21 October 2024
13 min read
#Property, Planning & Development, #Construction, Infrastructure & Projects
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In a previous edition, we examined the special circumstances required to be shown to enliven the discretion for the approval of owner builder permits (OBP) for dual occupancy projects.
The recent decision in Wu v Commissioner for Fair Trading, Department of Customer Service [2024] NSWCATOD 161 builds on the existing caselaw in this area.
In this case, the applicant’s purpose for the dual occupancy dwelling was not to sell either or both of the dwellings, but to live in one of them and rent out the other or to have the applicant’s parents-in-law stay in the other. The applicant was the director and nominated supervisor of a licensed builder, but did not want to incur the cost of obtaining a policy of insurance under the Home Building Compensation Fund (HBCF).
The internal review decision had confirmed the rejection of the application, noting that:
The applicant filed no additional supporting evidence when the matter came before the Tribunal.
The Tribunal considered the facts and reasons in its earlier decisions on special circumstances, which followed the purpose revealed in the second reading speech, namely, to ensure appropriate controls on building and construction work and to avoid development of dual occupancies for commercial purposes and/or financial advantage by owner-builders.
The Tribunal concluded that no factors causing financial hardship to the applicant had been shown, nor had it been suggested that the development could not proceed unless an OBP was granted. The preference for the applicant’s company not to incur the cost of HBCF was held not to prevent the development, either by the company or another licensed builder. The alternative commercial motivation (to generate rental income) was also determinative.
In contrast, in the earlier decision of Hammoudi, which allowed an application, there were issues of future provision for accommodation for a family member who cared for the applicant and his wife as they entered old age, as well as evidence of no intention to subdivide and that the applicant could not afford to build a home using a contracted licensed builder.
Interestingly, the draft Building Bill 2024 does not provide a specific pathway for dual occupancy OBPs in the same way as section 32(1A) of the Home Building Act 1989, but provides a discretion to the Secretary to grant an application if special circumstances are shown, despite not being satisfied that “the intended principle place of residence is not a secondary dwelling” or that the applicant or a co-owner hadn’t had held another OBP within the five year period prior to the application. It is unclear if the secondary dwelling concept in the draft bill is intended to refer to a dual occupancy context or a holiday home context. If the latter, then the policy direction is to close down the dual occupancy exception altogether.
Author: Christine Jones
Construction nightmares: How builder bankruptcies are costing Aussie homeowners millions
Australia needs to build new homes. Driving demand is both high immigration, with 2023 seeing net migration of 518,000 immigrants, coupled with an ongoing trend for fewer habitants per home. On the supply side, building commencements are in decline, with 2024 data for new dwelling commencements at 10-year lows, opens in a new window. Overall, the ratio of new population to new dwelling approval is the worst since data began to be recorded in 1984. Despite this urgent need to build, residential construction companies are going into liquidation at an alarming rate. According to ASIC data, opens in a new window, in the 2023-2024 financial year, 2832 construction companies went into insolvency in Australia, representing the greatest proportion of company collapses and a problem that is trending worse, not better. These are not small or newly established companies, either. Read more here.
Mirvac’s $2b answer to the lack of three-bedroom apartments
Property developer Mirvac will launch its luxury $2 billion Harbourside Residences project in Sydney next month, cranking up the supply of sought-after but scarce three- and four-bedroom apartments. Although the broader market for new apartments is relatively soft, Mirvac has noted a stronger than expected demand from potential buyers, especially for larger apartments, according to development head Stuart Penklis. Read more here.
Newer apartment prices to climb by 23 per cent by 2026
Sameer Chopra, CBRE’s head of research, Pacific, said the high costs of construction and shortage of new apartments would justify the expected rise in new apartment values, supporting the typical premium in price over older apartments. “Apartment values have not kept pace with construction costs in the past five years,” he said. “That disparity is currently at 23 per cent. We expect this gap to close out and revert to a premium. “But for the gap to close out quickly, we need interest rate cuts. This will significantly boost prices and supply.” Future supply of apartments is expected to hit 50,000 each year between 2025 and 2029, well under the 75,000 homes needed to meet the country’s population growth. Read more here.
Why rents and vacancy rates are both falling
Australia’s residential rental boom is over, with the pace of rental growth stalling for both houses and units in what data provider Domain said was the weakest September quarter in more than four years. Asking rents even fell in cities such as Brisbane and Canberra, reflecting the slowdown hitting the market rental despite the national vacancy rate falling to just 0.9 per cent. Read more here.
High Court hearing for strata owners could shake-up construction insurance
Today, an appeal hearing in the High Court of Australia could determine the future of the proportionate liability regime used by insurers and construction professionals in NSW for the last two decades. Wednesday’s hearing follows a series of recent NSW legal cases under the Design and Building Practitioners Act 2020 (NSW) (DBPA), that Clyde & Co. says have “disrupted the status quo in relation to claims.” Read more here.
Have your say – Review into Home Building Compensation Scheme
The NSW Government is taking action on its commitment to review the State's Home Building Compensation scheme (HBC). HBC insurance is required for home building work which is valued at $20,000 or more. It's required for the construction of new homes, swimming pools associated with a home, and renovations or alterations to homes. Where home building work is defective or is not completed by a building business, the HBC fund will compensate homeowners to help them get their building work completed or fixed. However, there are limits on the cover and compensation. The consultation is open until 11:59pm, Monday 11 November 2024. Read more here.
Housing Diversity Planning Proposal Lake Macquarie (Hunter)
HIA a submission was provided to the Lake Macquarie City Council on the planning proposal to amend the Local Environmental Plan 2014 to increase housing diversity in residential zones. Download the proposal here.
Australian Bureau of Statistics – Building Activity, Australia
Provides estimates of value of building work and number of dwellings commenced, completed, under construction and in the pipeline. Released on 9 October 2024. Key statistics:
In seasonally adjusted terms:
Read the report here.
Australian Bureau of Statistics – Building Approvals, Australia
Provides the number of dwelling units and value of buildings approved. Released on 1 October 2024. Key statistics:
The August 2024 seasonally adjusted estimate:
Read the report here.
Building Activity, completions exceed commencements
Dwelling completions are picking up from last year, with houses up by 3.3 per cent and units up by 22.4 per cent. Read more here.
Principles and scope of a Building Product Registration Scheme
Housing Industry Association provides a response to the ABCB Building Product Framework – Consultation Paper. Download the proposal here.
Claire Rewais and Osama Rewais t/as McVitty Grove v BPB Earthmoving Pty Ltd [2024] NSWSC 1271
BUILDING AND CONSTRUCTION – adjudication – construction contract – payment claim by defendant – adjudication determination stipulating payment of adjudicated amount – application by plaintiffs seeking declaratory relief, order quashing determination or order restraining enforcement – where defendant failed to prove service of payment claim – where defendant filed adjudication application prematurely – adjudicator’s findings as to timing of service and making of application – application of Brodyn v Davenport – HELD – determination not void merely by virtue of non-compliance with more detailed requirements of Building and Construction Industry Security of Payment Act 1999 (NSW)
BUILDING AND CONSTRUCTION – adjudication – construction contract – application of Home Building Act 1989 (NSW) – contract for “residential building work” – whether sections 10 and/or 94 bar enforcement of right to progress payments under Building and Construction Industry Security of Payment Act 1999 (NSW) – consideration of phrase “right of action” – right of action does not encompass statutory remedy to receive progress payments under Building and Construction Industry Security of Payment Act 1999 (NSW) – HELD – defendant entitled to enforce adjudication determination
Building and Construction Industry Security of Payment Act 1999 (NSW) sections 13, 14, 17, 22, 31, 32A; Building and Construction Industry Security of Payment Act 2002 (Vic); Electronic Transactions Act 2000 (NSW) sections 5, 8, 13A; Electronic Transactions Act 2000 (Vic) section 13A; Home Building Act 1989 (NSW) sch 1, sections 4, 6, 7, 7AAA, 10, 12, 92, 94, 99; Home Building Regulation 2014 (NSW) rr 5, 12; Limitation Act 1969 (NSW) section 14; Magistrates Court Act 1921 (Qld) section 45
Cui v Salas-Photiadis [2024] NSWSC 1280
LAND LAW – Caveats – Withdrawal of caveat under section 74MA of the Real Property Act 1900 (NSW) – Whether caveat failed to specify the nature of the equitable estate or interest claimed – Where interest on caveat was noted to be a “charge” – Whether there is a material difference between an “equitable charge” as opposed to an “equitable mortgage”
BUILDING AND CONSTRUCTION – Home Building Act 1989 (NSW) – Where loan agreement between first and second defendants purported to grant the first defendant a security interest over property in connection with construction works performed on property – Whether loan agreement was an “other agreement” under section 7D of the Home Building Act 1989 (NSW) – Whether caveat lodged by first defendant was invalid by reason of section 7D of the Home Building Act 1989 (NSW)
Home Building Act 1989 (NSW), sections 6, 7D; Real Property Act 1900 (NSW), sections 3(1), 74F, 74K, 74MA, 74P; Real Property Regulation 2019 (NSW) clause 7, Sch 2 – items 1, 4, 10
Drummond v Gordian Runoff Limited ACN 052 179 647 [2024] NSWCA 239
BUILDING AND CONSTRUCTION – Home Building Act 1989 (NSW) – insurance – “last resort” home warranty insurance policy – where insurer denied liability under policy on basis insureds failed to satisfy requirements of section 103BB(3)(a) – whether section 103BB was itself incorporated as a term of policy – whether section 103BB alters the effect of the policy so as to engage section 54 of the Insurance Contracts Act 1984 (Cth) – whether operation of section 54 of Insurance Contracts Act 1984 (Cth) was attracted where a refusal to pay is premised upon effect of s 103BB(3) and not upon the policy
CONSTITUTIONAL LAW – Commonwealth and State relations – inconsistency of laws – whether Home Building Act 1989 (NSW), section 103BB inconsistent with Insurance Contracts Act 1984 (Cth)
Building Services Corporation Legislation Amendment Act 1996 (NSW); Home Building Act 1989 (NSW), sections 18B, 90, 92, 94, 96, 99, 103, 103B, 103BA, 103BB, 103BC, Sch 4, cll 106, 115; Home Building Amendment (Insurance) Act 2002 (NSW); Home Building Amendment (Insurance) Act 2009 (NSW); Home Building Amendment (Warranties and Insurance Act) 2010 (NSW); Home Building Amendment Act 2011 (NSW); Insurance Contracts Act 1984 (Cth), sections 40, 54, 57; NSW Self Insurance Corporation Amendment (Home Warranty Insurance) Act 2010 (NSW); The Commonwealth Constitution, section 109; Home Building Regulation 2004 (NSW), cll 63, 63A; Uniform Civil Procedure Rules 2005 (NSW), r 20.26
Unique Commercial Group Pty Ltd v Cusumano [2024] NSWCATAP 204
BUILDING AND CONSTRUCTION – Home Building Act 1989 (NSW) – Statutory warranty under section 18B – time limit of statutory warranty under section 48K(7) – “major defect” for purposes of section 18E(1)(b)
APPEALS – internal appeal under section 80 of the Civil and Administrative Tribunal Act 2013 as of right “on any question of law” – relevant principles regarding leave to appeal – whether a late redraft of the grounds of appeal requires an extension of time – whether to grant leave to extend time – the importance of articulating a question of law with precision
Civil and Administrative Tribunal Act 2013 (NSW); Civil and Administrative Tribunal Rules 2014 (NSW); Civil Procedure Act 2005 (NSW); Home Building Act 1989 (NSW)
Emrit Services Pty Limited v Lidden [2024] NSWCATAP 189
APPEALS – statutory warranties under Home Building Act 1989 (NSW) – definition of “major defect” and “major element” – lack of jurisdiction – error on a question of law
Civil and Administrative Tribunal Act 2013 (NSW); Civil and Administrative Tribunal Rules 2014 (NSW); Home Building Act 1989 (NSW)
Easy Trades Australia Pty Ltd v The Owners – Strata Plan No. 3844 [2024] NSWCATAP 194
Appeal – Errors of law – Rectification methodology – Necessary and reasonable - Set off
Home Building Act 1989
Proclamations commencing Acts
Bail and Other Legislation Amendment (Domestic Violence) Act 2024 No 30 (2024-519) – published LW 11 October 2024
Crimes (Domestic and Personal Violence) and Other Legislation Amendment Act 2024 No 59 (2024-520) –published LW 11 October 2024
Government Sector Finance Amendment (Integrity Agencies) Act 2024 No 57 (2024-518) – published LW 9 October 2024
Law Enforcement (Powers and Responsibilities) and Other Legislation Amendment (Knife Crime) Act 2024 No 31 (2024-521) – published LW 11 October 2024
Regulations and other miscellaneous instruments
Bail Amendment (Electronic Monitoring) Regulation 2024 (2024-522) – published LW 11 October 2024
Final Determination [Biodiversity Conservation Act 2016] (2024-523) – published LW 11 October 2024
Unsafe Plants in Non-rural Areas Code of Practice 2024 (2024-525) – published LW 11 October 2024
Environmental Planning Instruments
Cumberland Local Environmental Plan 2021 (Map Amendment No 6) (2024-524) – published LW 11 October 2024
Disclaimer
The information in this article is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavour to provide accurate and timely information, we do not guarantee that the information in this article is accurate at the date it is received or that it will continue to be accurate in the future.
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