The Supreme Court has recently made an important decision regarding the scope of the statutory duty of care under the Design Building Practitioners Act 2020 (DBPA).
THE CONSEQUENCES
The Court has found the definition of “construction works” under section 36 of the DBPA extends to works on building other than class 2 residential apartment buildings and is broader than the definition given to “building work” under section 4 of the Act.
This represents an important decision which clarifies the ambiguity around the statutory duty of care since the DBPA commenced its operation on 10 June 2020.
The decision clarifies the broader definition given to “building work” for the purposes of Part 4 of the DBPA and confirms that persons who carry out construction works to commercial and non-class 2 buildings may also owe a non-delegable duty of care under the DBPA to the owners of the buildings.
Since the decision of the High Court in Woolcock Street Investments Pty Ltd v CDG Pty Ltd [2004] 216 CLR 515, owners of commercial and non-residential buildings have encountered legal impediments when recovering against contractors, and other building professionals for defective building works. This decision, alongside with Part 4 of the DBPA, allows those owners a potential avenue of recovery.
Builders, contractors and other building professionals involved in building activities must also be aware of their potential liabilities in carrying out or being involved in building work and ensure the scope of works must be carefully defined and documented.
THE BACKGROUND
The DBPA commenced on 11 June 2020 as a response to the problems facing the residential building industry after highly publicised defects in multi-storey residential buildings such as the Opal Towers and Mascot Towers.
The DBPA establishes a framework for a documentary & regulatory regime centering upon compliance declarations which is further detailed under the Design and Building Practitioners Regulation 2021 (the Regulation).
Part 4 of the DBPA also introduced a non-delegable statutory duty of care for a person who has carried out “construction work” to landowners to avoid economic loss caused by defects. This duty was retrospective and applies to building works carried out under contracts entered before the commencement date of 11 June 2020.
On the other hand, Pts 2, 3 and 5 to 9 of the DBPA did not commence until 1 July 2021, which was the same date on which the Regulation commenced.
Prior to the decision, there was considerable debate about the interpretation of the statutory duty of care under Part 4, and whether the duty applies to persons who had carried out construction work on non-class 2 buildings. Class 2 building are generally multi-unit, multi-storey residential apartment buildings. This is because:
- Section 4 of the DBPA defines “Building work” to mean, relevantly, “… the construction of a building of a class prescribed by the regulations for the purposes of this definition”. Under r 12 of the Regulation, a building is prescribed if the building, or a part of the building, is a class 2 building.
- Construction work under Part 4 of the DBPA is broadly defined and includes: ” any of the following—
(a) building work,
(b) the preparation of regulated designs and other designs for building work,
(c) the manufacture or supply of a building product used for building work,
(d) supervising, coordinating, project managing or otherwise having substantive control over the carrying out of any work referred to in paragraph (a), (b) or (c).”Section 36 of the DBPA contains a separate definition of “Building Work” in relation to Part 4, and “building work” is defined as ” building work includes residential building work within the meaning of the Home Building Act 1989“. It does not confine the definition of “Building Work” to class 2 buildings. - For there to be construction work, the person must have carried out some aspect of building work.
The DBPA makes references to the Home Building Act 1989 (HBA) and the Environmental Planning and Assessment Act 1979 (EPA&A) which also contain their own definitions of buildings and dwellings.
THE CASE
In Goodwin Street Developments Pty Ltd atf Jesmond Unit Trust v DSD Builders Pty Ltd (in liq) [2022] NSWSC 624, the plaintiff commenced proceedings against the builder (first defendant) and the builder’s representative (second defendant) for alleged loss from defective work associated with the construction of three residential boarding houses intended for student accommodation close to the University of Newcastle.
The first defendant was rendered insolvent in early 2021. However, there was evidence that the second defendant engaged in project management and had carried out superintendent duties in his personal capacity.
The plaintiff sought damages against the second defendant for trespass and amended its claim to include relief for a breach of the statutory duties under Part 4 of the DBPA.
Boarding houses are explicitly excluded from the definition of residential building work under the HBA, but are considered buildings within the definition given under the EPA&A. The second defendant argued that the duty of care under the DBPA did not apply, as the work was not residential building work.
THE DECISION
The Court found that “building work” in section 36 of the DBPA is an inclusive, not an exclusive, definition. Accordingly, the work carried out by the second defendant to the boarding houses was defective construction work and in contravention of the statutory duty of care under Part 4 of the DBPA.
The fact that a “boarding house” is not a “dwelling” within the meaning of the HBA and thus that construction of a boarding house is not “residential building work” for the purposes of the HBA merely means that work in relation a boarding house is not for the purposes of the DBPA “building work” by reason of any provision in the HBA, insofar as those provisions are incorporated by reference into Pt 4 of the DBP Act.
In its reasoning, the Court also referred to the Hansard of the Second Reading of the DBPA, which gave effect to the definitions of “building” and “building work” under Part 4 of the DBPA.
“Amendment No. 1 provides that the duty of care applies to all buildings and includes a definition of “building” for the purpose of the duty of care and that “building” has the broad meaning of “building” in the Environmental Planning and Assessment Act. Amendment No. 2 makes clear that the duty of care extends to building work, including residential building work within the meaning of the Home Building Act. This amendment will ensure that the duty of care amendments will have broad coverage, which is the intent.”
