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In the recent Supreme Court case OC SP 61288 versus Brookfield Multiplex (10.10.12) his Honour McDougall J ruled that BM had no duty of care to SP 61288 for a range of building defects.
I am of the view that his Honour’s judgment rests on a fundamental error in interpretation, namely that “rectifying a defect” is synonymous with “repairing damage”. Neither the legislature nor the Macquarie Dictionary see it this way.
The Macquarie Dictionary defines repair as “to restore to a good or sound condition after decay or damage”. It defines defect as “falling short; a fault or imperfection”.
Entirely in line with this, the Strata Schemes Management Act talks about “repair” in relation to “damage”, and “rectify” in relation to “defect”. This construction is acknowledged by the Act in several ways and has different implications in each case.
First, the word “repair” is never used conjointly with the word “defect” (e.g. paragraphs 54, 61, 62, 75 and 82 in the Act).
Second, the Act, as per Part 4, Division 3, Section 82, para (3), requires an OC to have a damage policy and specifically states: “A damage policy is to provide for the repair of damage to, or the restoration of the damaged portion of, the building in the event of its being damaged but not destroyed, so that the repaired or restored portion, is in a condition no worse or no less extensive than that portion or its condition when that portion was new.” There is no reference in Section 82 to defects or a defects policy!
Third, in the Act, the relevant verb for remedying a defect is “rectify” (e.g. para 64).
Fourth, when repairs become necessary, the OC is under an obligation to repair.
Fifth, in relation to defects, an OC has discretionary powers whether to rectify or not (e.g. paras 64 & 228).
In short, the Act differentiates between damage and defects in terms of what they are and how they are remedied (damage is repaired and defects are rectified), and an OC has an obligation to repair, but there is nothing in the Act that obliges an OC to make good a defect. This is not surprising since it was surely not the intention of the legislature to make owners liable for the shonky work of builders/developers.
For example, the steel lintels in the contested building that were not hot-dip galvanized (contrary to specifications) constitute a defect and not damage or decay. The onus to rectify therefore rests with the builder/developer and not the OC.
Putting it charitably one could say that his Honour is guilty of an act of omission – he didn’t read the Act.
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