Written by A recent decision of the NSW Supreme Court in Peninsula Point Frederick Pty Ltd v Secretary, Department of Customer Service [2026] NSWSC 476 has provided important guidance on how decisions are made and reviewed under the NSW strata building bond regime, particularly where developers challenge the amount proposed to be released to owners corporations.
The case involved a decision to release the full value of a building bond to an owners corporation following a quantity surveyor’s assessment that the cost of rectifying building defects exceeded the bond amount. The developer disputed that outcome, relying on its own expert evidence which suggested the rectification costs were significantly lower and raised concerns about the reasoning, duplication of items, and unsupported allowances in the report. An internal review upheld the original decision. The developer then sought judicial review in the NSW Supreme Court.
The Supreme Court found that the internal reviewer made a legal error by failing to properly engage with the developer’s detailed criticisms of the quantity surveyor’s assessment. In particular, the Court held that ignoring substantive issues such as alleged duplication of costs and gaps in reasoning amounted to a denial of procedural fairness.
However, the Court also made clear that the building bond system is designed to be relatively fast and administrative in nature. It is not intended to become a full-scale dispute resolution process where competing expert evidence is tested in detail or finally determined. Instead, decision-makers are entitled to rely on available reports to form a practical and protective estimate of likely rectification costs, with any deeper disputes about defects and liability to be resolved elsewhere. As a result, the decision was set aside and sent back for reconsideration.
For owners corporations, the case highlights both the strengths and limitations of the regime. While the bond is intended to provide a practical funding mechanism for defect rectification, decisions about release of funds can still be challenged and delayed. Simultaneously, developers must ensure that their objections are properly considered if they are to succeed on review.
The key takeaway from this case is that decision-makers must actively respond to meaningful technical criticisms of expert reports, even within a system designed to operate quickly and without the formality of a full court-style hearing.