Written by In Goodwin Street Developments Pty Ltd atf Jesmond Unit Trust v DSD Builders Pty Ltd (in liq) [2022] NSWSC 624, the NSW Supreme Court considered a dispute arising between Goodwin Street Developments and DSD Builders regarding defective building works.
In 2017, Goodwin Street Developments entered into a contract with DSD Builders to construct three residential boarding houses, intended for university student accommodation for the University of Newcastle on property owned by Goodwin. After observing substantial damage to the buildings, Goodwin served a notice on DSD terminating the building contract with immediate effect and commenced proceedings. At this point, DSD had gone into liquidation and so was ordered to be wound up in insolvency and a liquidator was appointed.
Goodwin also commenced proceedings against Mr Roberts who negotiated and administered the building contract on behalf of DSD and controlled the carrying out of the construction work. Goodwin claimed that Mr Roberts caused damage to the buildings and removed materials, fixtures and fittings that had been incorporated into the building. As such, Goodwin claimed Mr Roberts acted in breach of his statutory duty of care under s 37 of the Design and Building Practitioners Act 2020 (NSW). This section requires the duty holder to exercise reasonable care to avoid economic loss caused by defects in the building and arising from the construction work.
Mr Roberts submitted that the statutory duty of care does not extend to “construction work” carried out on a boarding house. S 36(1) of the Act defines “construction work” to mean either “building work” or “supervising, coordinating, project managing or otherwise having substantive control over.” S 36(2) then defines “building work” as including “residential building work.” Despite commenting on the “labyrinthine” and “fiendishly difficult” nature of s 36 definitions, the Court held a broader definition of “building work” appears to be consistent with legislative intent.
As such, the Court held by supervising and project-managing the works, Mr Roberts did carry out “construction work” for the purposes of s 36 and breached his duty of care under s 37 of the Act. This case provides much needed guidance on the application of the statutory duty of care owed by builders.