The NSW Court of Appeal recently concluded that a claim arising from a breach of section 18B of the Home Building Act 1989 (NSW) (HBA) does not invoke different causes of action for each individual defect.

This decision is significant because it means that a party who seeks relief under section 18B may (in certain circumstances) amend its claim to allege new defects, even after the limitation period has passed, provided the original claim was brought in time.

The facts

Parkview concerned proceedings brought by the Owners Corporation of a residential apartment building against the builder alleging that certain defects were caused by the builder’s breach of “one or more” of the six statutory warranties in section 18B of the HBA.

The Owners Corporation subsequently sought leave to amend its statement of claim to withdraw each of the 85 defects it had initially alleged (all of which were rectified or resolved), and then allege three completely new ones.

Decision at first instance

The primary judge, Justice Stevenson, considered Justice Giles’ decision in Onerati v Phillips Constructions (1989) 16 NSWLR 730, at 746:

“There is but one cause of action for breach of contract founded upon breach of a promise such as to carry out the work in a good and workmanlike manner. There is not a number of causes of action according to particular defects or classes of defect resulting from the breach”.

Justice Stevenson granted the Owners Corporation leave to amend. His Honour held that the principle in Onerati applied to claims by successors in title[1] such that there was “but one cause of action” in respect of each statutory warranty. Specifically, there was a single cause of action to enforce the promises made in each of the six statutory warranties.

The builder and developer appealed the primary judge’s decision arguing that the proposed amendment raised “new” causes of action, not aspects of the same causes of action, and were therefore brought out of time.

Decision by NSW Court of Appeal

The Court of Appeal upheld Justice Stevenson’s decision, with Justice Leeming delivering judgment and Ward P and Simpson AJA both agreeing. The Court of Appeal found that it was not necessary to have regard to the principle in Onerati, but instead found that the wording of the HBA itself supported there only being a single cause of action.

A word of caution

Major defects have a longer limitations period than minor defects under the HBA. Justice Leeming cautioned against a situation in which a successor in title brought a claim for “major defects” in time, but after the expiration period for minor defects, then sought to later amend the pleadings to include additional defects that were not major. If that were attempted, it may be that the plaintiff would have two causes of action – one with respect to the major defects and one with respect to the minor defects.