The Design and Building Practitioners Act 2020 (NSW) – 5 years on
Since its enactment on 11 June 2020, the Design and Building Practitioners Act 2020 (NSW) (DBP Act) has significantly reshaped the legal landscape for construction professionals in New South Wales.
Central to the Act is section 37, which imposes a statutory duty of care on those who carry out "construction work", requiring them to exercise reasonable care to avoid economic loss caused by defects.
The following key decisions provide clarity on the scope and application of the duty.
1. The Owners – Strata Plan No 87060 v Loulach Developments Pty Ltd (No 2) [2021] NSWSC 1068
The existence of a defect is not enough
The Owners Corporation of a residential strata development alleged numerous building defects, including water ingress and defective cladding.
Initially, the claim was based on breaches of statutory warranties under the Home Building Act 1989 (NSW). However, the Owners sought to amend their claim to include a cause of action under section 37 of the DBP Act.
The key issue was whether the Owners Corporation could simply assert the existence of defects as evidence of a breach of the statutory duty of care.
The Court held that merely listing defects is not sufficient to establish a breach of the statutory duty. Section 37 of the DBP Act does not create strict liability. A defect alone does not prove a breach. Plaintiffs must plead with precision, identifying the risk of harm, the precautions that should have been taken, and the causal link between the breach and the defect.
2. Goodwin Street Developments Pty Ltd v DSD Builders Pty Ltd (in liq) [2022] NSWSC 624
Duty of care applicable to all buildings
Goodwin Street Developments Pty Ltd (Goodwin) contracted DSD Builders Pty Ltd (DSD) to carry out the construction of three boarding houses intended for university student accommodation. The project suffered from delays and defective works, leading Goodwin to terminate the contract.
The Court had to determine whether Mr. Daniel Roberts, the fiancé of DSD’s director carried out “construction work” under section 36 of the DBP Act and if he breached the statutory duty of care under section 37.
Additionally, the Court examined whether the duty of care applies to buildings other than class 2 residential buildings and whether Mr. Roberts was liable for trespass and malicious damage.
The Court found that Mr. Roberts did carry out construction work by supervising and managing the site. Mr. Roberts was found to have breached his duty of care and was personally liable for the cost of rectifying defects and damage.
The Court also found that the duty of care under section 37 applies to all buildings, not just class 2 buildings.
The Court of Appeal upheld the broad interpretation of “building” under the DBP Act, confirming that the duty of care applies to all buildings as defined in the Environmental Planning and Assessment Act 1979.
(NSW): Roberts v Goodwin Street Developments Pty Ltd [2023] NSWCA 5
3. Boulus Constructions Pty Ltd v Warrumbungle Shire Council (No 2) [2022] NSWSC 1368
Duty owed by natural persons, not just companies
Boulus Constructions (Boulus) was contracted by the Council to build a retirement village, community centre, and learning centre in Dunedoo, NSW. A dispute arose, and Boulos commenced proceedings against the Council for payment under the Building Contract.
The Council cross-claimed alleging various building defects. It then sought to amend its claim to include breaches of the section 37 of the DBP Act and to join Mr. Brian Boulus (Managing Director) and Mr. Bradley McCarthy (Site Supervisor) as individual cross-defendants.
Boulus opposed the joinder on the basis that the Boulus and McCarthy were not "persons" under section 37. The Court disagreed and allowed the joinder.
The term “person” in section 37 is to be interpreted broadly and includes natural persons, not just companies. It is not necessary for a person to be a “registered practitioner” to owe a duty under section 37.
The Court also rejected the argument that imposing liability on directors contradicted the Corporations Act 2001 (Cth).
4. Deaves v Sigma Group NSW Pty Ltd [2023] NSWCATAP 94
Accessible to homeowners via NCAT
The appellants (Deaves) purchased a lot in a residential strata development from the developer (Sigma Group). The appellants alleged breaches of statutory warranties under section 18B of the Home Building Act 1989 (NSW) (HBA) and a breach of the statutory duty of care under section 37 of the DBP Act.
At first instance, the NSW Civil & Administrative Tribunal (NCAT) found that it lacked jurisdiction to determine the DBP Act claim. However, this was overturned on appeal.
The NCAT Appeal Panel confirmed that the Tribunal has jurisdiction to hear DBP Act claims because claims under section 37 fall within the definition of a “building claim” under the Home Building Act 1989 (NSW), confirming the DBP Act is accessible to homeowners, subject to compliance with the three-year limitation period for building claims in NCAT under section 48K(3) of the HBA.
5. The University of Sydney v Multiplex Constructions Pty Ltd [2023] NSWSC 383
Issuing certificates alone is not substantive control
The Plaintiff University brought proceedings against several parties involved in the construction of the Charles Perkins Centre (located on its campus) alleging defective building work, including combustible cladding.
The focus of this interlocutory decision was the Plaintiff's attempt to amend its pleadings to include a claim that the certifier breached its statutory duty of care under section 37(1) of the DBP Act.
The Plaintiff alleged the certifier carried out “construction work” under section 36(1) of the DBP Act. This was principally because the certifier issued a compliance report and certificate of compliance.
The Court held that issuing certificates alone does not amount to substantive control.
To establish “substantive control,” the Plaintiff needed to show that the certifier actively oversaw the installation of the cladding, or had the ability or power to control how the work was carried out. The Court refused leave to amend the pleadings as proposed but the Plaintiff was given an opportunity to replead its case.
6. Kazzi v KR Properties Global Pty Ltd t/as AK Properties Group [2024] NSWCA 143
A broad scope of personal liability
This case involved the construction of a six-unit residential apartment building in Gerringong, NSW. The builder, Oxford (NSW) Pty Ltd (Oxford), failed to complete the project by the contractual date, leading the owners to terminate the contract after a two-year delay.
Mr. Kazzi, the sole director and nominated supervisor of Oxford, was found to have supervised and exercised substantive control over the building work, making him personally liable under section 37 of the DBP Act. This decision confirms the broad scope of personal liability under the DBP Act.
7. Pafburn Pty Ltd v The Owners – Strata Plan No 84674 [2024] HCA 49
No proportionate liability defence for upstream parties
The Owners Corporation sued Pafburn (builder) and Madarina (developer) for defective construction of a multi-storey residential building. The Owners Corporation alleged breaches of the statutory duty of care under section 37 of the DBP Act.
Pafburn and Madarina sought to rely on proportionate liability under Part 4 of the Civil Liability Act 2002 (NSW) (CLA), naming nine concurrent wrongdoers.
The High Court held that proportionate liability does not apply to breaches of the statutory duty of care under section 37 of the DBP Act.
Section 39 of the DBP Act makes the duty non-delegable, and section 5Q of the CLA treats breaches of non-delegable duties as vicarious liability, meaning the defendant is wholly liable to the Plaintiff for the acts of those to whom work was delegated.
Key takeaways
The case law to date collectively demonstrates that the DBP Act imposes a broad and robust duty of care, extending liability to a wide range of individuals and entities involved in construction. So far, the Courts have interpreted the Act in a way that prioritises consumer protection and accountability. The following are the key takeaways:
- The statutory duty of care under section 37 applies to all buildings as defined in the Environmental Planning and Assessment Act 1979 (NSW).
- It applies to any person who carries out construction work, including supervisors, project managers, and individuals acting on behalf of a builder.
- The phrase “substantive control” is interpreted broadly and does not require actual exercise of control.
- A person may owe a duty even if they did not actively exercise control, as long as they had the ability and power to control the work.
- Section 37 does not create strict liability. A defect alone does not prove a breach.
- Claims for breaches of Section 37 are not apportionable in certain circumstances. Upstream parties (e.g. developers, head contractors) who delegate work cannot apportion liability. Cross-claims remain available to those parties, but they do not reduce liability to the Plaintiff.
- Downstream parties who do not delegate work (e.g. certifiers, engineers) may still argue for apportionment but whether such defences will be accepted remains unclear.
