Legalese: The statutory duty owed under the Design and Building Practitioners Act 2020 (NSW) (DBPA) and statutory warranties owed under the Home Building Act 1989 (NSW) (HBA) are not apportionable, subject to the common law principal of vicarious liability, and therefore the proportionate liability scheme will not apply.
Plain English: Basically, if you are found liable for defective works under the HBA or DBPA, you will be made to wear the entire blame. You cannot share this blame with others (such as your subcontractors or the Owners of the property).
In this part of the article, we define key terms:
Proportionate Liability is a scheme in NSW established by the Civil Liability Act 2000 (NSW) (CLA). It allows persons who are found to be liable for damages to share (or apportion) the blame and the costs of that damage with others who contributed to the damage. It goes a step further and allows the damages to be apportioned depending on how much damage each wrongdoer is found to be liable for.
Vicarious liability is a common law principle which provides that an employer can be held legally responsible for the actions of their employees.
A statutory duty is a duty imposed on someone by the legislation. This includes:
The duty owed by a person who carries out construction work thereby owing a duty to exercise reasonable care to avoid economic loss caused by defects (see s. 37 of the DBPA).
A statutory warranty is an obligation owed by someone, and a right afforded to someone else, and both of which are established by legislation. This includes:
The duty owed by a person who completes construction works to the principal/property owner, to the effect that the works will be completed in a timely, proper and workmanlike manner and that the end result will be fit for habitation (see s. 18B of the HBA).
Below we touch on two cases where this principle of non-delegable statutory duty has recently been confirmed.
The Owners – Strata Plan No 84674 v Pafburn Pty Ltd [2023] NSWCA 301
In this matter, the Owners sued Pafburn (being the builder) and Madarina Pty Ltd (the developer), arguing that both entities breached the statutory duty owed under the DBPA as the building works completed by the pair were said to be defective.
Pafburn admitted that it owed the Owners the statutory duty under the DBPA. However, it argued that it should not solely wear the blame, and that its nine subcontractors (made up of manufacturers, suppliers, certifiers, tilers, waterproofers, council and formwork subcontractors) who contributed to the defective works should be held to be proportionally liable (if there was liability).
The Court reminded the public of s. 37(3) of the DBPA, which provides the statutory duty under the DBPA is to be treated as though it is a common law duty. This means that the principal of vicarious liability applies (i.e. employer responsible for employee actions/omissions).
As a result, the Court determined Pafburn could not apportion the liability of the defective works with the 9 subcontractors.
In legalese:
“[101] Whether as a matter of general law principle, or by operation of s 5Q [of the CLA], the liability of the respondents [Pafburn] in the present case should be treated as a form of vicarious liability [employer responsible for employee] which is not subject to any limitation on their liability by apportionment as between them and concurrent wrongdoers under Pt 4 of the Civil Liability Act. There are two available pathways, but they reach the same conclusion.”
This decision has been appealed to the High Court and the decision is currently reserved.
The Owners – Strata Plan 80867 v Da Silva [2024] NSWDC 263
On 5 July 2024, the Court confirmed that the HBA statutory warranties are also non-delegable.
In this matter, the Owners sued Da Silva (being a waterproofing contractor) for completing defective works on the property. The defect meant that water from the balconies could enter inside the apartments through the sliding doors when it rained.
Da Silva admitted that the works were defective but argued that the liability for the defects should be apportioned with the installer of the sliding doors for incorrect installation, and also with the Owners for giving instructions to not complete the works to code. Both points were successfully defended by the Owners.
The Court reminded the parties of s. 34(3A) of the CLA, which provides that the proportionate liability scheme does not apply to the statutory warranties owed under the HBA.
Therefore, Da Silva was found solely liable for the defective works.
In legalese:
“[265] Section 34(3A) [of the CLA], which is in Part 4 [the part which provides the proportionate liability scheme], provides that “This Part does not apply to a claim in an action for damages arising from a breach of statutory duty under Part 2C [being the part that contains the statutory warranties] of the Home Building Act 1989 and brought by a person having the benefit of the statutory warranty”.
If you would like more information on the above or need any assistance, please contact us on 02 8329 6500 or excellence@kreisson.com.au
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