29th January, 2026
Construction defect disputes often depend on how contractual warranties are interpreted and enforced. The NSW Supreme Court decision in 85 Princess Pty Ltd v Fleming [2025] NSWSC 407 provides helpful guidance for property owners, developers and investors.
Background
The case involved the sale of an industrial property with two warehouses built on a concrete slab. Before contracts were exchanged, cracking in the slab was already known, and some limited repairs had been carried out.
Despite this, the purchaser relied on personal warranties given by the vendor’s director about the quality of the construction and the rectification of defects.
After settlement, further cracking appeared in the slab. The purchaser asked for additional repairs, but no further work was done. The purchaser then commenced court proceedings, seeking either:
- damages of about $5.3 million, or
- an order requiring the vendor to carry out the promised rectification works (specific performance).
Issues before the Court
The Court considered:
- whether the concrete slab was defective,
- whether the warranties had been breached,
- what the appropriate measure of damages was, and
- whether specific performance was an available remedy.
Findings on liability
The Court found that the slab had not been constructed in accordance with the warranties. In particular, the saw cuts in the slab were defective and failed to properly control cracking. As a result, the warranties were breached.
Damages and proportionality
Despite finding a breach, the Court rejected the claim for full removal and replacement of the slab. This approach was considered disproportionate to the defect.
The slab was still functional and continued to support tenant use. Importantly:
- the cost of replacing the slab exceeded the purchase price of the property, and
- there was no evidence that the cracking reduced rental income or the property’s market value.
Because of this, the Court did not accept that substantial damages were justified.
Instead, the Court indicated that a program of monitoring and targeted repairs would have been a more appropriate response. This method addressed the problem without unnecessary costs, while the property remained in use.
However, the purchaser did not provide evidence showing how much this repair plan would cost. Without that information, the Court could not calculate proper damages, and so only $100 was awarded to acknowledge the breach.
Specific performance
The purchaser also sought specific performance of the warranties. Courts are generally reluctant to order parties to carry out building works, except where the obligations are clearly defined and damages are inadequate.
In this case, the repair obligations were not sufficiently certain, and damages were considered an adequate remedy. The Court therefore refused to order specific performance.
Key takeaways
- A breach of warranty does not automatically justify major rectification costs.
- Courts will closely assess proportionality, unnecessary costs and supporting evidence.
- If alternative remedies are proposed, they must be supported by clear cost evidence.
- Clear drafting of warranties and rectification obligations is critical.
Early legal advice can help manage risk and avoid costly disputes.
You can read the full decision here.
How Our Firm Can Help
Castrikum Adams Legal advises on defects, disputes, or contractual uncertainty across the Northern Rivers, including, Byron Bay, Bangalow, Murwillumbah, Mullumbimby, Ocean Shores, Lennox Head, Ballina, and Lismore.
Disclaimer: The cases referenced in this blog are publicly available information and are not matters on which our firm has worked or provided representation for. This content is intended for general informational purposes only and does not constitute as legal advice.
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