10 August 2022
11 min read
#Property, Planning & Development, #Construction, Infrastructure & Projects
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In the recent decision of The Owners – Strata Plan No 84674 v Pafburn Pty Ltd (No 2) [2022] NSWSC 1002, the Court, for the first time, applied the test for “controlling” construction work, within the meaning of section 36 of the Design and Building Practitioners Act 2020 (NSW) (Act). This test was set out in the Court’s earlier judgment in the same proceedings (see our earlier article here).
The judgment clarifies the factual information and the standard of proof required to be established in proceedings to strike out a claim for breach of the duty of care under section 37 of the Act (Statutory Duty).
The Owners – Strata Plan No. 84674 (OC) brought proceedings against Pafburn Pty Limited (Builder) and Madarina Pty Limited (Developer).
The OC alleged that the Builder and Developer each carried out “construction work” within the meaning of section 36 of the Act, owed the OC the Statutory Duty and breached that duty.
The Builder admitted that it had carried out construction work and owed the OC the Statutory Duty. However, the Developer disputed that it had carried out construction work within the meaning of section 36 of the Act, and applied to have the OC's claim against it struck out.
The OC also applied to file an amended claim that included new defects. The Builder and the Developer opposed this. They argued that they were prejudiced because the limitation period for filing a cross-claim to pass through its liability for the new defects had expired.
The primary issues for the Court to decide were whether:
The Court refused to dismiss the OC’s claim against the Developer and allowed the OC to file its amended claim.
The Court’s reasons for refusing to summarily dismiss the OC’s claim against the Developer included the following:
The Court was unable to conclude that the OC was incapable of establishing, on the basis proposed in the amended claim, that the Developer was able to and in fact did control how the building work was carried out, thus engaging in construction work for the purpose of sections 36 and 37 of the Act.
The OC had further alleged that the Developer was in a position to control the works on the basis that its sole director was also the nominated supervisor for the building works. His Honour found that the director holding both roles was not determinative, but that it was arguable that, as a result of holding both roles, the director may have in fact had the ability to control the building work.
The Court’s reasons for granting the OC leave to rely on its amended claim, which included new defects, included the following:
The effect of this decision is that if a plaintiff is able to plead sufficient facts that, if proven, will show that a person was in a position to control the building works, the Court is unlikely to strike out a claim for breach of the Statutory Duty before a substantive hearing of the claim. Careful identification and pleading of those facts is therefore necessary.
Further, a defendant who is sued for breach of the Statutory Duty, who identifies concurrent wrongdoers in its defence, and relies on section 35 of the CL Act, will need to identify some prejudice other than the expiry of the limitation period for filing cross-claims, in order to successfully oppose new defects being added into the claim after the limitation period has expired.
Authors: Christine Jones, Marie-Louise Scarf & Annie Papageorgiou
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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.
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