until July 2020.
In my principal judgment, I held that the Owners were entitled to Hungerfords interest from the date they demanded the Builder to resume work: 20 March 2019. Although the work necessary to rectify the Concrete Strength and Boundary Encroachments defects commenced slightly later (30 May 2019 for the Boundary Encroachments defect and 17 July 2019 for the Concrete Strength defect), both defects existed when the Owners demanded the Builder resume work. In those circumstances, I see no reason why Hungerfords interest as against Mr Kazzi should not also commence on 20 March 2019.
The formal order that the Owners seek, in these circumstances, is that I "recall" pars 9 to 14 of my 21 June 2023 judgment. I do not think that is necessary. The reasons in this judgment will speak for themselves.
I will now invite submissions as to costs, as to any further matters requiring determination and as to the orders necessary to finalise the proceedings.
Annexure A (172411, pdf)
[3]
Endnotes
Oxford (NSW) Pty Ltd v KR Properties Global Pty Ltd trading as AK Properties Group ABN 62 971 068 965 [2023] NSWSC 343.
Oxford (NSW) Pty Ltd v KR Properties Global Pty Ltd trading as AK Properties Group ABN 62 971 068 965 (No 2) [2023] NSWSC 680.
(1989) 171 CLR 125; [1989] HCA 8.
At [J298]-[J326].
At [J339]-[J346].
At [J347]-[J351].
See my decision in The Owners - Strata Plan No 87060 v Loulach Developments Pty Ltd (No 2) [2021] NSWSC 1068 at [42]-[44].
The Owners-Strata Plan 86807 v Crown Group Constructions Pty Ltd [2023] NSWSC 44 at [23] (Ball J) and The Owners-Strata Plan No 86807 v Crown Group Constructions Pty Ltd (No 2) [2023] NSWSC 520 at [18] (Ball J).
At [J47]-[J51].
At [J78]-[J79].
At [J344].
At [J46]-[J50].
At [J77]-[J78].
See the authorities to which I referred at [13] of my 21 June 2023 judgment.
At [J321].
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Decision last updated: 28 July 2023
Parties
Applicant/Plaintiff:
Oxford (NSW) Pty Ltd
Respondent/Defendant:
KR Properties Global Pty Ltd trading as AK Properties Group ABN 62 971 068 965