The NSW Parliament recently passed the Design and Building Practitioners Act 2020 (“DBPA”).
New Statutory Duty of Care
Part 4 of the DBPA, which commenced on 11 June 2020, establishes a new statutory duty of care. Generally speaking, any person who carries out construction work will have a duty to exercise reasonable care to avoid economic loss caused by defects in or related to a building for which the construction work is done or arising out of that work (section 37 of the DBPA).
“Construction work” is defined under section 36 of the DBPA to mean any of the following:
(a) building work (which includes residential building work within the meaning of the Home Building Act 1989);
(b) the preparation of regulated designs and other designs for building work;
(c) the manufacture or supply of a building product used for building;
(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) above.
The duty of care extends to construction work carried out before the commencement of Part 4 of the DBPA if the economic loss caused by a breach of the duty of care first became apparent within the 10 years immediately before the commencement of the DPBA. Therefore, the duty of care under Part 4 of the DBPA is retrospective.
The duty of care is owed to each owner of the land in relation to which the construction work is carried out and to each subsequent owner of the land on which the construction work is or was carried out and whether it was carried out under a contract or other arrangement with the owner or a previous owner. These owners are defined to include the owners of a lot in a strata scheme, development lot or neighbourhood lot within a community scheme, the owners corporation, community association, precinct scheme and neighbourhood scheme.
A person to whom the duty of care is owed is entitled to claim damages for the breach of the duty such as the costs of rectifying the defects, consequential loss caused by the defects and the reasonable costs of providing alternative accommodation where necessary.
Accordingly, owners corporations can now directly pursue other parties involved in the construction work in addition to the builder and developer such as engineers, architects, designers, project managers, subcontractors, suppliers or manufacturers.
It is also important to note the following:
- The duty of care under Part 4 cannot be delegated or contracted out of;
- The statutory warranties or other obligations imposed under the Home Building Act 1989, other Acts or the common law are not limited by the new duty of care so that a claim for breach of duty of care under section 37 of the DBPA can be added in existing proceedings commenced under the Home Building Act 1989;
- The duty of care under Part 4 does not limit damages or other compensation that may be available to a person under another Act or at common law because of a breach of a duty by a person who carries out construction work;
- The duty of care is subject to the limitation period that applies to negligence claims under the Limitation Act 1969 meaning there will be strict time limits to bring a negligence claim;
- Claims under Part 4 are subject to the Civil Liability Act 2002e. proportionality claims will apply to the new duty of care; and
- Claims under Part 4 are subject to the 10 year long stop period from the date of completion of the building under s 6.20 of the Environmental Planning and Assessment Act 1979.
Owners corporations (and their strata managers) should obtain advice in relation to the owners corporation’s options and rights to claim under the new duty of care. Please feel free to contact us at firstname.lastname@example.org if you have any questions about the new legislation and how we may be able to assist you.
Disclaimer: Please note that the information contained in this article is not legal advice and should not be relied upon. You should obtain legal advice specific to your circumstances before you take any action or otherwise rely upon the contents of this article.