The Owners – Strata Plan No 80453 v Walsh

These proceedings were commenced on 11 April 2011 in the Consumer, Trader and Tenancy Tribunal and transferred to this Court on 14 November 2011.

The plaintiff is an owners corporation of a strata apartment building in Sans Souci.

The second defendant (now the only active defendant), Milano Investments Pty Ltd, was the builder and developer.

Milano has sold all but 1 of the 24 apartments in the development.

The plaintiff claims that there are some 273 defects in the building and claims damages from Milano in respect of those alleged defects.

On 13 February 2015 the matter was provisionally fixed for hearing for three weeks commencing on 19 October 2015. That date was confirmed on 27 February 2015.

All the evidence has now been served and joint expert reports have been ordered to be prepared in accordance with the usual order for hearing.

By notice of motion filed on 22 May 2015, Milano seeks an order pursuant to Uniform Civil Procedure Rules r 28.2 that the following question be determined separately from any other question and before the trial:

The basis for that application is the decision of the High Court of Australia in Brookfield Multiplex Ltd v Owners – Strata Plan No 61288 [2014] HCA 36.

Milano contends that the effect of that decision is that as the plaintiff, as an owners corporation, paid nothing to acquire the common property in which the defects are said to exist, it cannot show it has suffered any damage by reason of those defects.

Milano contends that it follows that the separate question will be resolved in its favour and that that will be an end to the proceedings.

Mr Weinberger, who appeared today for Milano, submitted that the separate question could be decided assuming the correctness of all the allegations made by the plaintiff in its further amended list statement.

It is true that there are recent judicial statements to the effect that the Court is, in the modern age, more inclined to order early determination of separate questions than was the case prior to the enactment of the Civil Procedure Act 2005 (NSW) (see for example The Owners Corporation of Strata Plan 61390 v Multiplex Corporate Agency Pty Ltd [2012] NSWSC 322 per Pembroke J at [3] to [4] and Solarus Projects v Vero Insurance (No 5) [2013] NSWSC 1966 per Campbell J at [22]). However, I am not in this case prepared to so order for a number of reasons.

First, the High Court decision in Brookfield was handed down on 8 October 2014, some nine months ago. In the meantime, these proceedings have progressed and been made ready for hearing; indeed, set down for hearing. The alleged implications of the High Court's decision were first pleaded in Milano's further amended technology and construction list response filed on 28 April 2015, more than two months after the matter was fixed for hearing.

Second, it is by no means clear to me that the High Court decision would necessarily resolve all the issues in this case. In that regard, Mr Hicks, who appeared for the plaintiff, submitted that:

Further, Mr Hicks submitted that the plaintiff brings these proceedings not only in its own right, as owner of the common property, but also as representative of the lot owners (including Milano itself).

Mr Hicks accepted that this appeared only "obliquely" from the plaintiff's further amended list statement, which speaks simply of the damage suffered by "the plaintiff" (for example see pars 32 and 33).

However, Milano, in its further amended technology and construction list response, appears clearly to appreciate that the plaintiff brings these proceedings in both capacities and thus includes, amongst the "Issues Likely to Arise":

It also makes a detailed response to the plaintiff's claim brought as representative of the lot owners: see pars 39 and following, including par 44, which is in the following terms:

Those issues would not be determined by any answer to the separate question because, as Mr Hicks submits, the terms of the separate question do not address the question of the capacity in which the plaintiff brings these proceedings.

Third, the implications of Milano’s position are profound. If Milano is correct, it would mean that an owners corporation could not ever take action in respect of defects to common property. That suggests to me that, were there to be a separate determination of the question, an appeal is likely, if not inevitable.

What would happen then? Is the hearing date to be preserved in case the question is resolved adversely to Milano? Would it be vacated pending any appeal? Should it be vacated now? Milano offers no satisfactory proposal to deal with these questions. I doubt that one could be formulated.

The hearing date is only three months away and it is my opinion that it is too late to order a determination of a separate question in this case. The legal questions that Milano wishes to agitate would most appropriately be dealt with at the hearing.

I made the following orders: