In a significant victory for owners corporations across Australia, the High Court has ruled that builders and developers cannot escape liability for negligent construction work. The landmark decision in Pafburn Pty Limited v The Owners – Strata Plan No 84674 affirms that developers and head contractors bear a non-delegable duty to ensure the quality of construction, even if the work is outsourced to subcontractors. This ruling has far-reaching implications for the building industry and provides greater protection for property owners.

On 11 December ds2024, the High Court of Australia handed down its judgment in the case of Pafburn Pty Limited v The Owners – Strata Plan No 84674. The key findings of the decision are as follows:

Key Findings

1. Appeal Dismissed: The appeal by Pafburn Pty Limited and Madarina against the NSW Court of Appeal decision in favour of the owners corporation was dismissed with costs. This means that the decision is in favour of the owners corporation.
2. Non-Delegable Duty: The court held that the duty imposed by Section 37(1) of the Design and Building Practitioners Act 2020 (NSW) (DBPA) is a non-delegable duty. This means that the developer and the head building contractor cannot limit their liability by delegating construction work to others.
3. Proportionate Liability: The court found that the proportionate liability scheme under Part 4 of the Civil Liability Act 2002 (NSW) (CLA) does not apply to claims for breach of the duty under Section 37 of the DBPA. The liability for breach of this duty is personal and cannot be apportioned among concurrent wrongdoers.
4. Vicarious Liability: The court clarified that Section 5Q of the CLA, which deals with liability based on non-delegable duties, applies to the duty under Section 37(1) of the DBPA. This means that the developer and the head building contractor are treated as vicariously liable for the negligence of those to whom they delegated construction work.
5. Economic Loss: The court confirmed that the owners corporation is entitled to claim damages for economic loss caused by defects in the building arising from the construction work, as per Section 37(1) of the DBPA.
6. Legislative Intent: The court emphasised that the DBPA was enacted to address public concerns about building defects and to ensure that owners have effective redress for economic loss caused by such defects. The provisions of the DBPA are intended to impose individual and collective responsibility on building practitioners for their work.
7. Outcome: The matter was remitted to hearing to determine whether the list response pleading can be maintained against all alleged wrongdoers, specifically whether they can be characterised as persons who carry out construction work under the DBPA.

These findings reinforce the non-delegable nature of the duty of care imposed on developers and head contractors under the DBPA and clarify the interaction between the DBPA and the CLA. This is good news for an owners corporation because it means that a builder and developer cannot attempt to limit or apportion their liability by arguing that the work was done by someone else, in other words, their duty cannot be delegated to a subcontractor (non-delegable duty).

An owners corporation can still take direct action against subcontractors (if necessary), although the owners corporation must be able to establish that the subcontractors carried out construction work within the meaning of the DBPA and breached the duty in section 37 of DBPA. We also note that the decision does not prevent cross claims by the builder and developer.

Complex Area of Law

This is a complex area where we have significant experience please contact us if you have a similar case.

Helen Amanatiadis I LLB LLM I Lawyer

Helen is admitted as a practitioner of the Supreme Court of NSW and High Court of Australia. Highly qualified Helen has over 25 years of experience in commercial dispute resolution, with a primary focus on building and construction and strata law. Profile I Linked

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For all strata law advice including by-laws, building defects and levy collections contact our specialist NSW and Sydney strata lawyers here or call 02 9562 1266, we’re happy to assist.

A Second Phase of Reform

New South Wales is gearing up for significant changes in strata law, as the second phase of recommendations from the statutory review is set to be implemented. The proposed changes, introduced to the NSW Parliament on 20 November, 2024, aim to address a range of issues affecting strata communities across the state.

Key Proposed Changes

While specific details may vary, the proposed changes are expected to cover a broad spectrum of areas, including:

Accountability for Developers

• Enhanced Developer Responsibility: Developers will be held more accountable for the accuracy of initial maintenance schedules and levy estimates provided for new strata developments.

Improved Strata Management

• Stricter Oversight: Increased oversight of strata management agreements to ensure transparency and fairness.
• Building Manager Duty: Introduction of a statutory duty on building managers to uphold specific obligations.

Protecting Owners’ Rights

• Fair Contract Terms: Safeguarding owners corporations from unfair contract terms in standard form contracts.
• Stronger Committee Governance: Imposing new duties on strata committee members to improve governance and decision-making.
• Common Property Maintenance: Reinforcing owners corporations’ obligations to maintain and repair common property.
• Enforcement Powers: Granting NSW Fair Trading additional powers to enforce common property maintenance obligations.

Sustainability and Accessibility

• Sustainability Focus: Encouraging sustainable practices by requiring owners corporations to consider sustainability in annual general meetings and levy estimates.
• Embedded Network Protections: Enhancing protections for owners and owners corporations regarding embedded networks.
• Accessibility Improvements: Facilitating the installation of support infrastructure for owners with additional needs.

 Other Enhancements

• Clarity and Efficiency: Implementing various changes to streamline strata law processes and improve clarity.
• Financial Hardship Support: Providing assistance to owners facing financial difficulties.

Impact on Strata Owners and Committees

These proposed changes are likely to have a significant impact on both strata owners and committees. Strata owners can expect increased protection and greater involvement in decision-making processes. Strata committees, on the other hand, may face additional responsibilities and regulatory requirements.

What’s Next?

As the proposed changes progress through the legislative process, it’s crucial for strata managers, strata owners and committees to stay informed. By understanding the implications of these reforms, you can better prepare for the future and ensure the smooth functioning of your strata communities.

More Information

For more information and insights on the proposed strata law changes visit NSW Government changes to strata laws

Adrian Mueller I BCOM LLB FACCAL I Partner

Since 2002 Adrian has specialised almost exclusively in the area of strata law. His knowledge of, and experience in strata law is second to none. He is the youngest person to have been admitted as a Fellow of the ACSL, the peak body for strata lawyers in Australia. Profile I Linked

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For all strata law advice including by-laws, building defects and levy collections contact our specialist NSW and Sydney strata lawyers here or call 02 9562 1266, we’re happy to assist.

NSW Fire and Rescue (FRNSW) continues to grapple with a concerning surge in e-bike and e-scooter fires, with at least five incidents per week in NSW linked to lithium-ion batteries.

A recent fire at an inner Sydney e-bike shop, resulting in the evacuation of an entire apartment block, underscores this alarming trend.

FRNSW emphasizes the need for increased awareness and education regarding the safe selection, use, charging, storage, and disposal of lithium-ion batteries to minimize the risk of fires.

Key Safety Tips

• Never leave charging devices unattended: Avoid sleeping or leaving your home while lithium-ion batteries or powered devices are charging.
• Disconnect chargers: Unplug chargers once batteries are fully charged.
• Avoid hazardous storage: Keep batteries away from exits and flammable materials.
• Proper disposal: Do not dispose of batteries in regular trash or recycling bins.
• Recycling: Take used lithium-ion batteries to nearby BCycle battery recycling drop-off points.
• Buy reputable brands: Purchase batteries and chargers from trusted sources.
• Avoid mixing components: Do not combine batteries or chargers from different brands.
• Implement a by-law: Owners corporations should adopt an e-bike/e-scooter by-law to manage resident safety and mitigate fire risks.
• For more information, visit FRNSW Lithium-ion Battery Safety.
• In case of a fire, evacuate immediately and call 000.

A By-law Can Proactively Safeguard Your Strata Community

By implementing a well-crafted by-law, Owners Corporations can significantly reduce the risk of e-vehicle fires and establish clear guidelines, including:

• Protection for owners corporations in case of battery fire incidents
• Safe charging practices for lithium-ion batteries
• Restrictions on battery types to ensure safety
• Proper disposal procedures to prevent hazards
• Registration and storage requirements for e-vehicles
• Resident education for e-vehicle safety

We strongly recommend implementing an e-vehicle by-law for e-bikes, e-scooters, and other e-vehicles, especially as warmer weather approaches and more residents use these modes of transportation.

GET YOUR E-BIKE / E-SCOOTER BY-LAW HERE NOW!

Adrian Mueller I BCOM LLB FACCAL I Partner

Since 2002 Adrian has specialised almost exclusively in the area of strata law. His knowledge of, and experience in strata law is second to none. He is the youngest person to have been admitted as a Fellow of the ACSL, the peak body for strata lawyers in Australia. Profile I Linked

Contact Us

For all strata law advice including by-laws, building defects and levy collections contact our specialist NSW and Sydney strata lawyers here or call 02 9562 1266, we’re happy to assist.

New laws will soon commence in New South Wales to increase transparency and accountability in the strata management industry.

Strata managing agents who engage in unethical practices, such as undisclosed kickbacks or failing to disclose conflicts of interest, will face harsher penalties.

The new laws aim to protect the interests of strata owners by giving them greater control over their buildings and common property.

The big changes are:

• Increased penalties: Maximum penalties and penalty infringement notice amounts for agents who fail to disclose information about commissions have been raised.
• Strengthened conflict-of-interest disclosure: Agents will be required to provide more detailed information about potential conflicts of interest.
• Ban on insurance commissions: Agents will no longer be allowed to receive commissions on insurance products unless they actively help residents find the best deals.
• Enhanced enforcement powers: NSW Fair Trading has been granted additional authority to investigate and prosecute breaches of strata laws.

Best Practice Guide

The new disclosure requirements are largely in line with the Strata Community Association’s best practice guide.

This means that strata managers who are already following the guide will not need to make significant changes to their practices.

The new laws will also ensure that all strata managers are subject to the same standards.

Adrian Mueller I BCOM LLB FACCAL I Partner

Since 2002 Adrian has specialised almost exclusively in the area of strata law. His knowledge of, and experience in strata law is second to none. He is the youngest person to have been admitted as a Fellow of the ACSL, the peak body for strata lawyers in Australia. Profile I Linked

Contact Us

For all strata law advice including by-laws, building defects and levy collections contact our specialist NSW and Sydney strata lawyers here or call 02 9562 1266, we’re happy to assist.

In a recent NSW Supreme Court case the builder brought an application to the Court seeking an order that the owners corporation provide security for costs to protect the costs of the builder in the litigation in the event the builder was successful and unable to recover his costs from the owners corporation.

So, did the court grant with the builder’s application? Owners Corporation Litigation Security for Costs

For NSW strata legal or levy collection advice contact us here or call 02 9562 1266, we’re happy to assist.

In a recent decision, NCAT upheld a security fob by-law made by an owners corporation.  This is a good decision as it demonstrates that appropriately worded security fob and access key by-laws can be made by owners corporations.

Introduction

Many strata buildings contain security systems which restrict access to and egress from the buildings.  These systems often include security access keys or fobs which are distributed to owners and occupiers to enable them to get into and out of the building.

Did you know owners corporations are able to implement appropriately worded security fob and access key by-laws?

So, what was included in this particular by-law Security Access, NCAT and By-laws

For NSW strata legal or levy collection advice please contact us here or call 02 9562 1266, we’re happy to assist.

It’s the Gold Coasts crumbly ‘faulty tower’ with almost 1,000 building defects. Building experts have described the building as life threatening.

Only seven years old and the apartment block may have to be demolished. Literally sick of living with leaks, rust and mould the long-suffering strata residents of the Silverstone apartment complex are taking ASX-listed property developer Villa World, seeking $20 million in damages.

View the full strata mould article here Silverstone Apartment Defects

For NSW strata legal or levy collection advice please contact us here or call 02 9562 1266, we’re happy to assist.