In the recent case of Brookfield Multiplex Ltd v
Owners Corporation Strata Plan 61288  HCA 36, the High
Court of Australia unanimously held that a builder, Brookfield
Multiplex, that constructed a strata title apartment complex did
not owe a duty of care to the Owners Corporation (the Corporation)
to avoid causing economic loss occasioned by latent defects in the
common property. This overturned the decision of the New South
Wales Court of Appeal, which had held that a duty of care was
By way of background, the apartment complex was constructed
under a 'design and construct contract' between the builder
and a developer who owned the land on which the complex was built.
The Corporation was established following the registration of a
strata plan over the portion of the apartment complex to be used as
serviced apartments. The common property was vested in the
Corporation as the manager of the strata scheme and agent of the
owners of the serviced apartments.
The contract contained terms relating to the quality of work to
be performed by the builder and required the builder to remedy
defects or omissions in the work within a defined 'defects
The Court of Appeal of New South Wales unanimously held that the
builder did owe the Corporation a duty of care; however that duty
was narrower than the one argued for. Specifically, it was said to
encompass 'a duty to avoid causing loss resulting from latent
defects which were structural or dangerous or which made the
serviced apartments uninhabitable'.
The Court of Appeal dismissed the previous authority of
Woolcock Street Investments Pty Ltd v CDG Pty Ltd 
HCA 16, holding that 'the nature of the building is not the
deciding factor when determining whether a duty of care
exists'. Furthermore, the Court of Appeal stated there is no
'bright line' that distinguishes cases dealing with the
construction of dwellings and cases dealing with the construction
of other buildings.
The High Court firmly disagreed with the Court of Appeal,
stating the Court of Appeal had incorrectly dismissed the previous
authority. The High Court stated the view expressed by Justice
McHugh in Woolcock Street Investments should continue to
be accepted. Additionally, the authority of Bryan v
Maloney  HCA 16, which was relied upon by the Court of
Appeal, should be confined to a category of cases where the
building is a dwelling house and where it can be evidenced that the
subsequent owner falls within a class of persons incapable of
protecting themselves from the consequences of the builder's
lack of reasonable care.
The High Court held that, aside from that particular category of
case, it should be acknowledged that a builder has no duty in tort
to exercise reasonable care in the execution of building work to
avoid a subsequent owner incurring the cost of repairing latent
defects in the building.
This decision provides some comfort to the construction and
property industry, narrowing the boundaries of a builder's duty
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