Kreisson | April 2023
13 April 2023
In a previous Insight, we wrote about the Supreme Court decision of Goodwin Street Developments Pty Ltd atf Jesmond Unit Trust v DSD Builders Pty Ltd (in liq) [2022] NSWSC 624.
In that case, the Supreme Court of NSW determined that “construction work” defined in section 36(1) of the Design and Building Practitioners Act 2020 (NSW) (DBPA) included building work with respect to any class of building on the following basis:
This decision meant that the project manager owed a duty of care which he was found to have breached.
The project manager appealed to the NSW Court of Appeal on three grounds, and on 10 February 2023 the appeal decision of Roberts v Goodwin Street Developments Pty Ltd [2023] NSWCA 5 was handed down.
DID “BUILDING WORK” EXTEND TO BOARDING HOUSES?
One of the grounds of appeal made out by the project manager was that the trial judge erred in construing “construction work” and “building work” in section 36 of the DBPA to include the construction of boarding houses.
The Court of Appeal considered section 36 of the DBPA, which it noted was:
The Court of Appeal said that the conclusion of the primary judge that “construction work” as defined in section 36 of the DBPA related to the construction of any class of building (including boarding houses) was correct but for different reasons.
COURT OF APPEAL’S DECISION
After considering the history of the commencement of the DBPA [184], the Court of Appeal considered the operation of Part 4 and in particular section 37 which imposes the statutory duty of care.
The Court of Appeal observed that:
In order to resolve this core issue, the Court of Appeal formulated four constructions in respect of the definition of “building work” in section 36(1) of the DBPA, with the third of those constructions being the construction that was adopted by the Supreme Court of NSW.
The Court of Appeal held that:
The fourth construction set out by the Court was that the definition of “building work” in section 4(1) did apply to the definition of “building work” in section 36(1), but only as regards to the first topic addressed in section 4(1) (identifying the type of work undertaken), with the second topic (identifying what type of buildings that work is undertaken on) instead being addressed by the definition of “building” in section 36(1).
Accordingly, as the definition of “building” in section 36(1) has the same broad and encompassing definition of “building” found in the Environmental Planning and Assessment Act 1979 (NSW) (EPA Act), “building work” as defined in section 36(1) was held to be in respect of the construction of any class of building.
The Court noted that this decision reflected the intention of parliament, noting that:
KET TAKEAWAYS
The decision means that any building professional who has undertaken or undertakes building work in the construction of any building which meets the definition of “building” under the EPA Act is now exposed to a claim for breach of the duty of care owed under section 37 of the DBPA.
The duty is owed to current and subsequent owners of these buildings and requires building professionals to exercise reasonable care to avoid economic loss caused by defects. It operates retrospectively, provided the economic loss in question first became apparent within the 10 years before the commencement of the DBPA. If the economic loss has occurred since the commencement of the DBPA, a claim for a breach of the duty of care needs to be made within 6 years since that economic loss first became apparent.
Furthermore, the Court of Appeal’s decision, in no uncertain terms, confirmed that employees such as project managers, superintendents, directors and shadow directors can be found to owe the statutory duty of care. Accordingly, those working in the construction industry should take note that they must exercise caution and due diligence when performing supervisory or management roles in relation to a project or on a construction site.
Please contact us on (02) 8239 6500 if you have any questions regarding anything above or if you need any assistance.
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