Law Matters

HANNAH SHEPPHARD

SENIOR SOLICITOR MB NSW

DUTY OF CARE PROVISIONS GET TESTED IN COURT

The Supreme Court of New South Wales has given us what we’ve all been waiting for — a decision on section 37 of the Design and Building Practitioners Act 2020 (NSW) (DBPA) which imposes a duty on a person who carries out construction work 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.

In Goodwin Street Developments Pty Ltd atf Jesmond Unit Trust v DSD Builders Pty Ltd (in liq) [2022] NSWSC 624:

• Goodwin (the plaintiff who brought the Court claim) was a developer constructing three boarding houses near the University of Newcastle;

• DSD Builders Pty Ltd (the first defendant) (Builder) was the head contractor engaged by the developer under a contract dated 10 July 2017; and

• Mr Daniel Roberts (the second defendant) was a representative of the Builder and

Mr Roberts’ fiancée was the sole director of the Builder.

A licensed supervisor was originally engaged by the Builder to oversee the project, however Mr Roberts oversaw the Builder’s works from late August 2017.

Various disputes arose between Goodwin and the Builder, including in relation to defects in the works and the progress of the works.

Things soured and the building contract was terminated. The developer alleged in the Court proceedings that Mr Roberts poured concrete into the sewer pipes on the site, and caused other damage.

Aside from the claims of damage, there was no dispute in the proceedings that there were defects in the works to the value of $300,000. The issue for determination by the Court was whether Mr Roberts was personally liable for breach of the duty of care obligations in the DBPA and therefore responsible for the rectification costs.

The Court found that he was.

Key takeaways in the Court’s decision:

1. Mr Roberts was supervising and project managing the works under the contract and was therefore engaging in

“construction work” within the meaning of the DBPA.

2. The duty of care relates to a boarding house, and is not limited to residential building work only — “building work” as defined in section 36 of the DBPA has a broad reach and applies to commercial and residential work, as well as manufacture, supply and design work.

3. The Court commented that in relation to the determining whether the duty of care applies to boarding houses: “Resolution of the question involves consideration of the labyrinthine provision of s 36 of the DBP

Act. The section appears to have been drafted so as to make comprehension of it as difficult as possible.”

4. As it was Mr Roberts that was project managing the construction on the site, and as the construction works were undertaken under Mr Roberts’s supervision, the fact that the defects were not corrected despite Mr Roberts’s assurances to the developer that “I’ll fix it” bespeaks his want of care in project managing and supervising the construction work. [Decision at 145].

The Court’s decision confirms that the reach of the law in relation to holding individuals accountable for defective building work has been significantly extended by the introduction of the DBPA.

Hannah Shephard is a solicitor at MBA Lawyers, (02) 8586 3517. Specific legal advice should be sought for individual circumstances.