The case of The Owners Strata Plan No 89074 v Ceerose Pty Ltd [Ceerose] was recently decided by a single judge in the Supreme Court of NSW in November last year (2024); this is after 8 long years, over 52 court appearances, and thousands of pages in court documents. The proceedings had commenced in NCAT in 2016 when the Owners made a claim against the builder (Ceerose Pty Ltd) and the developer (Prisand Investments Pty Ltd) regarding the rectification of defects in a new 16-storey residential (mixed-use) apartment building in the Sydney CBD. Many of the defects concerned the fire safety system and the falls to the bathroom shower wastes.

The Owners were ultimately awarded damages of $1,952,984 (excl. GST) against the builder and the developer for their costs to engage other parties to rectify the defects. There was a dispute in the case as to whether the Owners were under a positive duty to allow the builder to carry out the rectification works directly as opposed to the Owners engaging other parties. Ultimately the Court found that the Owners had not acted unreasonably in engaging other parties to carry out the rectification works and in doing so refusing access to the builder.

The time taken to resolve these proceedings equates to a lot of time in court and in legal fees including solicitors, barristers, experts, mediators and court fees, not to mention the time and costs spent by the parties in countless meetings and administration work. In coming to her final decision, the judge adopted the reports of the court appointed referee in whole.

Under r 20.14 of the Uniform Civil Procedure Rules, the Court may, at any stage of the proceedings, refer any question out to an external referee - whether of liability or quantum of damages or relating to a question of fact or law. Usually the referee appointed will be an expert in the subject matter of the case. The referee is to conduct an inquiry into the question and report back to the Court with their opinion and reasons. In undertaking their inquiry and report, the referee may conduct the proceedings: in such manner as they think fit; is not bound by the formal rules of evidence (as would be the case in Court); and may inform themself in relation to any matter in such manner as they think fit. The Court may then adopt, vary or reject the report in whole or in part. This gives the referee a whole lot of power in deciding the case.

Due to the technical nature of the dispute in Ceerose and the thousands of documents involved, the Court in 2021 referred the issue of quantum and liability to Steven Goldstein as external referee – he is both a barrister and an engineer. The Court said:

“[...] a report from a person expert in the subject should be able to be produced more quickly and at less cost than before the Court, including where “It is simply impossible to make available a judicial officer with the time available to check hundreds, possibly thousands, of disputed invoices, building items, or such like””.

In making its final decision, the Court wholly adopted the findings of Mr Goldstein (over objections from Ceerose and Prisand Investments).

As building disputes become more common place, technical and complex, expect the Courts to make more use of the external referral process. If your proceedings before the Court are externally referred, treat the process just like you would before the Court – because the referee’s final decision may be exactly what the court orders.

Get the best advice possible in your case – speak to Hamilton Mott today.