One claim, every lot, and a consultant's schedule behind it.
A strata defect claim is not one owner's complaint. It is a schedule of items compiled across the whole building and run by the owners corporation on behalf of the scheme — usually pleading the statutory warranties and the statutory duty of care together.
Building defects in strata developments are costly, time consuming and extremely stressful. As the builder or the developer, these complications are something you do not need. We act for your side of them — not for owners corporations or lot owners bringing claims.
Why a strata claim is a different animal
An owners corporation owns the common property, and the benefit of the statutory warranties implied by the Home Building Act 1989 (NSW) passes to a successor in title rather than staying with the party who signed your contract. That is how a body corporate you never contracted with comes to sue you over common property. Two things follow. The defect schedule is compiled by consultants across the whole building rather than assembled from complaints. And the sum claimed commonly exceeds NCAT's jurisdictional limit for a building claim, so the proceedings run in the District Court or the Supreme Court.
The owners corporation has constraints of its own. Under the Strata Schemes Management Act 2015 (NSW) it generally cannot commit to legal services or legal action above a prescribed cost without a resolution at a general meeting, with limited exceptions. Whether that resolution was passed is worth asking early.
The Design and Building Practitioners Act 2020 (NSW)
Most strata defect claims now plead a second cause of action. Section 37 of the Design and Building Practitioners Act 2020 (NSW) imposes on a person who carries out construction work a duty to exercise reasonable care to avoid economic loss caused by defects. It is owed to each owner of the land and to each subsequent owner, it applies whether or not the work was done under a contract with that owner, and it cannot be contracted out of. “Construction work” is defined widely enough to catch design, the supply of a building product used for the work, and supervising, coordinating or project managing it.
Two features make it a serious exposure. The duty can attach to individuals — a director, a project manager or a site supervisor who substantively carried out the work or had control over it, not only the contracting entity. And in December 2024, in Pafburn, the High Court held by majority that the duty cannot be delegated. The consequence was that the developer and head contractor could not cut down their own liability by apportioning responsibility to the parties they had engaged, under the proportionate liability provisions of the Civil Liability Act 2002 (NSW). The route to sharing the loss is a cross-claim, brought properly and brought in time.
Time limits still apply, and they are not all the same. A statutory warranty claim runs six years from completion of the work where the breach results in a major defect, and two years otherwise. Separately, a building action cannot be brought more than ten years after the date of completion of the work under the Environmental Planning and Assessment Act 1979 (NSW). Which limb is in time is worth working out before anyone argues about waterproofing.
What the schedules contain
- external cladding and insulation, and the fire and compliance questions behind them;
- window and door installation, and water ingress where the facade meets an opening;
- waterproofing to balconies, bathrooms, planter boxes and basement structures;
- foundation movement and structural cracking;
- common property services — hydraulics, drainage, ventilation and fire systems.
Every item is tested the same way. Was it inside your scope? Is it non-compliant with the contract, the approved design and the standard that applied at the time? And is the rectification method proposed a reasonable one? A consultant's schedule is a list of allegations with prices attached, and a price is not the loss the law makes you liable for. Where a targeted repair would produce conformity with the contract, a full-replacement costing is a price, not a measure of recoverable loss.
The building bond
Part 11 of the Strata Schemes Management Act 2015 (NSW) applies a building bond scheme to residential strata building work within its scope: the developer lodges a bond of 2 per cent of the contract price, and an independent building inspector prepares an interim report and then a final report identifying defective building work. The bond can be drawn on to rectify work identified in the final report. Those reports routinely become the opening document in a later claim, which is why a developer's response to an interim report matters more than it looks. We act on those reports as well as on the defect proceedings that follow them — and the response to an interim report is the cheaper place to be arguing.
Questions builders and developers ask us.
The owners corporation never contracted with us. How can it bring a claim?
Two ways. The benefit of the statutory warranties implied by the Home Building Act 1989 (NSW) passes to a successor in title, and the owners corporation holds the common property in that character. Separately, section 37 of the Design and Building Practitioners Act 2020 (NSW) imposes a duty of care owed to each owner of the land and to each subsequent owner, whether or not the work was done under a contract with them.
Can our directors and project managers be personally named?
Yes, and that is a feature of the section 37 duty rather than an overreach by the claimant. The duty is imposed on a person who carries out construction work, and that has been read to include individuals who substantively carried out the work or had control over the carrying out of it — not only the contracting company. Whether a particular individual is properly named on your facts is worth testing early.
Can we apportion the loss to the certifier, the consultants and our subcontractors?
Not straightforwardly. In December 2024 the High Court held in Pafburn that the section 37 duty cannot be delegated, so a defendant who engaged others to carry out the work could not apportion that work away under the proportionate liability provisions. Whether the same reasoning reaches a party you never engaged is less settled. The reliable route to sharing the loss is a cross-claim, brought in time.
The defect report prices every item at full replacement. Do we have to pay that?
Not automatically, and it is a quantum argument rather than a liability one. Damages are measured by the cost of rectification where that work is necessary to produce conformity with the contract and is a reasonable course to adopt. Where a targeted repair achieves conformity, a full-replacement costing is a price, not a measure of recoverable loss. It is worth getting advice before accepting a figure.
Does the building bond deal with this?
Not on its own. For building work caught by the scheme, the bond and the inspector's interim and final reports are a separate statutory process directed at rectification of defective building work. They do not displace a claim under the statutory warranties or under section 37, and in practice the inspector's report often becomes the first exhibit in that claim.
Tell us what's happened.
Tell us what has been served on you, when the work reached completion, and whether any individual has been named alongside the company. You'll get a straight answer about where the exposure sits, what the matter is likely to involve, and what it will cost.
Information on this site is general in nature and is not legal advice, and may have been overtaken by a change in the law. Contacting us does not create a solicitor–client relationship.