Section 37 of the Design and Building Practitioners Act 2020 (NSW) (DBP Act) imposes a statutory duty of care on any person who carries out “construction work” to exercise reasonable care to avoid economic loss caused by defects in or related to a building.
Individuals, such as directors, project managers, supervisors, designers, or suppliers, can face personal liability if they exercise “substantive control” over such work.
Why owes the duty?
“Construction work” is defined very broadly: it includes not only the exercise of ‘physically’ building, but also the design, manufacture or supply of building products, and the supervision, coordination, or project management of such work. This means persons with “substantive control”, even if they are not on-site, can owe the duty, exposing them to personal liability.
Non-delegable duty – “The Buck Stops at the Top”
Courts have reaffirmed that the duty under s 37 of the DBP Act is non-delegable. That is, you cannot escape liability by delegating tasks to others. The High Court of Australia confirmed this in Pafburn Pty Limited v The Owners – Strata Plan No 84674 [2024] HCA 49.
Key risks for individuals
- Broad scope: If you are coordinating, supervising, designing, or supplying, you may owe a duty of care.
- No escaping via delegation: You remain liable even if another party carried out the work.
- Retrospective reach: Section 37 of the DBP Act applies to work dating back to 11 June 2010.
Practical takeaways for individuals
- Understand your role: Any form of control, including physical or managerial, may trigger liability.
- Document diligence: Keep records showing that you exercised reasonable care and adhered to the requisite standards.
- Obtain tailored professional indemnity insurance: Standard cover might not address risks under s 37 of the DBP Act, so it would be prudent to obtain tailored cover.
Conclusion
Section 37 of the DBP Act seriously shifts legal exposure onto individuals involved in construction-related activities. Courts have made it clear: if you carry out construction work, you can be held personally liable for economic loss caused by defects.
Know your duties and take proactive steps to manage your risk.
At Project Lawyers, we have acted (and continue to act) for directors, head contractors, subcontractors and those generally involved in the construction sphere, in relation to proceedings concerning s 37 of the DBP Act.
If you have any questions, please feel free to contact Maysaa Parrino or Matt Armota via email (maysaa@projectlawyers.com.au / matt@projectlawyers.com.au) or via telephone on (02) 9025 0808.
The contents of this publication are for reference purposes only. This publication does not constitute legal advice and should not be relied upon as legal advice. Specific legal advice should always be sought separately before taking any action based on this publication.
Liability limited by a scheme approved under Professional Standards Legislation.
Author: Maysaa Parrino & Matt Armota
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