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NSW Supreme Court determines that the statutory duty of care applies to all buildings

Since the introduction of the statutory duty of care in section 37 of the Design and Building Practitioners Act 2020 (DBP Act), there have been different schools of thought regarding the application of the duty, namely that the statutory duty of care applies to:

  • Class 2 buildings and residential building work for the purpose of the Home Building Act 1989 (NSW) (HBA), or
  • any building (as defined in the Environmental Planning and Assessment Act 1979 (EPA Act).

For the time being, this has been resolved by the NSW Supreme Court’s decision in Goodwin Street Developments atf Jesmond Unit Trust v DSD Builders (in liq) [2022] NSWSC 624, which has provided the first guidance from the Court as to the application of the duty, since it commenced in June 2020.

The Court determined that the duty of care applies to work completed on any building, as defined in the EPA Act.

The facts

In 2017, the plaintiff (Goodwin) entered into a contract with the first defendant (DSD) to construct three residential boarding houses for university student accommodation. The second defendant (Roberts) was the representative of DSD who negotiated and administered the contract and controlled the work completed.

In early 2018, disputes arose between Goodwin and DSD relating to defects and progress and, as a result, works were suspended. After the works were suspended, Goodwin’s directors observed damage to the construction work, terminated the contract and commenced proceedings against DSD. Goodwin later joined Roberts as a defendant to the proceedings.

A liquidator was appointed to wind up DSD in 2021. The proceedings against it were stayed, and Goodwin continued its claim against Roberts.

The issues

The primary issues for the Court to determine were:

  • whether Roberts carried out “construction work” on the site for the purpose of section 37 of the DBP Act
  • whether Roberts breached that statutory duty of care.

The Court’s decision

His Honour acknowledged the difficulty in interpreting the ‘labyrinthine’ provisions of the definitions in the DBP Act, before determining that Mr Roberts did carry out “construction work” for the purposes of section 37.

His Honour’s reasons for the decision were as follows:

  • the duty of care under section 37 of the DBP Act applies to “construction work”
  • “construction work” is defined in section 36(1) of the DBP Act to include “building work” and “supervising, coordinating, project managing or otherwise having substantive control over” the carrying out of any “building work”
  • “building work” is defined in section 4 of the DBP Act by reference to building classes prescribed in the regulations. Currently, the regulations only prescribe Class 2 buildings (typically, multi-unit residential buildings)
  • section 36(1) of the DBP Act contains another broader definition of “building work”, applicable only to Part 4 of the DBP Act (which includes section 37). It applies to any “building” as defined in the EPA Act, where that definition includes “any structure or part of a structure… but does not include a manufactured home, moveable dwelling, or associated structure within the meaning of the Local Government Act 1993 (NSW)”
  • the definition in section 36 applies to Part 4 of the DBP Act (including section 37), which commenced in June 2020. The definition in section 4 has no application to Part 4 of the Act and applies only to those other parts of the DBP Act that commenced in July 2021. This approach is necessary to give cohesion to the regime in the DBP Act, and is consistent with the parliamentary speeches regarding the draft act
  • a boarding house is within the EPA Act definition of a “building” and so the duty of care in section 37 was owed by Roberts.

His Honour couldn’t, however, find a specific role, in the context of the EPA definition of “building”, for that part of section 36(1) which includes residential building work within the meaning of “building work”. It had been argued that its function was to write back in to the application of the duty some work, associated with manufactured homes or moveable dwellings, which is otherwise excluded from the EPA Act definition of building. His Honour found it unnecessary to resolve this, as it had no bearing on the application of the duty to work to a boarding house.

Goodwin’s unchallenged evidence showed that Roberts introduced himself as the builder of the project from the outset. He attended regular site meetings, was the only representative of DSD and knew of the defects.

For this reason, His Honour concluded Roberts was the project manager and supervisor of the work and that he had breached his duty of care.

Impacts

The decision represents the first guidance on the application of the duty since the commencement of Part 4 of the DBP Act.

It remains to be seen whether this decision will be appealed or disturbed on appeal. If and until then, as a result of the Court adopting the broadest available position on the application of the duty, we are likely to see an increase in claims made under the DBP Act, as the legislation is called in aid by a wider group of asset owners.

Authors: Christine Jones, Marie-Louise Scarf & Annie Papageorgiou

In the media

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Published – articles, papers, reports

Australian Bureau of Statistics – Australian Industry
Annual estimates of key economic and financial performance of industries in Australia, including income, expenses, profit and capital expenditure (2021–21 financial year: released 27 May 2022). Read more here.

Australian Bureau of Statistics – Construction Work Done, Australia, Preliminary
Provides preliminary estimates of value of total construction work done, building work done and engineering construction work done (March 2022: released 25 May 2022). Read more here.

Home building to remain at capacity for the next year
HIA released its economic and industry Outlook Report for Australia today. The Outlook Report includes updated forecasts for new home building and renovations activity nationally and for each of the eight states and territories (24 May 2022). Read more here.

Practice

Australian Institute of Building Surveyors – Board Communique
The Board recently made a change to the National Accreditation Scheme in order recognise and accredit Building Surveying Academics. The change will allow academics to be properly recognised in undertaking the important role they have in the future of building surveying through education. (17 May 2022). Read more here.

Australian Building Codes Board – Certification transition arrangements for lead free plumbing products
This notice is to provide direction on the certification transition arrangements for the lead free requirements for plumbing products, as outlined in the National Construction Code (NCC) 2022 Volume Three (the Plumbing Code of Australia) (May 2022). Read more here.

Safework NSW – Building and Construction Safety Regional Show
This roadshow will bring together industry representatives and SafeWork NSW to engage, consult and collaborate on health and safety issues impacting the building and construction industry (May 2022). Read more here.

Cases

The Owners – Strata Plan No 84674 v Pafburn Pty Ltd [2022] NSWSC 659
BUILDING AND CONSTRUCTION – Design and Building Practitioners Act 2020 (NSW) – proper construction of definition of “construction work” – proper construction of “otherwise having substantive control over the carrying out of any work” – proper construction of s 37(1) – whether “person” includes the “owner of the land in relation to which the construction work is carried out”;
Design and Building Practitioners Act 2020 (NSW); Design and Building Practitioners Bill 2019 (NSW); Environmental Planning and Assessment Act 1979 (NSW); Home Building Act 1989 (NSW); Uniform Civil Procedure Rules 2005 (NSW).

Lanser v Halycon Super Pty Ltd [2022] NSWCATAP 169
ADMINISTRATIVE LAW – particular administrative bodies – NSW Civil and Administrative Tribunal – hearing rule – opportunity to be heard – no such opportunity lost – no question of principle;
Home Building Act 1989 (NSW).

Goodwin Street Developments Pty Ltd atf Jesmond Unit Trust v DSD Builders Pty Ltd (in liq) [2022] NSWSC 624
BUILDING AND CONSTRUCTION – malicious damage to property – action for trespass – standing of plaintiff to bring action for trespass – whether plaintiff had exclusive possession of the property – whether plaintiff entitled to recover loss for damage to the reversion – measure of damages for damage to the reversion – whether second defendant caused the malicious damage – whether second defendant carried out construction work for the purpose of the Design and Building Practitioners Act 2020 (NSW) – whether second defendant acted in breach of his statutory duty of care under that Act in relation to that construction work;
Building Products (Safety) Act 2017 (NSW); Community Land Management Act 2021 (NSW); Corporations Act 2001 (Cth); Design and Building Practitioners Act 2020 (NSW); Design and Building Practitioners Regulation 2021 (NSW); Environmental Planning and Assessment Act 1979 (NSW); Evidence Act 1995 (NSW); Home Building Act 1989 (NSW); Local Government Act 1993 (NSW); Strata Schemes Management Act 2015 (NSW).

Legislation

NSW

Bills introduced
Statute Law (Miscellaneous Provisions) Bill 2022 – 17 May 2022

Environmental Planning Instruments
Ballina Local Environmental Plan 2012 (Map Amendment No 5) LW 20 May 2022
Clarence Valley Local Environmental Plan 2011 (Map Amendment No 2) LW 20 May 2022
Inverell Local Environmental Plan 2012 (Map Amendment No 1) LW 20 May 2022
Liverpool Local Environmental Plan 2008 (Amendment No 94) LW 20 May 2022
Orange Local Environmental Plan 2011 (Map Amendment No 4) LW 20 May 2022
Parramatta Local Environmental Plan 2011 (Amendment No 61) LW 20 May 2022
Port Stephens Local Environmental Plan 2013 (Map Amendment No 3) LW 20 May 2022
Port Stephens Local Environmental Plan 2013 (Map Amendment No 4) LW 20 May 2022
Tamworth Regional Local Environmental Plan 2010 (Amendment No 23) LW 20 May 2022
Wingecarribee Local Environmental Plan 2010 (Map Amendment No 4) LW 20 May 2022
Yass Valley Local Environmental Plan 2013 (Map Amendment No 3) LW 20 May 2022

Disclaimer
The information in this publication is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavour to provide accurate and timely information, we do not guarantee that the information in this article is accurate at the date it is received or that it will continue to be accurate in the future.

Published by:

Annie Papageorgiou

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