By Laina Chan -
Snapshot
- The Design and Building Practitioners Act provides that a person who carries out ‘construction work’ has a duty to exercise reasonable care to avoid economic loss caused by defects in, or related to, a building for which the work was done.
- In Roberts v Goodwin Street Developments Pty Ltd, the NSWCA confirmed that this retrospective and extended statutory duty of care applies to all classes of buildings, not just residential building work.
- It is likely that this decision will lead to an increase in the number of claims.
With the enactment of the Design and Building Practitioners Act 2020 (NSW) (‘Act’), a retrospective statutory duty of care was created in favour of owners of land. The Act provides that a person who carries out ‘construction work’ has a duty to exercise reasonable care to avoid economic loss caused by defects in, or related to, a building for which the work was done. However, it was unclear from the Act whether the duty of care applied to all classes of building or simply residential building work as defined in the Home Building Act 1989 (NSW) (‘Home Building Act’).
The scope of the duty of care was considered in Goodwin Street Developments Pty Ltd atf Jesmond Unit Trust v DSD Builders Pty Ltd (in liq) [2022] NSWSC 624 (‘Goodwin 2022’) and the decision has been confirmed by the Court of Appeal in [2023] NSWCA 5 (‘Goodwin appeal’). It is now incontrovertible that the extended statutory duty of care applies to all classes of buildings.
Background
In Brookfield Multiplex v OC SP 61288 (2014) 254 CLR 185 (‘Brookfield‘), the High Court stated that a builder does not owe a subsequent owner a duty of care to avoid pure economic loss. The Owners Corporation, therefore, had no redress against the builder for defects in the serviced apartment building. The Act has overcome this principle in New South Wales. The other states and territories have been watching the operation of the Act with a view to similarly overcoming the effects of the Brookfield case.
