One Devel­op­ment, Two Tow­ers and Two Occu­pa­tion Cer­tifi­cates (one Inter­im and one Final). When Does the Home Build­ing Act Statu­to­ry War­ran­ty Peri­od Commence?

The NSW Supreme Court has clar­i­fied when statu­to­ry war­ran­ty peri­ods start for staged devel­op­ments under the Home Build­ing Act 1989 (NSW). In The Own­ers – Stra­ta Plan No 93543 v Zhang (No 3) [2025] NSWSC 571, the Court exam­ined com­ple­tion dates for sep­a­rate build­ings, impact­ing lim­i­ta­tion peri­ods for defect claims.

Most pro­ceed­ings brought by home­own­ers and own­ers cor­po­ra­tions against builders involve a claim for breach of the statu­to­ry war­ranties con­tained in sec­tion 18 of the Home Build­ing Act 1989 (NSW) (HBA).

The HBA statu­to­ry war­ranties, implied into every con­tract to do res­i­den­tial build­ing work and which are well known to most, can be found here.

Own­ers have a statu­to­ry time lim­it for com­menc­ing pro­ceed­ings for a breach of a statu­to­ry warranty.

Pro­ceed­ings seek­ing to invoke the statu­to­ry war­ranties under the HBA must be com­menced ​‘before the end of the war­ran­ty peri­od for the breach’. (HBA, s18E(1)(a)) 

The ​‘war­ran­ty peri­od’ is six years ​‘for a breach that results in a major defect in the res­i­den­tial build­ing work’ and two years in ​‘any oth­er case’. (HBA, s 18E(1)(b)). 

A ​‘major defect’ is, rel­e­vant­ly, a defect in a ​“major ele­ment” of the build­ing that is like­ly to cause the inabil­i­ty to inhab­it or use the build­ing, or the destruc­tion or threat of col­lapse of any part of the build­ing. HBA s 18E(4)(a) See the recent Swaab arti­cle here for fur­ther dis­cus­sion as to what con­sti­tutes a major defect. 

The war­ran­ty peri­od starts ​‘on com­ple­tion of the work to which it relates…’. (HBA, s 18E(1)(c)) 

In rela­tion to the con­struc­tion of a home, which is not a build­ing in a stra­ta scheme, the date of com­ple­tion occurs:

1. on the date that the work is com­plete with­in the mean­ing of the con­tract under which the work was done; or
2. if the con­tract does not pro­vide for when work is com­plete (or there is no con­tract), the com­ple­tion of res­i­den­tial build­ing work occurs on prac­ti­cal com­ple­tion of the work, which is when the work is com­plet­ed except for any omis­sions or defects that do not pre­vent the work from being rea­son­ably capa­ble of being used for its intend­ed pur­pose. (HBA, s 3B)

In rela­tion to the con­struc­tion of a new build­ing in a stra­ta scheme the date of ​‘com­ple­tion of the work’ is in accor­dance with s 3C of the HBA, and occurs on ​‘the date of issue of an occu­pa­tion cer­tifi­cate that autho­ris­es the occu­pa­tion and use of the whole of the build­ing…’. (HBA, s 3C(2)) 

Where the work com­pris­es the ​‘con­struc­tion of 2 or more sep­a­rate build­ings… the date of com­ple­tion of that work is to be deter­mined as if there were a sep­a­rate con­tract for each sep­a­rate build­ing … so that the work for each build­ing will have a sep­a­rate com­ple­tion date’. (HBA, s 3C(3)) 

For this pur­pose, a build­ing is ​‘sep­a­rate’ if ​‘it is rea­son­ably capa­ble of being used and occu­pied sep­a­rate­ly from any oth­er build­ing’. (HBA, s 3C(3)) 

When does the war­ran­ty peri­od start for sep­a­rate build­ings con­struct­ed as part of a staged devel­op­ment under the same contract?

The NSW Supreme Court recent­ly con­sid­ered this issue in the mat­ter of The Own­ers – Stra­ta Plan No 93543 v Zhang (No 3) [2025] NSWSC 571.

The Facts

1. The plain­tiff (the ​‘Own­ers Cor­po­ra­tion’) was the own­ers cor­po­ra­tion in respect of a 20-unit devel­op­ment in Hugh­es Street, Cabramatta.
2. The devel­op­ment com­prised two four storey res­i­den­tial apart­ment build­ings con­struct­ed over a base­ment carpark.
3. The front build­ing (Block A) com­prised units 1 to 10.
4. The rear build­ing (Block B) com­prised units 11 to 20.
5. Block A was built over an under­ground carpark, acces­si­ble by a lift sit­u­at­ed on the ground lev­el of Block A and stairs acces­si­ble from a court­yard between Blocks A and B. Each of the 20 units include a car space in the carpark.
6. There was a com­mon pedes­tri­an access­way to each of Blocks A and B. The access­way, togeth­er with a court­yard and planter box, lay between the two blocks.
7. An inter­im Occu­pa­tion Cer­tifi­cate expressed to exclude Units 1 and 10 and ​“exter­nal works” was issued on 13 May 2016.
8. The Stra­ta Plan was reg­is­tered on 17 June 2016.
9. A Final Occu­pa­tion Cer­tifi­cate for the whole devel­op­ment was issued on 4 July 2016.

The pro­ceed­ings were com­menced on 24 May 2018 with­in 2 years of the Final Occu­pa­tion Cer­tifi­cate, but not with­in 2 years of the Inter­im Occu­pa­tion Certificate.

The devel­op­er Mr Zhang con­tend­ed that Block A and Block B should be treat­ed as sep­a­rate build­ings such that they might have dif­fer­ent com­ple­tion dates and thus sep­a­rate dates from which the statu­to­ry war­ran­ty peri­od would commence

Mr Zhang, con­tend­ed that in rela­tion to defects in Block B that were not ​‘major’ defects for the pur­pos­es of the HBA, the pro­ceed­ings were com­menced beyond the expiry of the ​“war­ran­ty peri­od” under the 

Held:

The Court held that Block A could not be whol­ly occu­pied sep­a­rate­ly from block B because:

• Block B com­pris­es units 11 to 20, which the Court stat­ed where clear­ly relat­ed to units 1 to 10 in Block A; and
• the under­ground car park holds the allot­ted car spaces for all 20 units but can only be accessed via a lift in block A, or a shared court­yard between the blocks;
• The Court con­clud­ed that the whole use of Block B depend­ed upon the use of Block A. 

Con­se­quent­ly, the Court deter­mined that com­ple­tion was to be assessed in accor­dance with sec­tion 3C(2), being the date of issue of an occu­pa­tion cer­tifi­cate for which autho­rised ​‘the occu­pa­tion and use of the whole of the build­ing’.

Sec­tion 3C(3) did not apply. 

Notwith­stand­ing that Blocks A and B formed sep­a­rate tow­ers they did so as part of the same struc­ture and accord­ing­ly the Court held that the own­ers cor­po­ra­tion had com­menced pro­ceed­ings in time.