Residential Focus

Proportionate liability provisions of the Civil Liability Act 2002 apply to claims for breach of the statutory duty, Court rules

In May 2022, the NSW Supreme Court delivered an interlocutory judgement in The Owners – Strata Plan no 84674 v Pafburn Pty Ltd & Anor [2022] NSWSC 659 clarifying who may be considered a “person” carrying out “construction work” for the purposes of the statutory duty of care in section 37 (Duty) of the Design and Building Practitioners Act 2020 (NSW)(DBPA).

It found that a developer can be a person who has completed construction work if it had the “ability” to exhibit substantial control over the works. After that judgment was delivered, the defendant builder and developer filed their list responses (defences), which included proportionate liability claims against other contractors and consultants involved in the project.

The plaintiff filed an application to have the Court dismiss the defendants’ proportionate liability claims on the basis that the Duty is not delegable and the proportionate liability provisions in the Civil Liability Act 2002 (NSW) (CLA) do not apply to claims for breach of the Duty.

On 23 February 2023, the Court delivered its judgment in The Owners – Strata Plan No 84674 v Pafburn Pty Ltd [2023] NSWSC 116. It held that the proportionate liability provisions of the CLA do apply to claims for breach of the Duty and refused to strike out the defendants’ claims.

The defendants’ proportionate liability claims

The defendants’ defences included proportionate liability claims against nine other contractors and consultants involved in the project. Those other persons were said to be responsible for the loss suffered by the plaintiff, with the result that the defendants’ own liability to the plaintiffs should be limited.

The plaintiff’s application

The Owners Corporation applied to the Court for orders to strike out the proportionate liability sections of the defences, on the basis that the combined effect of the below provisions meant that a proportionate liability defence was not available regarding a claim for breach of the Duty:

section 39 of the DBPA states that the Duty is non-delegable. Non-delegable means that a person “cannot acquit themselves by exercising reasonable care in entrusting the task to a reputable contractor, but must actually ensure that the task is done, and done carefully”
under section 5Q of the CLA, a defendant will be held vicariously liable for the actions of another person as if they had committed those actions themselves, where:
- the defendant has entrusted that other person with a task that is subject to a non-delegable duty, and
- in performing the task, that other person has breached that non-delegable duty due to an action in tort.

Vicarious liability is a strict liability that means one person is held responsible “for the misconduct of another, although [the first person] is … free from personal blameworthiness or fault”.

Continuing from the list above:

section 39(a) of the CLA provides that where blame is apportioned, there is nothing to prevent another person from then being held vicariously liable for that portion of the claim.

The defendants’ submissions

In response, the defendants contended that adopting the plaintiff’s interpretation of the DBPA and the CLA provisions would mean that anyone owing the Duty would be liable for 100 per cent of the damage arising out of a breach by them, regardless of to what extent their actions were responsible for that damage. This would create an unusual and onerous burden on the defendants.

They also contended that section 5C of the CLA only applies to common law actions in tort and so does not apply to the Duty, as it is a statutory duty.

The Court’s decision

The Court agreed with the defendants. In reaching this decision, it:

found that section 5Q of the CLA applies to breaches of non-delegable duties in tort only and therefore cannot disturb section 37
noted that the Supreme Court in Boulus Constructions Pty Ltd v Warrumbungle Shire Council (No 2) [2022] NSWSC 1368 had stated that it was the intention of the NSW Parliament, when drafting the DBPA, for a proportionate liability defence to ameliorate the potential of the statutory duty to become overly burdensome on those who owe it
considered the intention of the NSW Parliament regarding the relationship between the CLA and the DBPA. It noted that section 34(3A) of the DBPA makes Part 4, under which section 37 lies, subject to the CLA and its proportionate liability provisions
noted that the second reading speech for the DBPA states that section 37 allows for a “beneficiary of the duty” to seek damages for breach of duty as if it was established under common law negligence, the provision is invariably a statutory duty by nature. Although the intention of section 37 was to re-establish the duty of care quashed in Brookfield Multiplex Ltd v Owners Corporation Strata Plan 61288 (2014) 254 CLR 185, it was not re-establishing it in common law
reflected on the intended function of section 5Q of the CLA. The provision was formed out of concerns that limitations and exclusions of vicarious liability claims under the 2002 reforms to the CLA would not apply to claims coming out of non-delegable duties. Given how closely related the two concepts are, plaintiffs can, in theory, bring vicarious liability claims as claims for breach of a non-delegable duty to avoid the limitations or exclusions on their damages sought. The Court found, that this risk was limited to claims arising from non-delegable duties established in tort only, meaning that there was no policy reason for section 5Q to apply to section 37.

Implications

It is clear, for now, that a defence of proportionate liability is available to defendants subject to claims for breaches of the duty under the DBPA. Likewise, the decision indicates that provisions in other legislation relating to duties of care established in common law and tort will not touch the Duty.

With this being relatively new legislation and few first instance decisions having yet reached appeals, the interpretation of the DBPA will remain a dynamic space for some time yet.

Authors: Christine Jones, Marie-Louise Scarf & Daniel Fane.

In the media

NSW Construction Compliance Unit receives funding boost
The NSW Government will deliver $1.3 million a year in funding to the state’s Construction Compliance Unit (CCU), in addition to increase unannounced and commencing stakeholder consultations. It is said that this will strengthen industrial relations and procurement oversight for Government projects (15 February 2023). More....

NSW home buildings becoming more expensive amid increasing cost of glass, cement, aluminium
The Housing Industry Association has stated that the cost of commodities such as concrete and glass are continuing to increase, increasing the cost of building a home (25 February 2023). More....

Calls for greater transparency in construction industry as another major Aussie building buckles
There are calls for greater transparency in the construction industry after EQ Constructions, a luxury NSW apartment building went into administration, owing millions and leaving employees and projects in limbo (14 February 2023). More....

In practice and courts

Decision reserved as at 24 February 2023
The Court of Appeal maintains a list of matters before the Court for which judgment is reserved. Read more here.

Cases

The Owners – Strata Plan No 84674 v Pafburn Pty Ltd [2023] NSWSC 116
CIVIL LIABILITY ACT – owners corporation sues builder and developer for building defects – breach of statutory duty imposed by s 37 Design and Building Practitioners Act – non-delegable duty by reason of s 39 Design and Building Practitioners Act – proportionate liability – apportionable claims – whether ss 5Q, 39(a) Civil Liability Act operate such that claim is not apportionable.
Civil Liability Act 2002 (NSW); Design and Building Practitioners Act 2020 (NSW).

Vidler v Lee t/as Northern Rivers Landscaping [2023] NSWCATAP 52
APPEAL – NCAT – appeal from Consumer and Commercial Division – no question of law – leave to appeal – new evidence – expert evidence – weight to be afforded expert evidence where there has been non-compliance by both parties with Procedural Direction 3 – unjust result – remitter.
Civil and Administrative Tribunal Act 2013 (NSW); Evidence Act 1995 (NSWQ); Home Building Act 1989 (NSW); Home Building Regulation 2014 (NSW).

Zahrouni v Vesta Homes Pty Ltd [2023] NSWCATAP 49
BULDING AND CONSTRUCTION – Home building – work orders of Tribunal – renewal of proceedings in Tribunal – scope and nature of renewal proceedings.
Civil and Administrative Tribunal Act 2013 (NSW); Civil and Administrative Tribunal Rules 2014 (NSW); Home Building Act 1989 (NSW); Residential Tenancies Act 2010 (NSW).

Superb Build Pty Ltd v Petrosyan [2023] NSWDC 2
CIVIL PROCEDURE – stay of enforcement pending determination of related proceedings
BUILDING AND CONSTRUCTION – stay of judgment giving effect to adjudication under Building and Construction Industry Security of Payment Act 1999 (NSW).
Building and Construction Industry Security of Payment Act 1999 (NSW); Civil Procedure Act 2005 (NSW); District Court Act 1973 (NSW); Home Building Act 1989 (NSW).
Civil Procedure Act 2005 (NSW); Environmental Planning and Assessment Act 1979 (NSW); Swimming Pools Act 1992 (NSW); Swimming Pools Regulation 2018 (NSW); Uniform Civil Procedure Rules 2005 (NSW).

Qui v Balmoral Street Developments Pty Ltd [2023] NSWCATAP 60
APPEAL – significant delay in lodgement – insufficient apparent merit to warrant extension of time
Civil and Administrative Tribunal Act 2013 (NSW); Civil and Administrative Tribunal Rules 2014 (NSW); Strata Schemes (Freehold Development) Act 1973 (NSW); Strata Schemes Development Act 2015 (NSW).

In-Style Developments Pty Ltd v La & Anor [2023] NSWDC 23
BUILDING AND CONSTRUCTION – whether notice to rectify defective or incomplete works invalid – whether owners’ termination of contract unlawful – whether the conduct by the owners (or the architect on their behalf) prevented the builder from substantially complying with his obligations to complete – whether cap on compensation under contract excludes or modifies right to compensation for defective works supplied in breach of statutory warranties – whether costs for strip out or structural works necessary and reasonable
Home Building Act 1989 (NSW); Uniform Civil Procedure Rules 2005 (NSW).

Rehman v F&F Smart Homes Pty Ltd [2023] NSWCATCD 12
BUILDING AND CONSTRUCTION – claims for defective, incomplete work, and delay – whether work order or money order should be made.
Civil and Administrative Tribunal Act 2013 (NSW); Civil and Administrative Tribunal Regulation 2013 (NSW); Civil and Administrative Tribunal Rules 2014 (NSW).

Egan v Egan [2023] NSWCATCD 10
BUILDING AND CONSTRUCTION – application to adjourn proceedings – application to file further evidence – application for summary dismissal – the guiding principle of the Civil and Administrative Tribunal Act 2013 (NSW)
Civil and Administrative Tribunal Act 2013 (NSW); Home Building Act 1989 (NSW).

Denmeade v Travers [2023] NSWCATCD 3
REAL PROPERTY – HOME BUILDING – defective and incomplete works – work order or money order – Home Building Act 1989 ss 18B, 18F, 48MA.
Home Building Act 1989 (NSW); Home Building Regulation 2014 (NSW).

Martignago v Visual Building Construction Pty Ltd [2022] NSWCATCD 219
BUILDING AND CONSTRUCTION – Home Building Act 1989 (NSW) – defects in building work – whether a work or a money order should be made in respect of defects in building work – assessment of the quantum of damages
Civil and Administrative Tribunal Act 2013 (NSW); Home Building Act 1989 (NSW).

Babhoota v AMT Grand Homes Pty Ltd [2022] NSWCATCD 217
BUILDING AND CONSTRUCTION – Home Building Act 1989 (NSW) – Defective building work – Variation of contract – whether exchange of emails satisfied requirement for variation to be in writing and signed – expert evidence.
Electronic Transactions Act 2000 (NSW); Home Building Act 1989 (NSW).

Tran v Buildarch Pty Ltd [2022] NSWCATCD 214
BUILDING AND CONSTRUCTION – Home building – limitation period – s 48K(8) Home Building Act 1989 – whether to transfer proceedings to the District Court.
Civil and Administrative Tribunal Act 2013 (NSW); Home Building Act 1989 (NSW).

Nu-Stone Building Pty Ltd v McInerney [2023] NSWSC 67
PRACTICE AND PROCEDURE – application for a stay of proceedings pending determination of application for leave to appeal and any appeal from a decision of the Appeal Panel of the Civil and Administrative Tribunal of New South Wales – whether there is an arguable ground of appeal on a question of law – whether arguable that leave to appeal would be granted – where there is a risk of substantial prejudice to the plaintiff if that the orders are not stayed – where there is no or limited risk of substantial prejudice to the defendants if the orders are stayed – balance of convenience and the interests of justice favour the granting of a stay.
Civil and Administrative Tribunal Act 2013 (NSW); Home Building Act 1989 (NSW); Uniform Civil Procedure Rules 2005 (NSW).

The Owners – Strata Plan No 89005 v Stromer (No 3) [2022] NSWSC 1707
CIVIL PROCEDURE – summary disposal under UCPR r 13.4 – sismissal of cross-claim – defective pleading concerning statutory duty under s 37 of the Design and Building Practitioners Act 2020 (NSW) – whether Scott Schedule provided by the cross-claimant adequately identifies the precautions the building supervisor should have taken to manager the risk of harm.
Design and Building Practitioners Act 2020 (NSW); Home Building Act 1989 (NSW); Uniform Civil Procedure Rules 2005 (NSW).

Kora v Ian’s Roofing Pty Ltd [2023] NSWCATAP 42
APPEALS – question of law – no issue of principle – leave to appeal – no issue of principle
Australian Consumer Law; Corporations Act 2001 (Cth); Civil and Administrative Tribunal Act 2013 (NSW).

Russell v Perri t/as Ferral Concreting [2023] NSWCATCD 7
COSTS – Party/Party – general rule that costs follow the event.
COSTS – Party/Party – self represented litigant.
Civil and Administrative Tribunal Act 2013 (NSW); Home Building Act 1989 (NSW).

Hua Nan Trading Pty Ltd v The Owners – Strata Plan No 32396 [2022] NSWCATCD 213
LAND LAW – Strata titles – Section 106(6) of the Strata Schemes Management Act 2015 – applicability of s41 of the Civil and Administrative Tribunal Act 2013 to s106(6).
Civil and Administrative Tribunal Act 2013; Strata Schemes Management Act 2015; Home Building Act 1989; Residential (Land Lease) Communities Act 2013.

Babhoota v AMT Grand Homes Pty Ltd [2022] NSWCATCD 205
COSTS – where parties had mixed success – whether settlement offer a genuine offer of compromise – whether offer unreasonably refused.
Civil and Administrative Tribunal Act 2013 (NSW); Civil and Administrative Tribunal Rules 2014 (NSW); Home Building Act 1989 (NSW).

Fayazi v Commissioner for Fair Trading [2023] NSWCATOD 15
OCCUPATIONS – builders – licences and registration – whether the applicant is a fit and proper person to hold a licence.
Administrative Decisions Review Act 1997 (NSW); Home Building Act 1989 (NSW); Work Health and Safety Act 2011 (NSW).

Legislation

Disclaimer
The information in this publication is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavour to provide accurate and timely information, we do not guarantee that the information in this newsletter is accurate at the date it is received or that it will continue to be accurate in the future.

Published by:

Christine Jones

Marie-Louise Scarf

Daniel Fane

Residential Focus

Proportionate liability provisions of the Civil Liability Act 2002 apply to claims for breach of the statutory duty, Court rules

The defendants’ proportionate liability claims

The plaintiff’s application

The defendants’ submissions

The Court’s decision

Implications

In the media

In practice and courts

Cases

Legislation

Share this

Key Contacts

Christine Jones

Marie-Louise Scarf

Residential Focus

Proportionate liability provisions of the Civil Liability Act 2002 apply to claims for breach of the statutory duty, Court rules

The defendants’ proportionate liability claims

The plaintiff’s application

The defendants’ submissions

The Court’s decision

Implications

In the media

In practice and courts

Cases

Legislation

Share this

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Key Contacts

Christine Jones

Marie-Louise Scarf