They owe a non-delegable duty to exercise reasonable care in construction work: court
The High Court has ruled that a developer and a head building contractor cannot limit their liability for economic loss caused by defects in residential strata buildings by apportioning blame to subcontractors and other entities involved in the construction.
The court found that under NSW’s Design and Building Practitioners Act (DBPA), these parties owe a non-delegable duty to exercise reasonable care in construction work, making them fully liable for any breaches, regardless of subcontractor involvement.
The case was brought by owners corporation representing a residential strata building against the developer, Madarina, and the head building contractor, Pafburn. The owners corporation sought damages for economic loss due to construction defects, alleging that both parties had breached their statutory duty under the DBPA to take reasonable care in the building’s construction. The key legal issue was whether Madarina and Pafburn could rely on part 4 of the Civil Liability Act 2002 (CLA) to reduce their liability by apportioning blame to other entities, such as subcontractors, architects, and certifiers, who were also allegedly responsible for the defects.
The High Court unanimously held that neither Madarina nor Pafburn could limit their liability through the proportionate liability scheme in the CLA. It ruled that the duty imposed by s. 37(1) and 39 of the DBPA is non-delegable, meaning the developer and head contractor remain fully responsible for ensuring reasonable care was taken during the construction, even if other parties were involved in the work. The court determined that Pafburn, as the head contractor, and Madarina, as the developer, each carried out “construction work” under s. 36 of the DBPA, which includes supervising and managing the project. Section 39 of the DBPA explicitly states that the statutory duty of care “is not entitled to be delegated,” preventing Madarina and Pafburn from shifting responsibility to subcontractors or other entities.
Additionally, s. 5Q of the CLA treats liability for breach of a non-delegable duty as equivalent to vicarious liability, reinforcing that the developer and contractor are wholly responsible for ensuring reasonable care was exercised. Because of this, the court concluded that the proportionate liability scheme in part 4 of the CLA does not apply in this case. The DBPA duty is not merely about taking reasonable care—it imposes direct responsibility for all construction defects arising from the work.
