An alternative view of Woolcock Street Investments v CDG Pty Ltd

Citation: (2004) 12 TLJ 194

In a nutshell…

The recent decision in Woolcock Street Investments provided an opportunity for the High Court to clarify the liability of builders and designers to subsequent purchasers for latent defects in commercial buildings. A critical issue for the joint majority was whether the plaintiff was vulnerable in the relevant sense. The majority held that the agreed case stated did not show the plaintiff to be vulnerable, since a purchaser such as the plaintiff could protect itself by obtaining a warranty from the vendor that the building was free of defects, by arranging to have the building inspected before purchase, or by obtaining an assignment of the vendor’s rights against the builder and other parties involved in the construction.

This comment argues that this view fails to take account of the engineering realities of the situation, which preclude discovery of latent defects at the time of the sale and which make it unlikely that a vendor would grant a warranty. Furthermore, the standard construction contracts in use in Australia prohibit the assignment of rights without the consent of both parties and such consent is not likely to be given. The High Court has also overlooked the tax issues associated with the sale of a building and has not in this case placed the same emphasis on reasonableness that it has done in other recent negligence cases. In all, the comment questions whether the High Court has provided any certainty in the area.