King & Wood Mallesons

Asia-Pacific 100 position: 3

NSW Court of Appeal finds defects duty

In a judgment dated 25 September 2013 in The Owners — Strata Plan No. 61288 v. Brookfield Australia Investments Ltd (2013) NSWCA 317, the NSW Court of Appeal has found that a builder owed a duty to exercise reasonable care in the construction of a building, to avoid causing an Owners’ Corporation to suffer loss resulting from latent defects in the common property which were structural, constituted a danger to persons or property in the vicinity or made those apartments uninhabitable. Along the way, the court found the builder owed a concurrent duty in tort to a developer with whom it had a detailed written building contract, although both were major, sophisticated corporations.

This is a surprising judgment, which will rightly concern the construction industry in Australia.

In Star of the Sea [2012] NSWSC 712, McDougall J had found that a builder did not owe a duty of care to an Owners’ Corporation in constructing a residential apartment block. At least part of the reasoning in Star of the Sea was that parliament had legislated in the Home Building Act (NSW) for a system of warranties to protect residential owners from defects…

If you are registered and logged in to the site, click on the link below to read the rest of the King & Wood Mallesons briefing. If not, please register or sign in with your details below.

Briefings from King & Wood Mallesons

View more briefings from King & Wood Mallesons

Analysis from The Lawyer

View more analysis from The Lawyer


Level 61, Governor Phillip Tower
1 Farrer Place
NSW 2000

Jurisdiction: PRC/Australia
No. of offices: 20
No. of qualified lawyers: 1,252