On 10 February 2023, the NSW Court of Appeal dismissed the Appeal of Roberts v Goodwin Street Developments Pty Ltd [2023] NSWCA 5 (the Roberts v Goodwin) thus confirming that the duty of care imposed by section 37 of the Design and Building Practitioners Act 2020 (NSW) (the Act) applies to all classes of buildings retrospectively for 10 years from the date of completion of the construction work.
When Part 4 of the Design and Building Practitioners Act 2020 (NSW) (the Act) took effect on 11 June 2020 and the Design and Building Practitioners Regulations did not commence until 1 July 2021, there was uncertainty in relation to how the Act, namely the statutory duty imposed under s37 of the Act, would operate, with many believing that the statutory duty of care would only apply to Class 2 (multi-residential) Buildings.
The following key decisions handed down in 2022 and 2023 were the first-ever decisions regarding Part 4 of the Act and have broadened the application of the duty of care to all classes of buildings.
Background
Goodwin Street Developments Pty Ltd atf Jesmond Unit Trust v DSD Builders Pty Ltd (in liq)
In 2017 Goodwin Street Developments Pty Ltd entered into a building contract with DSD Builders Pty Ltd to construct three residential boarding houses on a property which was owned by Goodwin. From late 2017, it was alleged that Daniel Roberts, the husband of the sole director of DSD, supervised the works. Following disputes regarding defective works and the progress of the works, Goodwin terminated the contract in March 2018.
In August 2018, Goodwin commenced proceedings against DSD (which later went into liquidation), as well as against Mr Roberts. Amongst other things, Goodwin claimed against Mr Roberts a breach of the statutory duty of care contained in s37 of the Act.
Section 37
Section 37 of the Act provides:
(1) A person who carries out construction work has a duty to exercise reasonable care to avoid economic loss caused by defects
a. In or related to a building for which the work is done; and
b. Arising from the construction work
Findings
The Court found that Mr Roberts had acted as the project manager and supervisor of the building works on behalf of DSD and had accordingly been a person who ‘carried out construction work’ within the meaning of Part 4 of the Act.
In a task that Justice Stevenson described as ‘fiendishly difficult,’ His Honour ultimately found that a boarding house, which was a non-class 2 building, was in fact a building to which s37 applied, thus Mr Roberts had breached his duty of care under the Act.
The Appeal
Mr Roberts appealed the decision and was ultimately unsuccessful. Mr Roberts asserted that the duty of care under the Act did not extend to boarding houses.
The Appeal Judges unanimously upheld the primary judges’ findings that a boarding house was a building under the Act, although their reasoning differed, and the definition of ‘building’ was not intended to be limited to class 2 buildings and the Act should be applied in such a way.
Key Takeaways
These two key decisions have a significant impact on the building industry, the professionals within it, as well as their insurers by significantly broadening the application of the definition of a building under Part 4 of the Act.
This means that if you carry out construction work on almost any building, not just class 2 buildings you may be liable for a failing to exercise reasonable care.
It should be remembered that the Duty of Care under s37 of the Act:
- Extends to all current and future owners of the property as well as leasehold strata schemes
- Applies for 10 years from the date of completion of the construction work.
- Is retrospective, meaning it applies to works already undertaken prior to the commencement of the Act
The contents of this publication are for reference purposes only. This publication does not constitute legal advice and should not be relied upon as legal advice, Specific legal advice should always be sought separately before taking any action based on this publication.
