Demystifying the DBP Act labyrinth: Court of Appeal confirms statutory duty for building practitioners applies to all buildings
Understanding the nature and extent of the statutory duty of care owed by building practitioners in relation to building works has proved challenging for building practitioners, their insurers and the legal profession. Since June 2020 when Part 4 of the Design and Building Practitioners Act 2020 (NSW) (DBP Act) came into effect, creating this Statutory Duty, the industry has been grappling to understand its scope and how it applies.
The recent decision of Roberts v Goodwin Street Developments Pty Ltd [2023] NSWCA 5 is the first Court of Appeal decision on the Statutory Duty. The Court of Appeal upheld the first instance decision of the Supreme Court in Goodwin Street Developments atf Jesmond Unit Trust DSD Builders (in liq) [2022] NSWSC 624 which found that the duty applied to all buildings, rather than being restricted to class 2 (multi‑level residential) buildings. However, the Court of Appeal Court adopted different reasoning to the trial judge.
The decision confirms that the Statutory Duty applies to a broader class of buildings than some may have originally interpreted. The decision is in harmony with legislative changes proposed by the Building Bill 2022 (and due for enactment in 2023). Namely, the Building Bill clarifies that the Statutory Duty does apply to non-residential buildings (our previous article expands on other key changes under the Building Bill).
Background: dispute – builder v developer
Mr Roberts was a builder who operated through DSD Builders Pty Ltd (DSD) (in liquidation). DSD was engaged by Goodwin Street Developments Pty Ltd (Goodwin) for the construction of student accommodation. The accommodation was categorised as a boarding house and a class 1b building. It was alleged that during the construction works Mr Roberts damaged the building and removed fixtures. Goodwin commenced proceedings against Mr Roberts in tort and pursuant to the Statutory Duty.
One of the issues in dispute was whether the Statutory Duty extended to a class 1b building (rather than just class 2 buildings).
Key provisions of the DBP Act
The Statutory Duty is governed by s37 of the DBP Act (contained in part 4) which provides that:
‘A person who carries out construction work has a duty to exercise reasonable care to avoid economic loss caused by defects:
(a) in or related to a building for which the work is done, and
(b) arising from the construction work.’
Construction work includes building work.
Section 36 contains definitions for ‘building‘ and ‘building work’ for Part 4, which are:
‘building‘ has the same meaning as it has in the Environmental Planning and Assessment Act 1979 .
‘building work‘ includes residential building work within the meaning of the Home Building Act 1989 .
The DBP Act also contains the following general definition of ‘building work’ in s4:
For the purposes of this Act,‘building work’ means work involved in, or involved in coordinating or supervising work involved in…–
(a) the construction of a building of a class or type prescribed by the regulations for the purposes of this definition,
The Design and Building Practitioners Regulations 2021 restrict ‘building work.’ to class 2 (multi‑level residential) buildings.
First instance decision
For detailed commentary on the first instance decision of Justice Stevenson in the NSW Supreme Court, we refer you to our earlier article: ‘A broader statutory duty of care for building practitioners’ In summary, Justice Stevenson found that Mr Roberts was in breach of s37 of the DBP Act and that the Statutory Duty applied to all classes of buildings, including boarding houses. This decision centred around his conclusion that the narrow definition of ‘building work’ in s4 of the DBP Act was not applicable whatsoever to the statutory duty in s37. Instead, he essentially concluded that the broader definition of ‘building work’ in the Environmental Planning and Assessment Act 1979 (NSW) applied.
Justice Stevenson aptly described the duty in the DBP Act as a ‘labyrinth’. He added that it appeared to have been drafted to make comprehension as difficult as possible.
Court of Appeal decision
The key issue for consideration on appeal was whether and how the general definition of ‘building work’ in s4 applies to the definition of ‘building work’ in s36. The Court assessed three plausible possibilities, being:
- the narrow definition of ‘building work’ in s4(1) applied in full to s37 and boarding houses were not encompassed by the Statutory Duty;
- the general definition in s4(1) had no application to the Statutory Duty[1];
- the general definition in s4(1) did apply to the further definition of ‘building work’ in s36, but only for identifying the type of work undertaken and not the type of building on which it is undertaken.
In the Court’s view, it was the third interpretation that made best sense of the text of DBP Act and its purpose. To reach this conclusion, the Court examined the convoluted legislative history to assess Parliament’s intention. This included amendments proposed by the Greens party on 3 June 2020 when the definitions of ‘building’ and ‘building works’ in s36 were added. It was noted that the amendments would ‘expand the duty of care to all classes of buildings’[2].
Implications
The Court’s interpretation provides clarity that the Statutory Duty extends to a broad range of building classes and not just class 2 buildings. The decision is particularly significant, considering that the Statutory Duty applies to a wide range of construction professionals[3] and retrospectively to construction work completed within the last 10 years. While some have speculated that the legislation will result in an influx of claims for breaches of the Statutory Duty, others hope that the DBP Act will instead fulfil its intended purpose – which is to increase the accountability of all those in the building profession and the standard of building in Australia.
From our perspective, we have not observed a significant influx of claims following the introduction of the DBP Act. It remains to be seen whether this trend continues in the wake of this decision and legislative changes which clarify the breadth and scope of the Statutory Duty.
[1] Finding of trial judge[2] Legislative Assembly Hansard 3 June 2020
[3] The range of which is due to be extended by changes planned to be introduced by the Building Bill 2022 this year.