Building Defects

On 10 June 2020 a retrospective duty of care commenced under the Design & Building Practitioners Act 2020 giving all owners who became aware of building defects losses in the 10 years before 10 June 2020 a right to sue in negligence against:

  1. builders,
  2. designers,
  3. subcontractors,
  4. suppliers or manufacturers; and
  5. supervisors, project managers or co-ordinators in control of the works.

This retrospective duty of care is currently limited to residential buildings including cladding, but there are relevant other time limits e.g. limits under the planning laws which need to be considered.

If the loss became apparent after 10 June 2020, the duty of care period reverts to the usual 6 years from awareness of the loss, but again other limitations need to be considered.

 

10 Year Retrospective Right

The Design and Building Practitioners Act 2020 (“DBPA”) makes game changing provisions and will have a significant impact on the building industry and on strata schemes.

The DBPA commences in stages:

  • Some of the Act commenced on 10 June 2020, especially Part 4 imposing a new duty of care with retrospective effect.This is not limited to residential buildings.
  • Most of the rest of the DBPA commences on 1 July 2021. This includes Part 2 [regulated designs and building work], Division 1 of Part 3 [professional engineering work] and Parts 5–9 [registration of practitioners, disciplinary action against practitioners, investigations, enforcement & miscellaneous].

Division 2 of Part 3 [specialist work] commences on a day to be proclaimed, presumably on or after 1 July 2021, depending on progress with technical aspects.

The DBPA differs from the bill which failed to pass last year including in the following way:

  • Increased scope, e.g. extension of building elements to services, construction work to manufacture or supply of building products and economic loss to reasonable costs of providing alternate accommodation.
  • There are new practitioner categories and obligations, i.e. specialist design practitioner/specialist work and professional engineer/professional engineering work.
  • Provision for compliance declarations to be given to principal certifier, who is to take them into account when issuing occupation certificates.
  • Enhanced enforcement powers, e.g. secretary able to issue a stop work order.
  • Major changes to transitional provisions, e.g. some work under existing arrangements caught and duty of care given retrospective effect.

Key features

  1. Registration of design and building practitioners:
  • Registration.
  • Professional indemnity insurance.
  • Disciplinary regime.
  • Regulation of design and building work:
  • Registered design practitioners, registered principal design practitioners and compliance declarations.
  • Building practitioners and relevant documents.
  • Professional engineering work.
  • Specialist work.
  • Secretary given broad investigative and enforcement powers.
  1. Duty of Care:
  • Imposes 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”.
  • Extends to persons carrying out construction work, defined as “building work,
  1. the preparation of regulated designs and other designs for building work, 
  2. the manufacture or supply of a building product used for building work,
  3. or supervising, coordinating, project managing or

otherwise having substantive control over the carrying out of any work [referred to above]”.

  • Construction work covered is very wide and includes supply and manufacture of building products.
  • Duty of care is owed to each owner and subsequent owner.
  • Not limited to residential buildings and includes leasehold strata schemes who do not presently have statutory warranty rights.
  • However, the regulations could narrow the type of person owed the duty of care.

Other important points to note:

  1. Delegation and contracting out of duty prohibited.
  2. Additional to other rights e.g. under Home Building Act 1989 and common law.
  3. Operates retrospectively to extend to economic loss from the date of the work “If the loss first became apparent within the 10 years immediately before the commencement of section 37 [10 June 2020] or the loss first becomes apparent on or after the commencement of that section.
  4. Subject to 10 year limitation period (from the date of completion of the work) under Section 6.20 of Environmental Planning and Assessment Act 1979 (previously known as Section 109ZK).
  5. So building work completed more than 10 years ago will be out of time.
  6. Proportionality claims will apply in respect of the new duty of care.
  7. Potential methods of limiting liability by limitation of liability schemes negotiated by professional bodies for their members, e.g. under the Professional Standards Act 1994 NSW could be an invalid attempt at “contracting out” of duty of care under the Design and Building Practitioners Act 2020.

 

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