Buyer beware! Does a builder owe a duty of care to subsequent purchasers?

16 April 2024

The Queensland Court of Appeal found in favour of the appellant, a builder, having determined that the respondent, the purchaser, failed to establish that the builder owed a duty of care as expressed in Bryan v Moloney due to a lack of vulnerability and/or reliance on the builder.

In issue

  • Whether a subsequent purchaser was able to establish vulnerability and/or reliance on a builder in order to establish that the builder owed the purchaser a duty of care as expressed in Bryan v Maloney (1995) 182 CLR 609.

The background

Ms Lewis (Lewis) purchased a residential property in Paddington in March 2017 from Mr King (King). King was the first purchaser of the residential property. The house was constructed during 2005 and 2006 by Mr Raymond (Raymond).

Shortly after moving into the house Lewis discovered defects associated with subfloor timber members, supports and fittings, and props and joists used to support the driveway and garage floor (the defects).

Lewis subsequently commenced a claim in the District Court of Queensland against Raymond, seeking to recover damages arising out of the allegedly negligent construction of the house.

The decision at trial

In the first instance, the District Court of Queensland found in favour of Lewis on the basis that:

  1. Raymond owed Lewis a duty of care as expressed in Bryan v Maloney (1995) 182 CLR 609, on the basis of her ‘vulnerability and reliance which was proved by her evidence’ which included that she:
    1. was a first home buyer.
    2. had relied upon a property inspection report (the pre-purchase inspection report) provided on behalf of King (which did not identify the defects).
    3. held no building qualifications.
    4. was pregnant at the time of purchase (and therefore not capable of, nor desirous of, entering the crawl spaces).
    5. trusted that the house which she purchased was built properly (like the purchaser in Bryan v Maloney).
  2. Part 5 of the Queensland Building and Construction Commission Act 1991 (Qld) (QBCC Act) had not replaced the duty of care expressed in Bryan v Maloney.

The issues on appeal

Raymond appealed the decision of the trial judge, on the basis that the trial judge erred in finding that:

  1. Lewis was relevantly vulnerable and/or had relied on Raymond;
  2. Raymond owed Lewis a duty of care pursuant to the principles in Byran v Maloney.
  3. A duty of care was owed by Raymond to Lewis despite the existence of the statutory insurance scheme under the QBCC Act.

The decision on appeal

Pursuant to Bryan v Maloney there must be something about the circumstances of the purchase of the building by the subsequent purchaser, such as the purchaser’s vulnerability and/or reliance on the builder, that supports the existence of a duty of care by the builder to the subsequent purchaser. When considering the issues of vulnerability and reliance the Court of Appeal noted that:

  • In considering whether Lewis had the requisite vulnerability for the imposition of a duty of care on Raymond based on Bryan v Maloney, it was not merely Lewis’ personal characteristics that were determinative of that vulnerability.
  • Lewis assumed there were not a lot of inaccessible areas because the pre-purchase inspection report did not state there were a lot of inaccessible areas. However Lewis’ assumption reflected the risk that she assumed before the auction, by being satisfied to proceed after reading the pre-inspection report rather than procuring further inspections of those areas.
  • Had Lewis arranged the further inspection of the house, the subject defects would have been discoverable (in contrast to the defects considered in Bryan v Maloney).
  • Lewis was satisfied to proceed with her purchase on the basis of the pre-purchase inspection report, despite the qualifications contained in it, and chose not to obtain the assistance of an independent building inspector prior to the purchase which would have revealed the existence of the defects. Lewis did not otherwise give evidence at trial of any actual reliance on the construction of the house by the original builder being without defects.

In light of the above, it was held that the evidence at the trial did not support the trial judge’s findings:

  1. Of vulnerability on the part of Lewis at the time of her purchase; as she had the capacity to procure an appropriately qualified or experienced person before the auction to do the inspection that would have revealed the existing defects in the residence.
  2. That Lewis relied on the builder of the subject property to have built the property free from defects.

Thus, the Court of Appeal accepted that Raymond did not owe a duty of care to Lewis pursuant to Bryan v Maloney, set aside the trial judge’s decision and entered judgment in favour of Raymond.

In view of the conclusion that the circumstances of Lewis’ purchase did not fall within Bryan v Maloney, the Court of Appeal concluded that it was not necessary to consider whether the existence of the statutory insurance scheme would further confine the application of Bryan v Maloney.

Implications for you

This case illustrates that a subsequent purchaser cannot be assured of recovering damages against a builder for construction defects, notwithstanding the duty of care set out in Bryan v Moloney. A subsequent purchaser will instead need to establish vulnerability (which will not be determined solely by their personal characteristics), and/or actual reliance upon the builder, in order for a duty of care under Bryan v Moloney to arise.

Raymond v Lewis [2024] QCA 43

Ask us how we can help

Receive our latest news, insights and events
Barry Nilsson acknowledges the traditional owners of the land on which we conduct our business, and pays respect to their Elders past, present and emerging.
Liability limited by a scheme approved under Professional Standards Legislation