The Owners – Strata Plan No 87060 v Loulach Developments Pty Ltd (No 2) [2021] NSWSC 1068

Andrew Hales  |  Maciej Getta  |  Jenny Cohen

Key takeouts

It is not enough to say a defect exists to establish a breach of the statutory duty of care owed under the Design and Building Practitioners Act 2020 (NSW) (DBP Act). A claimant must inform the defendant precisely how they were negligent. For example, a party could prepare a ‘Scott Schedule’ which lists the relevant defects, and in relation to those defects, set out the risk which the builder was required to manage, and the precautions which the builder should have taken in relation to that risk.

Facts

A body corporate (owners) commenced proceedings against the developer and builder (Loulach) on the basis of alleged defects in a residential strata development in Paramatta.  The owners based this claim upon alleged breaches of the statutory warranties implied by the Home Building Act 1989 (NSW) (HBA).

The owners alleged breach of the statutory duty of care created by s 37 of the Design and Building Practitioners Act 2020 (NSW) (DBP Act). The court directed the owners to serve a draft of the amended list statement and to include a Scott Schedule that identifying the defects.

The owners served the Scott Schedule in September 2021, and also circulated its proposed amended list statement which made no reference to the Scott Schedule. The draft amended list statement referred to defective work by reference to various consultants’ reports.

Loulach opposed leave being granted to the owners to plead the statutory duty of care in the manner adopted by the owners. Alternatively, the owners’ contended that it was sufficient for the draft amended pleadings to identify the defects.. The owners claimed that a defect constituting a breach of the HBA established that defect was the result of a breach of the statutory duty of care

Decision

The court refused to grant owners leave to amend the list statement in the draft form which it proposed. The court explained that breach of the duty of care is not established by the mere fact of a defect.

Rather a plaintiff must meet the other tests for negligence established under the common law and the Civil Liability Act 2002 (NSW), which includes addressing whether the risk was foreseeable, not insignificant, and what a reasonable person would have done.