This article details the latest updates about recent cases and outcomes concerning building defects in NSW strata properties.
Building Defects – Who is Liable?
Can the director of a building company that is responsible for the construction of a new strata building be held personally liable for defects in the building?
The Design and Building Practitioners Act 2020 (Act) was introduced in 2020 and provides that a duty of care is owed by “a person who carries out construction work” to an owners corporation to avoid defects in the construction of the building. But who exactly is classified as “a person who carries out construction work”?
Is “a person who carries out construction work” limited to the entity that was contracted to do the work such as the builder or does it also include all persons involved in completing the project such as a supervisor, project manager and even the director of the builder’s company or the developer?
Personal Liability of Project Manager
A recent decision by the Supreme Court of NSW has found that the husband of a director of a building company was personally liable for defective building works done by the builder under the Act because he acted as the project manager and supervisor of the builder: see Goodwin Street Developments Pty Ltd atf Jesmond Unit Trust v DSD Builders Pty Ltd (in liq) [2022] NSWSC 624.
In this case, the builder was placed into liquidation and the developer brought proceedings against Mr Roberts the husband of a director of the builder. According to the Court, Mr Roberts was a project manager of the builder, supervising construction works for the project. Therefore, Mr Roberts was found to be “a person who carried out construction work” under the Act and was found liable for the defects.
Liability of Developer
In another recent Supreme Court case, an owners corporation sued the builder and developer for damages arising from defects.
The Court found, among other things, that a developer could be held liable for defects under the Act as a person who carried out construction work.
The Court also said that under the Act, a person could be liable for defects if they could (but did not necessarily) have control of the building works: see The Owners – Strata Plan No 84674 v Pafburn Pty Ltd [2022] NSWSC 659.
Conclusion
These cases have far reaching consequences for directors, supervisors, project managers, developers and sub-contractors involved in construction work who all could be liable to owners corporations for defects under the Act, even for work done up to 10 years ago (as the Act is retrospective). However, for those persons to be liable, it must be proven that they have had or could have had some control over the building works.
Adrian Mueller
Partner + Senior Lawyer
JS Mueller & Co Lawyers
E: adrianmueller@muellers.com.au
P: 02 9562 1266
This post appears in Strata News #577.
If you have a question about building defects or something to add to the article, please leave a comment below.
Disclaimer: The information contained in this article is provided for your personal information only. It is not meant to be legal or professional advice nor should it be used as a substitute for such advice. You should seek legal advice for your specific circumstances before relying on any information herein. Contact JS Mueller & Co for any required legal assistance.
JS Mueller & Co Lawyers has been servicing the strata industry across metropolitan and regional NSW for over 40 years. We are a specialist firm of strata lawyers with in depth and unmatched experience in, and comprehensive knowledge of strata law and levy collection.
Read next:
- NSW: How To Establish A Major Building Defect
- NSW: Q&A Remediation of Serious Building Defect
- NSW: Q&A Who determines which documents form the Strata records?
This article has been republished with permission from the author and first appeared on the JS Mueller & Co Lawyers website.
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We are currently in the process of addressing waterproofing and concrete spalling remedial work on our Strata building in NSW. We are following the DBPAct 2020 & Regulations 2021. We are at the stage of having the DBP consultant write Specifications and having the Declared Design drawn up by the registered Architect for approval by the NSW Government Portal. Does this mean all DA, BCA, compliances need to be meet by the application before approval and tenders called to do any remedial work?
RE Design and Building Practitioners Act 2020 (Part 4)
First of all, I am quite surprised there are no comments about this new development (pardon the pun) in your laws, notwithstanding the long history of serious building defects in our strata world including NSW’s.
Second, would it be possible to confirm that Part 4 does not provide penalties etc, but is more about confirming a duty of care held by specific parties in the construction process, making it easier to pursue common law litigation against them – and that you would still have to prove they breached their duty of care and that damages flowed from this breach.
Third…I’ve talked to some strata lawyers in QLD and they are unaware of any similar law in this state. It seems that QLD may be lagging behind NSW once again when it comes to protecting unit owners.
Hi Ross
We spoke to Todd Garsden, Mahoneys about whether this case will have any impact on QLD Legislation and Todd replied:
Unfortunately, the position in New South Wales is slightly different to that in Queensland (at the moment). In New South Wales there was a relatively new piece of legislation that created a statutory duty of care to all persons who carry out construction work. I suspect that the trigger for this legislative change was as a result of an earlier decision of The Owners – Strata Plan No 61288 v Brookfield Australia Investments Ltd [2013] NSWCA 317 where the Court provided that no duty of care existed.
Until the law changes in Queensland to adopt a similar obligation, the position will not be the same as in New South Wales.