Executive summary 

The NSW Supreme Court’s judgment in The Owners – Strata Plan No. 81376 v Dydlam Developments¹ highlights the power of the so-called “Long Stop” provision in the Home Building Act 1989 (NSW) (HBA), and how an ineffective Occupation Certificate issued under section 109H(2) of the Environmental Planning and Assessment Act 1979 (NSW) (EPA) will be considered by the Court. The decision demonstrates that claims brought by insured claimants can be “long stopped” despite a potentially ineffective Occupation Certificate.

Background

An Occupation Certificate was issued under section 109H(2) of the EPA on 4 September 2008 in respect of a 98-unit strata development in Parklea. The development was affected by defects.

Counsel for the Owners Corporation (OC) first notified the home warranty insurer of the defects in a purported claim under the policy in 2012.

Throughout 2013 and 2021, the Builder, the Developer and the OC attempted (both under proceedings and under various settlement agreements) to rectify the defects. These remedial works were also affected by defects.

The Developer and Builder went into administration in 2022.

The OC issued two further claims to the insurance company in 2022 to recover their loss, which was approximately $13 million.

The Court had to decide whether the purported 2012 claim was valid, and whether the 2022 claims were made in time.

The insurance policy

The insurance policy covered the OC for loss or damage caused by an ‘Insured Event’. The ‘Insured Event’ was only covered if the loss or damage was suffered because of the ‘insolvency of the builder’.²

The Occupation Certificate

The parties agreed that the Occupation Certificate issued on 4 September 2008 did not authorise certain sections of the development. The OC believed this made the Certificate ‘not effective‘.³ Whether this ineffectiveness made the Occupation Certificate invalid would impact on the insurance provisions in the HBA, specifically in this matter the calculation of the time within which the insurance claims had to be made.

HBA – the “long stop” and the extension

Referred to in this decision as the ‘long stop limitation’,⁴ insurance contracts with respect to section 103BC(1) of the HBA usually provide insurance ‘only if a claim in respect of the loss is made to the insurer within 10 years after the work insured was completed‘.⁵

The OC’s argument

The OC argued that, as they believed the ineffective Occupation Certificate was invalid, the work was never ‘completed’. As the work was never completed, the long stop period never begun, and the OC’s 2022 claims were in time.

The decision

Stevenson J, citing Project Blue Sky,⁶ held that the ‘better view‘⁷ was that the 2008 Occupation Certificate could not be invalid. This was because:

1. the EPA provided for invalidity in other sections of the Act, but not specifically in section 109H. Since section 109H was silent on invalidity, the Court held Parliament must have intended that certificates incorrectly issued under that section were not automatically invalid; and
2. finding invalidity would also have the ‘startling result‘⁸ that the occupation of the building since 2008 had been unlawful. Parliament could not have ‘intended‘⁹ a breach to have such an effect.

The ultimate result from finding the Occupation Certificate not invalid was that the 10-year long stop period began to run when the Occupation Certificate was issued on 4 September 2008 and expired on 4 September 2018. As the claims under the policy were made in 2022, the claims were out of time.

As an aside, the purported claim in 2012 was also not a valid claim under the policy. This was because there was no ‘Insured Event’ as the builder was ‘not then insolvent‘¹⁰ in 2012. Counsel for the insurer did accept the 2012 claim as notice under 103BB(3) of the HBA. This section of the HBA allows an insured to claim for loss after the period of insurance, so long as the insurer is notified during the period of insurance. However, the actual claim after the period of insurance (in 2022) was still made after the expiry of the long stop limitation period.

Key takeaways 

The key takeaways are:

1. The insurer’s cover will end strictly pursuant to the long-stop provision in the HBA, that is, ten years after the Occupation Certificate is issued, regardless of the effectiveness of the Occupation Certificate; and
2. An insured should ensure their claims under their policy are made within time under the Policy and the Act and certainly prior to the end of the long-stop period, as claims outside this period are not made in time and will likely be rejected.

This article is written by David Vaughan, Partner, Nadim Sara, Associate, and Mark Jones, Solicitor.

¹ [2025] NSWSC 438.

² The Owners – Strata Plan No. 81376 v Dyldam Developments Pty Ltd [2025] NSWSC 438 [31].

³ The Owners – Strata Plan No. 81376 v Dyldam Developments Pty Ltd [2025] NSWSC 438 [72].

⁴ The Owners – Strata Plan No. 81376 v Dyldam Developments Pty Ltd [2025] NSWSC 438 [104].

⁵ Home Building Act 1989 (NSW) s 103BC(1).

⁶ Project Blue Sky Inc v Australian Broadcasting Authority (1998) 194 CLR 355, 388.

⁷ The Owners – Strata Plan No. 81376 v Dyldam Developments Pty Ltd [2025] NSWSC 438 [89].

⁸ The Owners – Strata Plan No. 81376 v Dyldam Developments Pty Ltd [2025] NSWSC 438 [91].

⁹ The Owners – Strata Plan No. 81376 v Dyldam Developments Pty Ltd [2025] NSWSC 438 [91].

¹⁰ The Owners – Strata Plan No. 81376 v Dyldam Developments Pty Ltd [2025] NSWSC 438 [50].