For strata managers dealing with persistent building defects, limitation periods and uncertain liability, the Supreme Court’s decision in Strata Plan 92183 v Samdora Pty Ltd [2026] NSWSC 406 is a significant development. The judgment provides valuable guidance on when waterproofing and drainage issues may be classified as “Major Defects” under the Home Building Act (HBA), while also reinforcing the obligations of builders and nominated supervisors under the Design and Building Practitioners Act 2020 (NSW) (DBPA). The case offers important lessons for managing defect claims, assessing risk and protecting the interests of owners corporations.
Were the waterproofing defects considered major defects?
The case concerned the development of a nine-unit residential building in Mangerton by the Defendants. The case started as many do in NCAT and there was a long history of emails between the parties trying to come to an agreement about what defects the builder agreed to return to rectify. Unfortunately, before the builder managed to complete the rectification work adequately, it fell into administration. The Supreme Court then had to review many “without prejudice” emails to determine what had exactly been “agreed” to and by which parties.
The original agreement for the rectification work dated back to 2019 and, after the disappearance of the builder, the case proceeded in the Supreme Court against the Developer as well as the nominated supervisor of the builder in his personal capacity under the DBPA.
In respect of the HBA claim, it had been agreed between the parties that, due to the age of the building, only claims relating to major defects remained claimable by the Plaintiff (owners corporation). The remaining defects claimed were categorised as “general” and “waterproofing”. The court heard arguments between the parties as to whether these defects, in particular the “waterproofing” defects, were Major Defects.
The definition of what is a “Major Defect” under the HBA is in section 18E which refers to:
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“a defect in a major element of a building that is attributable to defective design, defective or faulty workmanship, defective materials, or a failure to comply with the structural performance requirements of the National Construction Code…”
So, what is meant by a “Major Element”?
A “Major Element” is defined by section 18E of the HBA as:
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“…an internal or external load-bearing component of a building that is essential to the stability of the building, or any part of it (including but not limited to foundations and footings, floors, walls, roofs, columns and beams), or a fire safety system, or waterproofing…” and that “… causes, or is likely to cause… the inability to inhabit or use the building (or any part of the building) for its intended purpose, or the destruction of the building or any part of the building, or a threat of collapse of the building or any part of the building”.
The owners corporation’s expert argued that all the hydraulic defects were “waterproofing” and therefore were Major Defects. On behalf of the Defendants, the Court was referred to the NCAT Appeal Panel decision of Ashton v Stevenson [2020] where the Panel, had regard to the fact that the design and purpose of the drainage and bund in an outdoor terrace area was to collect and control rainwater in considering whether it was “waterproofing”. It was submitted by the Defendants that, based upon the Ashton decision, only if both the design and purpose of a defective building element was to prevent water from entering the building, only then could it meet the description of “waterproofing” for the purpose of the HBA. The Court decided that the Panel was not intending to establish a “design and purpose” test rather it was merely undertaking the task of making a factual finding as to whether a particular element is “waterproofing”. Kunc J decided that:
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“… an element will be waterproofing if its purpose is to prevent ingress of water into a building. This means that in some cases a particular element may be waterproofing because of how it is deployed and in other cases it will not be waterproofing.”
In this regard, the Court found that the stormwater overland flow path was a Major Defect, as was the rainwater overflow and balcony drainage system. The Court did not accept that actual evidence of water ingress was required.
Negligence under the DBPA: What must be proven?
With respect to the claim against the nominated supervisor of the builder, the Court also gave some clarification as to what needs to be established for a claim in negligence under the DBPA. The judge referred to the general principles of negligence under the Civil Liability Act 2022 (NSW) including that a person is not negligent in failing to take precautions against a risk of harm unless the risk was foreseeable and not insignificant and that in the circumstances a reasonable person in that position would have taken those precautions.
Kunc J referred to the leading High Court decision of Pafburn Pty Ltd v Strata Plan 84674 confirming that the duty was a personal non-delegable duty on the supervisor Mr Nassif and therefore he could not discharge the duty merely by exercising reasonable care in arranging for another person to carry out any work or task within the scope of the duty.
Can a nominated supervisor be personally liable under the DBPA?
The Court went on to find that Mr Nassif had breached his duty under s 37 of the DBPA because he had failed to exercise reasonable care to ensure that the work was relevantly compliant with the statutory warranties in s 18B(1)(c) of the HBA warranting that the work would comply with the warranties or any other law. So, the precaution that he had failed to take against the risk of harm to ensure the work was relevantly compliant was to have properly carried out “an active supervisory role” during the construction process by regular inspections and checking of the work such that the defects would have been identified and rectified prior to the completion of the development. The negligent failure to play an active supervisory role was a necessary condition of the harm because, if he had undertaken that role properly, the harm of the defects and the cost of repairing them would not have arisen because the defects would not be there.
What does active supervision require under the DBPA?
Those acting for Mr Nassif tried to argue that he relied on the fact that other professionals such as the certifier had inspected the building work but did not identify any of the defects however that argument was rejected by the Court and in particular noting that “it is, regrettably, a common experience that buildings for which an occupation certificate had been issued are later found to have defects.” In the same way, it is also regrettably a common argument that because a building has an occupation certificate then it must be free from defects. Unfortunately as we are aware in most cases that is not the reality.
What are the key takeaways for strata managers?
- What is or is not a major defect will be a factual finding for the Court or NCAT member to make in any particular case and some particular element may be waterproofing in some cases whereas the exact same thing may not be seen as waterproofing in another case;
- A builder can be in breach of its duty under section 37 of the DBPA by failing to reasonably exercise an active supervisory role to ensure that the building complied with the statutory warranties.
Summary
Strata Plan 92183 v Samdora Pty Ltd [2026] NSWSC 406 clarifies when waterproofing and drainage defects may constitute Major Defects under the Home Building Act and confirms that nominated supervisors can be personally liable under the Design and Building Practitioners Act for failing to actively supervise construction works. For strata managers, the decision provides practical guidance on identifying viable defect claims, assessing limitation risks and pursuing recovery against the parties responsible for defective building work.
Duncan Campbell Grace Lawyers E: enquiries@gracelawyers.com.au
Paul Berrill Grace Lawyers E: enquiries@gracelawyers.com.au
This post appears in Strata News #808.
This article has been republished with permission from the author and first appeared on the Grace Lawyers website.