Duty of care applies to any ‘building’ in NSW
Andrew Hales | William Vu
Key takeout
The NSW Supreme Court has held that the duty of care under Part 4 of the Design and Building Practitioners Act 2020 (NSW) (DBP Act) applies to any ‘building’ in NSW within the meaning of the Environmental Planning and Assessment Act 1979 (NSW) (EP&A Act), not just class 2 buildings, buildings containing a class 2 part, and ‘dwellings’ within the meaning of the Home Building Act 1989 (NSW) (HB Act).
The decision suggests that the scope of the duty of care is much wider than many construction industry participants had anticipated when the DBP Act came into force.
Facts
In 2017, Goodwin Street Developments Pty Ltd (owner) contracted with DSD Builders Pty Ltd (builder) to construct boarding houses. On 2 March 2018, the owner served a notice to rectify defects. The builder ceased work on site and failed to rectify the defects.
On 19 March 2018, a director of the owner attended the site and observed significant property damage, including cement poured into sewer pipes, holes made in walls and gutters, and detached stairs, doors and windows removed from site. The owner commenced proceedings against the builder and later joined Daniel Roberts, alleging Mr Roberts trespassed the site and/or breached his duty of care under the DBP Act. Mr Roberts argued he did not trespass, as the builder did not have exclusive possession, and that the statutory duty of care did not extend to the construction of boarding houses.
Decision
Stevenson J found that:
- Mr Roberts was liable to the builder for trespass to land; and
- the DBP Act duty of care extends to construction work on a boarding house and Mr Roberts breached that duty.
Trespass to land
Stevenson J agreed with Mr Roberts that the owner did not have exclusive possession of the site, as the contract required the owner to provide the builder with ‘possession’ of the site. However, his Honour found that the owner had a reversionary interest in the land, as it had only temporarily given the builder access to the site and retook possession a short time after the trespass. This interest entitled the owner to bring an ‘action on the case for trespass’ where the trespass occurred during the builder’s possession of the site and the trespass resulted in ‘permanent injury to the reversion’. On the facts the damage to the site met this test, as the injury continued until something was done to remove it, and Mr Roberts caused the damage.
Statutory duty of care
Part 4 of the DBP Act introduced a duty of care for persons performing ‘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’. Section 36(1) defines ‘construction work’ as including, among other things, ‘building work’ and the supervision, coordination and project management of ‘building work’.
‘Building work’ is defined in two places in the DBP Act:
- Part 1, section 4 (which definition is stated to be ‘[f]or the purposes of this Act’) by reference to the regulations made for the DBP Act (which at present limit the definition of ‘building work’ to work on a class 2 building or a building containing a class 2 part); and
- Part 4, section 36(1) which provides that ‘building work includes residential building work within the meaning of the Home Building Act 1989′.
Section 36(2) says ‘In this Part, a reference to building work applies only to building work relating to a building within the meaning of this Part’. In Part 4, ‘building’ has the same meaning as it has in the EP&A Act.
His Honour held that the definition in section 4 had no application to Part 4, and accordingly the construction of the boarding house was ‘construction work’ for the purposes of Part 4. The reasoning was that:
- Part 4 commenced on 10 June 2020 with retrospective operation, whilst Parts 2, 3 and 5 – 9 of the DBP Act commenced 1 July 2021 (which was the same date on which the Design and Building Practitioners Regulation 2021 (Regulation) commenced). Therefore (as submitted by the owner) the DBP Act could only operate coherently if the section 4 definition of ‘building work’ only applied to those parts of the DBP Act that commenced on 1 July 2021, but not applying to Part 4;
- the definition of ‘building work’ in Part 4 is an inclusive, not exclusive, definition. Therefore, the reference to ‘building work’ including ‘residential building work’ did not limit its definition to the HB Act (which excludes boarding houses);
- a boarding house is plainly a ‘building’ within the broad definition of the EP&A Act; and
- accordingly, the construction of the boarding house is ‘construction work’, as it includes ‘building work relating to a building [which includes a boarding house] within the meaning of Part 4 of the DBP Act’.
Mr Roberts’ duty of care was enlivened by virtue of evidence that Mr Roberts had represented he would ‘take care’ of the defect rectification work, suggesting he was supervising construction work. The fact the defects were not repaired was taken to be the breach of the duty of care.
Commentary
The decision arguably creates uncertainty as to the meaning of ‘building work’ in Part 4, section 36(1) of the DBP Act. By applying the interpretation in the judgment, there does not appear to be any clarity as to what the phrase ‘building work’ means. This is in contrast to the detailed definition of ‘building work’ in section 4 of the DBP Act, which is stated to be ‘[f]or the purposes of this Act’, and which on an available interpretation of the DBP Act provides a clear and certain base for the inclusive definition of ‘building work’ in Part 4, section 36(1).
Part 1 (including section 4) and Part 4 of the Act commenced on 10 June 2020. Parts 2, 3 and 5 to 9 commenced on 1 July 2021.
In deciding that the section 4 definition of ‘building work’ does not apply to the definitions of ‘building work’ or ‘construction work’ in Part 4 of the DBP Act, it is not apparent from the judgment that a detailed submission was made to the Court that sections 4 and 36(1) worked harmoniously during the period 10 June 2020 to 1 July 2021 and continue to work together following that date.
Given that section 4 says the definition of ‘building work’ applies ‘[f]or the purposes of this Act’, an available interpretation of the DBP Act would appear to be that:
- from 10 June 2020 until 1 July 2021, the duty of care only applied to ‘residential building work’ within the meaning of the HB Act (as defined in section 36(1)). This is because no other ‘building work’ had been prescribed by the Regulation for the purposes of the section 4 definition of ‘building work’ (and, it follows, the section 36(1) definition of ‘construction work’); and
- following commencement of the Regulation on 1 July 2021, the duty of care applies more broadly to work involved in, or involved in coordinating or supervising work involved in, the construction of a class 2 building or a building containing a class 2 part and ‘residential building work’ within the meaning of the HB Act.
This interpretation would provide certainty as to the meaning of ‘building work’ in Part 4, section 36(1), which (applying the judgment) now falls to be interpreted without reference to any other definition and is therefore unclear.