Kapila v Monument Building Group Pty Ltd [2025] NSWSC 1306

Andrew Hales  |  Luke Sundercombe  |  Tom Burke

Key takeout

• The Supreme Court of NSW has found that a builder who carries out construction work cannot apportion liability arising under section 37 of the Design and Building Practitioners Act 2020 (NSW) (DBPA), notwithstanding that other alleged concurrent wrongdoers were not the builder’s subcontractors or delegates concerning the same construction work.
• Defendants to claims under section 37 of the DBPA ought to consider bringing cross-claims against wrongdoers to redistribute liability owed by those persons to an owner.

Facts

The plaintiff (homeowner) engaged Monument Building Group (builder) in August 2015 under a building contract for renovations to the homeowner’s terrace house in Sydney.

The homeowner commenced proceedings regarding alleged defects against the builder and the builder’s sole director, who was the nominated supervisor under the builder’s contractor licence (nominated supervisor).

The homeowner’s claim against the builder was originally advanced on two causes of action. The first was a breach of contract claim alleging that the defects were acts or omissions that breached several clauses of the contract. These clauses replicated the warranties in section 18B of the Home Building Act 1989 (NSW) (HBA). The second was that the builder breached the duty of care owed to the homeowner by operation of section 37 of the DBPA. Section 37 imposes a duty of care on persons who carry out construction work to avoid economic loss caused by defects. Section 39 of the DBPA prohibits delegation of the duty of care. The homeowner ultimately did not press its DBPA claim against the builder.

The homeowner’s claim against the nominated supervisor was for breach of the section 37 duty of care owed to the homeowner concerning his supervision, coordination and management of the works.

The defendants sought to rely on the proportionate liability provisions contained in Part 4 of the Civil Liability Act 2002 (NSW) (CLA) to reduce their liability based on the concurrent wrongdoing of other parties engaged directly by the homeowner and not part of the builder’s contracting chain. The nominated supervisor also raised a contributory negligence defence.

Decision

The Court found for the homeowner in relation the claim against the builder for breach of contract and the claim against the nominated supervisor for breach of the section 37 duty of care.

Apportionment

The Court rejected the defendants’ proportionate liability defence. It was settled in Pafburn Pty Limited v The Owners – Strata Plan No 84674 [2024] HCA 49 that head contractors cannot apportion liability to subcontractors or delegates. The defendants sought to distinguish this matter from the High Court decision in Pafburn as the alleged concurrent wrongdoers in this case included the homeowner’s engineers and other consultants rather than the builder’s subcontractors. Richmond J noted that there was force in the contention that (at least on the majority’s reasoning in the High Court) Part 4 of the CLA will only be excluded in a claim which involves the delegation or otherwise entrustment of works. However, Richmond J decided that the Court of Appeal’s reasoning in the earlier Pafburn decision in The Owners – Strata Plan No 84674 v Pafburn Pty Limited [2023] NSWCA 116, which had not been rejected by the High Court on appeal, was binding on the Supreme Court. In that decision, the Court of Appeal held that section 39 of the DBPA prevents the apportionment provisions of Part 4 of the CLA from applying to claims made pursuant to section 37 of the DBPA.

The Court also decided, in obiter, that the claim against the builder under section 37 of the DBPA was not an apportionable claim. This was said to be based on the authority of Onslow v Cullen [2022] NSWSC 1257 at [55] – [58]. Specifically, the Court suggested that given the pleaded claim for breach of the contract, which required the work to be done with due care and skill, ‘merely replicates the statutory warranty in s 18B(1)(a) of the HBA’, section 34(3A) of CLA excludes it from being an apportionable claim.

Richmond J also noted the parts of the Court of Appeal decision that suggest cross-claims are the appropriate remedy against concurrent wrongdoers in similar situations.

Contributory negligence

The nominated supervisor’s defence of contributory negligence, although not prohibited by the restrictions against apportionment, was ultimately not made out on the facts.