The Owners – Strata Plan No 84674 v Pafburn Pty Ltd [2023] NSWSC 116

Andrew Hales |  Michelle Knight  |  Heidi Knights

Key takeout

In a claim for breach of the non-delegable statutory duty of care under the Design and Building Practitioners Act 2020 (NSW) (DBP Act), defendants are able to rely on the proportionate liability provisions under Part 4 of the Civil Liability Act 2002 (NSW) (CLA).

This means that a defendant can identify concurrent wrongdoers and, by virtue of the proportionate liability regime, seek to have their liability limited to an amount reflecting that proportion of the damage or loss claimed that the court considers just having regard to the extent of the defendant’s responsibility for the damage or loss.

Facts

The plaintiff was the owners corporation of a strata development in North Sydney (owners corporation).  Pafburn Pty Ltd (builder) was the builder of the development and Madarina Pty Limited (developer) was the owner of the land, until the strata plan was registered.

The owners corporation brought a claim for damages for breach of the statutory duty of care imposed by section 37 of the DBP Act for alleged defects in the common property. The builder and developer pleaded a proportionate liability defence naming nine concurrent wrongdoers.

The owners corporation applied to strike out the proportionate liability defence on the basis that the effect of section 39 of the DBP Act and sections 5Q and 39(a) of the CLA precluded the defendants from utilising the proportionate liability provisions where the statutory duty was non-delegable.

This case follows on from two previous decisions:

• The Owners – Strata Plan No 84674 v Pafburn Pty Ltd [2022] NSWSC 659, see Developers beware of the duty of care under the DBP Act – Construction Law Made Easy
• The Owners – Strata Plan No 84674 v Pafburn Pty Ltd (No 2) [2022] NSWSC 1002, see Developers beware of the duty of care under the DBP Act – Part 2 – Construction Law Made Easy

Decision

Rees J dismissed the strike out application and held that the defendants were entitled to rely on the proportionate liability provisions of the CLA to defend the owners corporation’s claim under the DBP Act. 

Her Honour first considered the principles of summary dismissal, noting that it must be clear there is no real question to be tried and a court’s discretion to summarily dismiss a claim is ‘sparingly invoked’.

After considering the purpose and history of the DBP Act, her Honour considered the specific provisions relevant to proportionate liability, including section 34(3A) which makes Part 4 of the DBP Act ‘subject to the Civil Liability Act 2002’ without limitation. This means that the proportionate liability provisions of the CLA apply to a claim for economic loss in an action for damages under section 37(1) of the DBP Act, whether that claim is an action ‘in contract, tort or otherwise’.

However, section 39 of the DBP Act makes the duty of care owed a non-delegable duty. Under the CLA, section 5Q equates liability in tort of a person for breach of a non-delegable duty with vicarious liability. Section 39(a) of the CLA provides that nothing in Part 4 ‘prevents a person from being held vicariously liable for a portion of any apportionable claim for which another person is liable’.

The owners corporation argued that the combined effect of section 39 of the DBP Act and sections 5Q and 39(a) of the CLA was to preclude the defendants from relying on the proportionate liability provisions, otherwise the non-delegable duty under the DBP Act ‘would become delegable’.

The builder and the developer submitted that if the owners corporation was correct, the effect would mean every defendant to a claim under section 37 of the DBP Act would be liable for 100% of the damage from their breach of duty, no matter how small or large a role they had in respect of that work. That outcome would be unusual and onerous.

Her Honour found that a claim for breach of the statutory duty imposed by section 37 of the DBP Act is not a claim brought in tort but a claim brought under statute. As section 5Q applies only where the non-delegable duty imposed arises in tort, the section is not engaged and the issue of vicarious liability for an apportionable claim under section 39(a) of the CLA does not arise.