25 May 2023
16 min read
#Property, Planning & Development, #Construction, Infrastructure & Projects
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The relatively new statutory duty of care under the Design and Building Practitioners Act 2020 (NSW) (DBPA) is a potential solution for defect claims which are time barred under the Home Building Act 1989 (NSW) (HBA) statutory warranties.
However, there is some level of uncertainty as to whether the legislature intended for the NSW Civil and Administrative Tribunal (NCAT) to have jurisdiction to deal with claims for breach of statutory duty under the DBPA. The NCAT is a statutory tribunal, with no inherent jurisdiction comparable to the Supreme Court of NSW. Rather, under section 29 of the Civil and Administrative Tribunal Act 2013 (NSW), the NCAT enjoys the specific jurisdiction bestowed upon it by other empowering legislation.
Unlike the Home Building Act 1989 (NSW) (HBA), the Design and Building Practitioners Act 2020 (NSW) (DBPA) has no provision that confers powers on the NCAT. An initial presumption from this omission may be that the NSW legislature did not intend for the NCAT to deal claims for breach of section 37 of the DBPA, that is, a failure in the duty to exercise reasonable care while carrying out construction work.
However, in at least two decisions, Deaves v Sigma Group NSW Pty Limited [2023] NSWCATAP 94 and Owners SP 92648 v Binah Constructions Pty Ltd [2021] NSWCATAP 68, the NCAT has considered that section 48K of the HBA (which confers jurisdiction on the NCAT to deal with “building claims”) is broad enough to encompass a claim arising under section 37 of the DBPA.
The following sections of the HBA are relevant:
48K Jurisdiction of Tribunal in relation to building claims
"The Tribunal has jurisdiction to hear and determine any building claim brought before it in accordance with this Part in which the amount claimed does not exceed $500,000 (or any other higher or lower figure prescribed by the regulations)".
… "The Tribunal does not have jurisdiction in respect of a building claim relating to building goods or services that have been supplied to or for the claimant if the date on which the claim was lodged is more than 3 years after the date on which the supply was made (or, if made in instalments, the date on which the supply was last made)".
For the purposes of section 48K, section 48A(1) defines “building claim” and “building goods or services” as follows:
"building claim means a claim for – (a) the payment of a specified sum of money, or (b) the supply of specified services, or (c) relief from payment of a specified sum of money, or (d) the delivery, return or replacement of specified goods or goods of a specified description, or (e) a combination of two or more of the remedies referred to in paragraphs (a)–(d), that arises from a supply of building goods or services whether under a contract or not, or that arises under a contract that is collateral to a contract for the supply of building goods or services, but does not include a claim that the regulations declare not to be a building claim". …
"building goods or services means goods or services supplied for or in connection with the carrying out of residential building work or specialist work, being goods or services – (a) supplied by the person who contracts to do, or otherwise does, that work, or (b) supplied in any circumstances prescribed by the regulations to the person who contracts to do that work. Section 48A(2) of the HBA expands the definition: (2) Without limiting the definition of building claim, a building claim includes the following – … (b) a claim for compensation for loss arising from a breach of a statutory warranty implied under Part 2C".
In Owners SP 92648 v Binah Constructions Pty Ltd [2021] NSWCATAP 68, the Appeal Panel of the NCAT considered that a claim for a breach of section 37 of the DBPA arguably fell within the definition of ‘building claim’ under section 48A(1)(a) of the HBA as it is a “claim for – the payment of a specified sum of money”.
In Deaves v Sigma Group NSW Pty Limited [2023] NSWCATAP 94, the Appeal Panel found that a breach of section 37 was a “building claim” because it was a claim for the payment of a specified sum of money that “arose from a “supply of building goods or services whether under a contract or not…”” ([79]).
Section 48K(3) provides (relevant to claims other than for breach of HBA statutory warranty) that the NCAT’s jurisdiction is limited in duration to 3 years after the building services were supplied.
When applied to a DBPA cause of action, that is an important practical limitation given that in the ordinary course, a claimant is likely to have recourse to the DBPA cause of action only if a claim under the HBA is out of time, with HBA claims expiring at 6 years from completion of the work for major defects and 2 years from completion of the work for other defects.
DBPA claims can still be made beyond the 3 years period provided for in section 48K(3), just not in the Tribunal.
Each of the above decisions were in circumstances where the NCAT was considering whether it had jurisdiction under the DBPA.
The issue has recently arisen the other way around, from the perspective of a court considering whether a matter which asserted multiple causes of action (including under the HBA and the DBPA) should be transferred to the NCAT, remembering the terms of section 48L of the HBA, which provides that if proceedings in respect of a building claim are commenced in a court, they must be transferred to the NCAT, on the application of a defendant.
In McLachlan v Edwards Landscapes Pty Ltd [2023] NSWSC 532 the Supreme Court of NSW dealt with an appeal from an interlocutory decision of the Local Court, which was asked by the defendant to transfer proceedings to the NCAT, relying on section 48L of the HBA. The claim relied on multiple causes of action including in negligence and breaches of the HBA, DBPA and the Australian Consumer Law and contract). It was not in dispute that the definition of ‘building claim’ was satisfied. The Local Court made the transfer order, finding that the claim for the breach of the statutory warranties in the HBA was “front and centre” of the multiple causes of action.
Significantly, the defendant’s position was that the 6 year warranty applied to the HBA claim and that the proceedings under the HBA were within time under section 48K(7). The plaintiff argued that its case went beyond the HBA and relied on causes of action including under the DBPA which were out of time in the Tribunal (but not a court) under section 48K(3).
The Supreme Court found that the Local Court was within its powers to transfer the matter to the NCAT as the NCAT could determine and quell the substance of the dispute between the parties which related to the claims for breach of the statutory warranties under the HBA. If the other causes of action “somehow managed to go beyond the claim for breach of the statutory warranties claim, then the plaintiff could continue litigating them” (emphasis within quote) in the Local Court of NSW ([48(2.)]).
In circumstances where it was agreed that the 6 year warranty applied, it is difficult to see how a case under the alternative causes of action could be successfully litigated in the Local Court if an action in the NCAT under the HBA were to fail. The decision appears pragmatic in that respect.
If there had not been agreement that the 6 year warranty applied, the Court may have had difficulty reaching the same result in a context where (if the defect was found not to be a major defect in the NCAT) successive actions may be required in the NCAT and then the Local Court. However, in those circumstances, the defendant would have had difficulty advancing its arguments under section 48L. The benefit to the defendant in accepting that the 6 year warranty applied, must also be recognised, in circumstances where a work order is beyond power for a court, notwithstanding section 48MA.
The Supreme Court didn’t spend any time on whether, and therefore appeared to accept that, the NCAT could deal with a claim under the DBPA as a building claim.
It is difficult to understand why a distinction should be drawn in section 48K between the power to consider a claim for breach of statutory warranty under the HBA for up to 6 years, and other building claims (including DBPA) for only 3 years. This would particularly bite in a claim brought between years 3 and 6 in the NCAT, if the defects fail to satisfy the HBA major defect criteria.
It also remains that there hasn’t been a specific consideration of jurisdiction from a superior court. Whilst this will surely arrive in due course, the reforms to building legislation currently under consideration, could easily put the issue to rest.
Authors: Christine Jones & Meru Sharma
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McLachlan v Edwards Landscapes Pty Ltd [2023] NSWSC 532
BUILDING AND CONSTRUCTION – jurisdiction of NSW Civil and Administrative Tribunal under the Home Building Act 1989 (NSW) – where claim substantively concerns breach of statutory warranty.
APPEALS – leave to appeal – whether leave required – interlocutory decisions – where matter transferred from Local Court to NSW Civil and Administrative Tribunal.|
Design and Building Practitioners Act 2020 (NSW); Home Building Act 1989 (NSW); Local Court Act 2007 (NSW).
Madic Construction Pty Ltd v Noble [2023] NSWCATAP 130
APPEAL – HOME BUILDING – renewal proceedings – orders made must be other than original orders – against the weight of evidence.
Civil and Administrative Tribunal Act 2013 (NSW); Civil and Administrative Tribunal Rules 2014 (NSW).
Hall v Commissioner for Fair Trading [2023] NSWCATOD 59
ADMINISTRATIVE LAW – Home building – application for individual contractor licence – application of Instrument – experience requirements – “employee” – “remuneration” – whether an employee.
Administrative Decisions Review Act 1997; Building Legislation Amendment Act 2021; Civil and Administrative Tribunal Act 2013; Home Building Act 1989; Licensing and Registration (Uniform Procedures) Act 2002.
Vlaanderen v Schuessler [2023] NSWCATAP 126
APPEAL – HOME BUILDING – dismissal of compensation claim – no error of law – no issue of principle.
Civil and Administrative Tribunal Act 2013 (NSW); Civil and Administrative Tribunal Rules 2014 (NSW).
The Owners-Strata Plan No. 86807 v Crown Group Constructions Pty Ltd (No 2) [2023] NSWSC 520
CIVIL PROCEDURE – originating process – amendment – claim under Design and Building Practitioners Act 2020 (NSW) – where no evidence of non-compliance with the Building Code of Australia – discretionary matters – where delay in bringing application – where no evidence of irremediable prejudice – leave granted conditional on evidence that building work did not comply with Building Code of Australia.
CIVIL PROCEDURE – originating process – amendment – claim under Design and Building Practitioners Act 2020 (NSW) – whether claim apportionable – determination as to the applicability of Pt 4 of the Civil Liability Act 2002 (NSW) unnecessary to grant of leave to amend.
Building Code of Australia; Civil Liability Act 2002 (NSW); Design and Building Practitioners Act (2020) (NSW); Environmental Planning and Assessment Act 1979 (NSW); Home Building Act 1989 (NSW); Law Reform (Miscellaneous Provisions) Act 1946 (NSW); Limitation Act 1969 (NSW); Limitation Act 1969 (NSW).
Brucic Pty Ltd v Turton [2023] NSWCATAP 129
BUILDING AND CONSTRUCTION – breach of statutory warranty of due care and skill under the Home Building Act 1989 (NSW) – whether work done was residential building work-whether work was done on a “driveway”, which is included within the definition of a “dwelling” – work done on part of road used to access dwelling on a small rural property – whether question of law involved – conclusion that work was done on a “driveway” was open to the Tribunal.
Civil and Administrative Tribunal Act 2013 (NSW); Civil and Administrative Rules 2014 (NSW); Home Building Act 1989 (NSW).
Kember v Commissioner for Fair Trading [2023] NSWCATOD 60
ADMINISTRATIVE LAW – REVIEW OF DECISION BY EXTERNAL DECISION-MAKER – decision to refuse contractor licence pursuant to the Home Building Act 1989 (NSW) – fit and proper person.
Administrative Decisions Review Act 1997 (NSW); Civil and Administrative Tribunal Act 2013 (NSW); Civil and Administrative Tribunal Rules 2014 (NSW); Firearms Act 1996 (NSW); Home Building Act 1989 (NSW); Weapons Prohibition Act 1998 (NSW).
Goodman v Commissioner for Fair Trading [2023] NSWCATOD 66
ADMINISTRATIVE LAW – Home Building Act – administrative review of decision to refuse application for renewal of licence – fit and proper person requirement – whether applicant took all reasonable steps to avoid external administration – whether applicant is capable of doing the work for which the certificate is required.
Administrative Disputes Review Act 1997; Home Building Act 1989.
Liquor Amendment (Alternative Age Verification) Regulation 2023 (2023-251) – published LW 17 May 2023
Environmental Planning Instruments
Bathurst Regional Local Environmental Plan 2014 (Amendment No 22) (2023-244) – published LW 12 May 2023
Blayney Local Environmental Plan 2012 (Amendment No 12) – published LW 19 May 2023
Bourke Local Environmental Plan 2012 (Amendment No 4) – published LW 19 May 2023
Cumberland Local Environmental Plan 2021 (Map Amendment No 5) – published LW 12 May 2023
Hornsby Local Environmental Plan 2013 (Amendment No 12) – published LW 19 May 2023
Mid-Western Regional Local Environmental Plan 2012 (Map Amendment No 9) – published LW 12 May 2023
North Sydney Local Environmental Plan 2013 (Amendment No 35) – published LW 19 May 2023
Orange Local Environmental Plan 2011 (Amendment No 33) – published LW 19 May 2023
Port Stephens Local Environmental Plan 2013 (Map Amendment No 5) – published LW 12 May 2023
Ryde Local Environmental Plan 2014 (Map Amendment No 3) – published LW 12 May 2023
Sydney Local Environmental Plan 2012 (Map Amendment No 5) – published LW 19 May 2023
Wakool Local Environmental Plan 2013 (Amendment No 6) – published LW 19 May 2023
Warrumbungle Local Environmental Plan 2013 (Amendment No 3) – published LW 12 May 2023
Wingecarribee Local Environmental Plan 2010 (Amendment No 67) – published LW 12 May 2023
Wollongong Local Environmental Plan 2009 (Amendment No 53) – published LW 19 May 2023
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.
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