ARTICLE
16 December 2024

Residential Focus: Proportionate liability defence off the table

HR
Holding Redlich

Contributor

Holding Redlich, a national commercial law firm with offices in Melbourne, Canberra, Sydney, Brisbane, and Cairns, delivers tailored solutions with expert legal thinking and industry knowledge, prioritizing client partnerships.
Builder could not entrust the construction work to another person in a way that would discharge its obligations under the DBPA.
Australia Real Estate and Construction

Today the High Court dismissed an appeal from the 2023 decision, The Owners – Strata Plan No 84674 v Pafburn Pty Ltd [2023] NSWCA 301 (Pafburn), where it had been held that:

  • liability under the Design and Building Practitioners Act 2020 (NSW) (DBPA) was a form of vicarious liability, which could not be apportioned to subcontractors
  • accordingly, a builder or developer was found to not able to rely on the proportionate liability provisions set out in part 4 of the Civil Liability Act 2002 (NSW) (CLA).

The broader dispute between Pafburn Pty Ltd and the relevant owners corporation has been instructive in relation to claims under the Design and Building Practitioners Act 2020 (NSW) (DBPA), although the particular decision under appeal is the first time the legislation has been considered by the High Court.

The practical result of Pafburn was that it was up to the (for example) defendant builder to pass on its liability to subcontractors by filing cross claims, rather than relying on the proportionate liability provisions of the CLA.

The secondary effect is to burden solvent defendants with primary liability and no ability to reduce exposure consistent with their contribution.

The majority of the High Court affirmed Pafburn in holding that the duty of care set out in section 37(1) of the DBPA was non-delegable and therefore section 5Q of the CLA applied. That duty was read to be that "reasonable care is taken by a person in the carrying out of any work or task delegated or otherwise entrusted to the person by the" person owing the duty of care in section 37(1) of the DBPA.

Relevantly, a builder could not entrust the construction work to another person in such a way that would discharge its obligations under the DBPA. Any failure by a subcontractor in the construction works would leave the builder vicariously liable.

Gordon, Edelman and Steward JJ, in their joint judgment, disagreed with this position, stating that the proportionate liability scheme in the CLA should apply to DBPA claims.

Notably, their Honours in the minority also cast doubt as to whether a certifier could be captured under the definition of a "person who carries out construction work".

To access the High Court decision here.

This publication does not deal with every important topic or change in law and is not intended to be relied upon as a substitute for legal or other advice that may be relevant to the reader's specific circumstances. If you have found this publication of interest and would like to know more or wish to obtain legal advice relevant to your circumstances please contact one of the named individuals listed.

Mondaq uses cookies on this website. By using our website you agree to our use of cookies as set out in our Privacy Policy.

Learn More