The Owners – Strata Plan No 93543 v Zhang

The plaintiff is the Owners Corporation of a 20-unit residential strata development at Cabramatta.

Immediately prior to registration of the strata plan on 16 June 2016, the defendant, Mr Zhang, was the owner of the property on which the complex is now built.

The Owners Corporation alleges that there are defects in the building and that Mr Zhang, as the builder and/or developer of the complex, is liable to compensate it for that defective work by reason of the statutory warranties specified in ss 18C and 18D of the Home Building Act 1999 (NSW).

On 28 August 2020, the proceedings were set down for hearing for five days commencing on 22 March 2021.

By notice of motion filed on Sunday 21 March 2021, the day before the hearing, Mr Zhang sought to withdraw admissions made by him in his List Response that:

I dealt with the application at the outset of the hearing and refused to grant Mr Zhang leave to withdraw these admissions.

These are my reasons.

Mr Zhang accepts that, by reason of the provisions of s 3A of the Home Building Act, and in the events that have happened, he was the developer of the project. He contends that ZH International was the builder.

As to the admissions that Mr Zhang, and ZH International on Mr Zhang’s behalf, entered into building contracts with contractors in connection with relevant residential building work, Mr Zhang contends that this admission is contrary to the facts, and was made as a result of the combined error of his former counsel while preparing the Response, and of his current solicitor in not detecting the error.

In that regard, his solicitor, Mr Marando, deposed that “it has always been my client’s instructions that he was not the builder on the project”.

It is true that there may be a tension between the admissions made and:

It is also true that, in his opening written submissions, Mr Rogers, who appears for the Owners Corporation, did not, in terms, rely on admissions and acknowledged that:

However, on Mr Zhang’s application to withdraw the admissions, Mr Rogers submitted:

I accepted that to meet the withdrawal of the admissions, it would be reasonable for the Owners Corporation to explore these matters, and that, to do so, the hearing dates would have to be vacated.

I found that matter to be decisive.

At present, a further 5-day hearing date may not be available until later this year, and perhaps not until next year. I concluded it would be profoundly unjust to the Owners Corporation to vacate the hearing dates in these circumstances.

As to the admission that the Owners Corporation was entitled to the statutory warranties, Mr Moorehouse, who appeared with Mr Tsang for Mr Zhang, submitted that this admission was made in error as, notwithstanding the fact that Mr Zhang was the developer of the project, he was not liable to the Owners Corporation under the statutory warranties because:

Mr Rogers accepted he could deal with the statutory construction point (which he described as being “meritless”) but stated that, in order to deal with the factual matter referred to at [17(b)], the Owners Corporation would need to investigate the factual propositions inherent in Mr Moorehouse’s submission, including whether there was a contractual relationship between Mr Zhang and ZH International.

Mr Rogers said, and I accepted, that the Owners Corporation had not hitherto needed to investigate these matters because Mr Zhang had admitted the Owners Corporation was entitled to rely upon the statutory warranties.

Once again, withdrawal of the admissions would have required that the proceedings be adjourned.

I was not prepared to impose that consequence on the Owners Corporation.

It is for these reasons that I refused to grant Mr Zhang leave to withdraw the admissions.

To the extent that Mr Zhang now finds himself in a position of disadvantage, that is entirely a consequence of the manner in which the matter has been prepared on his behalf.