Builders and developers may soon see one of the most significant shifts in building defect liability since the introduction of the Design and Building Practitioners Act 2020 (NSW).
Following the High Court’s decision in Pafburn Pty Ltd v The Owners – Strata Plan No 84674, builders and developers can currently be held liable for 100% of the loss arising from defective building work, even where consultants, subcontractors or other parties were responsible for causing part of the defect.
This has significantly increased the litigation and financial risk faced by builders and developers, particularly where one or more responsible parties are insolvent, uninsured or otherwise unable to contribute.
That position may soon change.
Parliament Indicates Pafburn Was Never Intended
During debate on the Building (Approvals and Practitioners) Bill 2026, former Minister for Better Regulation and Innovation, Kevin Anderson, who introduced the Design and Building Practitioners Act, stated that the High Court’s interpretation was contrary to Parliament’s original intention.
His comments were unequivocal:
“I never in a million years thought the High Court would interpret the Act as getting rid of proportionate liability, especially with section 41(3) in black and white in the Act.”
He also stated that if Parliament had intended to abolish proportionate liability, it would have expressly said so in both the legislation and the Second Reading Speech.
Why This Matters
The Pafburn decision removed the protection of the proportionate liability regime for claims brought under the statutory duty of care.
In practical terms, this means a builder or developer may be required to pay the entire amount of a judgment, even where other parties contributed to the defects, and then pursue recovery from consultants or subcontractors separately.
This has materially altered risk allocation across the construction industry and has affected insurance, contracting strategies and dispute resolution.
Proposed Legislative Reform
During debate on the Bill, Opposition Building Spokesperson Tim James proposed amendments to restore proportionate liability for statutory duty of care claims.
The proposed amendments would clarify that:
- claims under the statutory duty of care remain subject to the proportionate liability provisions in the Civil Liability Act 2002 (NSW);
- liability can be apportioned between concurrent wrongdoers; and
- proportionate liability applies despite the statutory duty being non-delegable.
The objective is to ensure each party is liable only for the proportion of loss it actually caused.
Government Leaves the Door Open
Although the Government did not support the amendments at this stage, it did not reject the underlying policy.
Building Minister Anoulack Chanthivong acknowledged that Pafburn has generated significant debate and indicated that the Government intends to undertake further consultation with industry participants, insurers, consumer groups and owners corporations before determining whether legislative reform should proceed.
What Builders and Developers Should Watch
The parliamentary debate is significant because it is rare for the Minister responsible for introducing legislation to publicly state that a High Court interpretation was inconsistent with Parliament’s intention.
If proportionate liability is reinstated, it would fundamentally rebalance risk allocation for statutory duty of care claims by allowing liability to be shared between those actually responsible for defective work.
For builders and developers, this could significantly reduce exposure to being treated as the “deep pocket” defendant and provide greater certainty when managing project risk, subcontractor and consultant engagement, insurance arrangements and litigation strategy.