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Oxford (NSW) Pty Ltd v KR Properties Global Pty Ltd trading as AK Properties Group [2023] NSWSC 343 (Oxford v KR Properties)

Directors of contractors should be relieved to hear that in the recent case of Oxford v KR Properties, the Supreme Court rejected a claim against a contractor’s director for breach of duty under section 37 of the Design and Building Practitioners Act 2020 (NSW) (DBPA). However, it should be noted that the claim was only rejected because the Owners failed to establish its loss as against the director.

A director can be liable under s 37 of the DBPA

Oxford v KR Properties once again confirms that a director of a contractor can be personally liable for breach of duty under  section 37 of the DBPA,[1] which provides:

37 Extension of duty of care

  • A person who carries out construction work has a duty to exercise reasonable care to avoid economic loss caused by defects
    • in or related to a building for which work is done; and
    • arising from construction work.

Loss under different causes of action must be separated

In this case, the Owners terminated the contract for default by the contractor and sought:

  1. contractual damages from the contractor for costs incurred to complete the works and rectify defective works; and
  2. damages from the contractor, and its sole director and shareholder for breach of duty under section 37 of the DBPA.

However, the Owners’ quantum evidence did not separate:

  • the loss flowing from the breach of the DBPA (i.e., rectification costs for the defects); and
  • other causes of action which applied to the contractor but not to its director (i.e., the extra over costs for completing the terminated contract).

Without specific proof of rectification costs, the Owners could not prove the director’s breach of section 37, i.e., that the director had failed to exercise reasonable care to avoid economic loss caused by defects arising from construction work.  Hence while the Owners succeed in their claims against the contractor, they failed in their DBPA claim against the director.

Key Takeaways

Whether pursuing or defending a claim of breach of section 37 of the DBPA, contractors (and their directors) should carefully identify the nexus between the director’s action/inaction and the loss flowing from the alleged negligence.

If you would like to discuss this article with us further, please contact Brett Vincent, Managing Partner, or Angie Kim, Graduate Lawyer on (02) 9261 5900.

[1] See also Goodwin Street Developments Pty Ltd atf Jesmond Unit Trust v DSD Builders Pty Ltd (in liq) [2022] NSWSC 624 and The Owners – Strata Plan No 84674 v Pafburn Pty Ltd [2022] NSWSC 659.