Are You A “Person” Who Owes A Duty Of Care In The Building Industry?

In response to the perceived building crisis in NSW, the NSW government enacted the Design & Building Practitioners Act 2020 (NSW) (Act).  The Act introduces a range of statutory obligations on builders, architects, engineers and other workers in the building industry, including the enactment of a statutory duty of care under s 37 of the Act.

Since the introduction of the duty of care, there have been a number of judgments seeking to clarify who owes the duty of care and how it applies.  In the recent judgment of Stevenson J in Boulus Constructions Pty Ltd v Warrumbungle Shire Council (No 2) [2022] NSWSC 1368 (Boulos), the Court was required to consider who owes the duty of care.

In Boulos, the Council (cross-claimant) sought leave to join the Managing Director of the builder, Boulos Constructions (already a cross-defendant), and the Project Site Supervisor as additional cross-defendants to the proceeding.  Leave for the joinder was granted despite the opposition of Boulos on two grounds: (a) the defence of illegality, and (b) that the proposed cross-defendants were not “persons” that owed a duty of care

In relation to the defence of illegality, his Honour took the position that the common law defence of illegality did not apply as the duty of care arising under s 37 is a statutory duty of care, which overrides the common law position.

In relation to the definition of a “person” that owes the duty of care, his Honour confirmed that the “person” who owes the duty of care is not limited to a narrow scope of “persons” such as “building practitioners” but all “persons” involved in carrying out construction work (as defined in the Act) and that this includes a wide range of activities and actors and this goes beyond the definition of a “practitioner” – it will be a question of fact in each case.[1]

His Honour’s judgment appears to have caused some consternation for those involved in the building or construction trade, and their insurers on the basis that it would open the “floodgates” and, as submitted in opposition to the joinder “would also result in building cases that balloon to include huge numbers of defendants, increasing the cost and complexity of what is already a costly and complex area of litigation. This is especially so when one considers the potential for the defence of proportionate liability that can be pleaded in defence of a claim under [the Act] to raise the same issues of liability of multiple third parties even if the plaintiff does not join all potential defendants to their claim.

There is little doubt that the statutory duty of care will likely result in more claims being brought against those involved in the building and construction industry, but it is submitted that this is what the introduction of the duty of care was intended to achieve – a remedy for property owners where they previously had no or limited rights.  Contrary to some of the consternation or worry, the introduction of the duty of care did not introduce any new work practice or standard of work upon those involved in the building trade that did not already exist; it simply allowed a remedy for negligent work for those who previously, arguably through no fault of their own, came to own property which had been constructed negligently or contained negligent work.  To that extent, it is submitted that the consternation, is somewhat misplaced.  As pointed out by Stevenson J, the proportionate liability defences available under the Civil Liability Act can be relied upon by any defendant and moreover, this will only arise if some of negligent act can be shown to have cause the loss.  It is one thing for a plaintiff to make an allegation against all and sundry; it is another to prove the allegation.

Notwithstanding, for insurers of those involved in the building industry, an increase in litigation may very well lead to an increase in claim costs, or at the very least, in the defence of claims.  It follows that insurers may very well be more judicious and selective regarding the extent of any insurance coverage they provide to those involved in the building industry and those with a problematic claims history may have trouble obtaining insurance.

[1] See [61]


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