By: Charu Stevenson, James Clohesy and Chris Knight

Pafburn Pty Limited v The Owners – Strata Plan No 84674 [2024] HCA 49


At a glance

  • The High Court ruled that developers and builders cannot rely on proportionate liability defences for breaches of the DBP Act duty of care due to its non-delegable nature.
  • The decision does not determine whether proportionate liability defences are ruled out for sub-contractors or construction professionals to claims for breach of the DBP Act duty of care. 
  • Developer and builders will therefore need to bring cross claims for contribution in claims for breaches of the DBP Act duty of care. 
  • For abundance of caution, sub-contractors and construction professionals will need to bring cross claims (as well as pleading proportionate liability defences), until the position is clarified by a further decision in respect of those subject to the DBP Act duty of care further down the contractual chain than the developer and builder in this case. 


The High Court has determined that proportionate liability defences are not available to developers or builders for claims against them for breach of the duty of care under section 37 of the Design and Building Practitioners Act 2020 (DBP Act). 

Charu Stevenson and Hamshini Sathiyamoorthy previously wrote on Pafburn in ‘New duty of care: is Pafburn a knockout blow for proportionate liability defences?’. View the article here. 

Decision

In short, the four judge majority decided that neither the developer or the builder could plead proportionate liability defences to claims for breach of the DBP Act duty of care because the duty is a nondelegable duty of care and therefore s 5Q of the Civil Liability Act 2002 (NSW) (CLA) means that the developer and builder are vicariously liable for the work they delegated or entrusted to be done by others, including their subcontractors and the local council who was not contracted by either the developer or builder. 

In our opinion, the decision does not mean that all defendants of a claim for breach of the DBP Act duty of care cannot reduce their liability under the proportionate liability regime in the CLA. For example, in our view a proportionate liability defence remains viable for an engineer faced with a claim for breach of the DBP Act duty of care if it can establish the builder was a concurrent wrongdoer. It seems to us that the scope of the engineer’s non-delegable duty in that circumstance would be limited to design work and therefore it would not be vicariously liable for the builder’s defective workmanship having not delegated or entrusted that work to the builder, given it is outside the scope of its duty. 

The claims against the developer and builder were made in respect of defects in the whole building. The claim in this case was that the developer supervised project managed or had substantive control over the construction of the whole building and that the builder constructed the whole building. The breadth of the claims extending to the whole building is an important factor in the High Court’s reasoning because it was held that the developer’s supervision of the construction of the whole building and the builder’s construction of the whole building meant that the scope of their non-delegable duties extended to all defects in the building. 

If the supervision is only of work on a part of the building (for example, the foundations), the scope of the duty of care only reaches defects in that part of the building. Similarly, a plumber that performs plumbing work owes the duty of care in respect of all defects in that work. All of these duties are non-delegable within their scope. Accordingly, the decision means that it will be critical to identify the scope of the relevant person’s duty of care under the DBP Act in defending claims made against that person. 

In a strong dissenting judgment, the minority held that the proportionate liability regime applies to claims for breach of the DBP Act duty of care, and stated that it was not self-evident the DBP Act duty of care applied to certifiers at all. 

Implications

The decision will mean that all defendants in claims for breaches of the DBP Act duty of care will need to bring cross claims for contribution against joint tortfeasors rather than rely on proportionate liability defences. That will increase the costs of and complexity of building defects litigation. 

It is likely that a live debate will subsist on whether the Pafburn decision means that proportionate liability defences are not viable in answer to any claims for breach of the DBP Act duty of care.  

In our view, the decision does not go that far, but minds will differ on that, meaning the position will need to be clarified by a further decision in respect of those subject to the DBP Act duty of care further down the contractual chain than the developer and builder in this case.