Watch on-demand webinars and register your interest for virtual events
Our people work with clients to solve their toughest problems, creating new ways forward to help them thrive.
We’re adventurers, mentors, survivors, carers and crusaders. Here are some of our stories.
Shaping the future with our clients, people and communities
The recent Goodwin Street Developments decision provides much-needed guidance on the application of the statutory duty of care owed by builders (and certain building professionals) to property owners under section 37 of the Design and Building Practitioners Act 2020.
The NSW Supreme Court held that this duty of care is not limited by the definition of ‘building work’ contained in s4 (which limits other parts of the Act to Class 2 (residential apartment) buildings)1. Instead, it applies to any building caught by the broad definition of ‘building’ in the Environmental Planning and Assessment Act 1979, thereby potentially extending to non-residential buildings. This means that a wider scope of buildings will be captured by the duty of care than may initially have been contemplated by some in the industry.
In 2017, Goodwin Street Developments Pty Ltd entered into a contract with DSD Builders to construct three boarding houses on property owned by Goodwin. Disputes arose relating to defects and delays, which ultimately led to Goodwin terminating the contract in March 2018.
In August 2018, Goodwin commenced proceedings against DSD , which later went into liquidation, in 2021. Goodwin also sued Mr Roberts, who was alleged to be DSD’s representative by virtue of administering the contract and controlling construction work on its behalf. Goodwin claimed against Mr Roberts for property damage and trespass to land (in relation to the removal of certain material from the buildings and onsite damage), as well as breach of the statutory duty of care in s37 of the Act to avoid economic loss to Goodwin when carrying out ‘construction work’.
Goodwin was successful in both claims. In relation to the statutory duty of care claim, Justice Stevenson found that a boarding house (ie a non-Class 2 building)5 was a ‘building’ to which the duty of care in s37 applied. Further, by supervising and project-managing the works, Mr Roberts carried out ‘construction work’ within the meaning of s36 of the Act. Ultimately, His Honour held that Mr Roberts acted in breach of his duty of care under s37 of the Act.
The statutory duty of care is contained within Part 4 of the Act and relates to the carrying out of ‘construction work’. It requires the duty holder to exercise reasonable care to avoid economic loss caused by defects in or related to a ‘building’ for which the work is done, and arising from the ‘construction work’. ‘Construction work’ is defined in s36 of the Act and relevantly includes ‘building work’. Section 36 goes on to define ‘building work’, for the purposes of Part 4 of the Act, as including ‘residential building work’ within the meaning of the Home Building Act 1989 (NSW). It is therefore an inclusive, and not an exhaustive, definition. Importantly, ‘building’, for the purposes of Part 4 of the Act, is defined by reference to the far broader definition of ‘building’ contemplated in the EPA Act, which would capture both residential and non-residential structures.6
In contrast, s4 of the Act provides that, ‘for the purposes of this Act’, ‘building work’ means, among other things, work involved in the construction of a building of a class or type prescribed by the applicable regulations. The Design and Building Practitioners Regulation 2021 prescribes Class 2 buildings only.
In his judgment, Justice Stevenson commented on the ‘labyrinthine’ and ‘fiendishly difficult’ nature of the s36 definitions, noting that the ‘section appears to have been drafted so as to make comprehension of it as difficult as possible’.
Ultimately, he concluded that the definition in s4 has no application when considering the statutory duty of care in Part 4 of the Act, and that the broader definitions of ‘building work’ and ‘building’ contemplated in s36 apply instead. The rationale for this interpretation included that:
This refers to the building classification under the National Construction Code. Class 2 buildings are typically residential buildings containing two or more sole-occupancy units where people live above, beside or below each other.
Section 40 of the Act.
Clause 5 of Part 1 of Schedule 1 of the Act.
Section 41 of the Act.
A boarding house is typically classified as a Class 1b or Class 3 building under the National Construction Code.
The EPA Act broadly defines ‘building’ as ‘includes part of a building, and also includes any structure or part of a structure (including any temporary structure or part of a temporary structure), but does not include a manufactured home, moveable dwelling or associated structure within the meaning of the Local Government Act 1993‘.
Specifically, His Honour had regard to Mr David Shoebridge’s MPs comments to the NSW Legislative Assembly when introducing the amendments that gave effect to the current definitions in the Act that: ‘Amendment No. 1 provides that the duty of care applies to all buildings and includes a definition of “building” for the purpose of the duty of care and that “building” has the broad meaning of “building” in the Environmental Planning and Assessment Act. Amendment No. 2 makes clear that the duty of care extends to building work, including residential building work within the meaning of the Home Building Act. This amendment will ensure that the duty of care amendments will have broad coverage, which is the intent.’ [bolding added for emphasis] (NSW Legislative Council, Parliamentary Debates (Hansard), 2 June 2020 at 63).
Subscribe to our insights and updates
Australia remains a compelling infrastructure investment market. However, the lack of opportunities, the cost and complexity of bidding and policy and regulatory instability are starting to bite. Australia also risks being left behind by other regions on ESG investment.
We have partnered with Infrastructure Partnerships Australia surveying industry leaders and undertaking analysis to provide a clearer understanding of the industry and what the key priorities are that lie ahead.
27 Jun 2022
24 Jun 2022
17 Jun 2022
08 Jun 2022