The Owners – Strata Plan No 94624 v G & T Younan Constructions Pty Ltd

1. [1]

   Before the Court are proceedings commenced in the District Court by a Statement of Claim filed on 19 October 2022 by the Plaintiff against the First and Second Defendants. The District Court continued to case manage the proceedings until 4 June 2024, when they were transferred to the Equity Division of this Court.

2. [2]

   The first directions hearing after that transfer occurred on 21 June 2024. The Plaintiff filed a List Statement and Amended Scott Schedule on 19 July 2024 and the Defendants filed List Responses on 4 September. There were throughout this period frequent directions hearings until 7 November 2025, when Peden J set the matter down for hearing with an estimate of between three and four days commencing on 17 February 2026.

3. [3]

   In setting the matter down for hearing, Peden J made the usual order for hearing contained in Annexure 3 of Practice Note SC Eq 3, ordering expert conclaves to occur on 27 January 2026, 4 February 2026 and 9 February 2026. Those conclaves did not occur. While several expert reports were prepared for the Plaintiff prior to the ordered conclaves, only one, dated 13 December 2024, was prepared for the Defendants.

4. [4]

   Pursuant to Practice Note SC Eq 3, each party was also required, unless the Court otherwise ordered, to serve on the other party not less than 28 days before the date fixed for hearing a statement of evidence to be led from each witness that party intended to call. The Court has not “otherwise ordered” and there is no evidence in the court file of the Defendants serving affidavits or statements on the Plaintiff in accordance with the practice note. It is fair to say that the Defendants have failed entirely to comply with Annexure 3 of Practice Note SC Eq 3 and, by extension, Peden J’s orders.

5. [5]

   On 22 December 2025, Mr John-Paul Shehata, a solicitor who had been acting for the Defendants, filed Notices of Intention of Ceasing to Act in relation to each of the Defendants, and on 19 January 2026 filed Notices of Ceasing to Act in which he indicated that the Notices of Intention of Ceasing to Act had been served on the Defendants on 22 December 2025. There is no evidence that the Defendants have since then retained any other solicitors.

6. [6]

   The principles concerning the non-appearance at a hearing by one party was recently addressed by Griffiths AJ in Take Off Opportunities Pty Ltd atf The Clear Runway Trust v Susan Quinn Pty Ltd atf The Susan Amelia Quinn Trust [2025] NSWSC 231 (Take Off), where his Honour said at [14]–[18]:

7. [7]

   Not all of Barrett J’s observations in the passage set forth above by Griffiths AJ are applicable here. This case is not an ex parte application and so the Plaintiff is not required to bring to the Court’s attention “all relevant facts known to the applicant, including those unhelpful to the applicant’s case”.

8. [8]

   Applying the applicable principles to the present case, it is clear that I must be satisfied that the Defendant has been served with all relevant documents and afforded ample opportunity to be heard.

9. [9]

   The Notices of Ceasing to Act filed by Mr Shehata on 19 January 2026 included the last known email addresses of the Defendants. On the evening of 13 February 2026, two working days before the hearing was to commence, my Associate emailed the parties noting that the Defendants had not filed any material required by Annexure 3 of Practice Note SC Eq 3 as ordered by Peden J on 7 November 2025, and that I intended to hear the matter from 17 February 2026. The Defendants did not respond.

10. [10]

    As the Defendants did not appear on the morning of the hearing, I had my Tipstaff call the matter outside the Court, to no avail.

11. [11]

    As Mr Shehata did not file the Notices of Intention of Ceasing to Act until six weeks after the matter was set down for hearing and in circumstances where my staff had notified the parties that I intended to hear matter and the matter had been called outside, I was satisfied that the Defendants had been served with all relevant documents and provided ample opportunity to attend and be heard.

12. [12]

    I therefore decided to proceed with the trial in accordance with r 29.7(2)(a) of the Uniform Civil Procedure Rules 2005 (NSW), and by application of the principles for undefended hearings set out by Griffiths AJ above. As is clear from that passage, the Plaintiff must, despite the absence of the Defendants, prove its claim.

Salient facts

1. [13]

   The Plaintiff is the owners corporation of a residential building located at Dee Why which was built by the First Defendant, G & T Younan Constructions Pty Ltd (the Builder), pursuant to a contract dated 14 January 2015 (the Building Contract) with the Second Defendant, Gold Star Holding Pty Ltd (the Developer). The Plaintiff submits the Second Defendant was a developer within the meaning of s 3A of the Home Building Act 1989 (NSW) (the HBA) and the Second Defendant at paragraph 15 of its List Response admits as much.

2. [14]

   The Developer was the registered proprietor of the property the subject of these proceedings up until 2 December 2016, on which date Strata Plan No 94624 was registered and the Plaintiff owners corporation was established, becoming the immediate successor in title to the Developer.

3. [15]

   These proceedings concern common property that vested in the Plaintiff upon registration of the strata plan pursuant to s 24(2)(a) of the Strata Schemes Development Act 2015 (NSW). The Plaintiff has a duty under s 106(1) of the Strata Schemes Management Act 2015 (NSW) (SSMA) to maintain and keep that common property in a state of good and serviceable repair.

The claims

1. [16]

   The case is pleaded both in contract under the HBA and in tort under the Design and Building Practitioners Act 2020 (NSW) (the DBPA).

2. [17]

   The contract claim is for breach of statutory warranties implied by the HBA and is pursued against both Defendants. The Plaintiff contends that the Builder’s work under the Building Contract breached the statutory warranties implied by s 18B of the HBA, which reads as follows:

3. [18]

   The Plaintiff, being a successor in title to a person entitled to the benefit of a statutory warranty against the Builder, is entitled to those same benefits against the Builder due to s 18D(1) of the HBA, which reads:

4. [19]

   Despite arising from the Builder’s work, the Plaintiff’s claim under the HBA extends to the Developer by virtue of s 18C of the HBA, which reads:

5. [20]

   This means that, subject to the Court being satisfied that there is defective work that contravenes the statutory warranties in s 18B, the Defendants are both exposed to liability under the HBA.

6. [21]

   An alternative claim under the DBPA is pursued against the Builder only. During the hearing, Mr Issac, Counsel for the Plaintiff, confirmed that the claim under the DBPA was only pursued as an alternative, such that it will become supererogatory if the claims under the HBA are upheld. I will therefore proceed to determine this matter on the basis that if the Plaintiff succeeds in establishing that the Builder breached the statutory warranties, it will not be necessary to determine the claim under the DBPA.

Evidence

1. [22]

   Among the evidence filed by the Plaintiff is an affidavit sworn by Bernice van der Struik on 23 May 2023. Attached to that Affidavit is a number of documents including the strata plan, development consents, construction certificates, occupation certificate, title and dealing searches, and ASIC company extracts. The Plaintiff also filed several expert reports.

2. [23]

   In response, the Defendants filed a single report by Mr George Dahrie dated 13 December 2024. Mr Dahrie is a construction and engineering consultant whose report is an expert report in response to the alleged defects outlined in the expert reports below.

3. [24]

   As the Defendants have not appeared, that report has not been read, nor has it been the subject of a conclave between Mr Dahrie and the three experts to whom he has apparently responded. The Plaintiff has thus not read its expert evidence in reply and to establish the alleged breaches relies only on the following expert reports:

   1. (1)

      a common property building defects report by Mr Charlie Thomas, dated 22 December 2023;

   2. (2)

      a hydraulics report by Mr David Woods, dated 19 October 2023;

   3. (3)

      a structural engineering report by Mr John Riad, dated 16 November 2023;

   4. (4)

      a structural engineering report by Mr John Riad, dated 20 November 2023;

   5. (5)

      a structural engineering report by Mr John Riad, dated 3 December 2023;

   6. (6)

      a quantum report by Mr Josh Heymann, dated 6 December 2023;

   7. (7)

      a grand summary by Mr Josh Heymann, dated 25 September 2025; and

   8. (8)

      a balustrade structural adequacy report by Mr Mark Thomas, dated 8 November 2023.

4. [25]

   I have considered those reports in the context of comprehensive written submissions filed by Mr Isaac of Counsel, which allowed the Court comfortably to proceed to hear this matter on the evidence in the absence of the Defendants in accordance with the principles set out by Griffiths AJ in Take Off.

The defects

1. [26]

   The Amended Scott Schedule contains 18 items which fall into three categories. I will consider each of these categories in turn and truncate certain of the items to avoid anfractuosity.

2. [27]

   The Plaintiff submits that the parties’ experts agree on several of these items. While that may be the case, in circumstances where the Defendants’ evidence has not been read, it is sufficient to note that the Plaintiff’s experts identify these defects and there is no contradicting evidence.

3. [28]

   Mr Charlie Thomas, a general building consultant engaged by the Plaintiff, observed water penetration occurring through the CSR Hebel PowerPanel wall system at the floor level of a bedroom in Unit 3 along the length of the eastern external wall. This penetration has caused mould and moisture staining on the carpet gripper strip and the underside of the carpet adjacent to the eastern external wall, with high moisture level readings of 22.9% on the floor in the affected area and 20% in the affected part of the gripper strip.

4. [29]

   When inspecting the external portion of the eastern wall, Mr C Thomas observed cracked and delaminated render on the wall system as well as a horizontal crack 200mm below a weephole. He carried out water testing to determine the source of the water ingress and observed water penetrating to the base of the eastern wall of the bedroom of Unit 3 through the cracked area.

5. [30]

   Penetrative testing was conducted by the creation of a hole in the eastern façade adjoining Unit 3. That testing revealed a number of problems.

6. [31]

   In summary, these problems involved water that penetrated into the base of the eastern façade wall being prevented from draining because weepholes placed above the slab edge had been rendered over. The absence of a concrete hob or set-down to the concrete slab increased the likelihood of water penetrating the eastern façade to the interior of the building. The incorrect application of a waterproof membrane in the cavity allowed water to be drawn into the building and there were various other cavity-related issues observed in Mr C Thomas’ report.

7. [32]

   Mr C Thomas in his report provided a scope of works for remediation that included removing the Hebel wall panels, installing a strip of fibre cement sheeting and other additional works to prevent further water ingress. After that it would be necessary to make good the water damage.

8. [33]

   Mr C Thomas observed water penetration affecting the northern external wall of the study of Unit 18. There were similar cavity problems to those that caused the high moisture readings in Unit 3, though the moisture readings on the carpet gripper strip in Unit 18 were 89–99%.

9. [34]

   Mr C Thomas’ recommended scope of works for remediation of this problem included installing a drainage conduit among other work to make good the damage.

10. [35]

    This was another water ingress defect identified by Mr C Thomas with similar issues to those experienced in items 1 and 2. As with those defects, Mr C Thomas has recommended a scope for the remediation of the defect.

11. [36]

    These items, which concern the eastern and northern façades respectively, have similar water ingress problems and are reflective of a failure of the Defendants’ work to be done with due care and skill and in accordance and compliance with any other laws. Mr C Thomas recommends remediation of the ingress problems that blight these units, including making good the damage caused by such problems.

12. [37]

    This defect concerns the concrete awning which Mr C Thomas observed to contain efflorescence stalactites on the eastern side of the awning, and mineral leaching from the soffit of the tiled concrete awning above the main foyer, among other related defects. In Mr C Thomas’ opinion, the membrane was re-emulsified due to its exposure to saturated screed over an extended period of time. The screed had become saturated due to inadequate termination of the waterproof membrane, into the conduit drain which allowed water to track behind the membrane as well as the absence of sealant fillets or bond breakers at the junction of the adjoining walls. According to Mr C Thomas, these problems were caused by a failure to undertake the work with due care and skill or in compliance with any other law.

13. [38]

    This item related to the tiled roof slab. Mr C Thomas undertook invasive investigation by removing a ceramic tile and its screed to visually inspect the waterproofing membrane. Having undertaken this, he observed that here, like in item 6, the sand and cement screed beneath the tiles was saturated. There were other issues with the sealant ultimately caused by a failure to undertake the work with due care and skill or in accordance or compliance with any other law.

14. [39]

    This is another problem that has been revealed by invasive testing which disclosed problems that prevent water draining out of the cavity. Various issues here include an absence of weepholes, weepholes installed in the wrong location, the absence of waterproofing membrane in the cavity façade and no concrete hob or set-down in the concrete slab.

15. [40]

    This is a similar problem to that identified in item 8.

16. [41]

    The building has a flat concrete roof which Mr C Thomas observed to be delaminating, cracking and blistering. Attempts to patch such cracking have been unsuccessful. There are inadequate falls, inadequate upward terminations of the membrane at perimeter hobs, corrosion of steel reinforcements, depressions in the slab and other matters, all of which established a failure for the work to be undertaken with due care and skill or in accordance or compliance with any other law.

17. [42]

    Mr David Wood, a hydraulic engineering expert for the Plaintiff, observed seepage water entering the fire escape and onto the stair floors and tunnel floors. This breaches clause FP 1.4 of the Building Code of Australia, which requires that external walls must prevent the penetration of water that could cause dangerous or unhealthy conditions. The water ingress causes a slip hazard in a fire escape tunnel and on stairs within that tunnel. In the absence of any drainage, the seepage water is overflowing the slot and ponding on the floor and stairs, which is a particular danger in creating a slip hazard. This is considered to be a failure for the work to be undertaken with due care and skill or in accordance or compliance with any other law.

18. [43]

    These are similar water seepage problems relating to the fire escape tunnels.

19. [44]

    These items relate to the balcony glass, balustrades and posts throughout the building. Amongst other problems, the posts are insufficiently strong and so are exhibiting signs of fatigue. They are unable to provide strength and rigidity because, according to Mr Mark Thomas, a structural adequacy testing expert, the posts are undersized. They are 40mm x 40mm x 2.5mm but should have been 50mm x 50mm x 2.5mm. Mr M Thomas infers that the defects he observed in the balustrades at Unit 7 are endemic.

20. [45]

    In addition to this, Mr M Thomas opines that the thickness of the glass is undersized for its corresponding span. A structural engineering expert, Mr John Riad, has applied lateral force by hand to the span of the balustrade and in his report describes severe deflections in excess of 30mm, which is non-compliant with AS1288.2006.

Disposition

1. [46]

   On the basis of the uncontested expert evidence, I am satisfied on the balance of probabilities that the Defendants are each liable for the costs of rectification of the defects that will have to be undertaken by the Plaintiff in compliance with its strict obligations to maintain and repair the common property under s 106 of the SSMA.

2. [47]

   The overall cost of rectification has been quantified by the Plaintiff’s quantity surveying expert, Mr Josh Heymann, whose calculation of the total cost of rectification is in the amount of $1,719,383.54.

3. [48]

   While the Court is not obliged to accept the uncontested evidence of experts, having considered the reports together with the comprehensive submissions of the Plaintiff’s Counsel, I see no reason to question the observations and opinions of those experts. I am satisfied that each of the persons who have prepared reports are subject matter experts in their field and have sought to comply with the Expert Code of Conduct. Accordingly, I am satisfied that the Plaintiff has established liability and corresponding damages in the aforesaid sum.

Orders

1. [49]

   I make the following orders:

   1. (1)

      The First and Second Defendants pay the Plaintiff damages in the amount of $1,718,393.54.

   2. (2)

      The First and Second Defendants pay the Plaintiff interest pursuant to s 100 of the Civil Procedure Act 2005 (NSW) in the amount of $945,205.43, calculated from 2 December 2016 to 17 February 2026.

   3. (3)

      The First and Second Defendants pay the Plaintiff’s costs of the proceedings.