Navigating D&C Novation in Queensland: Protecting the Architect’s Compliance Position Against Builder-Led Value Engineering
- John Merlo
- 2 days ago
- 21 min read
Key Takeaways
A novation is not a mere assignment of rights. It substitutes a new contractual relationship for the old one, but the deed should deal expressly with accrued rights and liabilities and with the treatment of pre-novation services.
Agreeing to an "ab initio" (from the beginning) novation without first reconciling the original consultancy terms with the builder's D&C contract can expose pre-novation services to elevated standards and uninsured liabilities.
Queensland's proportionate liability scheme cannot simply be excluded by contract for apportionable claims, but a separately drafted indemnity may still create additional contractual exposure depending on its wording.
A builder’s value-engineering demands do not displace the architect’s compliance obligations, professional duties or the need to act within the architect’s authorised scope of services under a novated contract.
Day One After Novation: Managing the Builder’s Immediate Value-Engineering Demands
You have just signed the novation deed, shifting from the developer’s consultant to a consultant engaged under the D&C builder. The ink is barely dry, and the builder is already pressing for design changes to reduce cost. This is the point at which the architect must establish clear boundaries: what falls within ordinary design development, what requires a formal variation assessment, and what must be refused because it would compromise compliance, exceed scope or undermine the project record.
Navigating the Builder’s First Cost-Cutting Directive
The first RFI from the new D&C builder usually marks an immediate shift in the project’s commercial reality. The architect’s reporting line has changed from implementing the developer’s design brief to responding to the builder’s delivery objectives. Builders may have legitimate commercial reasons for reviewing specification choices, but the pace and breadth of those requests can force rapid decisions that affect compliance, scope and future liability.
In a novated design and construct arrangement, commercial pressure to approve cheaper materials or simplified detailing often becomes the starting point for later defect allegations. The builder controls procurement and programme pressure, but the architect still controls design documentation within the agreed scope. That makes early concessions particularly dangerous if they are undocumented, conditional without follow-up, or allowed to blur the line between compliant design development and builder-led substitution.
The moment the first post-novation RFI arrives, the architect’s response strategy begins shaping the project record that may later be examined by a certifier, insurer, regulator or court. It should not be treated as a routine documentation query. Any RFI that seeks a design change should be treated as a proposed variation to the design basis and assessed accordingly.
Apply the following protocol to every post-novation RFI that involves a design alteration. Classify the instruction before you respond.
Separate each item into three categories:
(a) design development that does not alter NCC compliance or the approved development application — these you may action through your ordinary documentation workflow;
(b) value-engineering substitutions that alter materials, systems or construction methods but remain code-compliant — these require a formal written variation assessment and your express approval before you proceed; and
(c) any instruction that would produce a design the architect reasonably considers non-compliant with the NCC, the Queensland Development Code or the approved basis of assessment — these should be refused in writing, with the relevant compliance reason identified before any further action is taken.
Respond in writing in a form that can be independently retained by your practice, not only within the project management platform. The written response should identify the reason for rejection, reference the relevant NCC provision, Queensland Development Code requirement or approval constraint where possible, and state clearly that the instruction is not being accepted for compliance or scope reasons, rather than mere design preference. A status change within a shared platform is rarely enough to create the independent documentary trail needed if the design is later challenged by a certifier, insurer, regulator or claimant.
Confirm your authorised scope before answering. Before responding to any RFI requesting a design substitution, check whether the assessment falls within your post-novation scope of services and expertise. If the builder is asking you to approve a product, performance claim or system outside your engagement, record in writing that the assessment sits outside scope and decline to approve it unless and until the engagement is varied appropriately. Scope creep at the RFI stage is a common way architects become exposed to liability for procurement decisions they did not control.
Log and segregate every response immediately. Each RFI refusal or variation assessment must be copied to your own file on the day it is issued, tagged with the RFI number, the date received, the date of your response, and a clear notation of whether your response constituted approval, conditional approval or refusal. This document segregation is the pre- and post-novation record your practice will rely on to defend against a defect claim years after practical completion.
Warning: Responding to a value-engineering RFI with a conditional approval — for example, approving a product substitution 'subject to structural engineer confirmation' — without obtaining and filing written confirmation that the condition has been satisfied before construction proceeds can shift practical risk back onto your practice. Do not issue conditional approvals unless your engagement includes a documented process for verifying and recording that each stated condition has been satisfied before the substitution is incorporated into the works.
Drawing the Line on Compliance, Professional Duties and Scope
Warning: Contractual obligations owed to the D&C builder do not relieve the architect of compliance obligations, professional duties or the need to act within the agreed scope of services. Accepting a builder-led instruction that compromises compliance may expose the practice to certification problems, disciplinary issues, uninsured contractual arguments and later defect claims, regardless of the commercial pressure applied under the novated contract.
In Queensland, building work and building assessment processes are governed by legislation and by the applicable building assessment provisions, including the NCC. A D&C builder’s value-engineering instruction does not displace the architect’s obligation to act consistently with those requirements or with the architect’s professional obligations.
Protecting the practice’s compliance position requires discipline in following the written refusal and record-keeping protocol outlined above for each non-compliant or out-of-scope instruction. For registered architects in Queensland, that approach also aligns with the BOAQ Code of Practice requirements to notify the client in writing of matters preventing the architect from following instructions and to maintain proper records.
Documenting Pre-Novation vs Post-Novation Instructions
Isolating your pre-novation design decisions from post-novation variations is a critical administrative step that must begin on day one. The developer approved your original schematic design and development application; the builder is now demanding deviations during the construction documentation phase.
You must implement a strict document control system that clearly tags which party instructed which variation and when. If a defect claim arises three years after practical completion, this precise paper trail serves as vital evidence. Without it, you risk bearing liability for a compromised, hybrid design that neither fully satisfies the developer's original brief nor meets the required compliance standards.
Novation Is Not Assignment: Why the Deed Wording Still Matters
The most dangerous misconception at this stage is treating the novation as a simple handover of the client file. A novation is legally different from an assignment: it substitutes a new contractual arrangement in place of the old one. That distinction matters because the deed may also deal with pre-novation services, accrued rights and the extent to which the builder assumes the developer’s position from the novation date or from the beginning.
Why Novation is a Substitution, Not a Transfer
At law, a novation substitutes one contractual relationship for another. This differs fundamentally from an assignment, which transfers the benefit of rights but does not, by itself, transfer obligations. In practice, the precise effect of the deed still depends on its drafting, particularly in relation to accrued rights and pre-novation services.
Under section 190 of the Property Law Act 2023 (Qld) — which replaced the Property Law Act 1974 (Qld) on 1 August 2025 — an assignment of a debt or legal thing in action must be absolute, in writing, and the debtor must be given actual notice of the assignment for the transfer of legal rights to become effectual. The precise statutory mechanics of s 190 establish the mechanism for an absolute assignment of a legal thing in action, sharply distinguishing it from the common law doctrine of novation, which requires tripartite consent to substitute entirely new obligations.
This conceptual separation between assignment and novation is well established. Careless use of 'transfer' language in a deed can create avoidable ambiguity about whether rights alone are being assigned or a broader substitution of contractual position is intended. That is one reason the deed should deal expressly with release, accrued rights and the treatment of pre-novation services.
The "Ab Initio" Trap: Accepting Liability for Past Developer Decisions
Expert insight: Signing an 'ab initio' novation deed without aligning the pre-novation design basis to the builder’s contractual requirements can create significant contractual and insurance risk. Where the deed retrospectively treats the builder as if it had always been the client, the architect may be exposed to allegations measured against a different brief, different risk allocation and, potentially, obligations that fall outside ordinary PI cover.
The legal mechanism behind this trap is straightforward. An ab initio novation deed treats the builder as if it had been the client from the commencement of the architect’s engagement. In practical terms, that can expose the architect’s pre-novation work to review against the builder’s contractual framework rather than the original developer brief. If the builder’s terms include fitness for purpose language, uncapped liability or performance obligations exceeding ordinary reasonable skill and care, the architect may face arguments based on standards that were not the basis on which the earlier services were priced, documented or insured.
This is structurally different from a prospective novation, also called a switch novation, in which the architect's contractual obligations transfer to the builder only from the novation date forward. Under a prospective deed, the developer retains responsibility for the brief they issued and the instructions they gave prior to novation. The architect's exposure to the builder is limited to post-novation services. The pre-novation design record remains governed by the original consultancy agreement, which aligns with the policy wording under which the architect's PI insurance was written.
The PI coverage gap is most acute where the two contractual documents are materially inconsistent. Consider a scenario in which the developer engaged the architect under a standard consultancy agreement requiring reasonable skill and care, but the builder's D&C contract — which the ab initio deed now deems to have always applied — contains a fitness for purpose warranty for the building envelope. The architect's PI policy was issued against the reasonable skill and care standard. The ab initio deed has retrospectively imposed a fitness for purpose obligation.
The insurance risk is obvious. Many PI policies contain exclusions for liability assumed under contract beyond the liability that would have attached at common law absent the contract. If the novation deed retrospectively imposes a higher contractual standard, the insurer may dispute cover for that additional exposure. That is precisely why the deed should be reviewed against the policy wording before execution and notified promptly afterwards.
Builder-drafted novation deeds often adopt ab initio wording by default. The deed language that triggers this effect includes phrases such as "the Architect is deemed to have been engaged by the Contractor from the date of its original engagement" or "the Contractor steps into the position of the Principal from the commencement of the Architect's services" or any formulation that deems the builder's contract to apply "as if" it had always been in place. Each of these formulations achieves the same result: it applies the builder's elevated standards to design work that was completed before those standards were ever agreed to.
If you have already executed an ab initio novation deed without obtaining prospective language, the position is more difficult but not necessarily irretrievable. Three remedial steps should be taken immediately.
First, instruct your solicitor to review the executed deed and the original consultancy agreement side by side to identify every material inconsistency between the two — particularly fitness for purpose warranties, unlimited liability provisions, and indemnity obligations that exceed your common law duty of care.
Second, notify your PI insurer in writing of the executed deed and its terms without delay, attaching both the deed and a schedule of the specific clauses that extend your liability beyond the original engagement. Late notification is not ideal, but it is usually preferable to silence. Section 40(3) of the Insurance Contracts Act 1984 (Cth) may preserve cover where written notice of facts that might give rise to a claim is given as soon as reasonably practicable and before the policy expires.
Third, write to the builder requesting a supplementary deed or side letter that retrospectively limits the novation to prospective effect only. Builders will not always agree, but the request itself creates a contemporaneous record that you did not intend to assume retrospective liability on the elevated terms — a record that may assist both your insurer and your solicitor if a claim eventuates.
For architects who have not yet signed, the position is far more straightforward.
Before executing any novation deed, instruct your solicitor to identify whether the deed is ab initio or prospective in its effect and to insert express prospective language in its place. The following form of words is commonly used to achieve this result: "This deed takes effect from the Novation Date only. The rights, obligations and liabilities of the parties in respect of services performed and instructions given prior to the Novation Date remain governed by the Original Agreement and are unaffected by this deed." If the builder refuses to accept prospective language, that refusal is itself an important signal about the risk you are being asked to assume, and warrants immediate legal advice before you proceed.
Dealing Expressly with Accrued Rights and Pre-Novation Liability
If a novation deed does not deal expressly with accrued rights and pre-novation liability, the architect may face uncertainty about whether the original developer retains rights in relation to earlier services. For that reason, the deed should address release and the treatment of pre-novation claims in clear terms.
Standard form novations sometimes stay silent on the express release of the architect's liability to the original developer for pre-novation services. Without that drafting discipline, the architect may still face arguments about responsibility for earlier decisions under contract, tort or statute. Addressing the point expressly during the transition from developer engagement to builder engagement is therefore a basic risk-control step.
Paragraphs 24, 26 and 34 of the BOAQ Code of Practice operate together to impose specific record-keeping and notification obligations on registered architects in Queensland. Paragraph 24 requires an architect to promptly advise the client in writing of anything that would, or would be likely to, prevent the architect from following the client's instructions. Paragraph 26 requires the architect to maintain thorough records of all correspondence and documents sent and received for at least seven years after completion of services. Read together with paragraph 34 of the Code, which requires an architect to withdraw from services where continuing would require a breach of the Act or the Code, these obligations mean the Board expects architects to create and preserve a clear documentary record where client instructions conflict with professional obligations, the agreed scope or the architect's ability to continue acting consistently with the Code.
A failure to do so is not merely a litigation risk — it is a potential disciplinary matter. The Board of Architects of Queensland has the power to take disciplinary action against a registered architect who fails to comply with the Code of Practice, and a pattern of undocumented acquiescence to non-compliant builder instructions could support a finding of unsatisfactory professional conduct, independent of any civil claim.
Proportionate Liability in Pre- and Post-Novation Design Defects
When a water ingress or structural defect surfaces three years after practical completion, the homeowner won't distinguish between your pre-novation concept and the builder's post-novation variations. At this point, the risk shifts to how liability is divided among the original developer, the D&C builder, and your practice. Queensland's statutory apportionment rules will heavily influence your ultimate financial exposure.
Defining Concurrent Wrongdoers Across the Novation Boundary
When a design defect claim bridges the pre- and post-novation periods, the architect, the developer, and the builder may all be classified as concurrent wrongdoers if their independent acts contributed to the same loss. A flawed pre-novation developer brief combined with poor post-novation builder execution creates a complex web of shared responsibility.
Under section 30 of the Civil Liability Act 2003 (Qld), a concurrent wrongdoer is one of 2 or more persons whose acts or omissions caused, independently of each other, the loss or damage that is the subject of the claim. For construction defect disputes, that concept becomes relevant where loss is said to arise from a combination of design, briefing, coordination, certification or construction decisions across the pre- and post-novation periods.
Novation may also have separate insurance and regulatory consequences on residential projects. Where the underlying contract or delivery structure changes materially, home warranty and other insurance arrangements should be checked directly against the applicable policy, statutory requirements and current QBCC guidance rather than assumed to carry across automatically.
Section 31: Apportionment Helps, but Only Within an Apportionable Claim
In a multi-party design defect claim, the proportionate liability regime can be a significant protection for an architect. If a builder’s later value engineering, procurement choice or construction method materially contributed to the failure, the statutory scheme may limit the architect’s liability to its just and equitable share. However, that protection operates within an apportionable claim itself. It does not automatically dispose of a separate contractual indemnity the architect may have given in the novation deed.
Under section 31 of the Civil Liability Act 2003 (Qld), liability in an apportionable claim is limited to the proportion of the loss the court considers just and equitable having regard to the defendant’s responsibility. Under section 28, that regime applies to claims for economic loss or property damage of the relevant kind, not to every claim that may be pleaded in a construction dispute.
As defined in section 31, the liability of a defendant who is a concurrent wrongdoer in relation to the claim is limited to an amount reflecting that proportion of the loss or damage claimed that the court considers just and equitable having regard to the extent of the defendant's responsibility. For a proportionate liability Queensland architect, this statutory apportionment is a critical factor in defending an apportionable claim involving a D&C builder — but it must be understood alongside the contractual indemnity analysis discussed below, because the two operate on parallel tracks.
Why You Cannot Contract Out of the Apportionment Scheme
Warning: D&C builders often seek broad indemnity clauses in novation deeds to shift downstream defect risk onto the architect. Under Queensland law, parties cannot simply contract out of the statutory apportionment regime for apportionable claims. That said, an indemnity may still create a separate contractual avenue of recovery depending on its drafting and the way the claim is framed. This is why broad indemnities should be resisted or narrowed at the deed stage rather than treated as harmless boilerplate.
Under section 7(3) of the Civil Liability Act 2003 (Qld), this Act, other than chapter 2, part 2 and chapter 3, does not prevent the parties to a contract from making express provision for their rights, obligations and liabilities under the contract. By explicitly excluding Chapter 2, Part 2 from the freedom to contract out, the statute prohibits parties from overriding the statutory apportionment scheme within an apportionable claim. However, a well-drafted contractual indemnity does not purport to override the apportionment regime; it creates an independent contractual obligation to reimburse the builder for loss. The distinction is critical: the court may apportion liability within the statutory claim, while a separately worded indemnity may still need to be analysed on its own terms. This is why simply relying on the proportionate liability scheme without also negotiating the indemnity wording in the deed is an incomplete risk strategy.
Professional Indemnity Insurance: The Notification Dead-zone
As the commercial dynamic shifts from developer to builder, your practice's risk profile alters fundamentally. Insurance issues begin as soon as the draft novation deed arrives. Failing to test the deed against current PI cover and notification obligations can leave the practice exposed if the builder later seeks to pass on defect-related losses.
PI Insurance Notification Protocols Before Executing the Deed
Expert insight: Executing a novation deed often materially changes the architect's risk profile (especially if standard terms are amended by the D&C builder). Failing to implement correct PI insurance notification architect protocols before executing the deed is a common administrative error that can compromise coverage for future design defect claims.
Executing a novation deed that materially alters the architect’s risk profile without checking notification and cover implications can compromise the practice’s position on future design defect claims.
The notification protocol operates in four stages, each of which must be completed in sequence.
Send the proposed deed to your PI broker before you execute it. Do not wait until after the deed is signed to involve your insurer. The moment a draft deed arrives from the builder, forward it to your PI broker with a covering note that specifically identifies every clause extending your liability beyond your common law duty — indemnity clauses, fitness for purpose warranties, unlimited liability provisions, and any clause that removes your right to rely on proportionate liability under the Civil Liability Act 2003 (Qld). The point is to assess whether those specific clauses are likely to fall within the scope of the current policy before the practice becomes bound by them.
Obtain a written coverage opinion, not merely a verbal assurance. If your broker advises that a particular indemnity or warranty is likely to be acceptable, ask for that view in writing and keep it on file. A verbal assurance is of limited value if a defect claim arises years after practical completion and the advice later has to be proved. If the insurer identifies clauses that sit outside coverage, you have three options available to you: negotiate the offending clauses out of the deed; request a specific policy endorsement to extend coverage to the new risk; or decline to execute the deed in its current form. The second option is only available if the insurer is prepared to issue the endorsement before you sign.
Formally notify the insurer once the deed is executed. Under standard policy conditions, and reinforced by section 40(3) of the Insurance Contracts Act 1984 (Cth), providing written notice to your insurer of facts that may give rise to a future claim before your current policy expires preserves coverage even if the actual claim is made in a later policy period. If the deed or surrounding circumstances disclose facts that might give rise to a claim, consider giving formal written notice to the insurer promptly after execution, attaching the executed deed and identifying the relevant risk features.
Disclose the novation at your next renewal. PI insurance in Australia operates on a claims-made and notified basis. The policy that will respond to a defect claim made three years from now is not the policy you hold today — it is the policy in force when the claim is eventually made against you. Every renewal application you lodge between now and that future claim must accurately describe your contractual obligations, including any elevated indemnities you accepted in the novation deed. Failure to disclose a material change in the nature of the practice’s professional activities or contractual risk profile at renewal may create difficulties on a later claim, including non-disclosure issues or reliance on contractual liability exclusions, depending on the policy wording and the facts.
How elevated builder indemnities create uninsured exposure. Many PI policies exclude or limit cover for liability assumed under contract to the extent it would not have attached at common law absent the contract. If a novation deed requires the architect to indemnify the builder for losses beyond the architect’s proportionate responsibility or beyond ordinary reasonable skill and care, that may create assumed contractual liability exposure. Insurers commonly scrutinise those clauses closely, and the insurer may contend that the additional liability falls outside cover. The policy wording, not the novation deed, ultimately defines the outer boundary of available cover.
Why Broad Deed Indemnities and PI Cover Often Misalign
When a D&C builder inserts broad indemnity clauses into a novation deed, the commercial effect — whether or not it is the conscious intention — is to shift the cost of a future defect claim entirely onto the architect. The commercial purpose of these clauses is usually to shift loss arising from design issues onto the architect, but their practical effect depends on their drafting, their interaction with the architect’s ordinary duty of care and the terms of the PI policy.
Many PI policies do not respond fully to liability assumed under contract beyond the architect’s ordinary duty to exercise reasonable skill and care. If the novation deed includes broad indemnities untethered to fault, scope or insurance, the practice may assume exposure that is only partly insured or uninsured altogether. While s 7(3) of the Civil Liability Act 2003 (Qld) preserves the statutory apportionment regime for apportionable claims, that does not remove the need to control indemnity drafting at the front end.
Protective Strategies for the Novation Deed and D&C Contract
You are not obligated to sign a standard-form novation deed that strips your protections, no matter how aggressively the builder pushes. This is the moment to negotiate terms that quarantine your pre-novation advice and strictly limit your liability for builder-led substitutions. The following strategies outline what needs to be in the deed before you proceed.
Defining the Post-Novation Scope So Builder Variations Do Not Become Architect Liability
Clearly defining the post-novation scope of services within the novation deed ensures you are not held contractually responsible for supervising the builder's unauthorised design deviations. A rigorously drafted scope of services should quarantine the architect’s responsibility to the agreed documentation and review functions, such providing construction detailing or reviewing shop drawings, while expressly excluding any broader role in general superintendency, site supervision or approval of unauthorised substitutions.
A rigorously defined post-novation scope of services ensures the architect is only liable for agreed documentation phases and not for unapproved onsite variations executed by the D&C builder.
Vague scope definitions often leave the architect exposed to allegations of failing to identify a builder's non-compliant substitution during periodic site visits.
Resisting Fitness for Purpose Warranties and Other Elevated Standards
D&C builders frequently demand "fitness for purpose" warranties in the novation deed, attempting to force the architect to guarantee that the final design will meet the builder's broad, often undefined, commercial objectives. The point of resisting or qualifying a fitness for purpose clause is to keep the architect’s contractual standard aligned with reasonable skill and care, rather than an outcome guarantee.
The enforceability of a fitness for purpose exclusion depends on the specific wording of the novation deed and the architect's ability to resist the builder's drafting demands. As detailed in the PI insurance sections above, standard policies contain a strict exclusion for liability arising from fitness for purpose warranties, meaning acceptance of such an obligation will almost certainly leave the practice personally exposed for any claim arising from that warranty. Where the deed is professionally reviewed before signing, removing or heavily qualifying these warranties should be a primary focus.
Essential Clauses for a Safer Novation
Express release of accrued rights: Ensure the deed deals clearly with release, accrued rights and responsibility for pre-novation services.
Limitation of liability cap: Negotiate a clear monetary cap on your liability, ideally aligned with your PI insurance limits and any applicable professional standards scheme.
Proportionate liability preservation: Include a clause expressly confirming that nothing in the deed is intended to exclude the proportionate liability provisions of the Civil Liability Act 2003 (Qld) to the extent they apply.
Strict variation mechanism: Define a mandatory written variation process that requires the builder to obtain your formal approval before implementing any design substitution or value engineering on site.
PI insurance alignment: Ensure indemnities, warranties and retrospective risk assumptions are reviewed against the practice’s current claims-made PI policy before execution.
To ensure your novation deed includes these critical protections, get legal advice from a construction lawyer before signing the builder's proposed terms.
Conclusion
That first aggressive RFI from the new D&C builder is the moment the theoretical risks of novation become a practical project problem. The deed has been signed, the builder is pressing for thinner slabs and substituted glazing, and the architect is suddenly being asked to trade documentation control for speed and cost savings.
By understanding the legal mechanics at play, you can see that novation is not a mere assignment and that the deed wording matters materially to pre-novation exposure, accrued rights and insurance risk. More importantly, the builder’s cost-cutting mandate does not displace the architect’s compliance obligations, professional duties or the need to act within scope.
Queensland’s proportionate liability regime may limit exposure within an apportionable claim to the architect’s just and equitable share, but it does not eliminate the need to control deed indemnities and retrospective risk assumptions. That is why deed negotiation remains as important as technical compliance.
Before responding to the first value-engineering RFI, secure the baseline. Review the deed to understand how it treats pre-novation services, accrued rights, indemnities and scope. Check PI notification and coverage issues promptly, and implement a disciplined written variation process that records every post-novation builder demand and every refusal, qualification or approval. In practice, those early boundaries are what protect the architect’s compliance position when the defect allegations arrive later.
FAQs
What is the legal difference between assigning and novating an architect's contract in Queensland?
An assignment transfers rights, but does not by itself transfer contractual obligations. Under section 190 of the Property Law Act 2023 (Qld), an absolute assignment of a debt or legal thing in action must be in writing and notified to the debtor. By contrast, a novation substitutes a new contractual arrangement for the old one and requires the consent of all relevant parties. In practice, the legal effect still depends on the deed’s drafting, especially in relation to accrued rights and pre-novation services.
Can a D&C builder force a Queensland building designer to approve non-compliant value engineering?
No. A D&C builder’s commercial instruction does not relieve an architect or designer of the need to act consistently with the applicable compliance requirements, professional obligations and the agreed scope of services. If a proposed substitution would compromise compliance or falls outside scope, it should be refused or qualified in writing with the reason recorded clearly.
How does proportionate liability apply when a design defect claim bridges pre- and post-novation periods?
In a multi-party defect claim, the architect, developer and builder may all be concurrent wrongdoers under section 30 of the Civil Liability Act 2003 (Qld) if their separate acts or omissions contributed to the same loss. Under section 31, liability in an apportionable claim is limited to the share the court considers just and equitable, having regard to each party’s responsibility. In construction disputes, that can be important where pre-novation design decisions and post-novation builder changes both contribute to economic loss or property damage.
Can a novation deed contract out of Queensland's proportionate liability scheme?
Not simply. Parties cannot contract out of the statutory apportionment regime for apportionable claims in Queensland. Section 7 of the Civil Liability Act 2003 (Qld) expressly prohibits parties from overriding Chapter 2, Part 2 by contract. However, a contractual indemnity in the novation deed does not technically override the apportionment scheme — it creates a separate contractual right for the builder to recover loss from the architect. The court may apportion liability within the statutory claim, but a separately drafted indemnity may still require separate contractual analysis. That is why negotiating indemnity clauses carefully, rather than relying solely on the statutory regime, is essential.
What is the "ab initio" novation trap for design professionals?
The 'ab initio' (from the beginning) trap arises where the novation deed treats the builder as if it had always been the client from the commencement of the architect’s engagement. That can expose pre-novation services to assessment against a different contractual framework, including broader warranties, indemnities or performance obligations than those applying under the original developer engagement.
Why is PI insurance notification critical before signing a novation deed?
Executing a novation deed can materially alter the architect’s risk profile, particularly where the builder proposes elevated indemnities, retrospective risk assumptions or fitness for purpose obligations. Because PI insurance is written on a claims-made basis, the deed and surrounding facts should be reviewed promptly for notification and coverage implications before and after execution.
This guide is for informational purposes only and does not constitute legal advice. For advice tailored to your specific circumstances, please contact Merlo Law
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