Australia: Residential Focus: Statutory duty of care applies to all buildings in NSW

NSW Court of Appeal confirms statutory duty of care applies to all buildings

In mid-2022, the NSW Supreme Court held that the duty of care under section 37 of the Design and Building Practitioners Act 2020 (NSW) (DBPA) was not limited to construction work on class 2 (multi-unit residential) buildings. In dismissing an appeal from this decision, the NSW Court of Appeal has, in Roberts v Goodwin Street Developments Pty Ltd [2023] NSWCA 5, confirmed that the duty applies to all buildings as defined in the Environmental Planning and Assessment Act 1979 (NSW) (EPAA).

Background

Section 4(1) of the DBPA defines building work to be work involved in, or involved in co-ordination or supervising work involved in, the construction, alteration, repair, renovation or protective treatment of a building of a class or type specified by the Regulations. Clause 12 of the Regulation prescribes class 2 or class 2 containing buildings for the purpose of this definition.

Under Part 4 of the DBPA (within which the duty of care in section 37 sits) anyone carrying out construction work has a duty of care to current and future landowners to avoid causing economic loss due to defects in a building for which the work is done, arising from the construction work.

'Construction work' is defined by section 36 as "building work", "the preparation of regulated designs and other designs for building work", "the manufacture or supply of a building product used for building work", and "supervising, coordinating, project managing or otherwise having substantive control over the carrying out of" that work.

Importantly, for the purpose of Part 4, section 36 provides that 'building work' includes residential building work within the meaning of the Home Building Act 1989 (NSW) (HBA) and 'building' has the same meaning as it has in the EPAA.

Facts at first instance

An owner (Goodwin Street Developments Pty Ltd) contracted with a builder (DSD Builders) to construct three boarding houses on its property in 2017. Following a number of delays and the discovery of significant defects on the site, the owner terminated the contract in March 2018 and commenced proceedings against the builder shortly after. One of the directors of the builder (Daniel Roberts) was later added to the proceedings as a defendant.

The owner made two allegations against the director. First, that he had caused damage to the property and removed certain building materials, fixtures and fittings, previously incorporated into the building. And second, that the director had breached his statutory duty of care under section 37 of the DBPA due to the defects at the property.

In answer to the second issue, the director contended that no duty of care existed as the boarding house under construction was not subject to the statutory duty in section 37 of the DBPA as it was not a class 2 building.

Findings

It was held that the director had engaged in project management and supervision of the building work, as defined in section 37, and thus owed (and was in breach of) a duty of care to the owner.

Key to that finding was the Court's interpretation of the DBPA, that the definition of 'building work' in section 4(1) did not apply to the provisions within Part 4.

Rather, the broader definition of 'building' under the EPAA (as provided in section 36 of the DBPA) applies to Part 4, meaning the duty of care was owed to anyone undertaking construction work (as defined by section 36) on "any structure or part of a structure" aside from a "manufactured home, moveable dwelling or associated structure within the meaning of the Local Government Act 1993 (NSW)" (although the Court noted how "fiendishly difficult" it was to interpret the intended functions of these provisions).

However, the Court could not resolve the purpose of having both definitions of 'building' and 'building work' within section 36. It was posited that the inclusion of 'building work', via the HBA, crawled back some types of buildings excluded under the definition of 'building' within the EPAA. Yet, as this was ancillary to the question at hand, it was unnecessary to determine.

On appeal

The NSW Court of Appeal approved the Supreme Court's findings, confirming the broader application of the statutory duty of care under section 37 in NSW. However, the Court of Appeal put forth its own, slightly different reasons for reaching this conclusion.

It found that while the definition of 'building work' in section 4(1) actually applies to the definition of 'building work' in section 36, the definition should only be utilised to identify the type of work being undertaken. 'Building' in section 36 works separately to identify what type of building the work was being done on, and still retains the broad definition designated by the EPAA.

Moreover, the definition of 'building work' in section 36 was noted to be specifically non-exclusive in that it was to be taken to include building work within the meaning of the HBA. The Court inferred from this that it was designed to qualify that the definition of 'building work' in section 4(1) should also be taken to include the definition of 'building work' under the HBA for the purposes of Part 4.

As the type of work the director undertook still fell within the definition of section 4(1), and the boarding houses remained captured by the broad definition of 'building' under section 36, the decision of the Supreme Court was upheld and the appeal was dismissed.

Interestingly, the Court of Appeal's findings also resolved a matter raised in the Supreme Court regarding the purpose of defining 'building work' within section 36. The purpose was not to crawl back the exclusions under the EPAA, but rather to expand on the function of section 4(1) of the DBPA.

Implications

The Court of Appeal's decision lends certainty to this space, both for current and prospective plaintiffs and, as broad as it can be, class of builders and industry professionals who may find themselves defendants to claims under this legislation.

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