The ruling, handed down last week, was the result of a two-year legal wrangle between Brookfield Multiplex and the owners’ corporation of a 22-storey apartment complex in the northern Sydney suburb of Chatswood.
Findings handed down by the High Court concluded the purchasers of apartments were "investors in a hotel venture" and Brookfield did not have a contract with the owners’ corporation.
The court found the owners' corporation of the serviced apartments could not sue the builder to recover the cost of fixing the alleged defect.
A previous dispute with a separate owners' corporation, responsible for floors 10 through to 22 had been settled.
Christopher Kerion of Kerin Benson Lawyers said the ruling has a massive impact in terms of how many building defects are in buildings around Australia. The problem, he believes, is endemic.
“The City Futures Research Centre, part of the University of NSW, did a survey in 2012 that found 85 per cent of respondents had one or more defects in buildings since 2000,” Mr Kerion said.
“Clearly the problem is endemic; if you are going to buy a new unit, be aware of the fact it is probably going to have defects but what leverage do you have to get the builder to come back and fix the defect.
“The limitation to do that is now two years instead of six, and if that time passes you have lost your right and ability to sue.”
Incoming changes to the Home Building Amendment Act begin on December 1. The changes to the act will cut down the time it takes to report a major defect, from six years down to two.