The Bianco Apartments case and Non-delegable Duties of Care
On 30 October 2023, the decision in Body Corporate 406198 v Argon Construction Limited & Auckland Council was released. This judgment is of note as it addresses a number of legal issues which arise frequently in construction claims.
In this article we will cover off the issue of non-delegable duties of care.
The Body Corporate and its individual unit owners sued the head contractor Argon and the Auckland Council in negligence in relation to a 157 unit development known as Bianco Off Queen Apartments. Like many claims of its kind, building defects were alleged.
It is generally well established that parties involved in construction such as builders and local authorities owe duties of care to owners and subsequent purchasers. In the case of builders, the scope of that duty is to ensure compliance with the Building Code, good trade practice and other relevant statutory requirements.
Normally, if a head contractor employs a competent subcontractor the head contractor will not be liable for shoddy work of that contractor. However, in special circumstances a “non-delegable” duty of care will be imposed which would mean that the head contractor would be liable for the acts of their subcontractors – it could not “delegate” full responsibility to its subcontractor. Whether those special circumstances existed was a key issue in this case.
Here, Argon was the head contractor and the builder at the centre of the construction work. It had project management functions and it was the key party with significant control over and capacity to influence the quality of the construction and its inherence to Building Code standards.
Argon also entered into the construction contract to “construct, complete, deliver and remedy defects” and agreed to be responsible for the acts or omissions of subcontractors or subcontractor’s agents under the special conditions of the construction contract. Significantly, one of the other terms of the construction contract was that Argon agreed to review certain aspects of the design or specification of the contract works in order to reduce the construction costs and increase efficiency of the construction.
Further, its subcontractors were obliged contractually to comply with all instructions from the head contractor and were specifically prohibited from having any direct communications or taking instructions from the architect.
In these circumstances, the Court considered that the parties expressly contemplated that Argon might be liable for the acts or omissions of subcontractors with respect to compliance with the Building Code. The Court took the view that Argon did owe non-delegable duties of care to the plaintiffs as subsequent purchasers, and further noted that there were important public policy reasons of accountability and loss distribution which meant it was appropriate for Argon to be liable in this case.
The exact nature of any contractor’s role and responsibilities in the particular circumstances, including the level of control and supervision will be key to determining whether a contractor might be responsible for defects in the work of others as well as their own.
The Court’s findings underline the need for care to be taken so that the roles and responsibilities – and liability for defects - of every contractor are clearly defined.
If you would like to discuss this case or any construction law issues, get in touch with our team.