New Defective Building Laws Come into Effect

New Defective Building Laws Come into Effect

The High Court has previously ruled that a builder does not owe an owners corporation a duty of care for pure economic loss arising from defective building work. This results in the owners frequently having to foot the bill for rectification after statutory warranty periods have expired.

On 11 June 2020 the Parliament of NSW passed the Design and Building Practitioners Act 2020 which applies to building work, including residential buildings. The law was introduced following concerns raised about building defects and combustible cladding after reports of defects in high rise buildings. These are the top takeaways:

  1. Those who carry out construction work on residential buildings (including the design, the supply or manufacture of building products, engineering work, and supervisory or other management roles) owe a duty of care to the owner (and subsequent owners) to avoid economic loss caused by defective building work.
  2. The duty of care is retroactive, meaning an owner or subsequent owner can make a claim if the loss first became apparent 10 years prior to the commencement of the act, or after.
  3. The claim for a breach of the duty of care is still subject to limitation periods. A claim based on the negligence of those involved in the defective work must be commenced within 6 years from the date on which the loss or damage arises.
  4. The duty of care is over and above contractual rights created by the building contract, therefore they can be enforced by subsequent owners.
  5. “Residential building work” includes construction of a dwelling, alterations or additions to a dwelling, or the repairing, renovation, decoration or protective treatment of a dwelling.