The NSW Court of Appeal has delivered judgment on the application of Part 4 of the Civil Liability Act 2002 (NSW) to the Design and Building Practitioners Act 2020 (NSW) (DBP Act).

Key takeaways

This case overturned previous authority and determined that the proportionate liability regime contained in Part 4 in the Civil Liability Act does not apply to claims for breach of statutory duty brought pursuant to the DBP Act.

This case has important implications for property owners, as well as for developers and builders:

• Owners can take comfort that a defendant will be liable for the whole of the loss suffered and cannot reduce their liability by apportionment between concurrent wrongdoers.
• Defendants will not be entitled to name concurrent wrongdoers in a defence but will be required to cross-claim against them. This has the effect that a defendant cannot reduce its liability to a plaintiff by nominating concurrent wrongdoers.

Background to the case

The Owners claimed against the defendant builder, pleading a breach of the statutory duty of care contained in s37 of the DPB Act. In its defence, the builder nominated several concurrent wrongdoers and relied on the proportionate liability provisions contained in Part 4 of the Civil Liability Act.

The Owners applied to strike out these portions of the defence on the basis that Part 4 of the Civil Liability Act did not apply because the duty owed by the builder was non-delegable.

The decision came before Rees J in the first instance where it was determined that the proportionate liability regime in the Civil Liability Act did apply and, as such, concurrent wrongdoers could be nominated in defence of a claim.

The effect of this decision plainly assisted defendants in defraying any liability they potentially faced, while requiring a plaintiff to commence proceedings against a number of different defendants. This had the obvious effect of increasing the complexity of the proceedings as well as the costs.

Decision

There were two main issues considered by the Court on appeal:

1. Was the non-delegable duty imposed by s37(1) of the DPB Act a ‘tort’ for the purposes of s 5Q of the Civil Liability Act; and
2. Did the proportionate liability regime in Part 4 of the Civil Liability Act apply?

The Court considered the legislative intention of s37 of the DPB Act and determined that a claim brought against s37 is a claim in ‘tort’ for the purposes of s5Q of the Civil Liability Act because of the deeming phrase in s37(3): ‘as if the duty were a duty established by the common law’.

Adamson J opined that effect must be given to these words and noted that pursuant to s39 of the DPB Act the duty may not be delegated. This led Her Honour to conclude that the duty imposed by s37 was non-delegable and that this was ‘sufficient to exclude Part 4 of the Civil Liability Act by necessary implication’ (at [11]).

As a result it followed that the proportionate liability regime did not apply because the duty was not delegable.

Section 5Q of the Civil Liability Act was considered and it was determined that while the terminology may be inapt, the section should not be read down and the builder was vicariously liable for the actions of the concurrent wrongdoers.

Further information / assistance regarding the issues raised in this article is available from the author, Megan Palmer, Partner, or your usual contact at Moray & Agnew.