Builders and Developers Beware – Duty of Care for Economic Losses 2024

Contents

Are you aware that developers, builders, and other persons owe a statutory duty to exercise reasonable care to avoid economic loss caused by defects?

The Design and Building Practitioners Act 2020 (NSW) imposes obligations on any person who carries out construction work on a building.  The duty is owed to the owner and any later owners of the building

What’s covered by the Act?

The Act imposes obligations in relation to ‘construction work’.   Critically, ‘construction work’ extends to the preparation of designs, manufacturing or supply of building products and project management as well as the construction itself.  

It imposes a duty of care where the loss arose from the commencement or the Act (10 June 2020) or where the loss became apparent in the 10 years before 10 June 2020.

Can you contract out of this?

The duty of care imposed by the Act is non-delegable.   This means that if the Act imposes obligations on a person, that person cannot contract out of it.   Any provision in a contract that tries to contract out of the obligation would not be valid.

Subcontractors and Consultants

A recent NSW Court of Appeal decision affirmed that developers and builders are liable for the acts of subcontractors and consultants who breach their statutory duty of care.

In The Owners – Strata Plan No 84674 v Pafburn Pty Ltd [2023] NSWCA 301, the builder and developer tried to argue that they were only proportionately responsible for the defective works.   They named 9 other parties who they claimed were responsible.   The Court of Appeal held that the Act imposed non-delegable duties on each of the builder and developer and these could not be allocated between the other offending parties. 

Got questions?

If you need advice about your obligations under the Act, or are concerned about an existing or potential building claim, call Lorri Field or Victoria Absolon or visit pdclaw.au.

Victoria Absolon

Victoria advises on a wide range of property and commercial matters, including contract negotiations and real estate transactions. She has a passion for assisting clients in understanding complex legal issues so that they can successfully achieve their business goals.

Recent articles

Browse some recent articles from the PDC Law blog.

Understanding Easements and Transfer Duty in Australia: A 2024 Guide

Easements are vital components in property law, providing specific rights of use over land without transferring ownership. These rights are crucial for various needs, such as access, utility passage, and maintenance. Additionally, understanding the implications of easements on transfer duty—a type of property transaction tax—is essential for property transactions in Australia. What is an Easement?…

August 21, 2024
Lorri Field

Unlocking the Potential of Urban Areas with In-Fill Affordable Housing Strategies for 2024

In the quest to address urban housing challenges, in-fill affordable housing has emerged as a beacon of hope, offering practical incentives to developers while fostering sustainable community growth. The State Environmental Planning Policy (Housing) 2021, also known as the Housing SEPP, introduces critical measures to incentivise the inclusion of affordable housing in residential projects. This…

June 11, 2024
Lorri Field

Protecting your Intellectual Property through Trademarks 2024

Registering a trademark is an effective way to protect the value of your intellectual property and your brand. By obtaining legal advice, you can avoid costly mistakes including making a registration too similar to an existing trademark or registering in the incorrect class.What can I register a trademark over? With 35 classes of goods and…

May 13, 2024
Jade Cross
Call (02) 4288 0150 phone