Pafburn Pty Limited v The Owners - Strata Plan No 84674
High Court of Australia · 2024
Pafburn Pty Limited v The Owners - Strata Plan No 84674 [2024] HCA 49
A developer and head contractor sued over building defects pointed at the waterproofer, the cladding supplier, the architect, the certifier and the council. Could each be made to pay only its own share?
What happened?
An owners corporation for a residential strata building in North Sydney sued the developer, Madarina, and the head building contractor, Pafburn, for the cost of building defects. The claim was made exclusively under the Design and Building Practitioners Act 2020 (NSW) (the DBPA) and alleged breach of the duty in s 37(1) ([4], [8]). Pafburn was the sole shareholder of Madarina, which owned the land before the strata plan was registered ([5]-[6]).
The defendants pleaded in response that the claim was an "apportionable claim" under s 34 of the Civil Liability Act 2002 (NSW) (the CLA), and named as concurrent wrongdoers the waterproofing subcontractor, the manufacturer, supplier and installer of the aluminium composite panels, the architect, the principal certifying authority and the local council ([12]). They admitted that Pafburn carried out construction work, and denied that Madarina did ([11]). The owners corporation applied to strike out the paragraphs that relied on proportionate liability ([14]).
What did the Court decide?
The High Court dismissed the appeal with costs, so the order striking out the paragraphs of the defendants' pleading that relied on Pt 4 of the CLA stood ([2], [66]). The Court divided four to three, in two sets of reasons: a joint judgment of four Justices and a joint dissent of three.
Proposition
What is the principle?
Gageler CJ, Gleeson, Jagot and Beech-Jones JJ, in the joint reasons, began from the statutes' structure. Under Pt 4 of the CLA a claim for economic loss arising from a failure to take reasonable care is an apportionable claim, and each concurrent wrongdoer's liability is limited to the proportion the court considers just ([22]-[28]). Overlaying that, s 5Q treats liability for breach of a non-delegable duty as if it were vicarious liability, and s 39(a) preserves vicarious liability for a proportion of an apportionable claim ([29]). The appellants argued that a person's s 37(1) duty reaches only the construction work that person in fact carried out ([44]-[47]). The joint reasons said that argument "fails to engage with the nature of that duty as expounded in s 39 of the DBPA" ([51]).
They held that s 39 makes the s 37(1) duty personal to each person who carries out construction work, and that s 37(1) "is not to be read in isolation from its context" ([54]). Section 41(3) of the DBPA subjects Pt 4 of that Act to the CLA, so s 5Q applies ([55]). The consequence for apportionment followed from the vicarious-liability fiction, and "there can be no apportionment of liability" as between the defendants and those persons ([57]). For a person who supervises the construction of the whole building, the duty extends to all defects in or related to the building arising from the construction work, whether or not that person performed any of the physical acts ([52]). The joint reasons added that this reading maintains the unity of the two Acts without implied repeal of Pt 4 of the CLA ([63]) and fits the DBPA's purpose of "individual" responsibility ([64]).
The dissent read s 37 as creating a duty to take reasonable care in the construction work a person carries out personally or through an agent, and said that "carries out" cannot mean "agrees to have carried out" ([83]-[84]). On that reading s 39 does not turn the duty into a strict one for subcontractors' work ([81]). They said that "the statutory duty imposed by s 37 of the DBP Act is not strict liability; it is a duty to take reasonable care in carrying out construction work" ([90]), so s 5Q does not apply, a s 37 claim is apportionable under Pt 4 ([92]-[97]), and the matter should go back to decide who truly carried out construction work ([103]-[104]).
Why does this case matter?
The reflex in a negligence problem about economic loss from several wrongdoers is to ask who else contributed and divide the loss. The case matters because that reflex is where this kind of problem is decided, and applying it without first asking which statute the claim is brought under, and what kind of duty that statute creates, produces the wrong answer on the question the examiner set.
It also links two topics students usually learn apart: the common law's reluctance to find a duty owed by a builder to subsequent owners for pure economic loss, and the statutory regime for dividing liability among wrongdoers. A building-defect problem for a purchaser with no contract with the builder can test both at once.
Exam and application relevance
Say which instrument the claim is brought under before you discuss apportionment. The reasons concern a claim made exclusively under s 37 of the DBPA; they do not decide how Pt 4 of the CLA operates on a common law negligence claim against the same defendant.
Describe the duty in the Court's terms: the majority read it with s 5Q of the CLA, and the joint reasons' wording is framed around persons to whom the defendant delegated or entrusted work ([57], [61]).
State the case as a decision on a pleading. It decides that the pleaded Pt 4 defence could not stand on the claim as framed; it does not decide that any defendant is liable, or for how much ([62], [65]).
If your facts turn on whether a principal contractor is a person who carries out construction work merely because s 7(3) deems it to do building work, do not cite the case for an answer; the joint reasons reserved that question ([49]). Where the contractor supervised or controlled the work, the duty's reach is addressed at [51]-[54].
Attribute the opposing view to the three dissenting Justices by name and as a dissent when you contrast it.
The duty is stated here as the Court read the 2020 Act in December 2024. Check the Act's current status and text before applying it to a present claim.
Check your understanding
1. Which two provisions of the DBPA and which provision of the CLA did the majority combine, and what did the combination do to the defendants' pleading? 2. What did the joint reasons say about the case against the principal certifying authority and the local council, and why does that limit what the case can be cited for? 3. A sub-contractor's negligence caused a defect and the owner sues the head contractor in common law negligence only. Is Pafburn directly in point? Explain what you would need to check. 4. Who held that s 5Q of the CLA does not apply to a s 37 duty, and with what effect on the result?