BUILDER SEEKS ORDER RESTRAINING THE OWNER FROM ENTERING THE SITE

Duzenli Developments Pty Ltd ACN k623 852 031 trading as Zen Group Constructions v Benuga Pty Ltd ACN 001 131 997 [2020] NSWSC 1667 (23 November 2020)

This case involves the plaintiff-builder seeking an interlocutory injunction against the defendant restraining the latter from entering the site until the resolution of the proceedings before NCAT.

Facts:

The plaintiff, Duzenli Holdings Pty Limited (“the builder”), has until recently executed building work upon land in Bellevue Hill (“the site”), owned by the defendant, Benuga Pty Ltd (“the owner”).

Disputes between the owner and builder about their building contract (“the contract”) under the Home Building Act 1989  are pending before the New South Wales Civil and Administrative Tribunal (“NCAT” or “the Tribunal”).

On 2 November 2020, the owner purported to terminate the contract and lock the builder out of the property. The builder contends this was an invalid termination, that the contract is still on foot and that the builder is entitled to possession of the site. The builder commenced proceedings in the Tribunal on 2 November 2020, disputing that the contract had been validly terminated and seeking payment of monies the builder claims are due to it under the contract.

On  13 November 2020, Parker J made interim orders by consent restraining both the builder and the owner from gaining access to the site until an interlocutory hearing could be held.

The builder sought orders that the owner be restrained from entering the site except on the terms ordered by the Tribunal. The plaintiff/builder was seeking to continue the orders of Parker J and to uphold the regime of orders imposed by the Tribunal. The defendant/owner was contending that by terminating the building contract and by placing security guards at the site to prevent re-entry, it had revoked the builder’s contractual licence to enter the site to undertake the building work. In consequence, the defendant/owner submitted that it was entitled to exclusive possession of the premises and could restrain the builder from hindering the owner’s access to the site.

Issue: Should the court grant the order sought by the plaintiff restraining the owner from emtering the site?

Law:

• Home Building Act 1989 ss 18BA, 48MA, 48O(1)(c)

Analysis:

The Tribunal’s powers under the  Home Building Act to order rectification by the builder are broad. The Tribunal may order a party whether or not the party has requested it in an application before the Tribunal, to “do any specified work or perform any specified service or any obligation arising under this Act, or the terms of any agreement”: Home Building Act, s 48O(1)(c). If so minded, the Tribunal could make orders under Home Building Act s 48MA and s 48O(1)(c) (upon the application as presently framed) with a view to reducing the cost of rectification works to both parties by requiring the builder to rectify any defects that were found to exist.

In the Court’s view, this is a persuasive consideration favouring the grant of the relief the builder seeks. If another builder comes onto the site to rectify defects, the Tribunal’s consideration of the statutory “preferred outcome” under the  Home Building Act,  s 48MA,  will be foreclosed. The owner wants to engage another builder, if it is allowed back into the site. The owner points to other statutory obligations under Home Building Act, s 18BA, that require the owner to mitigate its loss. But the owner’s obligation to mitigate loss does compel the conclusion that the owner should be able to engage another builder. Home Building Act, s 48MA remedies may be the best way for the owner to mitigate loss.

Other practical considerations favour some restraint being put in place. Currently, the parties are expending their resources on two groups of security guards and the police have been called. A Court ordered regime will reduce the current waste of expenditure on unnecessary security and will reduce the risk of breaches of the peace. And with both builder and owner being off-site they both have a strong incentive to conduct the Tribunal proceedings expeditiously.

Conclusion: Court orders that the defendant by itself, and by its employees or agents, is restrained from entering the site until the NSW Civil and Administrative Tribunal has heard and determined all applications before it between the plaintiff  and the defendant in relation to building works at the site.

#Equity