Author: baron + associates

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.

In Built Environs WA Pty Ltd v Perth Airport Pty Ltd, the Supreme Court of Western Australia considered the degree of detail required when pleading large construction delay and disruption claims.

In this case, the contractor alleged that defects in design drawings and specifications caused significant inefficiencies across the project and sought to recover more than $13 million in preliminaries and related costs. The impacts said to arise included extensive rework, numerous technical queries, design changes, variations, delay notices and extensions of time. However, the damages case was pleaded as a single global figure. The pleading did not explain how particular alleged defects were said to generate specific categories of additional cost, or how the overall amount was derived from the events relied upon. This created a clear gap between the alleged causes and the loss claimed.

Justice Martin identified this deficiency as central. The pleading failed to provide a coherent explanation linking individual alleged drawing issues to specific cost consequences, instead relying on a general description of project inefficiency without properly articulating causation. The supporting schedule also did not explain how the global figure had been calculated.

Moreover, the necessary evidentiary requirements were not addressed, including the need to identify and exclude other potential causes of delay and increased cost. When the issue was raised, the contractor did not articulate a clear position. As a result, the relevant damages allegations were struck out, and the defendant was relieved of discovery obligations in relation to those claims. While the decision did not determine liability, it prevented that part of the case from continuing in its existing form.

The decision reinforces that claims of this kind must be supported by a clear causal framework. General allegations of widespread inefficiency, without properly linking specific defects to resulting cost impacts, will be insufficient.

The New South Wales Court of Appeal has recently considered when a registered right of way may be extinguished on the basis that it has been abandoned or has become obsolete. In Sheppard v Smith [2022] NSWCA 167, neighbouring landowners sought orders under section 89 of the Conveyancing Act 1919 (NSW) to remove a right of way dating back to 1885 that had not been used for many years and was affected by various physical obstructions.

Section 89 gives the Court a broad discretion to modify or extinguish easements where appropriate. The applicants contended that the easement should be removed because it had been abandoned, had become obsolete and no longer provided any practical benefit.

The Court rejected those arguments and declined to extinguish the easement. In doing so, it confirmed that abandonment requires more than a lengthy period of non-use. While non-use is a relevant consideration, the critical question is whether the owner benefiting from the easement has demonstrated a clear intention to permanently relinquish the right. The Court emphasised that abandonment is not lightly inferred.

A significant factor was that the owners of the benefited land had taken active steps to ensure the easement was recorded on their certificate of title. The Court regarded this as a public affirmation of their intention to preserve the right of way. Although fences, garden beds and other structures had interfered with access over time, those features were not considered sufficiently permanent or persuasive to establish abandonment, particularly when viewed against the continued recognition of the easement on title.

The decision highlights that prolonged non-use alone will rarely justify the extinguishment of an easement. Before exercising its powers under section 89 of the Act, the Court will consider the surrounding circumstances, including the conduct of the parties, the continuing utility of the easement and whether its removal would cause substantial prejudice to the party entitled to its benefit.

The Supreme Court of New South Wales has recently considered when long-term use of a private access road will be sufficient to establish an easement by prescription, and in particular whether that use occurred with the consent of the landowner.

In Maloney v Putu Pty Ltd [2023] NSWSC 1148, the plaintiff sought recognition of a prescriptive easement over an access road that provided the only practical vehicular access to his property, Portland Head Farm at Ebenezer. The road had been used continuously since at least 1963 by the plaintiff, his family members, employees, contractors, suppliers, emergency services and other visitors.

A prescriptive easement may arise where a right has been exercised openly, continuously and ‘as of right’ for at least 20 years. A claim will fail if the use occurred by force, in secret, or with the permission of the owner of the burdened land, as use by permission is treated as a licence and not the exercise of a legal right.

The defendant relied on conversations dating back to 1978 and 1979 in which the then owner of the land allegedly gave permission for the plaintiff’s father to continue using the road. However, the Court found that the evidence was more consistent with neighbourly cooperation and tolerance than the grant of a revocable licence. The Court emphasised that the distinction between consent and mere acquiescence is critical. A landowner’s decision not to object to a particular use, particularly as a matter of neighbourly accommodation, does not necessarily prevent a prescriptive right from arising.

Several factors supported the conclusion that the road had been used ‘as of right’. The plaintiff consistently asserted an entitlement to use the road, the roadway was maintained at the plaintiff’s expense, and the route was used by a wide range of people without restriction. The Court also noted that successive owners were aware of the ongoing use but made no meaningful attempt to limit or control it.

The Court ultimately held that a prescriptive easement had been established over the road, confirming that long-standing, open and uninterrupted use may mature into a legally enforceable right where the evidence demonstrates that the right was exercised as of right rather than by permission.

The NSW Civil and Administrative Tribunal has held a builder and developer jointly and severally liable for a number of proven defects in a residential building’s mechanical ventilation and air-conditioning systems. The decision also provides guidance on the evidentiary standard required before the Tribunal will make orders requiring defective work to be rectified.

The dispute involved claims by The Owners of Strata Plan 102171 against Ceerose Pty Ltd as builder and Zone Q Milsons Point Development Pty Ltd as developer in relation to mechanical works undertaken between May 2019 and November 2020. An interim occupation certificate was issued on 6 November 2020. The proceedings were commenced within the two-year limitation period under s 18E of the Home Building Act 1989 (NSW), so the Owners were not required to establish that the defects were ‘major defects’ to pursue their claims.

The Tribunal accepted that several defects were established, including issues with duct installation, air filtration, condensate drainage, fan coil unit access, and corrosion affecting rooftop equipment. However, it declined to make rectification orders in respect of some alleged defects where the evidence was insufficient, no breach was proven, or the proposed remedial works were not supported by compliant design documentation. It confirmed that where the Building Design and Practitioner Act 2021 (NSW) applies, compliant design documentation must be provided before rectification orders will be made, otherwise the scope of work is too uncertain. The Tribunal also refused to order rectification where the proposed works were disproportionate or unlikely to deliver meaningful benefit, even where minor non-compliances were identified.

The builder’s cross-claim against a subcontractor was dismissed as it was filed out of time and failed to establish defects meeting the ‘major defect’ threshold. The developer’s indemnity claim against the builder also failed due to ambiguity in the contractual wording and the operation of the statutory warranty regime.

The Tribunal ultimately ordered the builder and developer to rectify the proven defects by March 2026, reinforcing that rectification orders will only be made where claims are clearly supported by sufficient evidence and properly defined scopes.

In The Owners – Strata Plan No 31337 v Balacco [2026] NSWCA 50, the New South Wales Court of Appeal examined the operation of the ‘obvious risk’ defence under s 5F of the Civil Liability Act 2002 (NSW) in relation to a routine trip-and-fall incident occurring in a residential carpark.

The proceedings arose after a resident sustained injury when she tripped on a speed hump within an internal carpark area managed by the owners corporation. The speed hump was not painted in a contrasting colour, unlike a number of other marked features in the same carpark. The District Court found the owners corporation liable in negligence, accepting that a combination of lighting conditions and the lack of visual contrast rendered the hazard difficult to identify. 

On appeal, the owners corporation challenged liability findings, reliance on the ‘obvious risk’ provisions, causation, contributory negligence, and aspects of the damages assessment. The Court of Appeal accepted there had been an error in the primary judge’s conclusion that lighting was inadequate at the relevant time. However, that finding was not decisive. The central issue remained whether the speed hump constituted an obvious risk assessed objectively in accordance with s 5F. The Court emphasised that the statutory test does not turn on a claimant’s subjective awareness but instead requires consideration of how a reasonable person in the same environment would perceive the hazard. It noted that where certain risks in a shared space are visually highlighted, unmarked features may become less readily apparent.

Ultimately, the Court upheld the finding that the unpainted speed hump did not amount to an obvious risk. It also affirmed that reasonable precautions in the circumstances included simple visual demarcation measures, and that the absence of prior incidents did not preclude a finding of breach. Causation was established on the basis that clearer marking would likely have reduced the risk of injury. While liability was largely upheld, the Court reduced the damages awarded on appeal.

The New South Wales Court of Appeal has recently provided important guidance on contamination disclosure obligations in property transactions, confirming that buyers cannot assume sellers are required to volunteer all information that may be relevant to a purchaser’s investigations.

The decision in 191 Bells Pty Ltd v WJ & HL Crittle Pty Ltd [2024] NSWCA 221 considered a question that regularly arises in property transactions: can a seller’s failure to disclose known contamination amount to misleading or deceptive conduct under the Australian Consumer Law (ACL)?

The dispute arose from a proposed acquisition of land at Meroo Meadow, NSW. Before the transaction proceeded, the purchaser was given an opportunity to undertake due diligence enquiries and investigations in relation to the property. The parties’ arrangements required the seller to provide access to information, facilitate inspections and assist the purchaser with its due diligence efforts ‘as far as possible’.

During the course of the proposed acquisition, environmental assessments revealed significant contamination on the property, including buried waste and asbestos-containing materials. The purchaser argued that the seller was aware of at least some of these issues and that its obligation to assist ‘as far as possible’ required it to disclose that information. On that basis, the purchaser alleged that the seller’s conduct was misleading or deceptive.

The Court rejected those arguments. It held that an obligation to support or facilitate a purchaser’s due diligence process is not equivalent to a contractual duty to identify and disclose every matter that may be relevant to the purchaser’s investigations. The Court found that the seller’s obligation was one of cooperation, not proactive disclosure.

The decision is a timely reminder that disclosure obligations are determined by the terms of the parties’ agreement. If purchasers expect to receive information about contamination, environmental risks or other adverse property conditions, those expectations should be reflected in express disclosure provisions, warranties or representations. The case also reinforces the importance of thorough due diligence. Purchasers should ensure that appropriate enquiries are made, expert advice is obtained where necessary and contractual protections are negotiated before committing to a transaction. In the absence of clear contractual language, courts may be reluctant to impose disclosure obligations that the parties themselves did not include.

The Supreme Court of New South Wales has reinforced that landowners who unreasonably oppose access arrangements may lose the costs protection ordinarily available in easement proceedings under s 88K of the Conveyancing Act 1919 (NSW).

In Jeffrey v Adams [2023] NSWSC 1270, the Court was asked to determine whether a right of carriageway should be created over neighbouring land to secure ongoing access to the applicants’ property. The application arose after existing access arrangements became impractical due to physical impediments and the applicants sought to formalise a route that had long been used as a workable alternative.

When considering whether an easement should be imposed, the Court examined the practical requirements of the land, the history of access between the parties and the suitability of competing routes. It concluded that the proposed easement represented the most effective means of access and was reasonably necessary for the continued use of the property. Alternative routes advanced by the opposing landowners were not accepted because of concerns regarding their safety, gradient and practicality.

A significant aspect of the judgment concerned costs. Section 88K generally contemplates that an applicant seeking a compulsory easement will bear the legal costs associated with obtaining that benefit. However, the Court emphasised that this protection is not absolute.

The evidence demonstrated that the respondents had adopted positions which went beyond merely requiring the applicants to establish their case. Their opposition lacked a sufficient legal basis and unnecessarily prolonged the dispute. In those circumstances, the Court considered it appropriate to depart from the usual rule and ordered the respondents to pay the applicants’ costs.

The decision serves as an important reminder that parties resisting easement applications should ensure their objections are grounded in legitimate legal or factual concerns. While the legislation affords affected landowners significant protection, unreasonable conduct may ultimately result in an adverse costs order.

In STM123 No. 16 Pty Ltd v Wang [2025] NSWSC 444, the Supreme Court of New South Wales considered the consequences of a purchaser defaulting under a contract for the acquisition of a high-end residential apartment. The decision demonstrates that a buyer’s failure to complete a property transaction can expose them to substantial financial liability, particularly where market conditions deteriorate before the property is resold.

The dispute concerned the sale of a luxury off-the-plan apartment in Point Piper. Under the contract, the purchaser was required to pay a deposit in instalments and complete the transaction by an agreed settlement date. The purchaser was in default after failing to satisfy the outstanding deposit obligation and subsequent contractual requirements. The purchaser was placed in default and the vendor ultimately terminated the contract.

Following termination, the vendor undertook extensive efforts to secure another purchaser. The property was actively marketed over an extended period, including inspections, private viewings and ongoing price adjustments designed to reflect changing market conditions. Despite these efforts, the property eventually sold more than a year later for $3.68 million less than the original contract price.

The Court was required to determine the extent of the vendor’s recoverable loss. A significant issue was whether damages should be assessed by reference to the property’s value at the time the contract was terminated or by reference to the eventual resale outcome. While the usual position is that damages are assessed at the date of breach, the Court found that approach would not adequately reflect the circumstances of the prestige residential market, where sales opportunities can be limited and market movements may materially affect value. In assessing damages, the Court accepted that the later resale provided the most reliable measure of the vendor’s actual loss. The vendor was awarded damages reflecting the significant shortfall on resale, together with additional losses arising from the failed transaction, including additional marketing expenses and interest.

The decision serves as a reminder that defaulting purchasers may remain exposed to significant claims long after a contract has been terminated. It also highlights the willingness of courts to adopt a practical approach when assessing loss in specialised property markets where an immediate resale cannot reasonably be achieved.

In Russo v Russo (No 2) (2026) NSWSC 311, the NSW Supreme Court clarified the process for resolving disputes between co-owners following a court-ordered sale of property under s 66G of the Conveyancing Act 1919 (NSW). The case followed earlier orders requiring the sale of two jointly owned properties in Revesby, NSW, with the remaining issues concerning accounting between the parties and costs arising from the main proceedings and the defendant’s cross-claim, which had already been dismissed.

The Court confirmed the appointment of a real estate agent and a chartered accountant as trustees for sale, responsible for all steps necessary to effect the sale, including marketing, inspections, and completing the transactions.

A key issue was how to determine competing claims for expenditure on the properties, including improvements and contributions to joint liabilities such as rates, mortgage payments, and land tax. The parties proposed different mechanisms, including delegation to the trustees or referral to a Registrar.

Justice Richmond rejected both approaches and ordered a Court-supervised taking of accounts. Each party was required to serve detailed, verified accounts of their claimed expenditure supported by available records, with the Court overseeing the process and resolving any disputes. The Court also confirmed that oral evidence may be given where documentary support is incomplete, with cross-examination available if required. In relation to costs, the Court ordered that both parties’ costs of the s 66G application be paid from the net proceeds of sale. It rejected proposed apportionment based on the relative significance of issues, noting there was no overlap between the main proceedings and the cross-claim.

The decision provides guidance in co-ownership disputes, confirming that where parties dispute financial contributions to real property, the Court will generally supervise the accounting process to resolve competing claims.