Pafburn Pty Limited & Anor v The Owners – Strata Plan No 84674 [2024] HCA 49
Facts
In Pafburn Pty Limited & Anor v The Owners – Strata Plan No 84674 [2024] HCA 49, the Owners Corporation of a residential strata building in North Sydney initiated legal action against Pafburn Pty Limited (“the head contractor”) and Madarina Pty Ltd (“the developer”). The Owners Corporation (“the applicant”) alleged that both parties breached the statutory duty of care under section 37 of the Design and Building Practitioners Act 2020 (NSW) (“DBPA”), resulting in construction defects. The head contractor and the developer asserted that their liability should be reduced by attributing responsibility to subcontractors and consultants involved in the construction, invoking proportionate liability provisions under Part 4 of the Civil Liability Act 2002 (NSW) (“CLA”).
Part 4 of the CLA creates a scheme of proportionate liability. In Pt 4 of the CLA, s 34 provides that:34 provides that:
“(1) This Part applies to the following claims (apportionable claims) –
(a) a claim for economic loss or damage to property in an action for damages (whether in contract, tort or otherwise) arising from a failure to take reasonable care, but not including any claim arising out of personal injury,”
Principles Used to Come to Decision
The High Court examined the interplay between the DBPA and the CLA, focusing on whether the statutory duty of care under section 37 of the DBPA is non-delegable and if proportionate liability provisions apply. Section 39 of the DBPA stipulates that the duty is non-delegable, meaning that those who owe the duty cannot transfer their responsibility to others. Additionally, section 5Q of the CLA addresses vicarious liability, indicating that a person with a non-delegable duty is liable for the negligence of those they engage to perform the work. The Court analysed these provisions to determine if the head contractor and the developer could limit their liability by attributing fault to subcontractors and consultants.
Decision
In a 4-3 majority decision, the High Court dismissed the appeal by head contractor and the developer, ruling that the statutory duty of care under section 37 of the DBPA is non-delegable. The dissenting Justices argued that the head contractor and developer should be allowed to rely on proportionate liability provisions, sharing responsibility for defects with subcontractors and consultants. They disagreed with the majority's view that the statutory duty of care under the DBPA was non-delegable, advocating for a fairer allocation of liability among all parties involved. Ultimately, the Court held that head contractors and developers cannot rely on proportionate liability defences to reduce their responsibility by attributing fault to subcontractors or consultants and that the head contractor and developer were wholly liable for the Owners Corporation's loss resulting from the construction defects, regardless of any delegation of work.
Lessons/New Principles
This decision clarifies that under the DBPA, developers and head contractors bear full responsibility for the statutory duty of care and cannot mitigate their liability through proportionate liability defences by pointing to subcontractors or consultants. Whilst this decision clarifies the responsibilities of developers and builders, clients should remember that the case was decided by a 4-3 vote. As such, Bastion Legal can help you assess your specific circumstances carefully.
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