Subsequent owners beware: no duty of care owed by builder

In the recent case of Brookfield Multiplex Ltd v Owners Corporation Strata Plan 61288 [2014] HCA 36, the High Court of Australia unanimously held that a builder, Brookfield Multiplex, that constructed a strata title apartment complex did not owe a duty of care to the Owners Corporation (the Corporation) to avoid causing economic loss occasioned by latent defects in the common property. This overturned the decision of the New South Wales Court of Appeal, which had held that a duty of care was owed.

By way of background, the apartment complex was constructed under a 'design and construct contract' between the builder and a developer who owned the land on which the complex was built. The Corporation was established following the registration of a strata plan over the portion of the apartment complex to be used as serviced apartments. The common property was vested in the Corporation as the manager of the strata scheme and agent of the owners of the serviced apartments.