Duty of Care in Construction Law

24 September 2025 in Building and Construction Law | 5 min read | skip to FAQs

The Design and Building Practitioners Act s37 2020 (NSW) legislates duty of care in construction law. Put simply, there is a duty of care which obliges building and construction workers to avoid economic loss caused by defects relating to or arising from their relevant work. This duty of care cannot be delegated and is owed to owners of the land and to each subsequent owner of the land. Where the duty of care is breached, a party is entitled to seek damages. There have been several legal cases that have considered this duty of care as outlined in s37 of the Act and further defined it. This article briefly examines the decisions made and the reasons given by the court which more clearly define duty of care obligations in construction law. We also discuss the extent of duty of care in construction law and the recent building product safety amendments.

Supreme Court Ruling on Duty of Care in Construction Law

The NSW Supreme Court recently considered the concept of duty of care in construction law in the matter of The Owners-Strata Plan No 87060 v Loulach Developments Pty Ltd (No 2) 2021 (Cth).

The Context

The matter involved a dispute between the Owners Corporation (the ‘Owners’) of a strata development and the developer and builder of the development (‘Loulach’). The Owners alleged that Loulach was responsible for various defects in the development and that they had breached their duty of care under the Design and Building Practitioners Act s37, 2020 (NSW).

The Issue

For the purpose of this article, the relevant issue for the court’s determination in the case was whether Loulach had in fact breached their duty of care under the Act.

The Decision

The court rejected the Owner’s contention that Loulach had breached their duty of care under the Act. The court stressed that “there is no provision in the Act stating that the mere fact of a defect establishes a breach” of a duty of care. The court contended that the Act was meant to “alleviate the need for a party like the Owners to prove a duty of care owed by the Builder” and emphasised that the Act’s duty of care provision was not intended to be a shortcut for establishing a breach of that duty.

The judge explained that parties claiming a breach of the duty of care under the Act must provide adequate evidence to substantiate the claim and indicated that prospective plaintiffs “must identify the specific risks that the builder was required to manage, and the precautions that should have been taken to manage those risks“.  The court also clarified that a breach of the duty of care will not necessarily exist simply where a defect is found and the plaintiff claims the builder failed to take all steps necessary to prevent the defect.

In summary, the judgment said that prospective plaintiffs alleging a breach of the duty of care within the Act should ensure that they specify the defect, the risks the builder was responsible for and what the builder should have done to manage the risk.

Other Court Decisions relating to Duty of Care in Construction Law under s37

The court’s decision was supported by the comments made by justices of both the Court of Appeal and the Supreme Court in the case of Garzo v Liverpool/Campbelltown Christian School (Garzo).

The court endorsed the view of the Court of Appeal in Garzo that plaintiffs should formulate claims in a manner which considers:

1. The precautions the defendant should have taken
2. The risks of damage which eventuated and
3. How precautions should have been directed specifically at these risks

The court similarly endorsed the Supreme Court that plaintiffs should articulate the risk of harm with respect to which the defendant was to take precaution. As such, clear articulation of these risks properly positions the court to assess the defendant’s liability for the risk or harm resulting from it. It should be noted, the court in this Case appropriately extrapolated the judicial material in Garzo, which dealt with claims under the Civil Liability Act. This is because the duty of care provisions in the Act have been expressed as being subject to the Civil Liability Act.

The Extent of Duty of Care in Construction

The Design and Building Practitioners Act introduced a duty of care for all persons involved in construction work. This means that anyone involved in construction work, including builders, designers, engineers and project managers, must take reasonable care to avoid defects that may cause economic loss to the owner. The duty of care applies retrospectively to buildings less than 10 years old from 10th June 2020. It also applies to subsequent owners.

The retrospective nature of this duty of care means that it applies to both new and existing buildings. It also applies to residential and commercial buildings. The New South Wales Supreme Court stated, in the case of Goodwin Street Developments Pty Ltd as trustee for Jesmond Unit Trust v DSD Builders Pty Ltd (In liq) that building and construction work includes major engineering projects and that the duty of care applies to any person involved in coordinating, supervising, project managing or otherwise having substantive control over the carrying out of the work.

Retrospective duty of care has significant implications in that liability may be imposed on any person who carries out construction work. Previously, liability for defects and economic loss was often difficult to establish, and it was not uncommon for responsibility to be shifted between different parties involved in a project. The Design and Building Practitioners Act seeks to address this issue by imposing a clear duty of care on all persons involved in construction work, thereby increasing accountability and reducing the risk of defects and economic loss.

Building Products Safety & Duty of Care in Construction

A significant effect of the Building Legislation Amendment Act 2023 legislation was the widening of the responsibility of building product safety to include the majority of occupations in the supply chain of building products. This includes designers, architects, tradespeople, and product developers and manufacturers, and was instituted via the Building Products (Safety) Amendment Act 2023 (NSW). It mandates an increased duty of care, and responsibilities across the building product supply chain with respect to product recall and rectification of products that don’t comply with relevant standards. As an example, building designers and architects must amend their designs to remove the product and specify the compliant replacement to other members of the building product supply chain.

Key Takeaways

1. The Design and Builders Practitioner Act 2020 legislates duty of care obligations in the construction industry.
2. The Act states that anyone involved in a  construction project has a duty of care and must take reasonable care to avoid building defects and construction work that causes economic loss to the owner/s of the building.
3. This extends to all persons involved in the construction of a residential home, apartments or commercial property. This includes architects, tradespeople, developers, manufacturers and project managers.
4. The duty of care applies retrospectively to buildings less than 10 yrs at 10th June 2020 and to subsequent owners.
5. Recent safety legislation broadens the duty of care and responsibility for rectification to all occupations in the supply chain of building products.
6. The Supreme Court’s decision in the Loulach case further defines duty of care under s37 of the Act. In essence, it states that to prove a breach of duty of care, the plaintiff must prove that there is a building defect, which was caused by the builder and what the builder should have done to manage the risk.
7. The Supreme Court’s decision in Garzo stated similarly that to prove a breach of duty of care, plaintiffs should prove the precautions the defendant should have taken, the risks that were present and what precautions should have been directed specifically at these risks.

 

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