The Design and Building Practitioners Act 2020 (DBP Act) introduced a higher standard of reporting required of building practitioners and codified a common law duty of care owed to owners.

While the positive effects of this change in policy are evident in ensuring quality and safety outcomes for owners, the question of whether the statutory duty of care is owed by the ‘developer’ of a building can only be answered on a case-by-case basis where who you are matters less than the role you play. This is because the duty attaches to conduct, control and influence, rather than job titles.

This article provides an overview of the duties that developers may have to consider while assessing their risk profile for each project they undertake by outlining:

1. the basic architecture of the legislative framework that underpins duties owed to owners;
2. which building practitioners may owe these duties; and
3. practical issues that developers may wish to consider when managing their risk profile, depending on the extent of their involvement in construction work.

Legislative framework

What you are in for

A person who carries out construction work has a duty to exercise reasonable care to avoid economic loss caused by defects in or related to a building for which the work is done and arising from the construction work (Duty).¹

No party can ‘contract out’ of the Duty and the Duty:

1. is owed to the owner(s);
2. is non-apportionable and non-delegable;² and
3. operates in tandem with the limitation periods set out in the Environmental Planning & Assessment Act 1979 and the Limitation Act 1969 which set a 10-year post-completion limit for building action subject to bringing any claim within 6 years after the defect manifests.³

Who is ‘on the hook’?

The Duty applies expansively. To understand the parameters of the Duty in terms of the work to which it applies and the individuals that may be bound by it, it is first necessary to understand:

1. the definition of ‘construction work’ under the DBP Act; and
2. who is ‘a person’ to whom the Duty applies for the purposes of the DBP Act.

The definition of ‘construction work’ offered by section 36 of the DBP Act is broad, encompassing general building work and other related services (including, for example, the preparation of designs and the manufacture or supply of building products).⁴ In short, sections 36 (a) to (c) identify the builder, the subcontractors, the consultants and the manufacturers/suppliers as parties that owe the Duty.

At section 36(d), the DBP Act also classifies ‘construction work’ as including concepts such as ‘general supervision’, ‘coordination’, ‘project management’ and having ‘substantive control’ of the performance of construction work.

While the supervision, coordination and project management of building and construction work is generally associated with contractors, the case of Goodwin Street Developments Pty Ltd atf Jesmond Unit Trust v DSD Builders Pty Ltd (in liq)⁵ opened the door to the idea that developers could be found to be exercising ‘substantive control’ over construction work (and therefore owe the Duty).

In University of Sydney v Multiplex Constructions & Ors⁶, the Court found that if a person ‘actually controlled‘ how the work was performed or had ‘the ability and power‘ to control how the work was carried out, then that person has ‘substantive control’ for the purpose of section 36(d) of the DBP Act.

Even if a developer is found to owe the Duty, the mere existence of a defect in the relevant construction work does not mean the Duty has been breached.⁷ A claim for breach of the Duty is a claim in negligence which will require the beneficiary (that is, the owner(s)) to:

1. establish that the developer had supervision and control over the performance of work;
2. identify, with precision, the specific precautions it says a reasonable person in the developer’s position should have taken to prevent the defect from occurring; and
3. prove (by reference to records, not speculation) that the developer failed to take those precautions.

Where does this leave you?

The general effect of the above is that a ‘developer’ who insists on overseeing every decision made, commenting or approving every drawing developed or used, instructing contractors and consultants on what to do or how to do it or when to do it, and so on, is likely to owe the Duty, whereas a ‘developer’ who has contracted out all supervision or decision making to others (for example, the superintendent, the builder, the certifier, etc) such that the ‘developer’ has relinquished actual control over how the construction work is designed and performed is less likely to be found to owe Duty.

In practice, taking steps to avoid being bound by the Duty may come at a higher upfront cost of construction to the developer.

To manage the risk associated with the concept of exercising ‘substantive control’, developers may wish to consider taking the following steps:

• When engaging contractors, obtain legal advice to ensure the distribution of responsibilities for each party has been properly documented.
• Consider whether a function (eg site walkthrough to identify any defects) needs to be performed by you or your personnel or can be outsourced to an independent contractor (eg a third-party superintendent).
• Wherever possible, contract on a ‘design and construct’ basis rather than a construct-only basis (so as to relieve as much design responsibility as possible) or engage (or permit to be engaged) experienced, suitably qualified and licensed/registered contractors and consultants to perform building work.
• Review any standard form contracts, internal policies, financial models and other business management tools to ensure that you have aligned your exposure to liability with your ability to recover from others.

This article was written by Matthew Graham, Partner, Peter Yacoub, Senior Associate, and Arissa Robles, Solicitor.

¹ Design and Building Practitioners Act 2020, s37.
² Design and Building Practitioners Act 2020, s40. See also Pafburn Pty Limited v The Owners – Strata Plan No 84674 [2024] HCA 49.
³ Environmental Planning & Assessment Act 1979 s6.20 and the Limitation Act 1969 s1434G.
⁴ Design and Building Practitioners Act 2020, s36 (a)-(c).
⁵ [2022] NSWSC 624.
⁶ [2023] NSWSC 383.
⁷ The Owners – Strata Plan No 87060 v Loulach Developments Pty Ltd (No 2) [2021] NSWSC 1068 (cited recently in Owners – Strata Plan No 87639 v Karimbla Properties (No4) Pty Ltd [2025] NSWSC 58).