The Owners - Strata Plan 89412 v Brookfield Residential Developments Australia Pty Ltd

The plaintiff is the Owners Corporation in respect of a five-storey block of 55 apartments at Little Bay.

The development was designed and constructed by Pimas Gale Constructions Pty Ltd (the “Builder”) under a “D&C Agreement” (the “Contract”) made on 13 May 2014 with Little Bay South 4 Pty Ltd (the “Developer”). The first defendant, Brookfield Residential Developments Australia Pty Ltd, was the Superintendent named in the Contract.

The Builder is now under external administration. The Developer is deregistered.

The Builder subcontracted the works to, amongst others, the second defendant (masonry works), the third defendant (waterproofing) and the fourth defendant (window installation). The Builder also engaged the eighth defendant to provide architectural and consulting services, which included monthly defect inspections. The ninth defendant is a director of the eighth defendant.

The Owners Corporation contends that the construction of the building was defective, that there are issues relating to the flashings of the external brick walls, balconies, courtyards and roof, and that this has caused water penetration.

By Notice of Motion filed on 19 October 2023, the Owners Corporation seeks leave to file a Second Amended Technology and Construction List Statement, as well as a Further Amended Scott Schedule.

Brookfield opposes the grant of leave.

I was informed that the other active defendants either consent to, or do not oppose, leave being granted.

Brookfield was not a party to the Contract.

As I have said, it was named as Superintendent.

In that capacity, the Contract contained the usual provision that the Superintendent acted as the agent of the Developer, and provided for the usual superintendent functions of certification and determination, dealing with payment claims, issuing payment certificates and issuing a certificate of practical completion if appropriate.

As Superintendent, Brookfield also had powers in respect of defective material or work and testing as set out in cll 30.3, 31.1 and 31.2 of the Contract as follows:

In the proposed List Statement, the Owners Corporation seeks to propound a case against Brookfield under s 37 of the Design and Building Practitioners Act 2020 (NSW) (the “DBP Act”).

Section 37 of the DBP Act provides, relevantly:

“Construction work” is defined, relevantly, in s 36(1) of the DBP Act as follows:

“Building work” is defined in s 36(1) of the DBP Act to include residential building work within the meaning of that expression as defined in the Home Building Act 1989 (NSW) and thus to include work involved in, or involved in coordinating or supervising, any work involved in the construction of a dwelling, including a strata title home unit. [1]

I attach to these reasons the proposed amendments to the List Statement referable to Brookfield.

The Owners Corporation seeks to allege that, for the purposes of s 37(1) of the DBP Act, Brookfield engaged in “construction work” of the kind referred to in subpars (a) and (d) of the definition of “construction work” in s 36(1) of the DBP Act; namely “building work” (that is, here, residential building work) and “supervising, coordinating, project managing or otherwise having substantive control over the carrying out of” such building work.

The Owners Corporation seeks to do so “in the premises pleaded and particularised in pars C3, C4, C4A and C11A of this List Statement”. [2]

Paragraphs C3 and C4 of the proposed List Statement simply allege Brookfield’s incorporation and that Brookfield was named as Superintendent in the Contract.

Paragraph C4A alleges that “from around 2014 to around 2017” Brookfield “carried out the role of the Superintendent the subject of the [Contract] in respect of the construction of the Building”. This is referred to as the “Superintendent Arrangement”. That allegation is particularised by reference to the powers given to Brookfield as Superintendent under cll 30 and 31 of the Contract. [3] I have set out those clauses above. The allegations in par C4A are not particularised by reference to any allegations as to what Brookfield did or did not do or should or should not have done.

Paragraph C11A takes the matter no further and, in effect, repeats pars C4 and C4A.

It is then said, in par C11B, that it follows that:

But the allegations in pars C3, C4, C4A and C11A rise no higher than an unparticularised allegation that Brookfield “carried out the role of Superintendent” in the three-year period referred to.

No allegation is made in the List Statement as to how it could follow, in this case, from the asserted fact that Brookfield “carried out the role of Superintendent” under the Contract that it “performed” or “coordinated and supervised” the work involved in the construction of the Building, or otherwise supervised, coordinated, project managed or otherwise had substantive control over such work.

Although the List Statement makes reference to Brookfield’s powers under cll 30 and 31 of the Contract, the List Statement contains no allegation as to what Brookfield did or did not do under those clauses, or under any other provision of the Contract, that could lead to the posited conclusion that it was engaging in “construction work” in either of the two ways the subject of the contentions.

As can be seen, the allegations in the operative part of par C11B are particularised by reference to “Sections 8 and 10 of the Spratling Report”.

The “Spratling Report” is a building defects report prepared by Craig Spratling and Associates Pty Ltd, described as building and civil engineering consultants.

Section 8 of the Spratling Report is a “Tabular Form Report” which sets out, over 28 pages, a series of alleged defects and associated “nominated breach[es]” and statements of “required remediation”. None of the detail in section 8 is directed to any act or omission of Brookfield.

Section 10 of the Spratling Report contains a range of ipse dixit assertions by its author, including as to the role of a building superintendent, alleged obligations of a superintendent to “attend regular site meetings to facilitate program aims” and “inspect the progress of works”, and to supervise “the workmanship of the contractor”. It also contains allegations as to what the author contends should have been “obvious” to Brookfield as Superintendent.

Thus, in order to understand the nature of the case made against it, Brookfield is left to search through Mr Spratling’s assertions to endeavour to ascertain what it is that the Owners Corporation is alleging against it.

The absence of particularity in the List Statement, save what can perhaps be divined from the incorporation by reference of the nominated parts of the Spratling Report, is itself a reason to refuse the Owners Corporation the leave it seeks.

There are further difficulties.

Paragraph C11D deals with the “standard of care” that the Owners Corporation contends was to be exercised by Brookfield. This includes an obligation to:

No factual basis is identified for any of these allegations which are particularised only by reference to “Section 10” of the Spratling Report.

Paragraph C12 deals with allegations as to what was “reasonably foreseeable” to Brookfield. In effect, it is alleged that it was reasonably foreseeable to Brookfield that if it failed to exercise reasonable care it would have “exposed the Building to the risk of the continued presence” of the claimed defects. This is particularised by reference only to (the whole of) sections 8 and 10 of the Spratling Report and the attached Scott Schedule (which is some 60 pages long).

Paragraph C13 recites the alleged defects in the Building.

Paragraph C14 alleges that, in relation to those defects, Brookfield either:

These allegations assume the correctness of the earlier allegations concerning an obligation to inspect, the foundation of which allegations is not made out in the proposed List Statement.

Such case as the Owners Corporation has against Brookfield cannot proceed on this basis.

I decline to give the Owners Corporation leave to amend its List Statement as against Brookfield in the manner proposed.