Key Takeaways

• Clear evidence is required to substantiate a claim under the DBP Act and to establish that:
  • The proposed defendant undertakes “construction” work as defined under the DBP Act; and
  • The proposed defendant has breached the duty of care by failing to take reasonable precautions.
• This case highlights the personal accountability of directors and supervisors for ensuring compliance with the statutory duty of care.
• Directors and supervisors must exercise diligence in their roles, as they can be held personally liable for defects arising from construction work under their control. This includes ensuring compliance with approved plans, conducting adequate inspections, and addressing potential defects proactively. The broad scope of “construction work” under the DBP Act means that liability is not confined to builders but extends to all individuals who have substantive control over the construction process.

 Material Facts

• The plaintiff alleged defective residential building work in relation to nine townhouses located in Mangerton.
• The first defendant, the builder of the property, was deregistered. The fourth defendant (Mr Nassif) was the sole director and shareholder of the builder and was also its nominated supervisor.
• The second defendant was the developer of the property and owned four lots in the property. The fifth defendant (Mr Chahwan) was the sole director and shareholder of the developer.
• The third defendant, a subcontractor, was also deregistered. Its director, the sixth defendant, had judgment entered against him on the first day of the hearing.
• The proceedings were confined to the plaintiff’s claims against the second defendant (developer), the fifth defendant (its director), and the fourth defendant (nominated supervisor and director of the builder).

 Relevant Findings

• The Court held that the director of the developer (Mr Chahwan) did not personally undertake construction work under section 37 of the Design & Building Practitioners Act 2020 (NSW) because there was insufficient evidence to establish that he was supervising, coordinating, project managing, or otherwise having substantive control over the carrying out of building work. The Court noted that the plaintiff’s case against Mr Chahwan was circumstantial and relied on limited instances or exchanges deposed by unit holders, which did not demonstrate that Mr Chahwan was appointed to or performed any of the functions constituting “construction work” as defined under section 36 of the DBP Act.
• In contrast, in respect of Mr Nassif (nominated supervisor and director fo the builder) the Court found that:
• As the nominated supervisor, he did carry out “construction work”. This included building work and supervising, coordinating, project managing, or otherwise having substantive control over the carrying out of building work.
• He owed a duty under section 37 of the DBPA to exercise reasonable care to avoid economic loss caused by defects in or related to the building and arising from the construction work.
• This duty was personal and non-delegable, meaning that Mr Nassif could not discharge it merely by exercising reasonable care in arranging for another person to carry out the work.
• He breached this duty in relation to certain specific defects, such as box gutters and improperly installed balcony overflows, which caused economic loss to the plaintiff. However, for other defects, the plaintiff failed to provide sufficient evidence to establish their existence during the relevant time period, and those claims were dismissed.