No Appor­tion­ment for Sec­tion 37 DBP Act Claims even where the alleged con­cur­rent wrong­do­er is not a sub­con­trac­tor of the builder:

Kapi­la v Mon­u­ment Build­ing Group Pty Ltd [2025] NSWSC 1306 con­firms that builders and nom­i­nat­ed super­vi­sors can be held ful­ly liable for build­ing defects under sec­tion 37 of the Design and Build­ing Prac­ti­tion­ers Act 2020 (NSW), even where oth­er pro­fes­sion­als, such as engi­neers, archi­tects or cer­ti­fiers, also con­tributed to the defects and were hired direct­ly by the homeowner.

Kapi­la v Mon­u­ment Build­ing Group Pty Ltd [2025] NSWSC 1306

The NSW Supreme Court’s deci­sion in Kapi­la v Mon­u­ment Build­ing Group pro­vides fur­ther clar­i­fi­ca­tion on the scope of lia­bil­i­ty under sec­tion 37 of the Design and Build­ing Prac­ti­tion­ers Act 2020 (NSW) (DBP Act). 

Build­ing on the High Court’s rea­son­ing in Paf­burn, the Court con­firmed that lia­bil­i­ty for breach of the statu­to­ry duty of care is not appor­tion­able, even where the alleged con­cur­rent wrong­do­ers are not sub­con­trac­tors or del­e­gates of the defen­dant builder.

The High Court’s Deci­sion in Paf­burn

In Paf­burn, the High Court con­firmed that the statu­to­ry duty of care imposed by sec­tion 37 of the DBP Act is non‑delegable.

Builders and devel­op­ers with sub­stan­tive con­trol over con­struc­tion work can­not rely on Part 4 of the Civ­il Lia­bil­i­ty Act 2002 (NSW) (CLA) to appor­tion lia­bil­i­ty for breach­es of that duty.

The High Court held that pro­por­tion­ate lia­bil­i­ty defences were unavail­able because builders and devel­op­ers are vic­ar­i­ous­ly liable for the neg­li­gence of sub­con­trac­tors they engage to per­form work with­in the scope of the statu­to­ry duty. As a result, the loss caused by those breach­es could not be appor­tioned among con­cur­rent wrongdoers.

How­ev­er, Paf­burn did not deter­mine whether appor­tion­ment might still be avail­able where the alleged con­cur­rent wrong­do­ers were not par­ties to whom the defen­dant had del­e­gat­ed or entrust­ed work. That unre­solved ques­tion was cen­tral to the deci­sion in Kapi­la.

The Issue Before the Court in Kapi­la

In Kapi­la v Mon­u­ment Build­ing Group, the NSW Supreme Court was asked to con­sid­er whether a builder could appor­tion lia­bil­i­ty for breach of sec­tion 37 where the alleged con­cur­rent wrong­do­ers were con­sul­tants engaged direct­ly by the home­own­er, rather than sub­con­trac­tors with­in the builder’s con­tract­ing chain.

Jus­tice Rich­mond acknowl­edged that there was force in the argu­ment that, on the High Court’s major­i­ty rea­son­ing in Paf­burn, Part 4 of the CLA might only be exclud­ed in cas­es involv­ing del­e­ga­tion or entrust­ment of work. 

Nev­er­the­less, his Hon­our con­clud­ed that he was bound to fol­low those aspects of the NSW Court of Appeal’s rea­son­ing in Paf­burn that were not dis­turbed on appeal to the High Court.

Facts of the Case

The plain­tiff home­own­er engaged Mon­u­ment Build­ing Group to car­ry out ren­o­va­tion works to a res­i­den­tial prop­er­ty in Syd­ney. Fol­low­ing com­ple­tion of the works, the home­own­er alleged mul­ti­ple defects, includ­ing issues with water­proof­ing, elec­tri­cal works, and non‑complying walls and roof gutters.

Pro­ceed­ings were com­menced against both the builder and its sole direc­tor, Miles Bru­jic, who was also the nom­i­nat­ed super­vi­sor under the builder’s con­trac­tor licence.

The Claims

The home­own­er advanced two cat­e­gories of claims:

1. Against the builder, for breach of con­tract, based on oblig­a­tions that mir­rored the statu­to­ry war­ranties under the Home Build­ing Act 1989 (NSW); and
2. Against the builder and the nom­i­nat­ed super­vi­sor, for breach of the statu­to­ry duty of care under sec­tion 37 of the DBP Act.

Sec­tion 37 impos­es a duty on per­sons who car­ry out con­struc­tion work to exer­cise rea­son­able care to avoid eco­nom­ic loss caused by defects. The claim against the nom­i­nat­ed super­vi­sor con­cerned his super­vi­sion, coor­di­na­tion, and man­age­ment of the works. Impor­tant­ly, sec­tion 39 of the DBP Act express­ly pro­hibits del­e­ga­tion of the statu­to­ry duty of care.

The Defence and Appor­tion­ment Argument

The defen­dants sought to reduce their expo­sure by rely­ing on the pro­por­tion­ate lia­bil­i­ty pro­vi­sions in Part 4 of the CLA. They alleged that respon­si­bil­i­ty for the defects lay part­ly with oth­er par­ties who had been engaged direct­ly by the home­own­er, including:

• the cer­ti­fy­ing authority;
• the struc­tur­al engineer;
• the archi­tect; and
• anoth­er engi­neer respon­si­ble for remov­ing a deep soil planter box.

The defen­dants argued that Kapi­la was dis­tin­guish­able from Paf­burn because the alleged con­cur­rent wrong­do­ers were not sub­con­trac­tors or del­e­gates of the builder.

The Deci­sion

The Court found in favour of the home­own­er on both the breach of con­tract claim against the builder and the sec­tion 37 claim against the nom­i­nat­ed supervisor.

Cru­cial­ly, Jus­tice Rich­mond reject­ed the defen­dants’ pro­por­tion­ate lia­bil­i­ty defence. While acknowl­edg­ing that the High Court had not express­ly resolved the issue, his Hon­our held that he was bound by the Court of Appeal’s con­clu­sion in Paf­burn that claims for breach of sec­tion 37 of the DBP Act are not appor­tion­able.

Accord­ing­ly, the Court deter­mined that:

• a claim for breach of sec­tion 37(1) of the DBP Act can­not be appor­tioned under Part 4 of the CLA, regard­less of whether the alleged con­cur­rent wrong­do­er was a del­e­gate or sub­con­trac­tor of the builder; and
• the appro­pri­ate course for a defen­dant fac­ing such claims is to bring cross‑claims against oth­er poten­tial­ly respon­si­ble par­ties, rather than rely­ing on pro­por­tion­ate liability.

Notably, the defen­dants in Kapi­la had not brought any cross‑claims, leav­ing them ful­ly exposed to the homeowner’s loss.

Key Take­aways

The deci­sion in Kapi­la rein­forces and extends the strict approach to statu­to­ry duty claims under the DBP Act:

• No appor­tion­ment avail­able: Lia­bil­i­ty for breach of the sec­tion 37 statu­to­ry duty of care can­not be appor­tioned, even where no del­e­ga­tion or sub­con­tract­ing has occurred.
• Cross‑claims are essen­tial: Defen­dants must active­ly pur­sue cross‑claims to recov­er con­tri­bu­tions from oth­er par­ties, as pro­por­tion­ate lia­bil­i­ty defences are unavailable.
• Increased expo­sure for indus­try par­tic­i­pants: Builders, nom­i­nat­ed super­vi­sors, and design pro­fes­sion­als engaged for dis­crete tasks (such as engi­neers and archi­tects) face height­ened risk of full lia­bil­i­ty with­out the pro­tec­tion of Part 4 of the CLA.

Kapi­la con­firms that the statu­to­ry duty régime under the DBP Act con­tin­ues to impose a strin­gent, pro­tec­tive frame­work, sig­nif­i­cant­ly reshap­ing risk allo­ca­tion in con­struc­tion disputes.