Passing the Parcel Doesn’t Apply to NSW Building Defect Claims Anymore
The Owners – Strata Plan No 84674 v Pafburn Pty Ltd [2023] NSWCA 301
GoStrata’s CaseWatch is a short, sharp and easy-to-understand review of important and interesting Court and Tribunal decisions affecting Australian strata title stakeholders.
Quick Read
This 2023 decision by the NSW Court of Appeal is about a building defects dispute in a North Sydney strata title building under the new Design and Building Practitioners Act 2020. The strata building took legal action against the developer and the builder for construction defects under the new 2020 laws governing liability for defects. As part of their defence to the legal action, the developer and the builder said that they were entitled to include the 9 sub contractors that were engaged to construct parts of the strata building and make them liable for any construction defects relating to their work, instead of themselves under the Civil Liability Act 2002. The key issue in the case was to reconcile the apparent inconsistencies between the two laws; one that said the developer and builders liability could not be transferred; and; the other that operates to share responsibility and liability between parties that caused the damage and loss. After analysing both laws and the nature of claims under the new 2020, the NSW Court of Appeal decided that the two laws co-existed because although the defects claim under the new laws was a tort [legally speaking], the way it was created and imposed [as non transferrable] meant that the apportioning [liability sharing] in the Civil Liability Act 2002 didn’t apply. It said they were ‘outflanked’. The decision is intricate and complex. But the decision an important first major decision on these new kinds of building defects claims making legal action for building defects by strata buildings simpler and easier, avoiding the problems created under the decision in the Brookfield Case, and matching the position of builders and developers in claims for breach of the warranties under Home Building Act 1989.
Implications
The key implications of this strata case are as follows.
The new duties under s 37 make developers and builders responsible for exercising reasonable care to avoid economic loss caused by defective construction work.
Those claims are a restatement and extension of the duty in negligence alleged in the Brookfield Case and so are torts [in legal speak].
There’s an apparent inconsistency between the Design and Building Practitioners Act 2020 and the Civil Liability Act 2002.
The Design and Building Practitioners Act 2020 duties do not arise vicariously under s 35 as they are directly imposed on developers and builders.