NSW Construction Industry Reforms Commence: Part 2 – A New Duty of Care for Building Practitioners

On 11 June 2020, the Design and Building Practitioners Act 2020 (NSW) (DBP Act) came into force.  The DBP Act will impact any person involved in the development and building and construction industry in NSW.  In Part 2 of this series on the new industry reforms we take a close look at the new duty of care imposed by the legislation.

It is vital that builders, design practitioners, project managers, engineers, subcontractors and suppliers be aware of their new obligations created by the DBP Act, which apply to both existing buildings built in the last ten years and the construction of new buildings.

Homeowners should also be aware of their entitlements under the DBP Act which previously were not available to them.

Following the now infamous Opal and Mascot towers debacles and other recent incidents involving major building defects, public interest has been centred on design and construction faults which have led to significant damage in property developments in Sydney.  Public confidence in the building and construction industry has diminished and it was inevitable that action would be taken to address the public concern.

A new duty of care

The new duty of care provisions in the DBP Act are in addition to duties, statutory warranties and other obligations imposed under the Home Building Act 1989 (HBA). They do not in any way limit the duties imposed under the HBA, any other legislation or common law.

The DBP Act specifies that a person who carries out construction work has a duty 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 extensively defined in the DBP Act to mean:

• Building work;

• Designs for building work;

• Manufacture or supply of a building product used for building work;

• Supervising, coordinating, project managing or otherwise having substantive control over the carrying out of any of the above.

This means that in addition to claiming against builders and developers, homeowners can now also directly make claims against parties such as the architect, engineer, individual subcontractors and suppliers and project manager for defects in their building.  Claims can also potentially be made against the private certifier in circumstances where they had substantive control over the carrying out of the building work.

The duty of care is owed to each owner of the land on which the is building is located and to each subsequent owner of the land. 

Importantly, a contract is not required to establish duty of care for construction work.  To the extent that a contract is used, the parties cannot exclude the duty of care.

The duty of care provisions of the DBP Act apply retrospectively, provided the loss first became apparent within the 10 years immediately before the commencement of the new legislation (that is, no later than 11 June 2010). A claim under the DBP Act for economic loss can be added to existing proceedings.

The practical effect of the duty of care provisions of the DBP Act is that homeowners can now pursue not only the developer and builder, but also many others involved in the construction of their building.

The limitation period for breach of duty of care under the DBP Act is six years from the date loss is first suffered because of the defect.  The 10 year long stop period from date of completion of the building (under s.6.20 of the Environmental Planning and Assessment Act 1979) still applies to claims under the DBP Act.

The duty of care provisions of the DBP Act are already in force.  The DBP Act also contains provisions relating to the regulation of design, building, engineering and specialist work and investigation and enforcement.  These provisions, as well as new regulations relating to these provisions will commence on 1 July 2021.

In addition, the Residential Apartment Buildings (Compliance and Enforcement Powers) Act 2020 (NSW) (RAB Act) has been implemented, with a start date of 1 September 2020 and is aimed at addressing serious defects identified in residential apartment buildings.

More information on the regulation, investigation and enforcement provisions the DBP Act as well as the RAB Act can be found here.

Both the DBP Act and RAB Act will have extensive ramifications for the building and construction industry as a whole in NSW.  Those working in the industry as well homeowners should familiarise themselves with the new duty of care, and the other new provisions shortly coming into effect.

Please reach out to our Building and Construction team at Bartier Perry if you would like further information.

Authors: Sharon Levy & Arvand Ghazizadeh

See also: NSW Construction Industry Reforms Commence: Part 1 – What Building Practitioners Need to Know