The Design and Building Practitioners Act 2020 – The Importance of Pleadings when making a Claim

15/06/2023

The Design and Building Practitioners Act 2020 (“DBPA”) is the New South Wales Government’s response to issues that arise in building and construction in particular, relating to high rise residential buildings subject to a Strata Scheme.  The High Court of Australia in the case of Brookfield Multiplex Limited v Owners Corporation Strata Plan 61288 (2014) 254 CLR 185 (“Brookfield Case”), found in those proceedings, that Builders and Engineers did not owe a common law duty of care to subsequent Purchasers in relation to commercial property until DBPA in 2020.  Similar restrictions applied in relation to high rise residential strata buildings.

Over time there have been many buildings which as constructed contained major defects.  Some of those defects were a consequence of design issues and/or construction issues.  Two recent examples are the Building failures at Mascot Towers and Opal Tower in Sydney, which have been the subject of significant commentary in the press.

Watson & Watson Lawyers have for many years been continually approached and have acted for many Owners Corporations and Strata Committees and Lot Owners in disputes relating to defective building works by the original Developer or Builder with positive outcomes being achieved for many clients.

The remedies available pursuant to the DBP Act are additional to the remedies that were available prior to 2020 primarily which were available and continue to be pursuant to:

(a)      The Contract between Developers and Contractors or Builders which bound the Developers and Contractors to the terms of the Contract;

(b)      The Sales Contracts between the Developers of strata units and purchasers of strata units (Lots) including off the plan purchasers; and

(c)      The Home Building Act 1989 (NSW) (“the HB Act”).

We refer to our earlier articles including Watson & Watson article 4 July 2022 Design and Building Practitioners Act 2020 (NSW) Construction Work the Subject of the Act – Owner to Whom the Duty is Owed?  This refers to basic issues that arise under the DBPA.  Essentially the DBP Act provides in the appropriate circumstances some remedies where the design practitioners and/or building practitioners were negligent in carrying out their works. 

To bring a claim the current owner or subsequent owner as provided for in the DBP Act must prove:

(a)      Firstly that a person owed the claimant, plaintiff or applicant a duty of care; and

(b)      Secondly that the person who owed the duty of care breached that duty of care; and

(c)      Thirdly the claimant has suffered damages as provided for in the DBP Act as a result of the breach of the duty.

The Supreme Court of New South Wales in cases commenced in the Technology and Construction List of the Equity Division have considered numerous issues that arise in relation to the requirements under the Design and Building Practitioners Act 2020 including the requirement for the Claimant (as Plaintiff) to properly plead and set out the cause of action and requirements of the Defendant to plead its defence and any cross claims.  The Pleadings are the framework of the claims being made and the defence to the claims.

In the Technology and Construction List proceedings are commenced by way of a Summons with a Technology and Construction List Statement. 

The Summons sets out:

(a)      The parties; and

(b)      The relief claimed. 

The List Statement sets out:

(a)      Nature of the dispute;

(b)      Likely issues to arise;

(c)      Plaintiff’s contentions;

(d)      Question appropriate for referral to a referee;

(e)      Mediation Statement in relation to possible Mediation.

Recently the Supreme Court of New South Wales has considered the requirements relating to claims under the DBP.

Establishing the Breach

In 2021 in the case of The Owners Strata Plan 87060 v Loulach Developments Pty Limited (2) [2021] NSWSC 1068 (“Loulach Case”) was one of the first cases to address the issue of the requirements of the pleading in the List Statement.  In the “Loulach Case” the Owners Corporation pleaded to the Court that “the mere fact there was a defect in the building” was sufficient to establish a breach of the statutory obligation under the DBPA.  Stevenson J decided that this was insufficient as it did not identify what the actual breach of duty was for example whether it be “the Builder failed to follow Architectural Plans” or “the Builder failed to read the Architectural Plans” or installed the cladding in such a way to make in unacceptable cladding.

His Honour noted that Part 4 DBP Act under which the claim was made, is subject to the Civil Liability Act (“CL Act”) and accordingly, the general principles of Section 5B of the CL Act applied. 

Section 5B of the CL Act general principles (1) provides:

“A person is not negligent in failing to take precautions against the risk unless:

(a)    The risk was foreseeable (that is it is a risk of which the person knew or ought to have known); and

(b)    The risk was not insignificant; and

(c)    In the circumstances a reasonable person in the persons’ position would have taken those precautions”.

Section 5B(2) of the Civil Liability Act provides a list of matters the Court is required to consider amongst other relevant things in determining whether a reasonable person would have taken precautions against the risk of harm. 

His Honour Stevenson J in the “Loulach case” went on to cite with approval, the Decision of Garling J in Garzo v Liverpool/ Campbelltown Christian School in which Garling J, opined that a ‘proper pleading of a claim requires the plaintiff to identify, and articulate clearly the risk of harm, in which it is alleged, the defendant was obliged to take precautions … a proper pleading will also need to plead whether it is part of the plaintiff’s case that … defendant has actual knowledge of risk of harm … that the risk was thereby foreseeable … or only contends that the defendant ought to have known the risk of harm…’

Stevenson J decided that a Plaintiff pleading a breach of statutory warranty as a basis for a claim for damages against a Defendant for a claimed breach of the Defendant’s duty under the DBP Act, must accurately identify the specific risk that was required to be managed and any precautions that should have been taken to alleviate the risk. 

There is no prescribed form for providing the particulars however, His Honour observed that the List Statement could refer to a Scott Schedule with the appropriate columns identifying in relation to each defect, the relevant risk and more importantly what the Plaintiff contends the Defendant should have done in relation to the risk. 

A similar issue arose in the case of The Owners Strata Plan 84674 v Pafburn Pty Limited [2022] NSWSC.  In the decisions considered by the Court, His Honour Justice Stevenson found that the List Statement provided was inadequate to properly identify the matters required to be pleaded.

The same issues do not apply where the claim is limited to a claim for breach of statutory warranties under the Home Building Act.  Also different principles apply in relation to claim under a Contract.

One needs to remember that the Summons and the List Statement sets out the framework of the case.  In addition, the evidence supporting the framework is separate and is required to be carefully considered and prepared in the appropriate form as part of preparation of the case before a hearing of the matter.  The Technology and Construction List sets out procedures providing for various directions and compliance with those Directions to prepare the case for hearing.  It is critical that the preparation of the framework and evidence is properly prepared.

There are appropriate rules and practice notes which deal with the requirements including the obligations of the witnesses.

Watson & Watson Lawyers are experienced in all aspects of building and construction and strata matters including disputes with builders, subcontracts or other building contractors relating to major defective work issues, inappropriate design including by Engineers and other related issues.  Do not delay contact Richard Watson, Accredited Specialist in the stream of Building & Construction or his Personal Assistant Shereen Da Gloria to discuss your matter and seek appropriate advice sooner rather than later.

This is only a preliminary view and is not to be taken as legal advice without first contacting Watson & Watson Solicitors on 9221 6011