NSW defect reform | 10 year retrospective duty of care

The NSW Parliament has enacted sweeping reforms in its ongoing pursuit to improve the regulation of the domestic building industry by passing the Design and Building Practitioners Act 2020 (NSW) (the Act).

The Act imposes a statutory duty on builders, developers, contractors, designers, manufacturers and project managers to exercise reasonable care to avoid economic loss caused by building defects. The scope of economic loss may include defect rectification costs, costs incurred in further preventing damage and the diminution in a development's value.

The duty is owed to the owner of the land and subsequent owner of the land, including owners’ corporations. This is a significant departure from the status quo, as previously builders did not necessarily owe a subsequent owner a duty of care to avoid economic loss.

Most importantly, the duty of care operates retrospectively and applies to building works carried out before the commencement of the Act. Under the Act, owners may claim damages for a breach of this statutory duty where:

(a) the economic loss first became apparent within the 10 years prior to 11 June 2020; or

(b) the economic loss first became apparent on or after 11 June 2020.

The Act also prohibits contracting out of this statutory duty.

While the new statutory regime brings good news for owners and subsequent purchasers of property alike, the reforms will have severe implications for those in construction work, exposing them to liability on completed projects where no such liability existed at the time the building works were undertaken and completed.

Henry William Lawyers can assist with any related enquires:

Ron Zucker +61 410 590 111

Vincent Tripodina +61 408 228 10

Chelsea Woodward +61 404 065 899

Anna Polhill +61 431 174 352