Andrew Hales  |  Maciej Getta  |  Luke Sundercombe

Roberts v Goodwin Street Developments Pty Ltd [2023] NSWCA 5

Key takeout

The NSW Court of Appeal unanimously found that the duty to exercise reasonable care to avoid economic loss caused by defects imposed by Part 4 section 37 of the Design and Building Practitioners Act 2020 (NSW) (DBP Act) applies to all ‘buildings’ as defined in the Environmental Planning and Assessment Act 1979 (NSW) (EP&A Act).  The EP&A Act appears to contain a broad definition of ‘building’ which is not limited to residential dwellings or apartments.

Although the Court of Appeal preferred a different interpretation of the relevant sections of the DBP Act than the Supreme Court at first instance, the practical consequence of the Supreme Court’s decision still remains the same.

As the statutory duty of care is retrospective (meaning it also applies to historic matters), any person that had previously undertaken construction work on any ‘building’ (within the meaning of the EP&A Act), not only a residential dwelling or apartment, owed a direct duty of care to the owner of the land and the subsequent owners of the land.

The NSW Government has indicated that from July 2023, a new Building Legislation Amendment (Building Classes) Regulation will provide that class 3 and 9c buildings (which covers large boarding houses, among other things) will be expressly covered by the DBP Act so the statutory duty of care will undoubtedly apply to them.  It is further anticipated that the proposed new Building Bill will expressly extend the statutory duty of care to all buildings.  At present both new pieces of legislation are under consideration by the NSW Government following a period of public consultation in late 2022.

Facts

The facts of this case were addressed in our update on the decision of the Supreme Court in 2022 which can be read here.  The Supreme Court held that the general definition of ‘building work’ at section 4(1) of the DBP Act had no application Part 4 of the DBP Act.

Following the Supreme Court’s decision, Mr Roberts appealed to the NSW Court of Appeal.  A key issue raised was that the primary judge erred in construing that the statutory duty of care applied to all buildings (and thus the boarding house the subject of the case).  Mr Roberts had argued that the duty only applied to class 2 buildings and ‘residential building work’ within the meaning of the Home Building Act 1989 (NSW) and therefore did not include works associated with the construction of boarding houses.

Decision

The NSW Court of Appeal (Kirk JA and Griffiths AJA, Ward P agreeing) dismissed the appeal on this issue.

The core dispute related to how the statutory duty of care is to be interpreted in light of there being:

• two definitions of ‘building work’ in the DBP Act (sections 4(1) and 36(1));
• at section 36(1) a specific definition of ‘building’ applicable to Part 4 of the DBP Act; and
• at section 36(2) a provision stating that in Part 4 a reference to ‘building work’ applies only to ‘building work’ relating to a ‘building’ within the meaning of Part 4. 

The NSW Court of Appeal considered the tension that has arisen from this drafting.  Four different constructions of the provisions were identified during the appeal, three of which the Court of Appeal suggested reasonable arguments could be made to support.  The Court of Appeal unanimously found that both definitions of ‘building work’ from different parts of the DBP Act, and the definition of ‘building’, have work to do in interpreting the scope of the duty of care.  That is:

• in respect of the duty of care, the general definition at section 4(1) applies only in respect of identifying the type of work or activity being performed (ie work involved in, or involved in coordinating or supervising work involved in the construction of a building, making of alterations or additions, or the repair, renovation or protective treatment of a building (as amended by the Regulations)), not the type of building on which the work or activity is undertaken; and
  
• the definition of ‘building’ at section 36(1), when read with the limitation on the application of ‘building work’ at section 36(2), identifies the type of building that the work or activity is undertaken on, in order to identify whether particular activities for a particular project are ‘construction work’ and attract the duty of care.

While conceding that ‘no construction here is straightforward’, the Court of Appeal considered that this construction of the DBP Act best gave effect to the text, context and purpose of the relevant provisions of the DBP Act and reduced the uncertainty of the retrospective operation of Part 4 of the DBP Act.  The Court of Appeal considered this reflected the intention of parliament that the statutory duty of care (as distinct from the balance of the DBP Act) was to apply to all ‘buildings’ and to do so retrospectively.