In the recent case of The Owners – Strata Plan 81837 v Multiplex Hurstville Pty Ltd [2018] NSWSC 1488Baron + Associates successfully argued that a development manager and a trustee did not fall within the definition of an owner in relation to the warranties within the Home Building Act 1989 (HBA). In this case, the registered proprietor of a site had obtained development consent to redevelop the land into seven residential, commercial and retail towers. SLH and eleven other companies entered into a Development Management Agreement (DMA) with Multiplex, the development manager.

More than six years later, the Owners Corporation of one of the finished towers sued both Multiplex and SLH 22 (a trustee entity) for defects within the building. They argued they were owed statutory warranties under s18B and s18C in the HBA because both Multiplex and SLH 22 fell within the definition of an ‘owner’ or ‘developer’. Under the Act, an owner is defined as a person who is entitled to the land for an estate of freehold in possession, or is entitled to receive the rents and profits of the land, whether as beneficial owner, trustee, mortgagee in possession or otherwise.

While Multiplex had extensive rights over the property in its capacity as the development manager, including selecting a builder, exclusive access to the property, entitlement to a Management Fee, and a call option that entitled Multiplex to any parts of the property that had not been transferred to other purchasers, the court held it did not fall within the strict definition of an owner under the HBA.

The Court also found that SLH 22 did not fall within the definition of an owner under the HBA as there was not enough evidence on the facts that the registered proprietor was holding the land on trust, which would have created an equitable interest the property. SLH 22 did not enter into a deed of trust, any oral agreement or other document that would have created a trust, and the wording of the DMA was not sufficient to imply one.

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