The NSW Government has recently passed 2 pieces of legislation with the objective to increase confidence of the community in the construction industry.
The Design and Building Practitioners Act 2020 (NSW) (“DBP Act”) was enacted on 10 June 2020 and it introduces a statutory duty of care to benefit owners of land and provides for methods to regulate design and building work, including registration requirements for designers, engineers, builders and other specialists.
The Duty of Care which has been introduced under the Act relates to the duty of a person carrying out construction work towards the owners (including subsequent owners) to exercise reasonable care in order to avoid economic loss due to defective construction. The duty is owed by any person who carries out construction work, including head contractors, subcontractors, manufacturers, suppliers and consultants. Accordingly, owners can claim damages when there is a breach of duty and owners can seek compensation for defects in building work.
The creation of the duty of care under the Act applies retrospectively. Buildings less than 10 years of age will also be covered under duty of care. Once the Act comes into force, a claimant in a breach of duty proceeding may have an additional cause of action and be entitled to amend their claim.
The Act also introduces a new regulatory system for building and design work to increase compliance with the Building Code of Australia and this part of the Act is scheduled to commence on 1 July 2021. Some of the aspects of the new regulatory system include:
- registration of persons involved in construction work (including maintenance works) like designers, builders, engineers and other specialist practitioners;
- declaration of regulated designs by registered designers;
- declaration by registered builders of building work before applying for an occupation certificate;
- insurance requirements for designers, engineers and builders (to be further detailed in the forthcoming Regulations); and
- delegation of investigation and enforcement powers to authorised officers and the Secretary of the Department of Customer Service.
The Residential Apartment Buildings (Compliance and Enforcement Powers) Act 2020 (NSW) (“RAB Act”) commenced on 1 September 2020 and gives the NSW Department of Customer Service powers to take necessary steps to prevent or remove serious defects in apartment buildings.
The Act applies only to residential apartment building which are defined as class 2 buildings within the meaning of the Building Code of Australia.
The main features of the Act are as follows:
Power of the Secretary: The Act gives power to the Secretary of the Department of Customer Service to intervene and require correction of serious defects in residential apartment buildings. In this respect, the Act gives powers to the Secretary to issue building work rectification order in cases where the Secretary reasonably believes that serious defects could take place as a result of the method being employed or has been employed in building works. The Secretary can also issue a prohibition order to delay the issue of an occupation certificate to ensure rectification of serious defects before residents take possession of the apartments.
Powers of authorised officers: The Act gives broad investigative and enforcement powers to authorised officers. Under the Act, authorised offices have power to enter occupied premises and carry out testing of the building work which might be potentially destructive. The Act gives the authorised officers the following powers:
- Require a person to provide information or records;
- Direct a person to answer questions where that person is suspected of having knowledge of required information in respect of those matters;
- Enter premises either with or without a search warrant. Premises used for residential purposes would require a search warrant.; and
- Direct a developer about the manner and specific timing that are to be adhered to while carrying out building work.
Occupation certificate: The Act requires developers to give an advance notice before they apply for an occupation certificate. The notification must be given to the Secretary in a prescribed form at least 6 months but not more than 12 months prior to the application. Additionally, the application must be updated within 7 days of a developer becoming aware about a change in the anticipated application time of sixty days or more. The timing allows the Department to carry out inspections before issuing the certificate.
The Secretary can also issue an order if they do not receive the required advance notice of an application for an occupation certificate or a building bond under the Strata Schemes Management Act 2015 (NSW).
Developer: The definition of a developer under the Act is broad and include land owners, principal contractors, strata scheme developers, people who contract or facilitate the building work to be conducted, and any other people to be prescribed by the forthcoming regulation.
Just like the DBP Act, the RAB Act has a retrospective application with a 10-year limit.