Pafburn: A Landmark Case in Proportionate Liability
Principal at Redenbach Legal and a seasoned construction law expert, Keith Redenbach joins David Turner on Hearsay the Legal Podcast to delve into the landmark ruling of Pafburn. The case of The Owners – Strata Plan No 84674 v Pafburn Pty Ltd [2023] NSWCA 301, or Pafburn, marks a significant shift in the legal landscape concerning proportionate liability in NSW construction cases, fundamentally altering over two decades of legal practice.
Background
The central issue in Pafburn was whether a builder being sued for negligence could rely on the proportionate liability provisions under the Civil Liability Act 2002 (NSW) to limit their liability, given the statutory duty of care imposed by the Design and Building Practitioners Act 2020 (NSW).
The New South Wales Court of Appeal held that the statutory duty of care under section 37 of the Design and Building Practitioners Act was non-delegable. This means that the builder could not apportion its liability to other concurrent wrongdoers, such as subcontractors or consultants, despite their involvement in the project. The court’s decision effectively rendered the proportionate liability provisions inapplicable in this context, holding Pafburn Pty Ltd fully accountable for the entire loss.
The Court of Appeal’s decision is due to be heard in the High Court. If upheld, it will solidify a new legal terrain in the world of building and construction. In light of this ruling, staying informed and seeking expert legal advice is essential in safeguarding against unforeseen liabilities and ensuring successful and safe project outcomes.
Check out Keith’s episode: Brick by Brick: Unpacking Pafburn and its Effect on Proportionate Liability in NSW on Hearsay the Legal Podcast now.
How Pafburn impacts:
Proportionate Liability
Proportionate liability was introduced in New South Wales and other Australian states to address the issues arising from joint and several liability. Under the traditional joint and several liability framework, any one of the multiple wrongdoers could be held liable for the full amount of the damage, regardless of their individual share of fault. This often led to situations where solvent parties bore the entire financial burden if other parties were insolvent.
The Civil Liability Act 2002 (NSW) aimed to mitigate this by allowing defendants to limit their liability to their proportionate share of responsibility. However, the emphasis on the non-delegable nature of the statutory duty of care in the Pafburn decision has effectively limited the applicability of proportionate liability defenses in cases involving the Design and Building Practitioners Act. This shift places a significant burden on builders and developers, who may now find themselves unable to distribute liability among other contributing parties.
Insurance Coverage Policies
The insurance section may also be affected by the Pafburn decision, as insurers may need to reassess their coverage policies in light of the increased liability exposure for builders and developers. The shift from proportionate to full liability could lead to higher insurance premiums and stricter underwriting processes, impacting the overall cost of construction projects.
Comparative Cases and Legislation
Pafburn aligns with a series of judicial decisions and legislative changes following catastrophic events, such as the Grenfell Tower fire in the UK and the La Crosse and Opal Tower incidents in Australia. These events have led to increased scrutiny of construction practices and a legislative push for enhanced accountability and consumer protection.
In the Brookfield case, the High Court ruled that a builder had no duty in tort to exercise reasonable care in certain circumstances, highlighting the complexities of liability in construction law. The Pafburn decision, however, underscores a movement towards holding parties fully accountable for their statutory duties, irrespective of contractual provisions.
For clients seeking legal services in the construction industry, the Pafburn decision underscores the importance of comprehensive risk management strategies. Builders, developers, and other stakeholders must be vigilant in ensuring compliance with statutory duties and maintaining robust quality control measures throughout the construction process.
Legal practitioners should advise clients on the potential risks associated with non-delegable duties and explore alternative dispute resolution mechanisms to mitigate liability exposure. Additionally, reviewing contractual agreements and ensuring clear delineation of responsibilities among parties can help manage the impact of similar legal challenges.
If you enjoyed reading this, you’ll like CPD episode 123 of Hearsay the Legal Podcast featuring Principle of Redenbach Legal with Keith Redenbach, where the effects of Pafburn on proportionate liability are explored in further detail.