Retrospective and future responsibilities

The Design and Building Practitioners Act 2020 (“the Act”) received assent on 11 June 2020.

The Act is a part of NSW’s response to the flaws in the compliance and enforcement systems within the building and construction industry. It addresses the public concern that has followed the defects arising in NSW developments including Opal Tower and Mascot Towers.

The Act is a reform of the circumstances in which a person who carries out construction work is liable and imposes a number of new obligations on design practitioners, engineers and builders.

Duty of Care

The Act creates a statutory duty of care on builders and certain designers, building product manufacturers and suppliers, and supervisors. This duty cannot be delegated or contracted out of.  Part 4 of the Act imposes a duty of care to those involved in construction work to exercise reasonable care to avoid economic loss resulting from defects or in relation to a building where the work is completed or where defects arise out of that construction work. The duty of care is owed to current and future owners.

Duty of Care – When does it apply?

The duty applies immediately from 11 June 2020 and can be retrospective for up to 10 years.

Schedule 1 provides that the duty extends to work carried out prior to the commencement of the Act in two instances:

1. If the loss becomes apparent to the owner within a ten-year period before the statutory duty of care came into effect; and
2. If the loss first became apparent on or after the commencement of the duty of care.

Duty of Care – How is it breached?

The duty is owed by anyone who carries out construction work. The term ‘construction work’ is defined in s 36 of the Act to mean:

(a)  building work,

(b)  the preparation of regulated designs and other designs for building work,

(c)  the manufacture or supply of a building product used for building work,

(d)  supervising, coordinating, project managing or otherwise having substantive control over the carrying out of any work referred to in paragraph (a), (b) or (c).

In the context of this duty of care, those who carry out construction work owe the duty to each owner of the land to which the construction work takes place and every subsequent owner of the land thereafter.

The Civil Liability Act 2002 is useful in determining breaches of the duty of care. The following factors will be relevant in determining breach:

1. Whether the construction worker knew that harm could be caused and subsequently failed to act;
2. It was likely that the act or omission by the construction worker would result in loss or damage to the owner;
3. The harm/loss/damage to the owner was caused by the actions or omissions of the construction worker; and
4. Reasonable precautions were available to the construction worker and that they failed to undertake these precautions.

If a breach of the duty of care has been found, the plaintiff or owner may be entitled to financial compensation from the party who breached their duty of care.

It is important to note that there are limitations to the liability of builders. An owner can only bring proceedings against a builder within six years of their knowledge of a breach.

Further, it is important to note that statutory warranties will apply in addition to the duty of care and that the duty of care cannot be contracted out of or limited by written contract.

Practical Guidance

To familiarise yourself with the Act, see below link:
https://www.legislation.nsw.gov.au/#/view/act/2020/7

Please also see HIA advice on the provisions of the Act:
https://hia.com.au/Publications/InformationSheets/nfscod1349-duty-of-care-nsw