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In this case, the plaintiff (Strata Plan 92183) brought proceedings alleging defective residential building work in relation to 9 town houses located in Mangerton, NSW.
Relevantly SP92183 claimed that both the builder’s director (Mr Nassif) and the developer’s director (Mr Chahwan) had both breached their duty to exercise reasonable care to avoid economic loss caused by defects as provided for by section 37 of the Design & Building Practitioner’s Act 2020 (DB&P Act).
Claim against Mr Chahwan (developer) for breach of s37 duty of care
SP92183’s claim against Mr Chahwan was based on the premise that Mr Chahwan had carried out ‘construction work’ (as defined by s36 of the DB&P Act), in relation to the repair work, because he had been ‘supervising, coordinating, project managing or otherwise having substantive control over the carrying out of [building work]’.
The Court dismissed the s37 claim against Mr Chahwan finding there to be insufficient evidence of the requisite weight to prove that Mr Chahwan had carried out “construction work” as required by the DB& P Act.
The Court held that Mr Chahwan, being the developer who was involved in litigation with SP 92183, a member of the strata committee and an owner of four units in the property, had an ‘incidental involvement in the repair work…and had every reason to be interested in ensuring that the work was carried out’.
However, on the evidence put before it, the Court could not conclude, on the balance of probabilities, that what Mr Chahwan was doing in relation to the repair work satisfied the requirement that he was carrying out “construction work” as defined for the purposes of s 37 of the DB&PA. That is. the Court held that Mr Chahwan did not have substantive control over the works.
The evidence adduced by SP 92183 was, according to the Court, of insufficient weight in and of itself to constitute the carrying out by Mr Chahwan of “construction work” and accordingly the claim against Mr Chahwan for failure to exercise reasonable care, failed.
Key Takeaway No 1
Substantial evidence of supervision, coordination, planning or project management must be put before the court to support a claim that a person was exercising ‘substantive control’ over the works.
Claim against Mr Nassif (builder)for breach of s37 duty of care
Mr Nassif was the sole director and nominated supervisor of the builder, Samdora Pty Ltd.
There was no dispute between the parties that Mr Nassif had carried out “construction work” for the purposes of the DB&P Act and that he therefore owed a duty of care to SP 92183.
A claim for breach of the s37 duty is a claim in negligence. SP92183 bears the onus of satisfy the relevant negligence requirements of the Civil Liability Act 2002 (NSW) namely that the risk of loss was foreseeable, significant and that a reasonable person in the position of Mr Nassif would have taken precautions to avoid that loss.
SP 92183 submitted that:
- Mr Nassif had breached his s37 duty because he had failed to exercise reasonable care to ensure that the work complied with the warranty in section 18B(1)(c) of the Home Building Act 1989 (NSW) that the work ‘would be done in accordance with, and would comply with [the HBA] or any other law’, including the BCA;
- The precaution which Mr Nassif had failed to take was to have properly carried out ‘an active supervisory role’ during the construction process by ‘regular inspections/checking of the works’, such that the defects should or would have been identified and rectified prior to completion of the development.
- If that ‘active supervisory role’ had been undertaken, the harm would not have arisen because the defects would not have occurred.
The Court found that Mr Nassif had failed to carry out any regular inspections or checks of certain of the works that would have brought those defects to the light.
Key Takeaway No 2
In order to succeed on a breach of s37 duty claim, the alleged defects must be capable of being identified and prevented by the person who has ‘substantive control’ over the works. That is, in this case that an ‘active supervisory role’ would have avoided the defects that were alleged.
Link to the case: https://www.caselaw.nsw.gov.au/decision/19db306dc3235154f93e0d38
For further information please contact:
Michael Byrnes, Partner
Phone: + 61 2 9233 5544
Email: mjb@swaab.com.au
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
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