Very wide duties will have a very wide impact 4 min read
We have learned much about the statutory duty of care under the Design and Building Practitioners Act 2020 (NSW) (the DBP Act) following its introduction, and there may soon be a duty of care on similar (but not identical) terms in the Building Bill 2022.
In this Insight, we explain the current duty of care regime and what to look out for in the future.
- The case law now gives some guidance on the duty of care created by the DBP Act. It is very wide in scope – both as to the buildings and the people in the construction chain to which it applies.
- The NSW Government's draft proposed Building Bill introduces a statutory duty of care (the proposed duty) that is similar in many respects to the existing DBP Act duty of care, but may apply to a different range of 'building work' and people within the construction chain. The final form of the Bill is yet to be seen but it could omit to repeal the DBP Act duty of care. Either way, this demonstrates the continuing evolution of the new duties incumbent upon industry professionals as a result of the ongoing Construct NSW reforms.
The courts have given guidance on the scope and application of the DBP Act duty of care. In particular, it:
- applies to all buildings within the broad definition of 'building' in the Environmental Planning and Assessment Act 1979 (NSW) (the EP&A Act), which includes part of a building and any structure or part of a structure (with some exceptions);1
- pierces the corporate veil (and, as such, can result in liability for individuals even when they were not party to a contract under which the work was performed);2
- applies to persons exercising substantive control over construction work, and may therefore apply even if they do not, as a matter of fact, do anything to cause that control to be exercised;3
- may be owed by an owner of land on which construction work was carried out to a subsequent owner of the same land, provided the original landowner carries out or has substantive control over the construction work;4 and
- is subject to the Civil Liability Act 2002 (NSW), so defendants to a claim for breach of the duty may have the benefit of proportionate liability defences.5
Impact of the DBP Act duty of care
- The very broad nature of the DBP Act duty of care (which applies to almost all 'buildings' and people – including individuals – within the construction chain) will give rise to additional liabilities for contractors and consultants, and may have a resultant impact on insurance cover and premiums.
- Professional indemnity insurance is unlikely to cover individuals' liability in the context of rectifying defects or incomplete works (where those defects result from defective workmanship, as opposed to design), which could leave individuals exposed to uninsured liabilities; and
- For building owners, potential liability to subsequent owners could arise where 'substantive control' was exercised over the construction work.
New proposed duty of care
Last year, the NSW Government released 'for consultation' a draft of the Building Bill, as part of a further step in the 'Construct NSW' building and construction industry reforms (see our Insight).
The Building Bill includes the proposed duty, which is on similar (but not identical) terms to the DBP Act duty of care.6 Notably:
Like the DBP Act duty of care, the proposed duty:
- may also apply to all buildings within the broad definition of 'building' in the EP&A Act;7
- will be non-delegable and parties will be unable to contract out of it;8 and
- is subject to the Civil Liability Act, so proportionate liability defences can apply.9
Unlike the DBP Act duty of care, the proposed duty:
- has a different definition of 'building work'.10 This could result in it applying to different activities than does the DBP Act duty of care;
- does not appear to extend to those who exercise 'substantive control',11 so the pool of those affected by the proposed duty may be smaller; and
- is not expressed as retrospective. If the intention is for the Building Bill to repeal the DBP Act duty of care, this may result in gaps between what plaintiffs can claim now under the DBP Act and in the future under the proposed duty.
Notwithstanding the above, the current version of the draft Building Bill does not include wording to repeal the DBP Act duty of care. While it appears to be the Government's intention that the Proposed Duty should replace the DBP Act duty of care and act to consolidate the law,12 if the legislation is passed as currently drafted and the DBP Act duty of care is not otherwise repealed, there will be two overlapping duties of care that apply to 'all buildings' but have different scopes.13 This will have implications for all industry stakeholders, both in understanding the relevant duties and obligations, and in unravelling the complexities of any claims when things do go wrong.
Roberts v Goodwin Street Developments Pty Ltd  NSWCA 5.
Goodwin Street Developments v DSD Builders (in liq)  NSWSC 624, Boulos Constructions Pty Ltd v Warrumbungle Shire Council  NSWSC 1368.
The Owners – Strata Plan No 84674 v Pafburn Pty Ltd  NSWSC 659 (Pafburn).
The Owners – Strata Plan No 84674 v Pafburn Pty Ltd  NSWSC 116.
See Building Bill s216.
See Building Bill s3(2) and Standard Instrument (Local Environmental Plans) Order 2006 [NSW] Dictionary.
See Building Bill ss 219, 220.
See Building Bill s221(3).
See Building Bill s185(1) and 215(1) and DBP Act ss 4 and 36(1).
Cf DBP Act s36(1) and Boulos Constructions Pty Ltd v Warrumbungle Shire Council  NSWSC 1368.
Building Bill 2022 Regulatory Impact Statement, Part 2 – What work can be regulated, August 2022.
See Building Bill s 221(1).