Court confirms proportionate liability defence can be pleaded to a claim for breach of statutory duty of care under DBP Act

The Supreme Court of NSW has confirmed that a proportionate liability defence can be pleaded to a claim for breach of the statutory duty of care under the Design and Building Practitioners Act 2020 (NSW) (the DBP Act).

In The Owners – Strata Plan No 84674 v Pafburn Pty Ltd [2023] NSWSC 116 the builder and developer are both sued by an owners corporation for building defects under the statutory duty of care imposed by s 37 of the DBP Act.

The owners corporation brought an interlocutory motion, applying to strike out the builder and developer's proportionate liability defences, in which the developer sought to apportion liability for the disputed defects to nine alleged concurrent wrongdoers.

The owners corporation contended that the defendants were precluded from relying on the proportionate liability provisions in part IV of the Civil Liability Act 2002 (NSW) (the CLA) because s 39 of the DBP Act says the statutory duty of care is non-delegable and to allow such a defence would make the non-delegable duty imposed under the DBP Act a delegable duty.

The owners corporation argued that a proportionate liability defence was precluded by the combined effect of:

• s 39 of the DBP Act, which provides that: "A person who owes a duty of care under this Part is not entitled to delegate that duty";
• s 5Q of the CLA, which requires that the liability for breach of a non-delegable duty is to be determined as if the duty were a vicarious liability of the defendant in respect of any action in tort, whether or not it is an action in negligence;
• s 39(a) of the CLA, which clarifies that the proportionate liability provisions of the CLA do not prevent a person from being held vicariously liable for a portion of any apportionable claim for which another person is liable¹.

Rees J in the NSWSC rejected the owners corporation's argument holding that s 5Q of the CLA is concerned with the nature of a given non-delegable duty, that the section must be read as a whole and it is directed to a defendant's "liability in tort...for breach of a non-delegable duty to ensure that reasonable care is taken by a person in the carrying out of any work or task delegated or otherwise entrusted to the person by the defendant” (our emphasis).

Her Honour held that s 5Q does not apply to the statutory s 37 duty, which is non-delegable as consequence of statute.

Her Honour felt fortified in this conclusion by the legislative history of s 5Q, which revealed the section's intent to bar plaintiffs from evading the CLA's reforms by bringing vicarious liability claims as claims for breach of a non-delegable duty instead. The Ipp Report was plainly concerned with tortious claims for breach of a non-delegable duty, as developed by the common law.

This decision is important for building practitioners and their insurers as it confirms that they are entitled to rely on proportionate liability defences in response to claims for breach of the new statutory duty of care imposed by s 37 of the DBP Act.

This case further illustrates the point we have consistently made, that the introduction of the DBP Act would have unintended consequences and lead to costly litigation on its interpretation. Nothing illustrates it better than this particular matter, which has already been the subject of an earlier judgment on a motion brought by the defendant developer to have the claim against it dismissed or struck out on the basis of a nuanced construction of s 37's use of the word "person".

View our previous insights on the statutory duty of care under s 37 of the DBP Act and its application below:

• Goodwin appeal dismissed: Statutory duty of care to remain broad
• NSW Supreme Court broadens building practitioners' statutory duty of care under section 37 of DBP Act
• Proposed legislation imposes new duties on manufacturers and suppliers of building products

For more information on how this decision may apply to your business, please contact a member of our team.

¹ It was previously held in Woodhouse v Fitzgerald [2021] NSWCA in an action in tort, that the effect of section 5Q and section 39(a) of the CLA was that the defendant who owed a non-delegable duty was liable for the proportion of the liability attributed to the independent contractor in that matter.

Photo by Artem Labunsky on Unsplash.