Strata Plan 92183 v Samdora Pty Ltd [2026] NSWSC 406
Introduction
Under the Design and Building Practitioners Act 2020 (NSW) (‘Act’), claims may be brought against directors of developers and builders making them personally liable for defective building work. Accordingly, in this key decision, the Court highlights the distinction between incidental involvement in a project and the exercise of substantive control, confirming that personal liability will only arise where a director’s conduct satisfies the statutory definition of “construction work”.
The Case
In this case, the plaintiff (Strata Plan 92183) sought damages in respect of alleged building defects in a townhouse development from six defendants being:
- the Developer and its Director,
- the Builder and its Director, and
- the Repair Contractor and its Director.
The plaintiff claimed that both the Builder’s Director and the Developer’s Director breached the duty of care provided for by section 37 of the Act.
The Act
Section 37 of the Act relevantly provides that:
(1) A person who carries out construction work has a duty to exercise reasonable care to avoid economic loss caused by defects—
(a) in or related to a building for which the work is done, and
(b) arising from the construction work.
(2) The duty of care is owed to each owner of the land in relation to which the construction work is carried out and to each subsequent owner of the land.
(3) A person to whom the duty of care is owed is entitled to damages for the breach of the duty as if the duty were a duty established by the common law.
(4) The duty of care is owed to an owner whether or not the construction work was carried out—
(a) under a contract or other arrangement entered into with the owner or another person, or
(b) otherwise than under a contract or arrangement.
“Construction work” is relevantly defined in section 36 of the Act as follows:
construction work means any of the following—
(a) building work,
(b) the preparation of regulated designs and other designs for building work,
(c) the manufacture or supply of a building product used for building work,
(d) supervising, coordinating, project managing or otherwise having substantive control over the carrying out of any work referred to in paragraph (a), (b) or (c).
What the Act means
In order for a director to have any liability, the Court deemed it necessary for the plaintiff to demonstrate that a director carried out “construction work” in relation to the repair work required to be undertaken.
Notably, construction work is not limited to physically carrying out building work and can involve any substantive control over carrying out of the work including supervision and project management.
The Developer’s Director
The question to the Court was whether the Developer’s Director carried out “construction work” as required by the Act, and therefore whether he owed the statutory duty of care to the plaintiff.
The Court determined that the case against the developer’s director was circumstantial and that there was no evidence that he was appointed by anyone to supervise, coordinate, project manage or otherwise have substantive control over the carrying out of the repair work.
Kunc J admitted that the Developer’s Director undoubtedly had incidental involvement in the repair work, and every reason to be interested in ensuring that the work was carried out and attended from time to time, however, this did not reach the standard required under the Act.
Accordingly, the Developer’s Director did not owe a duty of care to the plaintiff.
The Builder’s Director
Unlike the position with the Developer’s Director, there was no dispute between the parties that the Builder’s Director had carried out “construction work” for the purposes of the Act and therefore that he owed a duty of care to the plaintiff.
It was then left to the Court to consider whether the Builder’s Director breached section 37 of the Act, which the Court considered on a defect by defect basis.
Accordingly, Kunc J found the Builder’s Director liable for some of the defects, which could have been identified had the Builder’s Director regularly inspected the work. On the other hand, for other defects, Kunc J determined that there was insufficient evidence to suggest that these defects could have been identified had the Builder’s Director carried out regular inspections and checks and the plaintiff’s claim failed for these defects.
Key Takeaway
In this case, substantial evidence was required to prove that a director carried out “construction work”, being the defective work raised including by exercising substantive control through supervision, coordination or project management of the relevant works. If this key requirement is not satisfied, a director will not owe a duty of care under the Act.
Furthermore, this decision also highlights that liability will ultimately depend on whether the director failed to exercise reasonable care in relation to specific defects that could have been identified or prevented through regular inspections.