Passing the Parcel Doesn’t Apply to NSW Building Defect Claims Anymore

The Owners – Strata Plan No 84674 v Pafburn Pty Ltd [2023] NSWCA 301

Quick Read

This 2023 decision by the NSW Court of Appeal is about a building defects dispute in a North Sydney strata title building under the new Design and Building Practitioners Act 2020. The strata building took legal action against the developer and the builder for construction defects under the new 2020 laws governing liability for defects. As part of their defence to the legal action, the developer and the builder said that they were entitled to include the 9 sub contractors that were engaged to construct parts of the strata building and make them liable for any construction defects relating to their work, instead of themselves under the Civil Liability Act 2002. The key issue in the case was to reconcile the apparent inconsistencies between the two laws; one that said the developer and builders liability could not be transferred; and; the other that operates to share responsibility and liability between parties that caused the damage and loss. After analysing both laws and the nature of claims under the new 2020, the NSW Court of Appeal decided that the two laws co-existed because although the defects claim under the new laws was a tort [legally speaking], the way it was created and imposed [as non transferrable] meant that the apportioning [liability sharing] in the Civil Liability Act 2002 didn’t apply. It said they were ‘outflanked’. The decision is intricate and complex. But the decision an important first major decision on these new kinds of building defects claims making legal action for building defects by strata buildings simpler and easier, avoiding the problems created under the decision in the Brookfield Case, and matching the position of builders and developers in claims for breach of the warranties under Home Building Act 1989.

Implications

The new duties under s 37 make developers and builders responsible for exercising reasonable care to avoid economic loss caused by defective construction work.
Those claims are a restatement and extension of the duty in negligence alleged in the Brookfield Case and so are torts [in legal speak].
There’s an apparent inconsistency between the Design and Building Practitioners Act 2020 and the Civil Liability Act 2002.
The Design and Building Practitioners Act 2020 duties do not arise vicariously under s 35 as they are directly imposed on developers and builders.
The Design and Building Practitioners Act 2020 duties are not concurrent under s 36 as they only apply to developers and builders.

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Full Report & Case Details

This 2023 decision by the NSW Court of Appeal is about a building defects dispute in a North Sydney strata title building under the new Design and Building Practitioners Act 2020 concerning whether liability for the building defects could be split between the developer, the builder and the subcontractors who built the strata building.

The strata building took legal action against the developer and the builder for construction defects under the new 2020 laws governing liability for defects. Under the Design and Building Practitioners Act 2020, a duty of care is imposed on developers and builders in favour of strata buildings [to address the consequences of the High Court decision in Brookfield Multiplex Ltd v. Owners Corporation Strata Plan 61288 & Anor [2014] HCA 36.

As part of their defence to the legal action, the developer and the builder said that they were entitled to include the 9 sub contractors that were engaged to construct parts of the strata building and make them liable for any construction defects relating to their work, instead of themselves.

The Civil Liability Act 2002 allows a person who is liable for damages to apportion [share] liability with others who are also partially responsible in some circumstances. But, because the Civil Liability Act 2002 predated the Design and Building Practitioners Act 2020 whether or not this could be done had never been considered by any Courts.

The strata building argued that this kind of defence was not available for claims under the Design and Building Practitioners Act 2020 which it said were like claims under the Home Building Act 1989 which cannot be apportioned.

The developer and the builder argued that they could apportion liability because the claims under the Design and Building Practitioners Act 2020 were like negligence claims, which can be apportioned between responsible parties.

So, the primary issues for the NSW Court of Appeal to decide were whether the duty of care in section 37(1) of the Design and Building Practitioners Act 2020 was a tort [legal wrong] and, if it was if the proportionate liability provisions of the Civil Liability Act 2002 applied to it.

In making its decision the NSW Court of Appeal, reviewed both laws and concluded.

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Keywords

#NSW #NSWCourtofAppeal #defects #negligence #dutyofcare #delegableduty #apportionment #2023 #DBPA2020 #s36 #s37 #s39 #CLA2002 #pt4 #s5Q