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Residential Focus: Director and supervisor liability – more than just an empty threat

25 June 2024

15 min read

#Property, Planning & Development

Published by:

Brandon Thai, Vishwa Shah

Residential Focus: Director and supervisor liability – more than just an empty threat

In Kazzi v KR Properties Global Pty Ltd t/as AK Properties Group [2024] NSWCA 143, the Court of Appeal has confirmed the liability of the sole director of a builder in a defects claim, arising from his involvement as the nominated supervisor of a builder in the construction of a building.

The director/nominated supervisor was held to be liable under the Design and Building Practitioners Act 2020 (NSW) for a breach of his section 37 statutory duty of care by “making decisions as to the progress and manner of the works that gave rise to the defects on which the Owners relied”.

The builder had sued the developers to recover outstanding amounts under the building contract. The developers cross-claimed for defective and incomplete works.

The developers’ claim against the director/nominated supervisor failed at first instance, with the Court below finding that the quantum evidence and submissions were not specific enough to establish the director/nominated supervisor’s liability for the defects.

However, the developers raised on appeal that in cross-examination, the director/nominated supervisor had clearly admitted to three breaches of the duty of care.

The Court of Appeal agreed, finding that the director/nominated supervisor had been heavily involved in the decision-making process.

The Court outlined the decisions that the director/nominated supervisor had made which led to a finding of his personal liability:

“[94] …Mr Kazzi’s failure to undertake the necessary check surveys, or cause them to be performed, involved a breach of the duty of care in s 37 of the DBP Act with respect to this work…
[101] By causing Oxford, under his supervision, to construct the foyer and façade in a manner that significantly departed from the approved plans, Mr Kazzi breached the duty of care in s 37 of the DBP Act…
[108] Given Mr Kazzi’s position as the nominated supervisor, his involvement in the decision to install non-compliant door jambs in favour of a performance solution constituted a breach of the statutory duty of care. The non-compliances with fire resistant requirements which were the subject of defect B16, which included the installation of non-fire rated cladding on the external walls of units C5 and C6 without installing any fire protection beneath that cladding, also involved a breach on the part of Mr Kazzi of his statutory duty of care in supervising the building works.”

There is an emerging trend towards personal liability of director/nominated supervisors under section 37 of the Design and Building Practitioners Act 2020 (NSW). Similarly in Mangano v Amescorp Pty Ltd [2024] NSWDC 195, the director/nominated supervisor was found personally liable even though he had hired an on-site supervisor, due to his regular attendance on site.

Next steps

In terms of what follows, traditional asset protection structures at the cottage end of the industry clearly have some catching up to do (or are perhaps just redundant), as do contracts of employment for staff nominated supervisors at the bigger end of the industry. It’s not just a forward-looking issue. The emerging trend will have all levels of the industry looking at legacy projects from the last 10 years and identifying risks that were never recognised in structures, indemnities, pricing or wages.

Authors: Christine Jones & Brandon Thai

In the media

Development is booming in Gosford but is the city ready for the forecast growth over the next 20 years?
Construction in Sydney's 'satellite' city, Gosford, is ramping up, but many in the sector are struggling to keep up. The region has long struggled to develop at a similar pace to cities such as Wollongong to the south and Newcastle further north. While the skyline is filled with cranes, work on some projects remains at a standstill due to structural issues and voluntary administrations (20 June 2024).  Read more here.

Real estate agents weigh profits against prices as property market finds yet another gear
Property price growth across the country is, again, shifting up a gear, and it's unclear when the market will cool. The latest Bureau of Statistics figures show the mean price of residential dwellings rose by $14,300 to $959,300 in the March quarter. It means the value of the Australian property market, at $10.7 trillion, is now three times that of the share market, at $3.1 trillion (12 June 2024).  Read more here.

NSW and Victorian construction regulators unite to build a better industry and meet housing needs
Building Commission NSW (the Commission) has welcomed the Victorian Building Authority (VBA) to Sydney to share nation-leading industry regulation, insights, information, and innovations during a two-day visit. The Victorian delegation, led by the Chief Executive Officer and Commissioner of the VBA, Anna Cronin, discussed how the NSW building industry is regulated through strong legislative powers to audit the designs and building work of residential homes, apartments, boarding houses, and aged care. The Commission also detailed its use of disciplinary action like Stop Work and Building Work Rectification Orders used to better protect owners and occupiers from inheriting serious defects (24 June 2024).  Read more here.

Blackwattle Bay to deliver 300 more homes
Sydney’s Blackwattle Bay has taken a major step forward with an Expressions of Interest process opened today, seeking a development partner to renew a 3.6 hectare parcel of government-owned land currently home to the Sydney Fish Market. The NSW Government will also seek to increase the residential housing on the site to help address the states housing crisis. Previously the land-use controls were to have roughly 50% commercial and 50% residential, the new controls will aim to change this to about 30% commercial and 70% residential, adding approximately 300 additional homes (23 June 2024).  Read more here.

NSW Government reducing the cost of living for land lease communities
More than 40 thousand people living in residential land lease communities in NSW will be better off after changes to how these communities are regulated, making it fairer for residents. The Minns Labor Government has today passed new laws to fix some of the biggest and most pressing challenges for these communities, including changes to fees and charges (21 June 2024).  Read more here.

A Budget to deliver more houses and better homes
The 2024-25 NSW Budget delivers a plan to build quality homes and ease the pressure on renters, home builders and those living in strata communities with a $55.2 million investment. The NSW Government has already established Building Commission NSW and created the Strata and Property Services Commissioner and the NSW Rental Commissioner. The 2024-25 Budget sees them grow so they can continue to deliver better outcomes for the people of NSW (18 June 2024).  Read more here.

NSW Budget: Social Housing and Homelessness Investment
The Minns Labor Government is taking an historic step to build more homes and set the state on a path to end homelessness with significant investment in new social homes and increased support for people in crisis. There will be a record $6.6 Billion Social Housing and Homelessness Investment as Part of Building Homes for NSW Program (18 June 2024).  Read more here.

A budget investment in a fairer and more modern rental market
The 2024-25 NSW Budget will establish a NSW Rental Taskforce to help deliver the Minns Labor Government’s plan to build better communities and a fairer rental market. An $8.4 million investment into the work of the Rental Commissioner will deliver investigators, inspectors and support teams to engage with renters, target dodgy agents and act on serious breaches of rental laws (17 June 2024).  Read more here.

New homes, closer to jobs and services for essential workers in Sydney
The Minns Labor Government is investing $450 million to build new apartments for essential workers including nurses, paramedics, teachers, allied health care workers, police officers and fire fighters to rent at a subsidised rate in areas closer to the city, their jobs and services. Up to four new sites will be acquired by the NSW Government’s residential development arm Landcom, to build more than 400 new build-to-rent dwellings in the next three years (16 June 2024).  Read more here.

Planning to support the housing construction industry
The NSW Government is announcing additional measures to tackle the housing crisis by addressing bottlenecks that are slowing down the construction of homes in NSW. In a new pilot project, the NSW Government will explore how it can assist the construction industry to obtain finance and speed up the delivery of new homes (15 June 2024).  Read more here.

Housing industry calls for overhaul of skilled migration system
The Housing Industry Association (HIA) has sounded the alarm over Australia’s acute housing shortage, calling for urgent reforms to the skilled migration system to address critical labour shortages in the construction sector. According to data from the Department of Home Affairs, only 1,346 workers in construction trades have been granted temporary work visas in the nine months to March 2024, a figure that falls far short of industry demands (17 June 2024).  Read more here.

In practice and courts

National Construction Code 2025 Public Comment Draft
Have your say on proposed changes to the next edition of the National Construction Code (NCC). Your feedback is invited on the NCC 2025 Public Comment Draft (PCD) until Monday 1 July 2024. The NCC is updated every 3 years, based on required regulatory practices, industry research, public feedback provided and policy directions from governments to the Australian Building Codes Board (ABCB) between publishing cycles. Updated content is included in the Public Comment Draft for consultation. During the NCC Public Comment Draft consultation process, the ABCB seeks feedback on the suggested amendments and/or inclusions to the next edition of the NCC. Read more and access the consultation here.

Published – articles, papers, reports

Building Approvals, Australia – Latest release for April 2024
The latest release of this report from the Australian Bureau of Statistics provides the number of dwelling units and value of buildings approved for the April 2024 period. Access the report here.


Morgan v Pitch Perfect Constructions Pty Ltd [2024] NSWDC 235
BUILDING AND CONSTRUCTION – Home Building Act 1989 (NSW) – jurisdiction.
Australian Consumer Law (NSW); Civil and Administrative Tribunal Act 2013; Civil Procedure Act 2005; Fair Trading Act 1987; Fair Trading Regulation 2019; Home Building Act 1989; Home Building Regulations 2004.

Raysons Constructions Pty Ltd v The Owners Strata Plan No 87003 [2024] NSWCATAP 113
APPEALS – BUILDING AND CONSTRUCTION – statutory warranties expired – s18E(1)(e) not enlivened – owners corporation became aware of the defects in 2014 – proceedings commenced on 29 November 2020 – limitation period expired – whether jurisdiction to hear and determine the issues between the parties – mixed question of fact and law – whether the decision of the Tribunal was against the weight of the evidence – whether leave to appeal should be granted – whether the appellant has suffered a substantial miscarriage of justice.
Civil and Administrative Tribunal Act 2013 (NSW); Home Building Act 1989 (NSW).

New South Wales Self Insurance Corporation v Kavanagh [2024] NSWCATAP 109
HOME BUILDING APPLICATION – building claim – appeal against decision of insurer under building cover contract – whether policy provision excludes cover – successor in title – whether successor in title has an interest in the work – non-completion of work by builder.
Civil and Administrative Tribunal Act 2013 (NSW); Home Building Act 1989 (NSW); Home Building Amendment (Compensation Reform) Act 2017.

The Owners – Strata Plan No 2661 v Selkirk [2024] NSWSC 760
LAND LAW – strata title – duties of owners corporation – duty to maintain and repair common property – claims for rectification works and damages by lot owner under Strata Schemes Management Act 2015 (NSW), s 106(5) and 232(1) following breach of duty – whether entitlement of owners corporation to apply for orders to inspect and perform works on lot owner’s property an answer to resistance by lot owner to accessing her property – whether open to owners corporation to rely on unreasonable conduct by lot owner in failing to mitigate her loss in partial defence to claim for damages – consideration of nature of duty owed by owners corporation and statutory right to damages under s 106
Australian Consumer Law, s 236; Civil and Administrative Tribunal Act 2013 (NSW), s 83, cl 6(2) of Sch 4; Civil Liability Act 2002 (NSW), Pt 1A, s 5D; Civil Procedure Act 2002 (NSW), s 56; Court Suppression and Non-publication Orders Act 2010 (NSW); Home Building Act 1989 (NSW); Legal Profession Uniform Law Australian Solicitors’ Conduct Rules 2015 (NSW), r 5; Residential Tenancies Act 2010 (NSW), s 52; Safety, Rehabilitation and Compensation Act 1988 (Cth); Strata Schemes Management Act 1996 (NSW), s 62; Strata Schemes Management Act 2015 (NSW), ss 4, 106, 122, 123, 124, 232; Trade Practices Act 1974 (Cth), ss 82, 87.

Lee v Commissioner for Fair Trading [2024] NSWCATOD 79
ADMINISTRATIVE LAW – administrative review – occupation – qualifications and registration – professional engineer and design practitioner registration – alternative registration pathway requirements – whether experience is at least or equivalent to prescribed requirements.
Administrative Decisions Review Act 1997; Building and Development Certifiers Act 2018; Design and Building Practitioners Act 2020; Home Building Act 1989

The Owners – Strata Plan No. 94784 v Mirvac Projects Pty Ltd [2024] NSWSC 741
CIVIL PROCEDURE – guillotine orders – expert reports served late in face of guillotine order – whether leave to rely on late served reports should be granted – whether explanation for delay adequate, comprehensive, and candid.
Design and Building Practitioners Act 2020 (NSW); Home Building Act 1989 (NSW).

Owners SP 54026 v Kastri Aev Pty Ltd [2024] NSWCATAP 119
REAL PROPERTY – STRATA MANAGEMENT – strict duty of owners corporation to maintain and repair common property – lost rent claim arising from alleged breach of duty – limitation period in Strata Management Act 2015 (NSW) s 106(5) with (6) – nature of loss – extension of time under Civil and Administrative Tribunal Act 2013 (NSW) s 41.
Civil and Administrative Tribunal Act 2013 (NSW); Limitation Act 1969 (NSW); Strata Schemes Management Act 2015 (NSW).

Horan v The Owners – Strata Plan No. 68307 [2024] NSWCATAP 118
DAMAGES – assessment under s 106(5) of the Strata Schemes Management Act 2015 (NSW) – loss of opportunity – required proof.
ADMINISTRATIVE LAW – challenge on basis of unreasonableness – when available.
Civil and Administrative Tribunal Act 2013 (NSW) Residential Tenancies Act 2010 (NSW); Strata Schemes Management Act 2015 (NSW).

Visscher v SafeWork NSW [2024] NSWIRComm 1038
EMPLOYMENT AND INDUSTRIAL LAW – Industrial Relations Commission – Appeals – appeal against decision dismissing application under s 229 of the Work Health and Safety Act 2011 for external review of a decision to issue a prohibition notice – whether leave to appeal should be granted – whether Commissioner erred in finding that an owner-builder constructing a dwelling was conducting an “undertaking” – whether the Commissioner erred in finding the inspector held the “reasonable belief” required by s 195 of the WHS Act when issuing the prohibition notice – whether the Commissioner denied the applicant procedural fairness in not permitting him to adduce rebuttal evidence – whether the decision at first was otherwise affected by error.
Industrial Relations Act 1996 ss 187, 188; Work Health and Safety Act 2011 ss 5, 7, 195, 224, 229.

Craig v Shallita [2024] NSWCATAP 112
LANDLORD and TENANT – RESIDENTIAL TENANCY – no grounds termination – alleged retaliatory eviction – lack of utility with tenants’ vacation – water usage charges alleged breach – Residential Tenancies Act 2010 (NSW) ss 33, 85, 115.
Civil and Administrative Tribunal Act 2013 (NSW); Home Building Act 1989 (NSW); Residential Tenancies Act 2010 (NSW); Residential Tenancies Regulation 2019 (NSW); Strata Titles Management Act 2015 (NSW).

Manassa v Commissioner for Fair Trading [2024] NSWCATOD 81
ADMINISTRATIVE LAW – administrative review of decision to refuse an owner-builder permit for the construction of a dual occupancy – whether special circumstances exist – special circumstances found.
Administrative Decisions Review Act 1997; Home Building Act 1989.

Fam v Assassin Pert Control Pty Ltd t/as Assassin Pest Control [2024] NSWCATAP 106
APPEALS – errors other than questions of law – no question of principle.
Australian Consumer Law, s 18; Civil and Administrative Tribunal Act 2013 (NSW), s 80; cl 12 of Sch 4; Civil and Administrative Tribunal Rules 2014 (NSW), r 35(4)(c); Competition and Consumer Act 2010 (Cth), Sch 2; Home Building Act 1989 (NSW), s 48O; Property and Stock Agents Act 2002 (NSW), s 52.

Hiperia Holdings Pty Limited v Sghabi;; Sghabi v Hiperia Holdings Pty Limited [2024] NSWCATAP 105
HOME BUILDING – successor in title engaged contractor to complete residential building work of another builder – no liability for contractor where no inference drawn on available evidence that contractor had installed defective windows – no breach of statutory warranty where consequential loss arising from water penetration not caused by contractor’s work – contingency provision allowable in building defects claim.
APPEAL –Error on a question of law in relation to some findings of defective work – inadequacy of reasons – substituted findings of Appeal Panel.
Civil and Administrative Tribunal Act 2013 (NSW); Civil and Administrative Tribunal Rules 2014; Home Building Act 1989 (NSW).


Bills introduced by Government

National Housing and Homelessness Plan Bill 2024 – 24 June 2024

Bills passed by both Houses of Parliament

Residential (Land Lease) Communities Amendment Bill 2024 – passed by both houses 21 June 2024

Better Regulation Legislation Amendment (Miscellaneous) Bill 2024 – introduced and 2R Speech 20 June 2024

Regulations and other miscellaneous instruments

Land Tax Management Regulation 2024 – 7 June 2024

Building, Development and Strata Legislation Amendment Regulation 2024 – published LW 21 June 2024

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 newsletter is accurate at the date it is received or that it will continue to be accurate in the future.

Published by:

Brandon Thai, Vishwa Shah

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