Supreme Court New South Wales Medium Neutral Citation: The Owners - Strata Plan No 87639 v Karimbla Properties (No4) Pty Ltd [2025] NSWSC 58 Hearing dates: 12 February 2025 Date of orders: 13 February 2025 Decision date: 13 February 2025 Jurisdiction: Equity - Technology and Construction List Before: Stevenson J Decision: Grant plaintiff leave to amend pleadings; amendments to date only from the date of the application to amend Catchwords: CIVIL PROCEDURE – pleadings – amendment – late application for amendment – where plaintiff served evidence-in-chief concerning alleged defects based on inspection of some of likely affected units – where plaintiff adduced evidence that such defects likely to be systemic – where lengthy settlement negotiations followed but were not successful – where plaintiff, with consent of defendant, served extensive further evidence – whether plaintiff should have leave to amend its List Statement to reflect that evidence – whether adequate explanation for delay LIMITATION OF ACTIONS – where pleadings to be amended to incorporate further allegations of defect and causes of action – where amendments arise out of same or similar facts – whether Court should order that amendments take effect only from the date of application to amend Legislation Cited: Civil Procedure Act 2005 (NSW) Design and Building Practitioners Act 2020 (NSW) Environmental Planning and Assessment Act 1979 (NSW) Home Building Act 1989 (NSW) Cases Cited: Aon Risk Services Australia Ltd v Australian National University (2009) 239 CLR 175; [2009] HCA 27 Parkview Constructions Pty Ltd v The Owners - Strata Plan No 90018 [2023] NSWCA 66 The Owners - Strata Plan No 87060 v Loulach Developments Pty Ltd (No 2) [2021] NSWSC 1068 Category: Procedural rulings Parties: The Owners - Strata Plan No 87639 (Plaintiff) Karimbla Properties (No4) Pty Ltd ACN 102165195 (First Defendant) Karimbla Construction Services Pty Ltd ACN 093419875 (Second Defendant/First Respondent) Karimbla Construction Services Pty Ltd (NSW) ACN 152212809 (Third Defendant/Second Respondent) Representation: Counsel: F Corsaro SC / C Chiam (Plaintiff/Applicant) G A Sirtes SC / S Steinhoff (Defendants/Respondents) Solicitors: Chambers Russell Lawyers (Plaintiff/Applicant) Meriton Property Services Pty Ltd (Defendants/Respondents) File Number(s): 2019/271288 ex tempore JUDGMENT (revised) 1. The difficult case management issues thrown up by this List Statement amendment application show the unsatisfactory position that can result when an owners corporation of a large residential development in which defects emerge, hoping in due course to achieve a compromise with the builder, seeks to prove the existence of defects in a sample of units, without inspecting the remaining units, but adducing expert evidence that the observed defects are likely to be systemic. The problem arises if the owners corporation cannot settle with the builder and then adduces a further large body of evidence to prove that, in truth, the defects are systemic throughout the development and then seeks to amend its List Statement to reflect that quantitively vastly increased claim. 2. Here, the plaintiff is an Owners Corporation of a large development in St Ives known as "Alcove", comprising 299 residential units over six buildings and a former monastery on the site. 3. The defendants, Karimbla Construction Services Pty Ltd and Karimbla Construction Services (NSW) Pty Ltd, were the builders. They are members of the Meriton Group. I will refer to them as "the Builder". 4. This was a staged development with interim occupation certificates issued between December 2012 and July 2013. 5. The Owners Corporation alleges that there are structural, fire safety, waterproofing, mechanical, hydraulic and other defects in the building. 6. The Owners Corporation commenced these proceedings in August 2019 alleging breaches of the statutory warranties in s 18B of the Home Building Act 1989 (NSW). 7. Annexure A to its Technology and Construction List Statement was headed "Particulars of Breaches and Defective Work" and listed some 40 types of alleged defects. It also stated: "Defects and non-complying work in the common property also include defects of the same type or kind as those particularized above occurring in locations in the common property other than those locations stated above." 1. The allegations in the body of the List Statement also included the statement, on a number of occasions: "Further particulars of the breaches will be set out in the plaintiff's evidence and the Scott Schedule to be filed and served in these proceedings." 1. Between December 2020 and May 2021, the Owners Corporation served 13 expert reports. 2. It also served a Scott Schedule in May 2021. The Scott Schedule identified some 5,445 defects and identified many of those as being "systemic". 3. The quantum of the Owners Corporation's damages at that stage was in the order of $25.6 million. 4. The expert evidence then served was based on inspection by the relevant experts of only some of the units. The experts opined that many defects were systemic and thus likely, but not proven to be, present in more than the identified units. 5. Between December 2021 and March 2024, the parties had discussions to endeavour to resolve the Owners Corporation's complaints. I was told during the hearing yesterday that, during that time, the Builder performed some work to rectify some of the alleged defects. 6. Those discussions were without prejudice and for that reason, obviously, their detail is not before me. However, the fact that the negotiations took place over a number of years, rather than at a mediation or over some shorter time, leads me to infer that extensive and bona fide efforts were made by both parties to seek to resolve the issues arising from the alleged defects. 7. During this period, the Builder consented to the Owners Corporation's timetabling obligations being suspended, no doubt in the mutual hope that the matter would settle. 8. Possibly for the same reasons, the Builder also took no steps to bring any cross-claim against subcontractors and the like. 9. In the meantime, with the Builder's consent, in October 2023 the Owners Corporation filed an amended Technology and Construction List Statement adding a claim under the Design and Building Practitioners Act 2020 (NSW) and including a "Loulach Schedule" [1] identifying a large number of defects and specifying, as is now customary, the defect description, its location, the asserted foreseeability of risk, the asserted probability of risk, and the precautions asserted would have been taken by a reasonable person in the position of the Builder. 10. Settlement discussions broke down in March 2024. 11. Between April 2024 and October 2024, the Owners Corporation served 46 further reports from fire and safety, structural, waterproofing, mechanical, hydraulic, and general defects experts. That figure may not be quite as alarming as it sounds as the solicitor for the Owners Corporation has deposed that: "The number of further reports served by the plaintiff is largely accounted for by the experts breaking up their reports for the sake of convenience and to assist the parties and the Court to referee." 1. Some criticism was offered of that statement at the hearing but I see no reason not to accept it. 2. The Owners Corporation also served a very extensive report from a quantity surveyor opining that the total cost of the defects was now in the order of $123 million; a significant increase from the earlier posited figure. 3. In October 2024, the Owners Corporation also served a further Scott Schedule which contained some 8,000 rows of defects. Very recently, the solicitor for the Builder ascertained that some of the defects identified by the Owners Corporation's quantity surveyor had not made their way into that Scott Schedule; some figures in the Scott Schedule were not correct and there was some duplication. In substance, the solicitor for the Owners Corporation has accepted these criticisms and has proposed consequential amendments to the Scott Schedule. The Scott Schedule should now be amended to incorporate those matters. It is agreed that I should make an order to the effect that the Owners Corporation not be permitted to make any further additions to the Scott Schedule and I will do that in due course. 4. In relation to the evidence served last year in the Scott Schedule, the Builder consented to the orders enabling the Owners Corporation to serve that evidence. 5. Also in October 2024, the Owners Corporation proposed a Second Further Amended Technology and Construction List Statement containing a significantly amended "Loulach Schedule" which reflects the further evidence served. 6. As I said, the combined effect of all of this was to increase significantly the value of the Owners Corporation's claim from around $25.6 million to $123 million. 7. There is a dispute as to the extent to which the qualitative nature, as opposed to the quantitative nature, of the Owners Corporation's case has changed. 8. In written submissions, both parties refer to schedules evidently exchanged between the experts seeking to identify the extent to which the defects now relied upon by the Owners Corporation are "new". In submissions, I was not taken to those schedules and am not in a position to make any assessment of the extent to which the Owners Corporation's case is qualitatively new. The Owners Corporation's position in relation to that matter is set out in the following passage from the submissions of Mr Corsaro SC and Mr Chiam: "(a) The Plaintiff's fire and life safety expert, Mr Matthew Harriman, concluded that every item contained within the Defendants' corresponding schedule was, at the very least, identified in the expert reports issued by the Plaintiff prior to 6 October 2023. Other than some 100 or so specific items identified by Mr Harriman, the balance of the defects in the Defendants' schedule were identified in the Plaintiff's Scott [S]chedule of 19 May 2021 … (b) The Plaintiff's structural expert, Mr Nicholas Joannides, concluded that each of the structural defects contained in the Defendants' schedule was contained in the Plaintiff's Scott [S]chedule of 19 May 2021 … (c) The Plaintiff's waterproofing expert, Mr Samuel Nolan, concluded that with the exception of 11 items specified in the Defendants' schedule, each of the defects were identified in the Plaintiff's Scott [S]chedule of 19 May 2021. The balance of the items were identified in the Plaintiff's expert reports served prior to October 2023 … (d) The Plaintiff's mechanical expert, Mr Ross Warner, concluded that save for one exception, each mechanical defect in the Defendants' schedules were contained in the Plaintiff's 2021 Scott Schedule … (e) The Plaintiff's hydraulic expert, Mr Haimish McGill, concluded that each of the four defects contained in the Defendants' schedule were contained in the Plaintiff's 2021 Scott Schedule …" 1. However, there is no dispute that, quantitatively, the Owners Corporation has significantly expanded its case. 2. Now, by Notice of Motion filed on 11 November 2024, the Owners Corporation seeks leave to file the proposed Second Further Amended Technology and Construction List Statement. 3. During argument yesterday, two important matters were accepted by Mr Sirtes SC, who appeared with Ms Steinhoff for the Builder. 4. The first is that, as the Owners Corporation contends, the effect of the proposed amendment to its List Statement is to align its pleadings with the evidence that it has, in accordance with the orders to which the Builder has consented, served. 5. The second is that the Builder can meet the Owners Corporation's expanded case. 6. No trial date has been set. The Builder has not yet served any evidence. It is due to do so by the end of May, save for its quantity surveying evidence which is due by the end of July. 7. On applications such as this, the Court must balance such matters as the nature and importance to the applicant of the amendment, the effect of the proposed amendment on the defendant, [2] the delay in making the amendment, and the explanation offered for any such delay. 8. The task for me is one of case management. 9. A factor that I have in mind is that if the defects are as extensive as the Owners Corporation's evidence, not yet tested, suggests, this is a serious matter for the Builder as well as the Owners Corporation. But it would be a very hard thing to deny the Owners Corporation, and thus in effect its members, a chance to establish such a case. 10. Ultimately, the debate before me centred on two issues. Explanation for service of the second tranche of evidence 1. An explanation for the course adopted by the Owners Corporation is called for. 2. The usual position is that any litigant, including in this List, should adduce all their evidence-in-chief at one time. 3. The only direct evidence as to what has happened is from the Owners Corporation's solicitor, Mr Scott Chambers. In one of his affidavits Mr Chambers deposed, at an understandably high level, an account of the settlement discussions to which I have referred and concluded: "On 26 March 2024, I attended a general meeting of the Plaintiff and was asked to give certain advice in relation to the negotiations that had transpired. I gave that advice and received instructions. These instructions differ from those previously provided to my office in October 2023 when the recent timetable for liability and lay evidence was ordered by the Court. At that time there were still ongoing settlement discussions." 1. That somewhat Delphic observation was carefully drawn no doubt to ensure that the legal client privilege was not breached. 2. But looking at the circumstances as a whole, a fair inference is that the advice that Mr Chambers gave was that, now that the settlement discussions had broken down, it would be necessary for the Owners Corporation to seek to prove, as a matter of fact, the systemic defects the subject of the Owners Corporation's experts' previous opinions. 3. This has produced the unsatisfactory position of the Owners Corporation serving a further, very extensive, tranche of evidence; greatly expanding the value of its claim. 4. However, as I have said, the Builder consented to the directions that enabled the Owners Corporation to do this; and does not suggest it cannot now meet that evidence. 5. I am satisfied that there is an adequate explanation before the Court to warrant leave being granted, all other matters being equal. 6. I do not, however, seek to encourage parties, and owners corporations in particular, to conduct litigation in this List in the way that the Owners Corporation has conducted this case. 7. Mr Sirtes, with Ms Steinhoff, put the matter this way: "These proceedings represent another example of 'placeholder' litigation where Plaintiff's solicitors have, it seems, filed 13 expert reports and a Scott Schedule between December 2020 and May 2021, in accordance with the Court's orders in May 2020, sprinkled the word 'systemic' throughout some of those reports, having only examined a small proportion of the apartments and have now served a further 46 expert reports in order to bring a claim never conceived of, and never brought when the proceedings were first commenced in 2019." 1. I think that overstates matters and do not accept the implication in that submission that the Owners Corporation had adopted some improper pre-determined strategy to achieve a beneficial position in the litigation. 2. But the result is that the Owners Corporation has served evidence in two tranches, years apart, in proceedings that are now five years old. Limitation issue 1. The second issue upon which attention was focused yesterday is the limitation issue. The long stop period under s 6.20 of the Environmental Planning and Assessment Act 1979 (NSW) expired between December 2022 and February 2024. 2. As the Builder has emphasised, it may have lost the opportunity to make cross-claims against such of its subcontractors that are still in existence. 3. There is, however, no explanation as to why the Builder did not seek to do so earlier in circumstances where the Owners Corporation's claim has always been substantial. It may have been that was because of the factor I mentioned above. It is nonetheless a factor to be weighed in the balance. 4. Section 65 of the Civil Procedure Act 2005 (NSW) states relevantly: "(1) This section applies to any proceedings commenced before the expiration of any relevant limitation period for the commencement of the proceedings. (2) At any time after the expiration of the relevant limitation period, the plaintiff in any such proceedings may, with the leave of the court under section 64(1)(b), amend the originating process so as— (a) to enable the plaintiff to maintain the proceedings in a capacity in which he or she has, since the proceedings were commenced, become entitled to bring and maintain the proceedings, or (b) to correct a mistake in the name of a party to the proceedings, whether or not the effect of the amendment is to substitute a new party, being a mistake that, in the court's opinion, is neither misleading nor such as to cause reasonable doubt as to the identity of the person intended to be made a party, or (c) to add or substitute a new cause of action, together with a claim for relief on the new cause of action, being a new cause of action that, in the court's opinion, arises from the same (or substantially the same) facts as those giving rise to an existing cause of action and claim for relief set out in the originating process. (3) Unless the court otherwise orders, an amendment made under this section is taken to have had effect as from the date on which the proceedings were commenced." 1. Section 65(1) is engaged because the Owners Corporation commenced these proceedings before the expiry of the relevant limitation period. 2. The proposed amendments arguably raise new causes of action. 3. In so far as the amendments elaborate on the Owners Corporation's existing claims under the Home Building Act, no new cause of action was introduced as there is but one cause of action for breaches of statutory warranties under s 18B of the Act. [3] 4. However, in so far as the amendments introduce further claims for breach of the statutory warranties under s 37 of the Design and Building Practitioners Act, new causes of action may very well be introduced. 5. That being so, s 65(2)(c) is, subject to leave being granted, engaged as, qualitatively, the amendments clearly arise from the same facts, or substantially the same facts, as the existing claim. 6. The question arises then whether under s 65(3) I should "otherwise order". 7. If I do not "otherwise order", the amendments will take effect from the date the proceedings commenced. That is the default position. 8. Before me, neither party advocated for the default position. 9. In its Notice of Motion the Owners Corporation sought an order "otherwise" in this form: "Reserve to the referee or trial judge the question of whether the amendments occasioned by the filing of the Second Further Amended List Statement are taken to have effect from the date on which the proceedings were commenced, or the date of amendment, or some other date." 1. I am not persuaded to take that course. As Mr Corsaro and Mr Chiam asserted in their submissions, it would give rise to a complicated question of fact and would impose on the trial judge or the referee the complicated task of assessing in relation to a potentially large range of particular defects whether the defect is "new" and thus when in relation to that defect the amendment should take effect. That would greatly lengthen the hearing and is not a task I propose to impose on the trial judge or the referee. 2. On the other hand, Mr Sirtes and Ms Steinhoff submitted that the amendments should only date from now or perhaps, more fairly, from the date of the Owners Corporation's application to make the amendment. 3. In relation to the Owners Corporation's Home Building Act claims, making such an order would not adversely affect the Owners Corporation as the amendments would not introduce a new cause of action. 4. As I have said, the position may be different in relation to the Owners Corporation's Design and Building Practitioners Act claims. 5. I am persuaded that I should order that the amendments date only from the date of the Owners Corporation's Notice of Motion of 11 November 2024. That is because the Owners Corporation chose, perhaps understandably, initially to prove its case by identifying defects in some locations and foreshadowing, but without then proving that such defects were systemic or recurring. Now, more than 12 years after the project was completed, some years after the expiry of all relevant limitation periods, and five years after the proceedings were commenced, the Owners Corporation seeks to amend its List Statement to introduce, arguably, new causes of action and, undoubtedly, a greatly expanded case. In those circumstances, such limitation risks as may arise must in my opinion be borne by the Owners Corporation. That will be achieved by ordering that the amendments date only from the date of the application to amend. Conclusion 1. Overall, I am persuaded to allow the Owners Corporation leave to amend its List Statement in the manner it proposes. 2. This is for a number of reasons. 3. First, the amendments will align the pleadings with the evidence that the Owners Corporation has, with the Builder's consent, served. 4. Second, no trial date has yet been set. The Builder is not yet due to serve its evidence, and the Builder does not contend that it cannot meet the evidence and thus the proposed pleading. 5. Third, such prejudice to the Builder as may be suffered by reason of it being now unable to bring cross-claims is, to some extent, of its own making as it has always been open to it to take those steps earlier. 6. Fourth, such prejudice as might otherwise have been visited on the Builder by reason of the effluxion of limitation periods will be met by an order that the amendment date only from the date of the application for leave to amend. 7. Other litigants should not be encouraged to conduct litigation in this List in the manner adopted by the Owners Corporation here. In the normal course, litigants are expected to adduce timeously and in one tranche all of the evidence on which they rely in chief. A second bite at the cherry should be seen as a very narrow exception to that general rule which will not otherwise, and only in special circumstances such as those here, be permitted. 8. The parties should confer and agree on the orders to give effect to these reasons. 9. If the parties cannot agree as to costs they should exchange short submissions, no more than two pages, and I will deal with that question on the papers. ********** Endnotes 1. See my decision in The Owners - Strata Plan No 87060 v Loulach Developments Pty Ltd (No 2) [2021] NSWSC 1068 at [42]-[44]. 2. See, for example, Aon Risk Services Australia Ltd v Australian National University (2009) 239 CLR 175; [2009] HCA 27 at [102] (Gummow, Hayne, Heydon, Crennan, Kiefel and Bell JJ). 3. See, for example, Parkview Constructions Pty Ltd v The Owners - Strata Plan No 90018 [2023] NSWCA 66 at [90], [94], [103] (Leeming JA, Ward P and Simpson AJA agreeing). DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 18 February 2025