The Owners – Strata Plan 94800 v Aushome Construction Pty Ltd & Anor (No. 2)

Legislation Cited: Civil Procedure Act 2005 (NSW), ss 60, 61, 98
Home Building Act 1989 (NSW), 92, Schedule 1 – s 2
Home Building Regulation 2014 (NSW), rr 5, 56
Uniform Civil Procedure Rules 2005 (NSW), r 42.1

Cases Cited: Oshlack v Richmond River Council (1998) 193 CLR 72
The Owners – Strata Plan 94800 v Aushome Construction Pty Ltd [2025] NSWDC 143

Texts Cited: Nil.

Category: Consequential orders

Parties: The Owners – Strata Plan No 94800 (Plaintiff)
Aushome Construction Pty Ltd (ACN 114 033 055) (First Defendant)
South Summit Group Pty Ltd (ACN 166 478 431) (Second Defendant)

Representation: Counsel:
M Gunning (Plaintiff)
Solicitors:
Madison Marcus (Plaintiff)
First Defendant (P Rao, Director of the First Defendant, in person)
Second Defendant (W Zhang, Director of the Second Defendant, in person)

File Number(s): 2023/00363237

Publication restriction: Nil.

REASONS FOR JUDGMENT

Background

1. On 28 April 2025, I delivered my reasons for judgment in the proceeding. [1] At the conclusion of the Reasons, I made the following orders:

“(1) Pursuant to s 61(2) of the Civil Procedure Act 2005 (NSW):

(a) Mr George Dahrie (or some such other registered Design Practitioner as the defendants nominate) is to prepare, at the defendants’ cost, a Regulated Design to address the matters referred to by the building experts in items 4.3 and 31.1 in the plaintiff’s Updated Scott Schedule within 14 days of the date of these reasons and supply them to the parties.

(b) Mr Stephen Bolt, of the firm WT Partnership, is to prepare, at the shared costs of the parties, a report quantifying the costs of such Regulated Design within 7 days of receipt of the report referred to in (a) and to provide a copy of such report to the parties.

(2) Within 5 business days of its receipt of the report in order (1)(b) above, the plaintiff is to make submissions on:

(a) the quantification of costs specifically for items 4.3 and 31.1; and

(b) the final quantification of costs generally, as well as pre-judgment interest and costs in accordance with these reasons.

(3) Within a further 5 days of receipt of the plaintiff’s submissions the subject of orders 2(a)–(b) above, the defendants are to make submissions on:

(a) the quantification of costs for items 4.3 and 31.1 specifically; and

(b) the final quantification of costs generally, as well as pre-judgment interest and costs.

(4) All of the reports and submissions referred to in these orders are to be copied to the Associate to Abadee DCJ on the dates they are prepared.

(5) Subject to any further application, any continuing dispute about the costs for items 4.3 and 31.1 specifically, the final quantification of costs generally, pre-judgment interest and costs will be determined on the papers.

(6) Liberty to apply on two days’ notice.”

2. The principal matter left outstanding from the Reasons was quantification of the costs of rectification of two items (items 4.3 and 31.1 of the updated Scott Schedule) of works in respect to which I made findings about ‘Major Defects’. The works were in the nature of waterproofing remediation to unit 4 on level 1 and unit 31 on level 11 of the subject apartment. Secondary to the quantification of those items was the final quantification of rectification costs generally, taking into account determinations I had made in the Reasons where the parties were in dispute about whether or not there were major defects in respect to certain items. A feature of those calculations was the use of an escalation percentage that was different to that which had been deployed by Mr Madden, a quantity surveyor, in his report that the owners corporation relied upon at trial.

3. The issues of pre-judgment interest and costs were also left outstanding for further submissions.

4. The Regulated Design and Mr Bolt’s report (referred to in order 1) were received.

5. Through its legal representatives, the plaintiff (the owners corporation) provided written submissions on 21 May 2025 (in conformity with order 2). These have been marked (MFI 8). The second defendant supplied written submissions on 28 May 2025 (MFI 9). With additional leave, the owners corporation filed a submission in reply to that of the second defendant’s submissions (MFI 10). No submissions were received from the first defendant.

Quantification of rectification costs for items 4.3 and 31.1 of the Updated Scott Schedule

6. The Regulated Design for the two items, drawing no. ARCH-4600, was prepared by Mr Pavlo Doroch, of Doroch Architects Pty Ltd. Mr Doroch also prepared a design compliance declaration relating to drawing no. ARCH-4600, dated 7 May 2025.

7. Mr Bolt prepared a report dated 14 May 2025, which costed the Regulated Design.

8. Leave is granted to the owners corporation to reopen its case to rely upon the Regulated Design and Mr Bolt’s report. They will become, respectively, Exhibits H and J.

9. The owners corporation effectively adopts both Exhibit H and J.

10. The critical outcome from Mr Bolt’s report is his opinion that the cost of rectifying the defects in items 4.3 and 31.1, with reference to the Regulated Design, is $12,860.59. That figure takes into account trade costs, escalation costs, preliminaries, overhead and profit, contingencies and superintendent design and professional fees or costs. This breakdown is contained in paragraph 5 of the Executive Summary to the report.

11. The Second Defendant did not criticise any part of Mr Bolt’s report, or the Regulated Design.

12. I accept Mr Bolt’s evidence that the combined rectification costs for the two items is $12,860.59. That figure should be added to the more general quantification of costs to which I now turn.

General quantification of costs of rectifying the defects

13. The Reasons indicate findings made about major defects. In this regard, the Reasons separately categorised ‘Agreed Major Defects’ and ‘Disputed Defects Found to be Major Defects’.

14. In the Reasons, I had also determined, contrary to evidence from Mr Madden, that the appropriate escalation percentage was 8.06%; not 18%.

15. Subject to the costs for items 4.3 and 31.1, the owners corporation has now revised the table summarising its position on costs from the version which it supplied to the Court during the hearing, and which was contained in the closing written submissions of Counsel for the owners corporation (at paragraph 13). The revised table appeared at paragraph 12 of the owners corporation’s supplementary written submissions supplied to the Court after the Reasons had been published (MFI 8).

16. On the qualifications I have adverted to, that revised table identified the total rectification costs as being $387,795.53.

17. The owners corporation claims that the addition of the costs for items 4.3 and 31.1 results in total damages in the sum of $400,656.12.

Deduction for HBCF Insurance?

18. Mr Zhang, who authored the Second Defendant’s submissions, and who represented the Second Defendant as its director, did not criticise these revised calculations. His only point on damages was to seek from the Court a deduction from total costs in the sum of $19,506 on the basis that this sum was attributable to HBCF Insurance which was unnecessary for multi-storey buildings.

19. Upon receipt of Mr Zhang’s submission, the Court granted the plaintiff further opportunity to reply to his point.

20. The plaintiff argued, first, that Mr Zhang should not now be permitted to argue for this deduction. During the hearing, right up to judgment, he had said nothing about it. That being so, it should be accepted as part of the plaintiff’s claim.

21. Alternatively, if consideration could be given to it, the result is no different. This is because, construing regulation 56 of the Home Building Regulation 2014 (NSW), a distinction is drawn between the ‘construction’ of a multi-storey building from the ‘repairing’ of such a building. That construction is arrived at by the distinct concepts recognised in Schedule 1 (ss 2(1)(a) and (c)) to the Home Building Act 1989 (NSW). The exemption to which Mr Zhang refers applies only to the construction of a building; not its repair.

22. Further, by s 92 of the same legislation, read with regulation 5 of the Home Building Regulation*,* insurance is required to be in place for work in a contract that exceeds $20,000. Here the costs of the repair or rectification works well exceeds $20,000.

Consideration

23. I agree with the owners corporation that the second defendant should not be permitted to re-open to Mr Zhang to run the point that he does simply because it occurred to him after reasons for judgment had been delivered. The point he seeks to raise exceeds the scope of the permission granted to the parties to supply further submissions following delivery of the reasons. Mr Zhang did not seek the Court’s permission for any additional indulgence, in the form of an extended grant of leave, so as allow him to re-open his case in order to run the point he did, which he should have done.

24. I am conscious, of course, of his status as a non-legally trained director of a corporation. Nevertheless, being self-represented does not entitle a party to be exempt from the rules which are not only designed to instil procedural fairness, but also finality to this Court’s adjudication of disputes.

25. I also acknowledge the point that he raises involves a construction of legislation and regulations. Raising it in the circumstances that he did predictably generated the response of the type which the owners corporation have given.

26. The orders made on 28 April 2025 provided a very small window to deal with issues before orders were made to dispose of the proceeding in a procedurally fair and timely way. Mr Zhang’s unsolicited submission about the insurance issue has generated a new dispute. Further, I take into account not only the circumstance that if he was allowed to make it, it will draw out further disputation (as I expect Mr Zhang would likely cavil with the owners corporation’s submission in reply) at additional cost. Given the amount at stake, it is also highly doubtful that permitting further disputation on this particular issue satisfies the proportionality measure in s 60 of the Civil Procedure Act 2005. It also has the impermissible effect of drawing the Court away from dealing with other disputes and the interests of other litigants.

27. I would also add that I would only be prepared to even consider granting any further indulgence to Mr Zhang if his point was unanswerable. That is far from being the position. As the owners corporation’s submissions in reply indicate, the point he now raises is substantially disputed. It is not in the interests of justice for there to be freewheeling disputes after reasons for judgment have been given.

28. I accept the owners corporation’s calculations which Mr Zhang has not, in terms, disputed.

29. The quantum of the plaintiff’s monetary judgment is $400,656.12.

Pre-judgment interest

30. The Owners corporation submitted that it is entitled to interest and that this should run from the date (3 February 2023) the proceeding was commenced in the New South Wales Civil and Administrative Tribunal.

31. The second defendant did not contend to the contrary.

32. I accept the owners corporation submission, which, given the period in which the contract was performed by Aushome (and in respect to which South Summit is effectively jointly and severally responsible), strikes me as being generous to the defendants.

Costs

33. The owners corporation does not seek a special costs order. Rather, it seeks an order that reflects the general rule (Uniform Civil Procedure Rules 2005 (NSW), r 42.1) that costs follow the event and for those costs to be payable on the ordinary basis (reflected in the UCPR, r 42.2).

34. Mr Zhang, for the second defendant argues that no party “won decisively”: that a significant portion of the claimed costs for major defects were not permitted as the plaintiff did not establish that they were major defects and the rectification costs ultimately to be awarded is such that if it was necessary to identify any winner, it was the defendants.

35. It is trite that, subject to rules of court, costs are in the discretion of the Court (Civil Procedure Act 2005 (NSW), s 98(1)(a)). The purpose of the award of costs is compensate the successful party for its expense incurred in achieving that success; not to punish the unsuccessful party. [2] Mr Zhang does not, however, dispute the application of r 42.1 of the UCPR that costs should ‘follow the event’. His submissions put in issue what that expression means in the circumstances of this case.

36. It can be acknowledged that the flexibility that the Court has in the exercise of its discretion can result in its apportioning costs across different ‘issues’ and even depriving the successful party of its costs in certain circumstances, such as where that party unreasonably prolonged proceedings or otherwise engaged in conduct disentitling it to its costs, wholly or partly.

37. I do not accept Mr Zhang’s submissions. It was the owners corporation who brought the proceeding to seek different kinds of relief. Although, as I discussed in the Reasons, there was a level of ambivalence as to which relief it ultimately sought – a work order or damages – the owners corporation have practically achieved what they sought: rectification works will proceed for which they will not be left out of pocket.

38. It is a well-known occurrence that in construction cases, a homeowner does not always succeed in establishing all of their complaints about ‘major defects’, nor always succeeds in having its costs estimates accepted in respect to those major defects. That does not mean that when the question of whether the homeowner has succeeded – for the purpose of considering general costs orders – is defined according to a scorecard approach of tallying how many disputed defects or costs issues they have won against how many they have lost.

39. Moreover, this is not a case where the defendants were able to point to unreasonable conduct on the part of the owners corporation, illustrated, for example, by its rejection of any reasonable offer of settlement made by the defendants.

40. Ultimately, the owners corporation has obtained a monetary judgment in the order of $400,000. That is a significant amount. It obtained that result in the circumstances where there was a dispute that forced it to commence the litigation in the first place and continue with it through to a successful judgment over the defendants’ opposition. I also agree with the submission in reply by the owners corporation that it has not engaged in any ‘disentitling’ conduct such as to cause the Court to vary the effect of the general rule that its costs should be paid on the ordinary basis, as agreed or assessed.

41. The general rule for costs reflected in r 42.1 of the UCPR is appropriate.

Orders

42. The Court’s orders are:

43. Judgment for the plaintiff against the defendants for the sum of $400,656.12 (the ‘Judgment Sum’).

44. The defendants are to pay pre-judgment interest on the Judgment Sum from 3 February 2023.

45. The defendants are to pay the plaintiff’s costs, as agreed or assessed, on the ordinary basis.

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Endnotes

The Owners – Strata Plan 94800 v Aushome Construction Pty Ltd [2025] NSWDC 143 (the ‘Reasons’).

Oshlack v Richmond River Council (1998) 193 CLR 72 at [67].