By Stephen Aroney, Partner and Sindri Bergsson, Special Counsel

In an important decision, the Supreme Court of NSW has held that a project manager of a building company can personally owe a duty of care to home owners in respect of building work under their supervision and therefore be held liable in respect of defects in that building work. Further, the Supreme Court confirmed that the statutory duty of care owed by builders and building professionals under the Design and Building Practitioners Act (the Act) applies broadly, extends to commercial buildings.

The plaintiff, Goodwin Street Developments, was the owner of land and entered into a building contract with DSD Builders for the construction of three boarding houses. There was a dispute between the parties in respect of defects and damage to the building works, and the Plaintiff commenced legal proceedings against both DSD Builders and Daniel Roberts, the project manager for the works (who was also the husband of the director of DSD Builders). DSD Builders was subsequently placed into liquidation and the claim proceeded only as against Mr Roberts.

The Court found that Mr Roberts had acted as the project manager and supervisor of the building works on behalf of DSD Builders, and therefore Mr Roberts was a person who carried out “construction work” within the meaning of sections 36 of the Act. The consequence of this is that Mr Roberts was found to owe the statutory duty of care provided in section 37 of the Act. Ultimately, the Court held that Mr Roberts had breached that duty and was personally liable for various defects in the building works and damage to the house.

Further, the Court unravelled the “labyrinthine” definitions in section 36 of the Act regarding the definitions of “building” and “building work”. These definitions have caused legal practitioners great difficulties in determining whether the section 37 statutory duty of care applied only to certain residential buildings or whether the duty applied more broadly, particularly as those definitions appeared inconsistent with similar definitions in section 4 of the Act. The Court has now determined that the section 37 statutory duty of care applies broadly, and is not limited by the definition in section 4.

What this means is that the statutory duty of care under section 37 of the Act applies more broadly in 2 respects:

1. the duty is owed not just by those carrying out the building works, but also can be owed by project managers and supervisors who might be engaged as consultants or subcontractors themselves; and
2. the duty is seemingly owed in respect of both residential and non-residential (commercial) buildings.

This will have obvious implications for builders, project managers, anybody who supervises building works and their respective insurers.

http://www.austlii.edu.au/cgi-bin/viewdoc/au/cases/nsw/NSWSC/2022/624.html