Builders’ duties of care in domestic construction goes to the High Court
Brookfield Multiplex Ltd v. Owners Corporation Strata Plan 61288 & Anor. S66/2014
The fourth installment of the litigation involving an apartment complex in Chatswood. and the question whether a builder may owe a common law duty of care in a residential setting.
Diligent readers of the CommBar News will have been following the reports in this section about a piece of litigation in NSW involving an apartment complex in Chatswood, which were used as serviced apartments. The Owners Corporation brought a claim against Brookfield Multiplex alleging that Brookfield Multiplex’s work was defective and it was entitled to damages, for, among other things, a breach of a common law duty of care.
The decision at first instance
The decision at first instance –  NSWSC 1219 – was reported in this News in a case note by Caroline Kirton QC, published in the November 2012 edition. It was common ground between the parties that the implied warranties under the Home Building Act 1989 (NSW) had no application to the apartments. The Owners Corporation alleged instead that Brookfield Multiplex owed it a common law duty of care, which it had breached.
His Honour found that the Owners Corporation had not made out a case that a duty of care was owed to it by Brookfield Multiplex. He considered that the imposition of any such duty of care would be novel and did not think that it was appropriate for a judge of first instance to identify and impose “a novel duty of care”.
The NSW Court of Appeal decicion
The Owners Corporation was not satisfied with that result and appealed to the NSW Court of Appeal. The appeal decision –  NSWCA 317 (25 September 2013) -was reported in a case note by Ken Oliver, published in the November 2013 edition of the News).
The New South Wales Court of Appeal determined that, on the facts of the case, a builder owed an owners corporation a common law duty to take reasonable care in the construction of a building to avoid causing the owners corporation to suffer pure economic loss resulting from defects in certain categories of work.
Application for special to the High Court
Like any good airport novel, the matter did not end there. Brookfield Multiplex applied for special leave to the High Court and leave for the appeal and a cross appeal were granted on 14 March 2014.
The parties have now filed their submissions, which can be read on the High Court website. The questions posed by the Appellant are:
1. Whether a developer of commercial premises which had bargained with a builder pursuant to a detailed contract to protect itself against liability for defective work, was concurrently owed by the builder a duty of care in tort to exercise reasonable care in the construction of the building to avoid the developer suffering pure economic loss as a result of latent defects.
2. Whether an owners corporation established pursuant to s 8(1) of the Strata Schemes Management Act 1996 (NSW), as a successor in title to the common property, was owed by the builder a duty of care to avoid pure economic loss as a result of latent defects.
The Appellant relies heavily on the decision in Woolcock Street Investments Pty Ltd v COG Pty Ltd (2004) 216 CLR 515; the Respondent on the duty of care established in Bryan v Maloney (1995) 182 CLR 609. The Respondent also appears to dispute the need for there to be found a duty owed to an original owner before a duty can be owed to a subsequent owner, or alternatively submits that an original owner cannot bargain away the rights of subsequent owners.
The appeal is listed to be heard on 18 June 2014. Whatever the outcome, it is hoped that the decision will provide a significant statement in respect of common law duties of care. How it is to be applied in Victoria (and for that matter Queensland), each of which have slightly different statutory warranty schemes, will be the subject of the fourth instalment of this saga.
Suzanne Kirton – CommBar profile