Understanding Developer Liability for Building Defects in NSW

Recent legal developments have significantly strengthened the position of strata owners in New South Wales when it comes to dealing with building defects. A groundbreaking decision by the High Court of Australia has clarified that developers and head contractors are fully liable for defects in construction—even if the actual work was done by subcontractors.

This ruling provides powerful legal support for strata schemes and owners corporations seeking remediation for building defects. Here’s what you need to know.

⚖️ The Case: Pafburn Pty Ltd & Anor v The Owners – Strata Plan No 84674

In this 2024 High Court case, a residential apartment building was found to have serious defects. The owners corporation pursued legal action under the Design and Building Practitioners Act 2020 (NSW) (DBP Act), which imposes a statutory duty of care on anyone who carries out construction work.

The developers and head contractors tried to reduce their liability by invoking proportionate liability, claiming that subcontractors were partially to blame. The High Court rejected this argument, holding that:

• The statutory duty of care under the DBP Act is non-delegable.

• The obligation to avoid economic loss caused by defects cannot be divided among parties—it rests squarely with those at the top of the construction chain.

• Proportionate liability laws under the Civil Liability Act 2002 (NSW) do not apply to this type of statutory duty.

Implications for Strata Owners

For strata owners, this ruling is a positive development. It reinforces the responsibility of developers and head contractors to deliver defect-free buildings. If defects are discovered, owners corporations have a clearer path to seek remediation directly from those parties, without the need to pursue subcontractors or other involved entities.

• Direct Accountability: Developers and head contractors are directly accountable for defects, simplifying the process for owners seeking remediation.​

  
  

• Strengthened Legal Position: Owners corporations can pursue claims with greater confidence, knowing that statutory duties cannot be sidestepped through delegation.​

  
  

• Enhanced Building Standards: The decision reinforces the importance of quality assurance throughout the construction process, potentially leading to higher building standards.

For strata owners, this ruling is a positive development. It reinforces the responsibility of developers and head contractors to deliver defect-free buildings. If defects are discovered, owners corporations have a clearer path to seek remediation directly from those parties, without the need to pursue subcontractors or other involved entities.

If your owners corporation is facing the challenges of building defects, whether it's leaks, cracks, structural faults, or fire safety concerns, you'll need expert guidance to help navigate the complexities of defect claims. At Compass Strata, we specialise in helping strata communities identify, manage, and resolve building defect issues efficiently and effectively. Don’t leave your investment at risk. Contact Compass Strata today for trusted advice and proactive support—so you can protect your property and restore peace of mind.