Owners of SP 69312 v Allianz Aust Insurance (2012) 191 LGERA 160
Source
Original judgment source is linked above.
Catchwords
Owners of SP 69312 v Allianz Aust Insurance (2012) 191 LGERA 160
Judgment (32 paragraphs)
[1]
Counsel:
M Ashhurst SC / C Mobellan (Plaintiff)
F Corsaro SC / D Byrne (First to Third & Sixth Defendants)
[2]
Solicitors:
Sparke Helmore (Plaintiff)
Norton Rose Fulbright (First to Third & Sixth Defendants)
File Number(s): 2018/190513
[3]
JUDGMENT
The plaintiff is the Owners Corporation of a residential apartment building comprising 99 lots and common property in Strathfield (the "Building"). The Building was constructed between 2009 and 2011. An occupation certificate was issued on 7 January 2011.
The defendants are members of the group of companies associated with the Bechara family.
The first defendant, Omaya Holdings Pty Ltd, was the builder of the project (the "Builder"). The second defendant, Arinson Pty Ltd, was the registered proprietor of the property at the time of the construction and the developer (the "Developer"). There was a written building contract dated 4 September 2009 between the Builder and the Developer (the "Building Contract").
The Owners Corporation alleges that there are general building and fire safety defects in the Building. It seeks damages from the Builder and Developer for the alleged breach of warranties implied into the Building Contract by s 18B of the Home Building Act 1989 (NSW) and the alleged breach of the statutory warranty contained in s 37 of the Design and Building Practitioners Act 2020 (NSW).
The Owners Corporation also alleges that there was a contract between the Developer and the third defendant, Omaya Investments Pty Ltd, relating to the design and construction of fire safety related works.
[4]
The cross claims
The Developer and Omaya Investments brought cross claims against an architect, Integrated Design Group Pty Ltd (the "Architect") and a certifier, Bernie Cohen & Associates Pty Ltd trading as Essential Certifiers (the "Certifier"). Those cross claims were settled prior to the hearing.
[5]
General building defects
The Owners Corporation alleges a large number of general building defects.
On 29 September 2023, this question was the subject of an order for reference. The nominated referee has since retired. The parties agree that I should make a further order for reference. I will do that once the parties have chosen a new referee.
[6]
Fire safety defects
The Owners Corporation alleges a number of fire safety defects. The principal claims arise from the Owners Corporation's contention that the "Effective Height" of the Building is more than 25 metres. I return to this below.
Otherwise, there is now no dispute that the Builder and Developer are liable to rectify those defects by reason of the warranties under the Home Building Act, and that the cost of rectification is $298,462.79.
The Owners Corporation also makes a claim against the Builder and Developer under the Design and Building Practitioners Act 2020 (NSW). It is not now necessary separately to consider that claim in relation to these defects.
Judgment will be entered against the Builder and Development for this amount.
The Owners Corporation makes no claim against Omaya Investments for these fire safety defects.
[7]
Fire safety defects - the "Effective Height" defects
The Owners Corporation contends that the Effective Height of the Building for the purposes of the Building Code of Australia (the "Code"), as it applied at the relevant time, is more than 25 metres.
If that is so, it is common ground that:
1. adequate fire safety equipment has not been installed;
2. the cost to install the requisite fire safety equipment is $3,084,234.42; and
3. the Builder and the Developer are liable to pay this amount to the Owners Corporation.
There is a dispute, to which I will return, as to whether Omaya Investments has any liability to the Owners Corporation arising from the Effective Height issue.
The additional fire safety measures required, if the Effective Height of the Building is more than 25 metres, comprise:
1. sprinklers throughout the Building; [1]
2. two stairs to each level;
3. a stair pressurisation system;
4. a sound system with an intercommunication system;
5. a ring main and onsite water storage for the hydrant system; and
6. smoke exhaust for the ground floor commercial tenancies.
[8]
The provisions in the Building Code
At the relevant time, the Code defined "Effective Height" as being, relevantly:
"… the height to the floor of the topmost storey … from the floor of the lowest storey providing direct egress to a road or open space."
The Code defined "storey" as, relevantly:
"… a space within a building which is situated between one floor level and the floor level next above …".
The word "floor" and the expression "floor level" were not defined in the Code.
"Storey" was thus defined as being a "space within a building" situated between floor levels in the manner described.
This is not the ordinary meaning of "storey", which is "a complete horizontal section of a building having one continuous or approximately continuous floor", or "the set of rooms on the same floor or level of a building", [2] or "each of the sections of a building comprising all the rooms that are on the same level". [3]
There is no dispute about the "height to the floor of the topmost storey" of the Building. It is the penthouse level of the Building, level 8 of the Building which is at RL [4] 40.
The dispute is as to the identity, and thus the height of, the "floor of the lowest storey providing direct egress to a road or open space" (the "Lowest Storey").
The candidates are:
1. the ground floor level of the Building (the "Ground Floor"), which is at RL 15;
2. the garbage collection area (the "Garbage Area"), which is at RL 14.45; and
3. the car park entry area (the "Carpark Entry"), which is at RL 13.69.
The location of these areas is shown on the attached "Ground Floor Plan" Ground Floor Plan - CB4257 (594480, pdf) . There is a dispute, to which I will return, as to whether this plan, so far as it depicts the Garbage Area, is the plan relevant to determination of the Effective Height question.
As can be seen, if the Lowest Storey is the Ground Floor, the Effective Height is exactly 25 metres. That is how the Building was designed by Mr Simon Thorne, a director of the Architect, whose plans were the subject of a construction certificate issued by Mr Bernie Cohen, the sole director of the Certifier, on 7 September 2009 (the "Construction Certificate").
If, however, the Lowest Story is the Garbage Area or the Carpark Entry, the Effective Height is either 0.55 metres or 1.31 metres more than 25 metres: that is, either 25.55 metres or 26.31 metres.
[9]
The proper construction of the Code
The meaning of "Effective Height" in the Code was carefully considered by Lindsay J in Owners Strata Plan 69312 v Rockdale City Council. [5]
His Honour observed, and I agree, that the Code is to be construed by reference to its language and not by what any expert opines as to its meaning. [6]
There was a dispute before his Honour as to whether it was permissible to have regard to the "Guide to the Building Code of Australia" ("Guide") which, like the Code itself, is published by the Australian Building Codes Board. As his Honour observed, the Guide itself states that it "should not be taken to override" the Code and did not have "regulatory force" and that it was a "companion manual", or "reference book", and for "guidance only".
His Honour determined that the Guide was not relevant to the proper construction of "Effective Height", [7] and added nothing material to the text of the Code. [8]
Before me, it is common ground that I may have regard to the Guide, bearing in mind its stated limitations.
I respectfully disagree with Lindsay J's view that the Guide is not relevant to the proper construction of the Code although, of course, it cannot "override" the language of the Code.
The Guide provides important context within which to understand the object of the provision in the Code for the Effective Height of a building.
As his Honour observed, the Code is a formal document designed to define standards for the promotion of safety in the construction of buildings. [9]
As his Honour further observed, Effective Height is used in the Code to determine the content of the fire safety regulatory requirements for buildings and to provide an objective measure to permit an assessment to be made of the fire safety requirements that would have a bearing on the internal configuration of buildings. [10]
If the Effective Height of a building exceeds 25 metres, significantly more fire protection is required than if the Effective Height of a building is 25 metres or less.
The Guide gave colour to these matters and explained why 25 metres has been chosen as the distance between the topmost storey and the lowest storey providing direct egress to a road or open space beyond which extra fire protection measures is required.
Thus:
1. The Guide stated that the Effective Height:
"Measures the height of a building for safety purposes. Effective height is measured from the floor of the lowest storey providing direct egress to a road or open space (this will usually be the level at which the fire brigade would enter) - to the floor of the top storey."
1. Speaking of a provision in the Code as to the number of exits to be provided in a building having an Effective Height of more than 25 metres, the Guide stated that this distance:
"… recognises the effective operating height of fire brigade ladders and other fire-fighting and rescue equipment."
1. In relation to a provision in the Code concerning a fire control centre the Guide stated:
"The height of the building … is a measure of the extent to which the fire brigade can fight any fire or carry out rescue operations from the outside of the building and the evacuation time."
1. In relation to the provision in the Code concerning installation of fire sprinklers, the Guide stated that the Code:
"… requires all buildings with an effective height of more than 25 metres … to be sprinkler protected. The provision regarding an effective height of 25 metres recognises the effective operating height for fire brigade ladders and other firefighting and rescue equipment."
The Guide thus provides context for an understanding of the meaning of Effective Height.
The definition of Effective Height speaks of "the floor of the lowest storey providing direct egress to a road or open space" but does not state, in terms, where such "direct egress" is to be from. As Lindsay J observed, [11] egress means "a way out" and the definition thus invites the question, "[w]ay out from where?".
Lindsay J considered that question and concluded: [12]
"In my opinion, the word 'egress' implied identification in the features of a building of:
(a) at least one, and possibly more than one, point at which occupants of the building could exit it to a road or open space; and
(b) the existence within the building of a pathway, or pathways, reasonably accessible, from the point of egress to the whole of the building or, at least, a substantial part of it."
I agree, but consider the references in the Guide to the role of the fire brigade provide a context within which to assess what might be a "reasonably accessible" pathway to a point of egress or exit to a road or open space in the particular circumstances at hand. As the point of an Effective Height of more than 25 metres is, relevantly, as a determinant of the point beyond which further fire protection measures are required, consideration in each case of what would be a reasonably accessible pathway to the point of egress or exit to a road or open space must take into account the possibility of that pathway being used in the event of fire.
I do not read Lindsay J's reasons as reaching a different conclusion or finding that the reasonably accessible pathway to the point to exit to a road or open space should be determined by reference to whether a particular pathway was reasonably accessible whether or not there was a fire, or when there was no fire.
The configuration of the building that Lindsay J was considering and the competing contentions there as to what was the lowest storey with direct egress to a road did not require his Honour to reach any such conclusion.
It is true that his Honour held that the word "egress" implied "a point of exit rather than an escape route", [13] but that was in the context of his Honour rejecting an argument, not put to me, that "direct egress" should be read as a reference to "the route that connected" the point of egress to the topmost storey, [14] or a "line of march between the topmost storey and the point of exit", [15] as opposed to a point of exit.
If I am wrong, and Lindsay J's reasons should be understood to have the meaning I have set out at [45] above, I respectfully disagree.
[10]
Effective Height was considered during the design of the Building
As I have said, the Building was designed by the Architect.
On 22 June 2009, the Architect issued a set of drawings, including the Ground Floor Plan referred to at [26] above (the "June 2009 Plans").
The Certifier issued the Construction Certificate on the basis of the June 2009 Plans.
The actual certificate in the Construction Certificate stated:
"I certify that the work if completed in accordance with these plans and specifications (with such modifications verified by the Certifying Authority as may be shown on that documentation) will comply with the requirements of the Environmental Planning and Assessment Regulation 2000 as referred to in Section 81A(5) of the Environmental Planning and Assessment Act 1979."
As I have set out above, the June 2009 Plans show the Ground Floor, the Garbage Area and the Car Park Entry as being at RL 15, 14.45 and 13.69, respectively. The plans also showed the penthouse level, level 8, as being at RL 40.
Both the Architect and the Certifier gave evidence that attention was paid, during the design of the Building, to its Effective Height, the object being to achieve an Effective Height of exactly 25 metres.
The matter was thus not overlooked.
Thus, the Certifier, Mr Cohen, deposed:
"9. The basis for my review and assessment of the [June 2009 Plans] included the following:
a. determining the 'effective height' of the Development, as that term is defined in the [Code];
b. the 2009 version of the [Code] in force at the time of my consideration of the construction certificate submissions stipulated that the effective height of a building typical of the Development was measured from the floor of the topmost habitable (broadly speaking) storey, to the floor of the lowest storey providing direct egress to a road or open space; and
c. if the effective height of a building of this type exceeded 25 metres, the building was required to contain significantly more advanced fire safety measures than if the effective height was exactly 25 metres or less.
10. My review of the [June 2009 Plans] revealed to me that:
a. the topmost habitable floor of the development was Level 8, shown on the drawings as the Penthouse Level …;
b. the lowest storey providing direct egress to a road or open space was the Ground level, which was reflected on the plans with egress points discharging at multiple exits from the main accessible areas of the building (i.e., the residential lobbies) …;
c. although the driveway ramp in Basement 1 provided egress to a road (being Clarence Street), the egress was for vehicles and discharged from a roller door servicing a commercial car park and storage area, which is not a means of direct egress; and
d. accordingly, the effective height of the proposed Development was to be measured from the floor of Level 8 to the floor of the Ground floor, which I calculated to be 25.0 metres, as shown on the section and elevation drawings.
11. During assessment of the application for a construction certificate for the Development, Essential Certifiers issued a proposed schedule of essential fire safety measures ...
12. I prepared the Proposed Fire Safety Schedule on the basis that the proposed fire safety measures set out therein were those required for a building with an effective height of not more than 25.0 metres. Given my determination that the effective height of the Development was exactly 25 metres, I was satisfied that the fire safety measures set out in the Proposed Fire Safety Schedule were appropriate for the proposed Development and that these aspects of the building complied with the BCA.
13. On 7 September 2009, I signed and issued the construction certificate for the proposed Development … which also included the Proposed Fire Safety Schedule." (Emphasis in original.)
In cross-examination, Mr Cohen was not able to add anything as to his process of reasoning in issuing the Construction Certificate. That is unsurprising, as the Construction Certificate was issued over 15 years ago.
In cross-examination, Mr Thorne of the Architect said that it would have been his usual practice to look at the definition in the Code of Effective Height and to have made calculations accordingly. When pressed, Mr Thorne offered opinions as to, what was likely to have been his process of reasoning at the time. However, as I have said, this was over 15 years ago and I am not persuaded that Mr Thorne now recalls what process of reasoning he in fact adopted. Again, this is quite understandable.
[11]
The evolution of the design of the Garbage Area
As can be seen, the June 2009 Plans show the Garbage Area as being open to Clarence Street, and having access from the balance of the Ground Floor through passages leading to the lift lobby and elsewhere.
Some nine months after the issue of the Construction Certificate, on 19 May 2010, Mr Thorne of the Architect wrote to the City of Canada Bay Council (the "Council"), attaching an application under the s 96(1A) of the Environmental Planning and Assessment Act 1979 (NSW) to modify the prevailing Development Consent.
Mr Thorne wrote that:
"The proposed changes generally involve the swapping of the ground floor garbage room with basement 1 commercial areas with the relocation of car spaces as part of the adjustments.
…
The garbage loading bay is now a secured holding bay for the garbage on collection day.
Direct access to the kerbside is available from the garbage holding room and will be secured on non-collection days."
So far as concerns the Garbage Area, the changes are depicted on a further plan dated 17 May 2010 (the "May 2010 Plan"). May 2010 Plan - p 5, Ex 7 (1264825, pdf)
As can be seen from this plan, there is no longer access to the Garbage Area from Ground Floor, with the only access being through a roller shutter and walkway facing onto Clarence Street.
Mr Thorne's letter was sent to the Council with a "Section 96 Modification of a Consent Application Form" dated 20 May 2010. The applicant in that document is named as "Omaya".
This prompted the Council to prepare on 26 May 2010 a "Development Application Checklist" and on 28 May 2010 an internal instruction to "review the proposal".
On 22 June 2010, an officer of the Council, Mr Nigel Bertus, conducted a site inspection and stated in an internal memorandum:
"Following a site inspection carried out today at the abovementioned site in relation to the storage of garbage and recycling bins while awaiting pickup and the method of collection by Council's waste contractor when emptying the bin.
Council has generally no objection to the amendment on waste management grounds subject to the following details being
• A designated area is to be nominated including dimensions for the waste/recycling collection truck to stop and empty the bins. The area is to be located off Clarence Street. Details to be submitted."
Mr Ashhurst SC and Mr Mobellan, who appeared for the Owners Corporation, pointed to a Progress Claim made by the Builder on 14 May 2010 that showed that, by then, the following works had been completed to the Building:
1. 100% of the columns;
2. 100% of the upper floors; and
3. 30% of the external walls.
Mr Ashhurst and Mr Mobellan submitted that, in these circumstances, "the Court can infer [from Mr Bertus's note] that the [relevant] works [at that part of the site] had been completed".
I do not accept that submission.
The 14 May 2010 Progress Claim does show the matters at [67] but also shows that only 10% of internal walls were by then complete and that none of external doors, internal doors and wall, ceiling, and floor finishes were then complete.
That suggests the probability that the internal walls forming the Garbage Area were not at this stage complete.
That conclusion appears to be confirmed by a photograph produced by the Council on subpoena, and which appears in the documents produced by the Council immediately after the 26 May 2010 "Checklist":
Further, the terms of Mr Bertus's internal memorandum suggest that the proposed changes did not involve any reconstruction of existing works.
I find that, at the time of the 20 May 2010 Application to vary the Development Consent, the internal walls of the Garbage Area were not complete and that, contrary to the Owners Corporation's submissions, the works the subject of that application had not been commenced, let alone completed.
On 13 July 2010, the Council approved the proposal to modify the Development Consent.
On 14 July 2010, the Council wrote to the Builder notifying it of this consent, and stating:
"Amendments approved under this modification may require an amended Construction Certificate, or in the case of works already commenced/completed under this modification, a Building Certificate will be required. Please consult with your Principal Certifying Authority before proceeding."
In subsequent plans prepared by the Architect, the precise configuration of the Garbage Area altered slightly, although it remained accessible only from Clarence Street and not from the internal areas of the Ground Floor.
The final design of the Garbage Area is depicted in what appears to have been the final "issued for construction" plan of the ground floor prepared on 18 October 2018 by the Architect (the "Final Plan"). [16] The Final Plan is in this form attached. Final Plan - CB4435 (860508, pdf)
As can be seen, the Garbage Area is now a rectangular area, with no access internally from the Ground Floor, facing Clarence Street, at which there is to be located a "layback to allow for garbage loading zone".
On 7 January 2011, the Certifier issued a Final Occupation Certificate.
The operative part of the certificate reads:
"A Development Consent/Complying Development Certificate is in force with respect to the building.
A Construction Certificate/Complying Development Certificate has been issued with respect to the plans and specifications for the building.
The building is suitable for occupation or use in accordance with its classification under the Building Code of Australia.
Where required, a final Fire Safety Certificate has been issued for the building.
Where required, a report from the Commissioner of Fire Brigades has been considered."
The "Final Report" in that document is in this form:
"FINAL REPORT
The Accredited Certifier certifies that the subject stages of construction were inspected and found to be satisfactory and the development is completed in accordance with the approved plans and specifications and Council's Development Consent conditions if applicable.
Date Inspection Inspected by
12/11/09 Slab Chris Manzi
25/11/09 Storm Water Chris Manzi
11/12/09 Storm Water Tony Raco
11/05/10 Fire Safety Inspection Bernie Cohen
18/08/10 Water Proofing Chris Manzi
18/08/10 Fire Safety Inspection Chris Manzi
21/12/10 Final Inspection Ron Moore
7/1/11 Final OC Completion Ron Moore"
[12]
The Garbage Area
The Garbage Area, as constructed, is as depicted in the Final Plan.
It has access via a door to Clarence Street but no access internally from the Ground Floor.
As constructed, the Garbage Area cannot be the "lowest storey providing direct egress to a road or open space" as, although it might provide a point of such egress internally from the Garbage Area itself, there no "reasonably accessible" pathway, indeed no pathway at all, to that point of egress from any other part of the Building.
Mr Ashhurst did not dispute this, but submitted that, for the purpose of assessing the Effective Height of the Building, regard should be had only to the plans the subject of the Construction Certificate, that is the June 2009 Plans.
In closing oral submissions, Mr Ashhurst put the submission this way:
"The obligation to build for effective height is a construction certificate obligation, not a development application obligation. The fact that the defendants may have amended the DA, meant that they could use the garbage area differently, did not mean that they could construct it differently, and it did not mean that they had somehow thereby avoided their obligations in respect of effective height."
It followed, Mr Ashhurst submitted, that as the June 2009 Plans showed the Garbage Area to be accessible to the internal Ground Floor areas, the Garbage Area was a storey providing direct egress to Clarence Street and, being at RL 14.45, its floor was more than 25 metres from the penthouse at RL 40, with the result that the Effective Height of the Building was, at least, 25.55 metres.
Mr Ashhurst pointed to the fact that, although one or other of the Omaya defendants obtained the Council's Development Approval to vary the Garbage Area in the manner I have described, no further construction certificate was obtained to vary the Construction Certificate issued in 2009 on the basis of the June 2009 Plans.
In response, Mr Corsaro SC and Mr Byrne, who appeared for the defendants, submitted:
"[T]he absence of a modified construction certificate reflecting changes approved by an amendment to the development approval may be an irregularity, but does not invalidate the changes which were built as reflected in the modified development approval drawings."
Mr Corsaro and Mr Byrne drew attention to the observations of Basten JA, with whom Payne and Brereton JJA agreed, in Omaya Investments Pty Ltd v Dean Street Holdings Pty Ltd, [17] that: [18]
"… it would be a surprising result if compliance with plans which were conceded to be consistent with the development consent and had, in each case, been approved by the certifying authority, could result in invalidity of the development undertaken in accordance with them."
His Honour referred to similar conclusions reached by Sackville AJA, with whom McColl and Barrett JJA agreed, in Burwood Council v Ralan Burwood Pty Ltd (No 3). [19]
In this case, the Garbage Area has been constructed in accordance with the plans approved by the Council on 13 July 2020.
It is true that, on 14 July 2020, the Council notified the Builder that the Council's approval of an amendment to the Development Approval "may require an amended Construction Certificate". It is also true that, as it appears, no amended construction certificate was issued.
I am not persuaded that this, somehow, rendered the development actually undertaken as being invalid.
Further, the same Certifier that issued the Construction Certificate issued the Final Occupation Certificate and made the certification that I have set out at [81] above that a "Construction Certificate … has been issued with respect to the plans and specifications for the [B]uilding". The Occupation Certificate also referred to the Fire Safety Inspections set out at [82].
It would, in those circumstances, desert reality to ignore the final configuration of the Garbage Area when assessing the Effective Height of the Building.
My conclusion is that, for those reasons, the Garbage Area is not "the lowest storey providing direct egress to a road or open space" in the Building and is thus not a relevant integer in the calculation of the Building's Effective Height.
[13]
The Carpark Entry
The Carpark Entry is at RL 13.69.
The Car Park Entry comprises an entry pad, being an open level area of approximately 6.5 metres wide and some 1.9 metres deep, accessible directly from Clarence Street as shown on this photograph:
This area can accommodate a car arriving at and also departing from the carpark below.
Immediately adjoining the entry pad is a ramp leading down to a roller shutter door, as shown on this photograph:
What appears to be a doorway on the left hand side of the roller shutter is bolted closed.
As Mr Ashhurst pointed out, the roller shutter is not shown on the June 2009 Plans. But it is shown in the May 2010 Plan, as approved by the Council on 13 July 2010.
I cannot see how the Carpark Entry could be described as the "lowest storey providing direct egress to" Clarence Street.
First, it would strain language to describe the entry pad of the Carpark Entry as a "floor level" of the Building. It is a driveway, or perhaps, part of the ramp descending to the carpark.
Accordingly, the Carpark Entry itself is not a "storey" because it is not a space within the Building situated between one "floor level" and the floor level next above.
Second, even if the Carpark Entry could be described as a "point of egress" from the Building to Clarence Street, it is not one that is "reasonably accessible" [20] from the whole or part of the Building, especially in the case of fire, as it is accessible only from the carpark which, in turn, is accessible from the other storeys only by a lift.
Third, it is hard to see how the Carpark Entry could be described as "within a building" when, although within the Building envelope, it is exposed to the open air and was described by both Mr Thorne, and by an expert architect engaged by the Omaya defendants, Mr Kim Jones, as an "undercroft".
The Carpark Entry is, for those reasons, not "the lowest storey [of the Building] providing direct egress to a road or open space".
[14]
Conclusion as to Effective Height
It follows that the "lowest storey [of the Building] providing direct egress to a road or open space" is the Ground Floor.
Thus, the Effective Height of the Building is as it was designed to be: exactly 25 metres, being the height of the topmost storey, the penthouse, from the Ground Floor.
[15]
The claim against Omaya Investments
Much time was spent at the hearing on the question of the Owners Corporation's contention as to the existence of a building contract between the Developer and Omaya Investments. I understood the Owners Corporation's focus on this aspect of the case to arise from an apprehension on behalf of the Owners Corporation as to the financial position of the Builder and the Developer, and because of Omaya Investments' former role as trustee of the Bechara Family Trust.
However that may be, the Owners Corporation's claim against Omaya Investments is now confined to a claim under the Design and Building Practitioners Act, arising from Omaya Investments' alleged role in relation to the Effective Height issue.
The claim against Omaya Investments is predicated on a finding that the Effective Height of the Building is more than 25 metres.
As I have found that the Effective Height of the Building is, and always was, 25 metres, the claim against Omaya Investments must fail.
However, in view of the extensive submissions I received on the question, I shall deal with some aspects of it.
In its Fourth Amended Technology and Construction List Statement, the Owners Corporation alleges:
"On or around 2007 and on or around 2009 [Omaya Investments] entered into a contract … with the [Developer], whereby [Omaya Investments] agreed to undertake works and provide goods and services for the construction of the Building … being the following:
(a) Design and construction of fire safety measures in the Building; and/or alternatively certification of construction of fire safety measures in the Building;
(b) Coordination and engagement of design consultants in matters directly or indirectly related to the fire safety measures required for the purposes of compliance with [the Code];
(c) Coordination and engagement of consultants in matters directly or indirectly related to the certification of fire safety measures required for the purposes of compliance with the [Code]." [21]
It is said to follow from this that:
1. the work described in the preceding paragraph was "residential building work" for the purposes of the Home Building Act;
2. such work was also "construction work" for the purposes of the Design and Building Practitioners Act;
3. Omaya Investments thus had the duty of care set out in s 37 of the Design and Building Practitioners Act;
4. such duty extended to the Owners Corporation by reason of s 36 of that Act;
5. such duty was non-delegable by operation of s 39 of that Act;
6. Omaya Investments breached that non-delegable duty of care because it:
1. "failed to ensure that a properly qualified person had made a proper analysis" of the Effective Height of the Building; [22] and,
2. "failed to ensure" that the Building was designed and constructed to have an Effective Height of less than 25 metres or to have the requisite fire safety protections if the Effective Height was more than 25 metres. [23]
The question of breach was put a little differently in Mr Ashhurst's and Mr Mobellan's closing written submissions as follows:
"[Omaya] Investments breached its non-delegable duty of care to the [Owners Corporation] by reason of [the Architect's] failure to design the Building in accordance with the clear terms of the definition of 'Effective Height' and negligently miscalculating the Effective Height of the Building so as to fail to provide for the additional fire safety measures required by the [Code] for a building over 25m." [24]
And:
"… [Omaya] Investments is vicariously liable for the breach of duty of care by [the Architects] in failing to take reasonable precautions in assessing the Effective Height of the Building under the [Code]." [25]
[16]
Was there a building contract between the Developer and Omaya Investments?
Although there is a contract, the Building Contract, between the Developer and the Builder, there is no evidence before me that there is any written contract between the Developer and Omaya Investments.
The Builder is licensed to perform residential building works. Omaya Investments has never been so licensed: a factor pointing against a conclusion that it would enter into a contract with the Developer to carry out such works.
The Owners Corporation's case is that, nonetheless, the existence of such a contract is to be inferred from a number of circumstances.
[17]
The representations in the pleadings
The first matter relied upon is the statements in the Cross-Claim made by the Developer and Omaya Investments against the Architect and the Certifier, to which I referred in my judgment of 19 September 2024, [26] in which I granted the Owners Corporation leave to bring its current claim against Omaya Investments.
I set out those statements, then described by Ms Ashhurst and Mr Mobellan as "evidentiary admissions", in that judgment as follows: [27]
"The allegations relied on as 'evidentiary admissions' are, first, a statement in the Developer's and Omaya Investments' Amended List Statement for the Cross-Claim against the architect and certifier, under the heading "Nature of Dispute":
'4 [The Developer] engaged [the Builder] and [Omaya Investments] to carry out certain residential building works at the Property.'
Second, as against the architect, the Developer and Omaya Investments allege in the Cross-Claim, under the heading 'Claim against [the architect]', that:
'15 In about 2007, [Omaya] Investments engaged [the architect] to provide it with architectural design and construction associated services in relation to the development of the Property.'
Third, as against the architect, the Developer and Omaya Investments allege in the Cross-Claim, under the heading 'Common law duty of care':
'22A The salient features of the relationship between [the architect], and each of:
(a) [the Developer], as the registered proprietor of the Property; and
(b) [Omaya] Investments, as the party who engaged [the architect] to provide the IDG Architectural Services;
were that:
…
(d) [the architect] knew or ought to have known that:
…
(ii) [the Developer] had engaged [Omaya] Investments to carry out residential building work on the building at the Property; …'
The Developer and Omaya Investments make corresponding allegations in the Cross-Claim against the certifier, save that it is alleged that Omaya Investments appointed the certifier in November 2009." [28]
Those matters are not, in truth, "admissions", [29] but might involve an implied representation that the "party filing the pleading honestly believed it had a fair chance of prospects of success". [30]
I held that these matters were a sufficient basis for the Owners Corporation to allege the existence of a contract between the Developer and Omaya Investments, [31] but concluded: [32]
"At the end of the day, the assertions made by the Developer and Omaya Investments in their Cross-Claim, and such representations as may be found to arise from them, may not be a sufficient basis upon which to establish the Alleged Contract.
But I see the case as being at least arguable, such that the Owners Corporation should be granted leave to make the allegation and endeavour to establish it at hearing."
The Omaya defendants have not adduced evidence explaining how it was that Omaya Investments made the allegations in the Cross-Claim. Although, in their closing submissions, Mr Corsaro and Mr Byrne drew attention to authorities referring to representations made in pleadings under "a misapprehension, or at a time when the person did not have all the relevant information", [33] they did not direct my attention to any such evidence in these proceedings.
The representations made in the cross-claims are a factor to be weighed in the balance but must be considered in the light of the other evidence to which my attention has now been directed.
[18]
Nomination of Omaya Investments in development approval documents
The Owners Corporation has identified a number of documents which nominate Omaya Investments as the applicant for relevant approvals.
Thus:
1. Omaya Investments is named as the "applicant" in the 20 December 2007 application to the Council for development approval;
2. Omaya Investments is named as the "applicant" in a 4 June 2009 application to the Certifier for the Construction Certificate;
3. perhaps for this reason, the Certifier identified Omaya Investments as the applicant in the Construction Certificate itself and in the Final Occupation Certificate of 7 January 2011.
However, there are many other documents which point in a different direction.
For example:
1. the Builder, and not Omaya Investments, made additional submissions in relation to the development application on 4 March 2008;
2. the minutes of a meeting of the Council on 3 June 2008 record the Omaya representative being present on behalf of the Builder, not Omaya Investments;
3. on 6 October 2009, the Council wrote to the Developer, and not Omaya Investments, advising that consent had been given to an application to modify the development consent;
4. the Council's assessment of 20 May 2010 of an application to modify the development consent recorded the Builder as the applicant and the Developer as the Owner;
5. the Council's notice of determination of 13 July 2010 recorded the Builder, and not Omaya Investments, as the applicant;
6. a development application dated 10 August 2010 identifies the Builder, and not Omaya Investments, as the applicant and the Developer as the owner;
7. an assessment made by the Council on 2 September 2010 of an application to modify the development consent recorded the Builder, and not Omaya Investments, as the applicant and the Developer as the owner;
8. on 15 October 2010, the Council wrote to the Builder, not Omaya Investments, advising that it had consented to an application to modify the development consent; and
9. on 21 October 2010, the Council wrote to the Builder, and not Omaya Investments, advising that it had consented to the development consent.
[19]
The Architect
The Architect's fee proposal of 5 February 2007 was addressed to the Builder.
However, from April 2007 to October 2010, the Architect sent its invoices to Omaya Investments stating, each time, that the invoice was sent, "in accordance with our agreement".
On 17 September 2007, Mr Thorne of the Architect wrote to a representative of a traffic planning contractor that "Jessica from Omaya" had called and had requested that the traffic consultant's invoices, earlier issued to "Omaya Development", [34] be "reissued" to "Omaya Investments".
There is no direct evidence as to which Omaya entity paid the Architect's invoices, although it may be inferred from the Builder's failure to produce evidence of such payment in response to a Notice to Produce that it was not the Builder that paid the Architect.
There is in evidence a "Sepp 65 design statement" prepared by the Architect which is stated as being "prepared for" Omaya Investments.
On the other hand, the minutes of eight Design Coordination Meetings attended by the Architects were issued on the letterhead of the Builder, not Omaya Investments, and identified the Omaya representatives as having been in attendance as being from "Omaya Holding": the Builder.
[20]
The Certifier
The Certifier's February 2008 quotation was addressed to Omaya Investments.
Mr Cohen gave evidence that this was because Omaya Investments had been named in the relevant Development Consent.
The Certifier issued three invoices, each addressed to Omaya Investments. One, dated 18 August 2009, bears manuscript endorsements suggesting it was paid by a cheque drawn on account of Omaya Investments. On the other hand, one of the other invoices, dated 5 October 2010, bears a like endorsement showing it had been paid by the Builder.
[21]
The Progress Claims
Perhaps more significantly, all the invoices from the Architect and Certifier were included in progress claims made by the Builder, not Omaya Investments, to the quantity surveyor that was acting as certifier for the purpose of the Builder's and Developer's external funder.
Those progress claims attached invoices from the Architect and the Certifier, as well as invoices from other subcontractors, and included a statement:
"All subcontractors and suppliers to the [Builder] have been paid all monies which as at the date of this declaration are due and payable to them by the Contractor for the performance of work under the Contract and the supply of materials for use in work under the Contract …".
This does not itself prove which Omaya entity paid the "subcontractors and suppliers".
It does, however, show that, although Omaya Investments may have been acting as the Builder's agent or subcontractor for some reason of internal corporate convenience, it was the Builder itself that was seeking payment from the external funder for the work done.
[22]
Certification of fire services
The Owners Corporation pointed to a fire safety certificate which is in this form:
As Mr Corsaro and Mr Byrne submitted, the language of this template requires that the certification be given by the "owner of the building described above, or the agent of the owner". The Developer, not Omaya Investments, was the owner of the property, suggesting that Mr Bechara was giving this certificate as the "agent of the owner".
Further, in this document Mr Bechara was simply certifying that a properly qualified person had assessed the fire safety measures and that in such an assessment, those measures had been found to be capable of performing to the standard required. The certification does not itself establish that the design or construction of the fire safety services was carried out by Omaya Investments.
[23]
A Ferrcom inference?
Mr Ashhurst and Mr Mobellan submitted that I should not draw any inference in favour of the defendants in circumstances where they could have adduced direct evidence in support of the proposition that there was no contract between the Developer and Omaya Investments. [35]
However, this overlooks the fact that Mr James Abraham, the Development Manager of each of the Builder, the Developer, and Omaya Investments, made an affidavit in which he said:
"[Omaya] Investments was not named on the Contract [between the Developer and the Builder], nor are there any books and records to my knowledge which indicate that [Omaya] Investments undertook any construction works or was capable of undertaking any construction works at 48 Cooper Street, in circumstances where it does not and never has, held a contractor licence." (Emphasis added.)
Mr Ashhurst and Mr Mobellan objected to the part of that passage which I have emphasised in italics, and I rejected that evidence. However, I do not think that I should draw a Ferrcom inference against the defendant in those circumstances.
[24]
Conclusion
Overall, I am not persuaded by this evidence of the existence of a building contract between the Developer and Omaya Investments.
There are certainly some factors pointing towards that conclusion, particularly the invoices from the Architect, and the representations made by Omaya Investments in the cross-claims against the Architect and the Certifier.
However, the fact there is no document recording any building contract between the Developer and Omaya Investments, that Omaya Investments is not a licensed builder, and that, at the end of the day, it was the Builder, and not Omaya Investments, that sought payment for the work done by the Architect and the Certifier, persuades me that the more likely explanation for the role that Omaya Investments has played is that it was acting as agent or subcontractor of the Builder.
[25]
Residential building work?
There are further difficulties.
The Owners Corporation alleges that the work that Omaya Investments agreed to perform for the Builder, as alleged in the Owners Corporation's List Statement as set out at [118] above, was "residential building work" within the meaning of the Home Building Act.
"Residential building work" is defined in the Home Building Act as "any work involved in, or involved in co-ordinating or supervising any work involved in … the construction of a dwelling". [36]
The Omaya defendants developed submissions to the effect that the work that the Owners Corporation alleges that Omaya Investments agreed to perform, being confined to the design, construction and certification of fire safety measures, was not work involved in "the construction of … a dwelling" and thus not residential building work. [37]
In view of my conclusions as to Effective Height, it is not necessary for me to deal with this submission, save to note that, in their final written and oral submissions, Mr Ashhurst and Mr Mobellan did not address the question.
[26]
"Failure to ensure"
A further difficulty with the Owners Corporation's case against Omaya Investments is that it is framed as an obligation "to ensure" that the Building either had an Effective Height of 25 metres or less, or that it had the requisite fire safety protection facilities in the event that the Effective Height of the Building was more than 25 metres. [38]
The obligation under s 37 of the Design and Building Practitioners Act is to exercise reasonable care to avoid economic loss caused by defects arising from construction work. It is not an obligation to "ensure" anything. [39]
[27]
"Construction work" for the purpose of the Design and Building Practitioners Act
"Construction work" is defined in s 36 of the Design and Building Practitioners Act as any of the following:
"(a) building work;
(b) the preparation of regulated designs and other designs for building work;
(c) the manufacture or supply of a building product used for building work;
(d) supervising, coordinating, project managing or otherwise having substantive control over the carrying out of any work referred to in paragraph (a), (b) or (c)."
In their opening written submissions, Mr Ashhurst and Mr Mobellan submitted that:
"The works performed by the Omaya [d]efendants was 'construction work' within the meaning of section 36 of the [Design and Building Practitioners Act] by reason that the works constituted the coordinating, project managing or otherwise having substantive control over the carrying out of:
a. 'building work' within the meaning of section 36 of the [Design and Building Practitioners Act]; and/or
b. 'the preparation of regulated designs and other designs for building work' within the meaning of section 36 of the [Design and Building Practitioners Act]." [40]
The matter was put more narrowly in Mr Ashhurst's and Mr Mobellan's closing submissions as follows:
"Specifically, the Plaintiff contends as follows:
a. [Omaya] Investments had substantive control over the carrying out of works performed by [the Architects];
b. the works performed by [the Architects] were the preparation of regulated designs and other designs for building work and/or building work by reason that residential building within the meaning of the [Home Building Act]; and
c. [Omaya] Investments is vicariously liable for the breaches of duty of care by [the Architects] in relation to its assessment of the Effective Height issue." [41]
Mr Ashhurst and Mr Mobellan drew attention to my observations in The Owners - Strata Plan No 84674 v Pafburn Pty Ltd: [42]
"However, the words 'otherwise having substantive control' point to a conclusion to be reached having regard to all relevant circumstances. The words used are not 'otherwise substantively controlling the carrying out of' the work. A person could have 'substantive control over the carrying out of' work notwithstanding the fact, at any particular moment in time, the person was not actually doing anything to cause that control to be exercised; provided the person had the ability and the power to control how the work was carried out." [43]
But there is no suggestion in this case that Omaya Investments, or indeed any of the Omaya defendants, played any role in the design of the Building so far as concerns its Effective Height. Assuming that it was Omaya Investments that engaged the Architect, the terms of the Architect's fee proposal stated that the Architect's function was to "develop the drawings" necessary for the project. There is no suggestion in the evidence that any of the Omaya defendants had any ability or power to control how the drawings were prepared.
Far from having the ability and power to control how the Architect and Certifier acted so far concerns the Effective Height of the Building, the Omaya defendants left it to those professionals to exercise their expertise in that regard and received reassurances from both that the Building did not have an Effective Height greater than 25 metres.
Thus:
1. on 1 September 2009, Mr Cohen of the Certifier wrote to the Omaya defendants:
"The proposed building being under 25 metres in height is not required to be sprinklered, however as the carpark has greater than 40 car parking spaces [it] is required to be fitted with sprinklers …";
1. on 19 November 2009, Mr Thorne of the Architect wrote to the Omaya defendants and the Certifier:
"The building is currently at the maximum 25m height limit …";
1. on 24 November 2009, Mr Cohen of the Certifier informed Mr Thorne of the Architect that:
"… the modification to have the two storey units makes the second level of the topmost level and if over 25 metres as proposed the building will require to be sprinklered"; and
1. on 24 November 2009, Mr Thorne of the Architect passed on Mr Cohen's email to the Omaya defendants.
Thus, the Omaya defendants, and Omaya Investments in particular, did not have the "substantive control" now relied on by the Owners Corporation to contend that Omaya Investments engaged in "construction work" for the purposes of the Design and Building Practitioners Act.
[28]
Vicarious liability?
As I have set out above, [44] in their final closing submissions Mr Ashhurst and Mr Mobellan submitted that Omaya Investments was "vicariously liable" for the Architect's alleged breach of duty.
Mr Ashhurst and Mr Mobellan drew attention to s 5Q of the Civil Liability Act 2002 (NSW).
That section provides that:
"(1) The extent of liability in tort of a person (the defendant) for breach of a non-delegable duty to ensure that reasonable care is taken by a person in the carrying out of any work or task delegated or otherwise entrusted to the person by the defendant is to be determined as if the liability were the vicarious liability of the defendant for the negligence of the person in connection with the performance of the work or task." (Emphasis in original.)
But here, the Omaya defendants, and Omaya Investments in particular, did not have the duty to "ensure" that reasonable care was taken by the Architect in carrying out its work so far as concerns the Effective Height of the Building.
The Omaya defendants' obligation in s 37 of the Design and Building Practitioners Act to take reasonable care no doubt included an obligation to appoint a properly qualified architect to deal with the Effective Height issue. There is no suggestion of any breach by the Omaya defendants of that duty.
In the circumstances of this case, I cannot see how the operation of the provisions of the Design and Building Practitioners Act, when read in light of s 5Q of the Civil Liability Act, could have the result that any of the Omaya defendants is "vicariously liable" for any negligence of the Architect.
[29]
Conclusion as to Omaya Investments
For these reasons, the Owners Corporation's claim against Omaya Investments fails.
[30]
The claim against BSM Holdings Pty Ltd
The sixth defendant, BSM Holdings Pty Ltd, is the current trustee of the Bechara family trust.
Omaya Investments was the former trustee of that trust.
The Owners Corporation's claim against BSM Holdings is predicated on a finding that Omaya Investments, as trustee of that trust, has a liability to the Owners Corporation arising out of the Effective Height issue.
As no such liability has been established, the claim against BSM Holdings must also fail.
[31]
Conclusion
The parties should confer and agree on the orders necessary to give effect to these reasons.
[32]
Endnotes
Sprinklers are presently only in the car park levels.
Macquarie Dictionary, online ed, accessed 20 November 2024.
Oxford English Dictionary, online ed, accessed 25 November 2024.
Reduced Level, in metres, from the Australian Height Datum established within the Australian National Levelling Network.
(2012) 191 LGERA 160; [2012] NSWSC 1244.
Ibid at [111].
Ibid at [96].
Ibid at [109].
Ibid at [61].
Ibid at [68].
Ibid at [66].
Ibid at [72]
Ibid at [74].
Ibid at [67].
Ibid at [69].
As a "water drainage update".
[2021] NSWCA 2.
At [70].
[2014] NSWCA 404 at [193].
See [43] above.
At C12A.
List Statement C20M(g)(i).
Ibid, C20M(g)(ii) read with C20M(c).
At [5(h)].
At [40].
The Owners - Strata Plan 82089 v Omaya Holdings Pty Ltd (No 2) [2024] NSWSC 1188.
At [16]-[19].
"Rather than 2007, in the case of the Architect": this footnote appeared in the judgment.
See [24] of my earlier judgment.
See [25] of my earlier judgment.
At [29].
At [34]-[35].
Referring to Edwards v Olsen; Murphy v Stevens [2003] SASC 238 at [97]-[98] (Mullighan J, Besanko J agreeing) and The Nominal Defendant v Gabriel [2007] NSWCA 52 at [113] (Campbell JA).
There is no such company.
Citing the familiar observations of Handley JA in Commercial Union Assurance Company of Australia Limited v Ferrcom Pty Limited (1991) 22 NSWLR 388 at 418.
Home Building Act, Sch 1, cl 2(1)(a).
Referring to Woolfe v Alexander Sussman t/as A Sussman Construction Consulting Services & Anor [2001] NSWSC 702 at [18] (McClellan J); Collings Homes Pty Ltd v Head [2002] NSWSC 1219 at [25] and [28]-[34] (Malpass M); Provincial Homes Pty Ltd v Doyle [2004] NSWSC 624 at [57] (Wood CJ at CL).
See [119(6)] above.
See my observations in The Owners - Strata Plan No 87060 v Loulach Developments Pty Ltd (No 2) [2021] NSWSC 1068 at [43], and Oxford (NSW) Pty Ltd v KR Properties Global Pty Ltd trading as AK Properties Group ABN 62 971 068 965 [2023] NSWSC 343 at [337].
At [22].
At [23].
[2022] NSWSC 659.
At [25].
At [120] and [165].
DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated.
Decision last updated: 03 December 2024
Parties
Applicant/Plaintiff:
The Owners - Strata Plan 82089
Respondent/Defendant:
Omaya Holdings Pty Ltd
Legislation Cited (5)
Environmental Planning and Assessment Regulation 2000(NSW)