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

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.