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If you are a homeowner who has recently engaged, or is looking to engage, a builder or design consultant, you may benefit from new protective laws in New South Wales (NSW). The law was in response to recent spikes in residential building defects. These include the Mascot Towers and Sydney Olympic Park Opal Tower developments, where construction issues required the evacuation of residents. This article explains a new statutory duty of care that applies to the building industry, and how it will benefit homeowners.

What is a Duty of Care?

A duty of care, at its simplest, is an obligation to take reasonable care towards others. A statutory duty of care is one that arises at law (from legislation passed by the NSW Parliament).

What is the New Duty of Care?

On 11 June 2020, the new statutory duty of care came into effect. The duty of care belongs to the person who carries out “construction work”. 

The new duty of care requires a person who carries out construction work to exercise reasonable care to avoid economic loss caused by defects:

  • in or related to a building for which the work is done; and
  • arising from the construction work.

Who Benefits From the Duty of Care?

The duty of care benefits owners of properties (and importantly, subsequent owners of properties). This means that if you have purchased a new or newly renovated house or apartment, you may be able to rely on the duty of care. This is significant because if you are a subsequent owner, you would not usually have a contract with the original building practitioner that you could rely on.

If you are an apartment owner, the owners corporation for your apartment building will also benefit from the duty of care. This is important because, in apartment complexes, there may be defects in:

  • apartments owned by individual homeowners; and 
  • defects in common property. 

For example, if there are waterproofing issues in a building, they may affect individual apartment balconies, and also shared spaces like a parking garage.

Who Owes the Duty of Care? 

The duty of care is relatively expansive in terms of who owes the duty. 

For example, the definition of “construction work” is broad and extends to:

  • residential building work (for example, a new house or apartment, or renovations or alterations to a house or apartment); 
  • design preparation (for example, designs prepared by an architect or interior designer); 
  • the manufacture or supply of a building product used for building work (for example, a supplier of bricks or Colorbond roofing used to build a home); and
  • supervising, coordinating, project managing or otherwise having substantial control over any of the above categories (for example, a project manager).

The duty of care will apply even where there is no contract for the relevant construction work. 

Please note also, NSW has specific requirements for residential building contracts, including for them to be:

  • in writing;
  • signed by both parties; and 
  • to include various mandatory clauses (including a warning about how the contract sum can increase). 

What Does This Mean For Me?

The new duty of care is an additional check and balance on the works performed by builders and consultants you may engage in building or renovating your home. 

If you engage a builder or design consultant who breaches this duty of care, you may be able to claim damages against them. This usually involves commencing Court proceedings. However, if you try to resolve a dispute before going to Court (for example, through mediation), it may still be useful to know the potential for you to claim damages.

The duty of care applies retrospectively, which means you may be able to rely on it if you have had building works carried out within the 10 years before 11 June 2020.

Key Takeaways

  • Anyone who carries out residential construction work needs to take reasonable care to avoid economic loss caused by defects.
  • If there is a breach of this duty of care, you as a homeowner may be able to claim damages.
  • The duty of care could apply to construction work carried out in the 10 years prior to 11 June 2020.

If you would like any assistance in understanding the duty of care, or if you need help reviewing a residential building contract, contact LegalVision’s construction lawyers on 1300 544 755 or fill out the form on this page.

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