By: Marcus Saw and Tobias Campbell

Kapila v Monument Building Group Pty Ltd [2025] NSWSC 1306

At a glance

In late 2024, in a split 4:3 decision in Pafburn Pty Ltd v The Owners—Strata Plan No 84764 (HCA Decision), the High Court dismissed an appeal from The Owners—Strata Plan No 84674 v Pafburn Pty Ltd [2023] NSWCA 301 (Court of Appeal Decision).

The Court of Appeal Decision had found that:

• the duty of care owed under s.37 of the Design and Building Practitioners Act 2020 (DBPA) (by a developer and head contractor in that case) is non-delegable (per s.39 of the DBPA); and

• s.39 of the DBPA (which provides that the statutory duty under s.37 is non-delegable) operates to exclude the proportionate liability regime in Part 4 of the Civil Liability Act 2002 (CLA) from claims pursuant to s.37(1) of the DBPA entirely.

In the HCA Decision, the majority left open the possibility that the CLA’s proportionate liability regime could apply to some claims for breaches of s.37 of the DBPA.

Richmond J’s decision in Kapila v Monument Building Group Pty Ltd [2025] NSWSC 1306 (Kapila) carefully considered the Court of Appeal Decision. His Honour determined that he was bound by the Court of Appeal’s reasoning that supported the conclusion that the proportionate liability regime in NSW does not apply to a claim pursuant to s.37 of the DBPA.

Background

Kapila concerned a terrace house in Paddington which Dr Kapila (Owner) had retained the First Defendant (Builder) to renovate. Mr Brujic, the Second Defendant, was the sole director of the Builder and the supervisor under its licence.

The Owner alleged there were defects in the works (such as waterproofing and guttering issues) and brought a claim against both:

• Mr Brujic for breach of the statutory duty of care owed under Part 4 of the DBPA (presumably because there was no contract between the Owner and Mr Brujic); and

• the Builder for breach of contract (which contained the usual implied warranties pursuant to section 18B of the Home Building Act 1989) as well as for breach of duty under the DBPA.

Richmond J would ultimately find that the work was defective in relation to four of the five categories of defects.

Construction Work & Duty of Care

Section 37 of the DBPA imposes a statutory duty on any person who does ‘construction work’ to exercise reasonable care to avoid economic loss caused by defects.

Section 39 of the DBPA disentitles a person who owes a duty of care under s.37 when carrying out construction work from delegating that duty.

Construction work is defined (fairly broadly) in s.36 of the DBPA as:

• building work;

• preparation of regulated designs and other designs for building work;

• manufacture or supply of a building product used for building work; and

• supervising, coordinating, project managing or otherwise having substantive control over the carrying out of any construction work.

Mr Brujic was found to have carried out construction work in that he supervised the (defective) construction work undertaken by the Builder.

Apportionment

The Defendants denied liability. Alternatively, they pleaded that the claims against them under the DBPA were ‘apportionable’ within the meaning of the CLA. They contended that:

• the certifying authority, engineers and the architect were ‘concurrent wrongdoers’; and

• the HCA Decision was distinguishable on the facts, that decision having dealt with a head contractor’s liability for breaches of duty by its subcontractors, as distinct from the concurrent wrongdoers as alleged by Mr Brujic and the Builder, which were not their subcontractors.

His Honour found against the Defendants on the apportionment argument, observing that:

• the HCA Decision had emphasised the role of s.5Q of the CLA, which provides that a defendant who owed a non-delegable duty (such as the duty under s.37) will, in effect, be vicariously liable for the negligence of a delegate;

• it was arguable, based upon the majority’s confined reasoning in the HCA Decision, that only claims pursuant to s.37(1) which involved some kind of delegation of works would fall outside the scope of Part 4 of the CLA (in other words, delegation is a necessary element if a defendant is to be prevented from relying upon an apportionment defence by operation of s.39 of the DBPA); and

• such an interpretation was consistent with:

  • the majority in the HCA Decision’s explicit confinement of its reasoning, and the manner in which that reasoning made specific reference to s.5Q of the CLA; and

  • s.41(3) of the DBPA (which provides that s.37(1) of the DBPA is subject to Part 4 of the CLA)¹ which would otherwise be rendered otiose.

However, in circumstances where the High Court had not disturbed the reasoning of the Court of Appeal Decision, His Honour considered that he was bound to follow the reasoning of the latter, concluding that:

• a claim for breach of s.37(1) of the DBPA was not apportionable, irrespective of whether a concurrent wrongdoer was a delegate;

• it was unnecessary to have regard to s.5Q of the CLA if apportionment was unavailable (in line with the Court of Appeal’s reasoning); and

• the appropriate remedy available to a defendant in proceedings concerning breach of the statutory duty is a cross-claim against concurrent wrongdoers (which the Defendants in Kapila had not brought).

Key Takeaways

The DBPA and its interplay with the CLA is an area of the law that is subject to continuing development and refinement. The distinctions between the reasoning of the Court of Appeal Decision and the HCA Decision, raised by His Honour in Kapila, are likely to be further agitated by defendants seeking to have claims against them apportioned.

Until such time as the question of the apportionability of claims pursuant to s.37 of the DBPA is categorically determined by the High Court, Defendant parties to s.37(1) DBPA claims ought to (continue to) consider pleading cross-claims against other parties (in addition to any apportionment defences raised).

However, as matters presently stand, the risk presented by non-recovery against insolvent defendants will be borne by their co-defendants (and their insurers).

Key Contacts & Updates

For guidance on Construction matters, please contact our authors Marcus Saw and Tobias Campbell.

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