The Owners - Strata Plan No 51077 v Meriton Apartments Pty Ltd & Anor

Judgment 1These reasons are in respect of the hearing of a Notice of Motion on 5 December 2014, when the administration of the Lists did not allow time for their delivery. The main proceedings arise out of the design and construction of a strata development complex at 304-308 Pitt Street, Sydney, known as "Princeton Apartments" (the Complex). The plaintiff, the Owners - Strata Plan No 51077, has the management and control of the Complex Strata Scheme. The plaintiff claims damages for the cost of having to rectify various defects in the common property of the Complex. 2The first defendant, Meriton Apartments Pty Ltd, designed, developed and constructed the Complex. The second defendant, Micos Aluminium Pty Ltd, designed, manufactured and installed the windows, balustrades and glazing for the Complex. Meriton engaged Micos as an independent contractor. 3By Notice of Motion filed on 10 November 2014 the plaintiff seeks leave to file and serve a Second Amended Technology and Construction List Statement. Both defendants filed Motions to strike out the then current pleading and opposed leave being granted to the plaintiff to amend the List Statement. However during the hearing of the application Micos conceded that the problems with the proposed pleading, the subject of its objections, were cured by a further amendment made to the proposed pleading. 4The Motions were heard on 5 December 2014 when Mr F Corsaro SC, leading Mr M Auld, of counsel, appeared for the plaintiff, Mr SR Donaldson SC, leading Mr DA Moujalli, of counsel, appeared for Meriton, and Mr L Shipway, of counsel, appeared for Micos. 5The plaintiff relied upon the affidavit evidence of Marie-Louise Scarf sworn on 10 November 2014. Meriton relied upon the affidavit of Zena Nasser, sworn on 21 November 2014. 6The proposed List Statement relies upon s 62 of the Strata Schemes Management Act 1996 to allege that the plaintiff has the responsibility for the repair, care and maintenance of the common property. It is alleged that Meriton owned the land and designed and built the Complex using its own employees and sub-contractors. It is alleged that Micos manufactured and certified the windows which Meriton subsequently used to certify the windows to the relevant consent authority. It is alleged that Micos manufactured and supplied the balustrades for Meriton. There is also an allegation that Meriton or Micos, or both, designed and installed the windows and the balustrades. 7The plaintiff alleges that the windows and balustrades as manufactured, designed and installed by either Meriton or Micos, or both, have the defects identified in the List Statement. 8Meriton's short point is that because the plaintiff pleads its case against Meriton on the basis that it was both the owner and the builder, its claim in negligence is doomed to fail. It was submitted that the potential scope for the operation of the principles applied in Bryan v Maloney (1995) 182 CLR 609 is further confined by the decision in Brookfield Multiplex Ltd v Owners Corporation Strata Plan 61288 [2014] HCA 36; (2014) 313 ALR 408 (Brookfield Multiplex). It is submitted that it is confined to situations in which the duty owed by the builder to the subsequent owner is effectively an extension of, and of identical scope and content to, an anterior duty owed by the builder to the original owner with whom the builder contracted: Brookfield Multiplex [50], [60] per Hayne and Kiefel JJ; [64], [69], [102], [129] and [136]-[139] per Crennan, Bell and Keane JJ. The plurality in Brookfield Multiplex said at [69]: This Court's decision in Bryan v Maloney does not sustain the proposition that a builder that breaches its contractual obligations to the first owner of a building is to be held responsible for the consequences of what is really a bad bargain made by subsequent purchasers of the building. To impose upon on a defendant builder a greater liability to a disappointed purchaser than to the party for whom the building was made and by whom the defendant was paid for its work would reduce the common law to incoherence. 9Meriton submitted that it did not contract with itself, nor did it owe to itself any duty which could be extended to subsequent owners in the sense contemplated by the decision in Bryan v Maloney. It was submitted further that, whatever scope might exist for the extension of the duty owed by a builder to subsequent owners based on that decision, it cannot avail the plaintiff in the present case. 10The plaintiff distinguished the facts of the present case from Brookfield Multiplex. In the present case there is no sophisticated contract between Micos and Meriton with detailed provisions about the standard of the work required. It is submitted that this is not a case in which the lot owners exercised "contractual wisdom" to bargain for protection against the risk of defects from the developer, as was the case in Brookfield Multiplex (at [140]). 11The plaintiff submitted that the trial judge will have to determine the duty of care by examining the salient features of the relationship between Meriton and the plaintiff and between Micos and Meriton to determine the issue of vulnerability and whether other features warrant the imposition of the duty of care alleged. 12The plaintiff submitted that Brookfield Multiplex supports the continuation of the application of the principles in Bryan v Maloney that a builder owes a duty of care to a successor in title unless the relationship has the salient features referred to in the Brookfield Multiplex case. 13In Moorabool Shire Council v Taitapanui [2006] VSCA 30; (2006) 14 VR 55 the Victorian Court of Appeal held that a regime of statutory warranties implied by the Domestic Building Contracts Act 1995 (Vic) (which are in similar terms to those in the Home Building Act 1989) did not prevent the imposition of a duty of care. Ormiston and Ashley JJA said at 181: The warranties are such as particularly relate to construction work carried out by a builder. It is true that the particular warranties run in favour of successors in title. But it is another thing altogether to conclude that the Parliament objectively intended to displace the common law as it should otherwise apply in respect of the quite different conduct of a building practitioner of another class. The plaintiff submitted that there is nothing in the Home Building Act that suggests that parliament had intended to displace the law of negligence. 14In The Owners - SP69567 v Landson Alliance Australia [2014] NSWSC 1592 McDougall J heard an application for summary dismissal of a negligence claim on the ground that it was doomed to fail in light of the decision in Brookfield Multiplex. In the course of dismissing the application, his Honour remarked aptly to the circumstances of this case at [55]: There is one distinction between Brookfield Multiplex and this case which is worth bearing in mind. The former was not an application to strike out or for summary dismissal. The question of the existence of a duty of care was determined, as a separate question, on the basis of agreed facts and an agreed bundle of documents. This is not such a case. The question in this case falls to be decided purely by reference to the pleadings, and seeing, or envisioning, what might be proved within the compass of the pleadings. 15The plaintiff does allege that Meriton was both the owner of the land and the builder of the Complex. Meriton's argument in relation to the lack of utility in granting leave depends upon a finding that there could be no duty of care owed to the plaintiff in circumstances of a pleading against an owner and builder in this way. It will be a matter of fact for the trial judge as to the nature of the events that gave rise to the building of the Complex, the contractual characterisation, if any, and the true relationship between the owner and the builder. The manner in which the construction or building works were carried out (whether through a division of Meriton or otherwise) will be a necessary aspect of the salient features to be addressed by the trial judge. On the evidence on this application I am not satisfied that the case is so clearly untenable that it cannot possibly succeed: General Steel Industries Inc v Commissioner for Railways (NSW) (1964) 112 CLR 125. It will be a matter for the trial judge. 16The plaintiff is granted leave to file and serve a Second Amended Technology and Construction List Statement by no later than 16 December 2014. The matter is listed for directions on 19 December 2014.