Author: baron + associates

The case of Seymour Whyte Construction Pty Ltd v Liberty Mutual Insurance Company t/as Liberty Specialty Markets (No 2) NSWSC 281 involved an insurance policy issued by Liberty to Seymour Whyte Construction. The dispute concerned whether the policy covered costs incurred during a major construction project  involving the management and removal of asbestos-contaminated soil. Seymour sought indemnity for these costs, arguing they were a covered “loss” under its insurance policy because it was allegedly liable to a third party under common law principles such as nuisance or trespass.

The Court found that the policy only covered “clean-up costs” required under environmental laws, not costs arising from common law liability. As a result, most of Seymour’s claim failed. The Court only allowed a small claim for advice costs, however this was included in the amount Seymour had to pay itself under the policy, so no money was recovered.

Liberty then sought indemnity costs relying on two Calderbank offers. The Court confirmed that such an offer must involve a genuine compromise and that it is not enough for it to simply reflect what a party already accepts it may owe. The first offer was made before proceedings began and proposed payment of the main claim but excluded legal costs. The Court found this was not a real compromise, as it effectively accepted liability for the claim and did not give Seymour a meaningful reason to settle early. 

The second offer was made two years into the litigation and focused only on part of the dispute, while requiring Seymour to give up its ability to recover costs for that part of the case. The Court rejected this approach, noting it was inconsistent with the normal rule that costs follow the successful party and that breaking up the claim in this way would complicate costs recovery.

The Court also noted that Seymour’s refusal of both offers was not unreasonable. As a result, Liberty’s application for indemnity costs failed and standard costs principles applied.

Ultimately, this case confirms that indemnity costs will only be awarded where a Calderbank offer contains a genuine element of compromise, and where it was unreasonable for the offer to be rejected. Offers that merely reflect what a party is likely already liable for, or that split a dispute into artificial parts, will not override the usual rule that costs follow the event.

 In Sunshine East Pty Ltd v CBEM Holdings Pty Ltd [2023] NSWSC 744, the Supreme Court of NSW confirmed that a residential builder may still be entitled to payment under the Security of Payment Act 1999 (NSW) (‘SOP Act’) even without it possessing the required licence or homeowners warranty insurance.

In this case, Sunshine East Pty Ltd engaged ASY Construction Pty Ltd to oversee a residential development. The owner and construction manager then contracted CBEM Holdings Pty Ltd to complete civil and stormwater works under a standard trade agreement. The contractor entered the contract without holding the required builder’s licence under the Home Building Act 1989 (NSW) (‘HBA’). 

After carrying out the work, the contractor issued a payment claim under the SOP Act. The owner did not provide a payment schedule and did not make payment. The contractor commenced proceedings in the District Court to recover the amount claimed as a debt. The Court entered summary judgment for the contractor, finding the owner had no arguable defence, including on the licensing and insurance issues raised.

The owner appealed the decision to the Supreme Court of NSW. The appeal was dismissed, and the summary judgment in favour of the contractor was upheld. The Court found the contractor was still entitled to be paid under the SOP Act despite failing to meet licensing and insurance requirements, as this legislation confers a separate right to payment that is not removed by restrictions under the HBA.

Ultimately, this case reinforces that while the HBA may restrict contractual enforcement rights, it does not displace the operation of the SOP Act. However, issues arising from unlicensed work or lack of insurance may still be relevant to claims in separate proceedings.

In Rance v Dempsey (No 5) [2026] NSWSC 270, the Supreme Court of New South Wales ordered the sale of a co-owned East Gosford property under s 66G of the Conveyancing Act 1919 (NSW) (‘The Act‘), confirming the strong presumption in favour of a statutory sale in co-ownership disputes even where separate succession proceedings have been commenced.

The proceedings arose in relation to a property forming part of the estate of a deceased person who died intestate. The plaintiff, acting as administrator of the estate, applied for orders under s 66G of the Act seeking the appointment of trustees to sell the property. The application was made on the basis that the property was held in co-ownership and should be dealt with under the statutory process for selling co-owned property.

The defendant opposed the application, arguing that the Court should refuse to make the orders because of alleged equitable and statutory interests said to arise from separate succession proceedings. Those proceedings included claims that she was the spouse of the deceased and thus deserved potential entitlements under succession legislation. It was argued that these pending claims should prevent the sale of the property, or at least delay it.

However, the NSW Supreme Court ultimately held that the defendant’s asserted interests were uncertain and unestablished, and did not amount to a sufficient basis to prevent the property being sold under s 66G of the Act. As such, the Court decided that the property be transferred to the trustees, subject to any existing debts or charges, and that the defendant give up possession within seven days. The trustees were given full authority to prepare the property for sale, including advertising it, making repairs, hiring professionals, and recovering costs. 

The decision reinforces the strong presumption in favour of ordering sale in co-ownership disputes, and confirms that speculative succession claims will rarely prevent the statutory operation of s 66G of the Act.

In Larsen as trustee for the Larsen Superannuation Fund v Tastec Pty Ltd (formerly Wonders Building Company Pty Ltd) (No 2) (2025) NSWCA 210, the High Court confirmed a key principle for the construction industry: when builders make misleading or deceptive representations about aesthetic features, the cost of rectifying the work can be recovered, even if the property’s market value is unaffected.

In this case, Mr and Mrs Larsen contracted Tastec Pty Ltd (‘Tastec’) to supply and install a prefabricated home with a specific Maxline 340 cladding, chosen for its aesthetic appeal. The builder later encouraged them to accept a substitute product, claiming it was superior and visually comparable. In fact, no such product existed, and Tastec had merely modified a cheaper alternative to mimic the look. Relying on these representations, the Larsens agreed to the variation, only to discover the finished work did not meet their expectations.

The dispute began in 2019 when Tastec brought a claim in NCAT for unpaid contract amounts, prompting the Larsens to file a counter-claim in the District Court in 2021 for misleading and deceptive conduct. The trial judge initially ruled in Tastec’s favour. On the first appeal in 2023, the NSW Court of Appeal unanimously held that Tastec had breached the Australian Consumer Law by making misleading representations about the replacement cladding, but sent the question of loss back to the District Court for determination. On reconsideration, Judge Cole DCJ again denied damages, reasoning that the replacement cladding affected only aesthetics and did not diminish the property’s value. The Larsens then appealed a second time to the NSW Court of Appeal and were successful, with rectification costs awarded. Tastec later sought special leave to appeal to the High Court, which was refused on 5 February 2026, leaving the NSW Court of Appeal’s decision in place.

The case serves as a clear reminder for builders to exercise care when proposing variations or alternative products, as honesty is crucial even for minor or cosmetic changes. Where clients are misled into giving up contractual rights, rectification costs may be recoverable, with damages assessed based on the outcome the client would have received if not misled rather than the property’s market value alone. Such costs are generally upheld unless clearly unreasonable, and aesthetic preferences are recognised as valid considerations, reinforcing the importance of transparency and integrity in construction projects.

On the 1st of April 2026, the last phase of reforms under the Strata Schemes Legislation Amendment Act 2025 (NSW) (‘The Amendment Act’) came into effect, completing a series of legislative changes redefining the strata landscape in NSW. These reforms have a significant impact on developers and builders in residential strata projects, with expanded obligations around planning, compliance and transparency aimed at strengthening the position of lot owners and improving the management of strata schemes.

Initial Stages
The first two stages of the reform process under the Amendment Act unfolded in 2025, introducing a number of changes directly impacting developers. Firstly, the Australian Consumer Law unfair contract terms regime has been extended to apply to agreements entered into by owners corporations, including arrangements with developers providing ongoing services. These agreements must be fair, reasonable and consistent with market standards, and must not operate to the disproportionate advantage of the developer or its related party. Any terms found to be unfair may be rendered void and may also expose the parties to civil penalty consequences. Moreover, the reforms place tighter restrictions on the length of utilities and service agreements, including those for embedded networks such as electricity, telecommunications and electric vehicle charging infrastructure. In practice, this reform reduces the ability of developers to enter into long-term arrangements and confirms that the related delivery costs are the developers responsibility and cannot be passed on to owners corporations.

Recent Reform
The most recent changes, effective from 1 April 2026, introduce more prescriptive requirements. Developers must now use a standardised format for initial maintenance schedules, providing clearer guidance to owners corporations when planning inspections and managing ongoing maintenance obligations. Further, for multi-storey strata schemes, developers are required to engage an independent surveyor to verify that the initial maintenance schedule complies with the prescribed form and that the proposed contributions to both the administrative and capital works funds are sufficient to meet expected expenditure for the coming year. Additionally, the Amendment Act expands record-keeping obligations and establishes new disclosure requirements, including the need to identify embedded network arrangements.

Future Reform
Looking ahead, further amendments relevant to builders and developers are proposed under the Fair Trading and Building Legislation Amendment Act 2026 (NSW), which is currently under consideration. These foreshadow additional changes surrounding defect liability insurance and the establishment of a building administration fund to support the administration of building legislation.

In Pafburn Pty Limited v The Owners – Strata Plan No 8467 (2023), the NSW Court of Appeal has clarified the operation of proportionate liability in construction defect claims involving statutory duties. The dispute concerned defects in a residential strata development at 197 Walker Street, North Sydney, where the Owners Corporation brought proceedings against the builder and developer for breach of duty of care under section 37 of the Design and Building Practitioners Act 2020 (NSW).

Pafburn attempted to dilute its liability by attributing responsibility to subcontractors and other parties as ‘concurrent wrongdoers’ under Part 4 of the Civil Liability Act 2002 (NSW). While this position was accepted at first instance in the Supreme Court, it was rejected on appeal. The Court of Appeal held that the statutory duty imposed under the Act is non-delegable, meaning the builder remains responsible for compliance regardless of who carried out the work. The Court compared this form of liability to vicarious liability, which cannot be divided between multiple parties under the proportionate liability regime.

As a result, the builder could not reduce its liability by relying on others involved in the project. Although Pafburn may pursue separate claims against those parties, they remain fully liable to the Owners Corporation for the loss. This decision has significant implications for the construction industry, confirming that where non-delegable statutory duties apply, builders and developers may be entirely accountable for any defects, increasing risk in projects involving multiple contractors.

In the recent case of Kalantzis v Brown; Brown v Kalantzis; Kalantzis v Brown; Brown v Kalantzis (2026) NSWCA 17, the NSW Court of Appeal reinforced strict liability principles in construction-related property torts following a residential driveway collapse in Gosford. The defendants carried out excavation work near the boundary of a neighbouring property, removing soil that supported the land, which caused the adjoining driveway to fail and led the homeowners to sue for trespass and negligence. The plaintiffs successfully established both claims against the developer, builder, and individuals responsible for the excavation.

The Court confirmed that trespass does not require knowledge of the property boundary and extends to subsurface intrusion. Excavation that encroaches beneath an adjoining property, even if done mistakenly, constitutes intentional trespass. Importantly, liability for intentional trespass cannot be apportioned under the Civil Liability Act 2002 (NSW), meaning defendants may be jointly and severally liable for the full extent of damage.

In negligence, liability arose under section 177(2) of the Conveyancing Act 1919 (NSW), which prohibits removing support from neighbouring land. Despite geotechnical warnings highlighting a high risk of landslip, the defendants failed to implement recommended shoring and piling, thus materially contributing to the collapse. The Court emphasised that a defendant need not be the sole cause of damage; contributing materially is sufficient for liability.

This decision underscores critical considerations for developers and contractors: strict adherence to boundary limits is mandatory, geotechnical recommendations must be implemented, and defendants cannot rely on proportionate liability defenses to escape full responsibility. The ruling serves as a crucial reminder that even unintended or mistaken excavation can trigger significant legal and financial consequences.

The recent decision in Kogarah Investments No 1 Pty Ltd v Georges River Council (2026) NSWLEC 1048 addressed which parking standards apply when a residential apartment development includes affordable housing under the State Environmental Planning Policy (Housing) 2021 (‘Housing SEPP’). The key issue was whether visitor parking requirements from the apartment chapter (s 148) also applied alongside the affordable housing chapter (s 19).

In this case, Kogarah Investments proposed a development with an affordable housing component, providing parking in line with s 19, which sets non-discretionary standards for affordable infill housing. The Council contended that the development did not meet the full parking obligations, arguing that visitor parking standards under s 148 should operate in addition to s 19. Commissioner Dickson found in favour of Kogarah Investments, holding that the non-discretionary standards in s 19 fully govern parking for developments including affordable housing. The Court observed that the Housing SEPP contains separate chapters with distinct objectives, and there is no requirement to combine standards from different chapters. Applying further visitor parking requirements would conflict with the affordable housing framework.

Ultimately, this decision highlights the importance of considering the structure and intent of the Housing SEPP when planning residential developments, ensuring developers of affordable housing are not subject to overlapping or conflicting standards that could compromise projects.

In the recent case of CN1 Pty Ltd v NSW Self Insurance Corporation (2025) NSWSC 1464, the NSW Supreme Court examined whether residential building work carried out across separate, non-contiguous lots could be treated as a single residential development under section 3A of the Home Building Act 1989 (NSW) (‘HBA‘). CN1, the owner of multiple lots within a subdivision, had entered into contracts with a builder to construct dwellings on two non-contiguous lots. When the builder became insolvent, CN1 sought reimbursement under their insurance policies, but the claim was denied on the basis that CN1 qualified as a ‘developer’ under the Home Building Act and was therefore ineligible for coverage.

At first instance, NCAT found that CN1 was not a developer under section 3A of the HBA and was entitled to compensation from SiCorp, reasoning that the lots constituted separate developments. Subsequently, the NCAT Appeal Panel overturned the decision and ruled in SiCorp’s favour. The Supreme Court, however, set aside the Appeal Panel’s determination, finding that CN1’s status had been assessed at the wrong time. The Court clarified that whether a landowner or project owner qualifies as a developer must be evaluated at the time the building work is carried out, and that multiple lots, even if non-contiguous, may in some circumstances form a single residential development depending on the practical context of the project.

This decision highlights significant risks for landowners and builders involved in multi-lot projects. Being classified as a developer can affect insurance coverage, leaving owners potentially exposed to uninsured losses if the builder becomes insolvent or defects emerge. Landowners should carefully consider how projects are structured, including whether lots are contiguous or part of the same overall development, and the timing of construction relative to insurance policies.

A caveat can be removed by court order if it lacks any proper basis or fails to include the prescribed particulars. However, a recent Supreme Court decision reveals that sometimes the removal of a caveat is only the starting point. Here, the Court went further, using its discretionary powers to manage ongoing disputes and minimise future conflict between the parties.

Under the Real Property Act 1900 (NSW), a caveator must specify the legal or equitable interest claimed (s 74F) and provide the prescribed particulars under the Real Property Regulation 2019 (NSW). Further, the Court may only extend a caveat if satisfied the claim “has or may have substance” (s 74K).

In Al-Jaradat v Ghunmat [2025] NSWSC 1283, a husband lodged a caveat over a jointly owned property following a dispute about the sale process agreed in a financial settlement. Justice Slattery ordered the removal of the caveat because it “suffer[ed] from a material misdescription of substance” and lacked sufficient particulars. Importantly, the Court then imposed several conditions to protect the parties’ interests. To safeguard the husband’s interests, these conditions included giving him security over a replacement property or, alternatively, quarantining part of the sale proceeds to compensate him for the amount in dispute. The Court also directed an expedited costs assessment.

In this case, costs were awarded against the caveators, and the Court exercised its discretion to prevent further disputes, highlighting that caveat litigation does not always only end with removal.