Australia: Residential Focus: Part 1: Jurisdiction to deal with DBPA claims – the story so far

The relatively new statutory duty of care under the Design and Building Practitioners Act 2020 (NSW) (DBPA) is a potential solution for defect claims which are time barred under the Home Building Act 1989 (NSW) (HBA) statutory warranties.

However, there is some level of uncertainty as to whether the legislature intended for the NSW Civil and Administrative Tribunal (NCAT) to have jurisdiction to deal with claims for breach of statutory duty under the DBPA. The NCAT is a statutory tribunal, with no inherent jurisdiction comparable to the Supreme Court of NSW. Rather, under section 29 of the Civil and Administrative Tribunal Act 2013 (NSW), the NCAT enjoys the specific jurisdiction bestowed upon it by other empowering legislation.

Unlike the Home Building Act 1989 (NSW) (HBA), the Design and Building Practitioners Act 2020 (NSW) (DBPA) has no provision that confers powers on the NCAT. An initial presumption from this omission may be that the NSW legislature did not intend for the NCAT to deal claims for breach of section 37 of the DBPA, that is, a failure in the duty to exercise reasonable care while carrying out construction work.

However, in at least two decisions, Dea ves v Sigma Group NSW Pty Limited [2023] NSWCATAP 94 and Owners SP 92648 v Binah Constructions Pty Ltd [2021] NSWCATAP 68, the NCAT has considered that section 48K of the HBA (which confers jurisdiction on the NCAT to deal with "building claims") is broad enough to encompass a claim arising under section 37 of the DBPA.

Relevant sections of the HBA

The following sections of the HBA are relevant:

48K Jurisdiction of Tribunal in relation to building claims

For the purposes of section 48K, section 48A(1) defines "building claim" and "building goods or services" as follows:

NCAT's view so far

In Owners SP 92648 v Binah Constructions Pty Ltd [2021] NSWCATAP 68, the Appeal Panel of the NCAT considered that a claim for a breach of section 37 of the DBPA arguably fell within the definition of 'building claim' under section 48A(1)(a) of the HBA as it is a "claim for – the payment of a specified sum of money".

In Deaves v Sigma Group NSW Pty Limited [2023] NSWCATAP 94, the Appeal Panel found that a breach of section 37 was a "building claim" because it was a claim for the payment of a specified sum of money that "arose from a "supply of building goods or services whether under a contract or not..."" ([79]).

Section 48K(3) provides (relevant to claims other than for breach of HBA statutory warranty) that the NCAT's jurisdiction is limited in duration to 3 years after the building services were supplied.

When applied to a DBPA cause of action, that is an important practical limitation given that in the ordinary course, a claimant is likely to have recourse to the DBPA cause of action only if a claim under the HBA is out of time, with HBA claims expiring at 6 years from completion of the work for major defects and 2 years from completion of the work for other defects.

DBPA claims can still be made beyond the 3 years period provided for in section 48K(3), just not in the Tribunal.

The view from above, on transfer

Each of the above decisions were in circumstances where the NCAT was considering whether it had jurisdiction under the DBPA.

The issue has recently arisen the other way around, from the perspective of a court considering whether a matter which asserted multiple causes of action (including under the HBA and the DBPA) should be transferred to the NCAT, remembering the terms of section 48L of the HBA, which provides that if proceedings in respect of a building claim are commenced in a court, they must be transferred to the NCAT, on the application of a defendant.

In McLachlan v Edwards Landscapes Pty Ltd [2023] NSWSC 532 the Supreme Court of NSW dealt with an appeal from an interlocutory decision of the Local Court, which was asked by the defendant to transfer proceedings to the NCAT, relying on section 48L of the HBA. The claim relied on multiple causes of action including in negligence and breaches of the HBA, DBPA and the Australian Consumer Law and contract). It was not in dispute that the definition of 'building claim' was satisfied. The Local Court made the transfer order, finding that the claim for the breach of the statutory warranties in the HBA was "front and centre" of the multiple causes of action.

Significantly, the defendant's position was that the 6 year warranty applied to the HBA claim and that the proceedings under the HBA were within time under section 48K(7). The plaintiff argued that its case went beyond the HBA and relied on causes of action including under the DBPA which were out of time in the Tribunal (but not a court) under section 48K(3).

The Supreme Court found that the Local Court was within its powers to transfer the matter to the NCAT as the NCAT could determine and quell the substance of the dispute between the parties which related to the claims for breach of the statutory warranties under the HBA. If the other causes of action "somehow managed to go beyond the claim for breach of the statutory warranties claim, then the plaintiff could continue litigating them" (emphasis within quote) in the Local Court of NSW ([48(2.)]).

In circumstances where it was agreed that the 6 year warranty applied, it is difficult to see how a case under the alternative causes of action could be successfully litigated in the Local Court if an action in the NCAT under the HBA were to fail. The decision appears pragmatic in that respect.

If there had not been agreement that the 6 year warranty applied, the Court may have had difficulty reaching the same result in a context where (if the defect was found not to be a major defect in the NCAT) successive actions may be required in the NCAT and then the Local Court. However, in those circumstances, the defendant would have had difficulty advancing its arguments under section 48L. The benefit to the defendant in accepting that the 6 year warranty applied, must also be recognised, in circumstances where a work order is beyond power for a court, notwithstanding section 48MA.

The Supreme Court didn't spend any time on whether, and therefore appeared to accept that, the NCAT could deal with a claim under the DBPA as a building claim.

Reform?

It is difficult to understand why a distinction should be drawn in section 48K between the power to consider a claim for breach of statutory warranty under the HBA for up to 6 years, and other building claims (including DBPA) for only 3 years. This would particularly bite in a claim brought between years 3 and 6 in the NCAT, if the defects fail to satisfy the HBA major defect criteria.

It also remains that there hasn't been a specific consideration of jurisdiction from a superior court. Whilst this will surely arrive in due course, the reforms to building legislation currently under consideration, could easily put the issue to rest.

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