Building Defects – Who is Liable?

Can the director of a building company that is responsible for the construction of a new strata building be held personally liable for defects in the building?

The Design and Building Practitioners Act 2020 (Act) was introduced in 2020 and provides that a duty of care is owed by “a person who carries out construction work” to an owners corporation to avoid defects in the construction of the building. But who exactly is classified as “a person who carries out construction work”?

Is “a person who carries out construction work” limited to the entity that was contracted to do the work such as the builder or does it also include all persons involved in completing the project such as a supervisor, project manager and even the director of the builder’s company or the developer?

Personal Liability of Project Manager

A recent decision by the Supreme Court of NSW has found that the husband of a director of a building company was personally liable for defective building works done by the builder under the Act because he acted as the project manager and supervisor of the builder: see Goodwin Street Developments Pty Ltd atf Jesmond Unit Trust v DSD Builders Pty Ltd (in liq) [2022] NSWSC 624.

In this case, the builder was placed into liquidation and the developer brought proceedings against Mr Roberts the husband of a director of the builder.  According to the Court, Mr Roberts was a project manager of the builder, supervising construction works for the project. Therefore, Mr Roberts was found to be “a person who carried out construction work” under the Act and was found liable for the defects.

Liability of Developer

In another recent Supreme Court case, an owners corporation sued the builder and developer for damages arising from defects.

The Court found, among other things, that a developer could be held liable for defects under the Act as a person who carried out construction work.

The Court also said that under the Act, a person could be liable for defects if they could (but did not necessarily) have control of the building works: see The Owners – Strata Plan No 84674 v Pafburn Pty Ltd [2022] NSWSC 659.

Conclusion

These cases have far reaching consequences for directors, supervisors, project managers, developers and sub-contractors involved in construction work who all could be liable to owners corporations for defects under the Act, even for work done up to 10 years ago (as the Act is retrospective). However, for those persons to be liable, it must be proven that they have had or could have had some control over the building works.

Contact Us

For all strata law advice including by-laws, building defects and levy collections contact our specialist NSW and Sydney strata lawyers here or call 02 9562 1266, we’re happy to assist.

The Land and Environment Court has recently approved a collective sale of a strata scheme.

This is the first time the Court has approved the collective sale of a strata building since the strata renewal laws commenced on 30 November 2016.

The case highlights the importance of ensuring each step in the collective sale process is followed to the letter of the law.

The case also provides guidance on how various problems created by the strata renewal laws will be resolved by the Court including problems determining the amount of compensation that should be payable to the owners.

In this article we take an in-depth look at the case and what lessons can be learned from the Court’s decision First Strata Collective Sale Approved by Court

For NSW strata legal or levy collection advice please contact us here or call 02 9562 1266, we’re happy to assist.

On 15 January 2015, the Home Building Amendment Act 2014 changed the terminology and definitions for building defects from structural to “major” and from minor to “in any other case” i.e. non-major.

So, what is the new definition of a major building defect?

In these two recent NSW Civil and Administrative Tribunal (NCAT) Appeal Panel decisions they have considered the definition of major defect and how to establish whether a defect meets this definition, providing some useful guidance on this topic How to Establish a Major Building Defect.

For NSW strata legal or levy collection advice please contact us here or call 02 9562 1266, we’re happy to assist.

Do you know?

NSW Fair Trading has now provided an additional specialist resource to assist with the implementation of the Strata Building Bond and Inspections Scheme (SBBIS).

You may remember that Strata Building Bond and Inspections Scheme began on 1 January 2018 and applies to:

• Building contracts executed from this date
• Buildings with no written contract
• Building works that commence from this date
• Construction of residential or partially-residential strata properties that are four or more storeys high

Online Portal

The Strata Building Bond and Inspections Scheme is now administered by an online portal.

At any time before the occupation certificate is issued developers can register to use the portal to:

• Enter project details
• Upload documents as they become available, at anytime

PLEASE NOTE: These documents should reflect the completed building just before any occupation certificate is issued (not the start of the build).

 Owners Corporations and Strata Managers

Owners Corporations who are eligible should familiarise themselves with the portal to access information if and when needed. You may also refer to this information specifically developed for owners corporations and strata managers.

For any portal assistance, you may call 13 32 20 (8:30am to 5.00pm, Monday to Friday) or email stratabond@finance.nsw.gov.au or refer to more details online about the Strata Building Bond Scheme here.

For NSW strata legal or levy collection advice please contact us here or call 02 9562 1266, we’re happy to assist.