Last week, Kreisson Construction and Engineering—one of Sydney’s leading advisers in building and commercial disputes—brought together key players from the residential and commercial construction sectors, along with consumer advocates, regulators, and top litigators, to discuss significant changes in construction litigation and remediation.

Property owners, both individuals and owners corporations, now face fewer legal hurdles, as they only need to prove that the builder or developer breached their statutory duty, without having to identify the specific party responsible for the defect.

This ruling means that developers and builders (head contractors) cannot limit their liability by attributing fault to subcontractors or other parties.

For builders with experience in international standards, this decision comes as welcome news to the Australian property industry. With significant and upcoming government investment for first-home buyers, the sector is expected to see considerable growth in the coming years.

Mohamad Maarouf, Commercial Manager at BINAH, a Liverpool-based construction firm with a 4 Gold Star iCIRT rating, welcomes the industry’s shift toward greater accountability, particularly amid Australia’s skills shortage. While acknowledging that the shift places added responsibility on builders and developers, he believes the change ultimately serves the consumer.

“In Dubai, the process is very different from what we have here in NSW,” said Maarouf. “Whether you’re a customer, a company, or the main contractor managing a project, you’re required to appoint an independent engineering consultant to oversee certain stages of the build. It’s mandatory. It acts as a safeguard, and they play a critical role.”

Maarouf noted similarities in his own approach to project oversight in Australia. “Here, I rely on and engage experts to ensure I’m in a stronger position and to avoid defects,” he explained. “The Pafburn decision will impact builders and developers alike. There’s always tension between the two—developers aim to build as quickly and efficiently as possible, while the builder has to manage the practical realities.

Michael Glinatsis, Chief Executive Officer at Kreisson Construction and Engineering Lawyers, explains that the biggest change for builders and developers is the clear accountability introduced by Pafburn.

He elaborated, “Under the Design and Building Practitioners Act 2020 (NSW), builders and developers cannot escape liability. This means there is no apportionment of liability.”

In NSW, the Tribunal applies both the Home Building Act 1989 (HBA) and the Design and Building Practitioners Act 2020 (DBPA). In light of Pafburn, there is now a stronger position on non-contractual statutory duty of care (s37), which NCAT applies where parties, particularly homeowners and owners corporations, claim economic loss arising from defective building work.

In Pafburn, the High Court of Australia clarified that the statutory duty of care introduced by the DBPA imposes clear and non-apportionable liability on builders and developers for construction defects. This statutory duty applies even where there is no direct contractual relationship (‘no contract’) and is enforceable for up to 6 years for general defects and 10 years for structural defects from when the defect was or should have been discovered.

Michael explained, “This decision is important especially when you see the shortage of homes in NSW and timeframes needed to meet the demand.”

Marinsa Harper, Head of Business Development at Kreisson, highlighted Kreisson’s focus on providing educational opportunities for industry to ensure that new protocols are understood and followed. She emphasised the need for builders and developers to meet compliance and standards, extending beyond the traditional scope of their duty of care to include materials they may import, particularly when installing PODs or prefabricated homes.

She explained, “Companies need to ensure that the materials they are importing also meet Australian standards. It’s not just about building quickly.”

During the panel discussion, Tony Di Francesco, Junior Counsel at Frederick Jordan Chambers, addressed the tendency to define the building industry by its worst. He pointed to the Pafburn decision as a reminder that the sector should not be judged solely by bad practices or bad builders.

“You can push out the worst players,” he said, “but are they the rule? If people are con artists, they will be in every industry.”

The panel, which included former NSW Building Commissioner David Chandler, discussed the progress of the iCIRT rating system, developed by Equifax in consultation with government, industry, and market stakeholders to restore confidence in the construction sector. The discussion centred on recent changes in the industry, including the Pafburn decision and the impact of the Design and Building Practitioners Act. The implementation plan, originally led by Chandler and supported by the NSW Government, is aimed at strengthening public trust in building professionals.

David Weinberger, Junior Counsel at 9 Wentworth Chambers, further explained the significance of the Pafburn decision for both residential and commercial developers.

“The big takeaway is that there is now a clear stance for the industry.  There’s less grey area. It opens the door to sue developers and builders, who are now more personally responsible for the defects, than they were before,” said Weinberger.

While the general consensus on Pafburn was seen as a positive change in the industry, some panellists noted other areas still require attention.

Weinberger noted that while significant structural reforms are underway across the sector, further attention is needed at the technical or local level. “There’s still much to be addressed in the processes surrounding development applications and the integration of local and state planning legislation,” he said.

Panel members offered frank advice to builders and developers, urging a shift from short-term profits to long-term accountability. Chandler underscored the importance of quality partnerships, telling attendees: “Start with good suppliers and good contractors. The old days of entering the market with a $2 phone are gone.”

The panel raised concerns over the growing risk of subcontractor insolvency, calling for stronger safeguards, such as stronger financial due diligence to assess subcontractors’ financial stability before engagement. Panellists also highlighted the role of lenders, noting that while they hold no formal duty of care under current legislation, their significant role in funding and assessing projects and the risks of builders and developers creates an indirect line of accountability—one that may limit their ability to fully distance themselves from liability.