Running Defect Cases under the DBP Act

Key takeaways

• Increasing Popularity of DBP Act Claims: The statutory duty of care under the Designer Building Practitioners Act 2020 (NSW) (DBP Act) is becoming more popular among litigants, allowing owners and developers to recover from various parties involved in construction, including builders, directors, engineers, site supervisors, subcontractors, and certifiers.
• Detailed Pleading Requirements: When making claims under the DBP Act, plaintiffs must plead each defect in detail rather than broadly. This includes specifying the defects and the breach of statutory duty of care.
• Scope of Construction Work: The DBP Act applies to both residential and commercial building work, expanding the range of construction activities covered by the statutory duty of care.
• Criteria for Recovering Damages: To recover damages for breach of the duty of care, plaintiffs must demonstrate the existence of defects, costs of rectification, and specific steps the defendant should have taken. They must also show what would have occurred if those steps were taken and whether the harm would have been incurred.
• Vicarious Liability: The High Court's decision in Pafburn Pty Ltd v The Owners - Strata Plan No 84674 established that claims under the DBP Act are not apportionable, meaning defendants can be held vicariously liable for the work of their subcontractors and consultants.

It has almost been 5 years since the Designer Building Practitioners Act 2020 (NSW) (DBP Act) was enacted and it appears that the statutory duty of care allowing owners and developers to recover from builders, directors (personally), engineers, site supervisors, subcontractors and certifiers is becoming increasingly popular with litigants and certainly so, in the writer's experience. Many litigants have chosen to amend existing claims for breach of contract or the Home Building Act 1989 (NSW) to include claims for breach of the DBP Act (see for example The Owners - Strata Plan No 87639 v Karimbla Properties (No4) Pty Ltd [2025] NSWSC 58 per Stevenson J).

With the series of cases following on from Goodwin Street Developments Pty Ltd atf Jesmond Unit Trust v DSD Builders Pty Ltd (in liq) [2022] NSWSC 624, many parties have now sought to take advantage of the statutory duty of care held to be owed to owners under s 37 of the DBP Act which allows owners and developers to commence proceedings against builders, directors (for personal liability), architects, engineers, subcontractors and other consultants for defects.

Although there are only a small number of cases that have proceeded to final hearing, it now appears that a litigant seeking to recover damages for breach of the statutory duty of care should consider carefully the following:

1. in pleading claims under the DBP Act, it will not suffice to merely plead the defects and the breach of statutory duty of care broadly but the plaintiff will need to plead each defect in detail and the criteria referred to in paragraph 4 below (see The Owners of Strata Plan No. 87060 v Loulach Developments Pty Ltd (no.2) [2021] NSWSC 1068 at 40 to 44);
2. the construction work to which the Act applies not only includes residential building work but also commercial building work (see for example Krolczyk v Winner t/as J Winner Building Services [2022] NSWCA 196);
3. the prospective defendant will need to be a person who was in control or in a position to control the construction works the subject of the defect (see The Owners – Strata Plan No 84674 v Pafburn Pty Ltd [2022] NSWSC 659 at 58 per Stevenson J). Accordingly, the duty of care could extend to site supervisors, subcontractors or even certifiers (see for example The Owners Corporation SP 90832 v Dyldam Developments Pty Ltd [2024] NSWSC 1519);
4. a person seeking to recover damages for breach of the duty of care will need to not only demonstrate the existence of the defect and costs of rectification but will also need to demonstrate:
   • what steps the relevant defendant should have taken with respect to the defective work;
   • what would have occurred if those steps were taken; and
   • whether the relevant harm would have been incurred if the relevant steps had been undertaken
   (see The Owners — Strata Plan No 89005 v Stromer (No 3) [2022] NSWSC 1707 per Ball J at 4 to 11).
   In advising and appear on several cases under the DBP Act, the writer has found that it is sometimes difficult to obtain expert evidence to prove these criteria particularly since building experts are usually accustomed to only identifying the defects and the relevant costs of rectification.
5. As a result of the High Court’s decision in Pafburn Pty Ltd v The Owners - Strata Plan No 84674 (2024) APLC 24-049; [2024] HCA 49, claims against defendants under the DBP Act are not apportionable which means that prospective defendants will be held vicariously liable for the work of their subcontractors and consultants.

While complying with the above requirements does make it somewhat more difficult to prove a case for breach of the statutory duty of care owed by s 37 of the DBP Act, it does appear that the Act is having its desired effect in allowing owners and developers to seek to recover damages for defective works even where the builder is in external administration or has limited assets.

Whilst it still remains uncertain whether the duty of care extends to incomplete work, the decision of the Appeal Panel of NCAT in Clements v Murphy [2018] NSWCATAP 152 (in which the writer appeared) may apply by analogy to say that it does not. In that case, the Appeal Panel held that s 48MA of the Home Building Act 1989 (NSW), which mandates a preference for a works order in building cases in NCAT, does not apply to incomplete works as incomplete works are not defects.