Overview of the National Construction Code (NCC) 2022

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Various changes to the NCC are being implemented with new general requirements under the NCC 2022 to come into effect from 1 May 2023.

Some of the main changes include new liveable housing requirements, new residential energy efficiency and updated condensation mitigation, new fire performance requirements and the use of lead-free plumbing products.

Does the NCC 2022 Apply to My Construction Works?

The NCC 2022 will apply to construction contracts with applications for construction certificates issued on or following 1 May 2023 (subject to the transition periods outlined in the timeline below) and will be adopted by all states and territories (subject to any state and territory variations).

The NCC 2022 staged timeline is as follows:

1 October 2022: NCC 2022 Optional Adoption

  • Full NCC 2022 published.

1 May 2023: NCC 2022 Mandatory Adoption

  • General provisions come into effect (Except new energy efficiency and condensation and liveable housing).

1 October 2023: Transition Period Ends

  • New liveable housing requirements come into effect; and
  • New energy efficiency and condensation mitigation requirements come into effect.

1 September 2025: Transition Period Ends

  • Lead-free plumbing product requirements come into effect.

What Does This Mean for the Construction Industry?

Following their regulatory impact assessment, the Australian Building Codes Board (ABCB) have concluded that there are cost-effective improvements that will be implemented in the new code.

There will also be an improved structure and clause referencing system adopted which will include a Section-Part-Type-Clause system to improve consistency, user experience and online accessibility.

Energy Efficiency

There will be new energy efficiency requirements with a new minimum standard of thermal performance at 7 Stars NatHERS rating, compared to the previous 6 Stars NatHERS rating, to improve the thermal comfort of homes year-round.

There will also be a new annual energy use budget that provides a flexible approach to encouraging the selection of more efficient equipment. The annual energy use will be measured using a new ‘Whole of Home’ rating out of 100 which indicates whether the home meets the NCC budget. This rating will be separate from the NatHERS star rating assessment out of ten.

The options for demonstrating compliance with the performance requirements include using NatHERs accredited software, Deemed-to-Satisfy (DTS) elemental provisions, verification methods and performance solutions.

Fire Safety

There will also be changes implemented with regard to fire safety and the fire performance rating of building elements. The ABCB has considered stakeholder feedback in creating opportunities to integrate practical concessions whilst maintaining building safety. The main changes are additional concessions for minor, combustible building elements in section C2D10 (equivalent to section c1.9 in the 2019 code).

Plumbing Products

Changes have also been made to Volume Three of the NCC (Plumbing). These changes followed Macquarie University’s Lead in Plumbing Products and Materials Report which indicated that there is a possibility that Australia’s drinking water is currently susceptible to leaching from copper alloy drinking water products.

In response, the new code will require copper alloy plumbing products in contact with drinking water to contain less than 0.25% lead contact.

This will lead to major long-term health improvements for all Australians. Though, during the transition period between 1 September 2022 and 1 September 2025, plumbers may continue with the installation of existing products, provided that the products are certified under the WaterMark Certification Scheme.

Accessibility

Further, the new code aims to create more accessible housing and is based on the Silver Level of the Liveable Housing Design (LHA) Guidelines. The new rules aim to make Class 1a buildings (houses and townhouses) and Class 2 sole-occupancy units (individual apartments) easier to access and live in as well as being more cost-effective.

To Consider

It is important to review and consider the changes that are to be implemented in the new code.  The NCC 2022 may apply to your construction contract if the application for a construction certificate was made on or following the date on which the new code takes effect, which will be 1 May 2023 in the majority of cases.

For further information regarding the changes implemented in the new code, the preview of the NCC 2022 may be accessed through the following link: NCC 2022 .

 

 

 

Breach of contract or breach of statutory warranty? A lesson on limitation periods

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Part 2C of the Home Building Act 1989 (NSW) (HBA) sets out the statutory warranties which are implied into all contracts for residential building work. The statutory warranties are given by the holder of a contract licence (usually the builder) for the benefit of owners and serve as a guarantee that the works will meet a certain standard, for example, that the works will be done with due care and skill and will be in accordance with contract plans and specifications.[1] Section 18E(1) of the HBA provides that if a statutory warranty is breached, the limitation period for commencing proceedings is six years in the case of major defects, and two years in other cases.

In Onslow v Cullen [2022] NSWSC 1257, Justice Adamson considered the applicable limitation period where defective residential building works amount to both a breach of contract and a breach of the statutory warranties. The decision has important consequences for owners bringing a claim for breach of the statutory warranties, particularly in respect of non-major defects.

Facts

In January 2016, Mr Onslow, the builder, contracted with Mr and Mrs Cullen, the owners, to carry out building work on their residential property.[2] The contract was in the standard form issued by the Housing Industry Association (HIA) and clause 39 incorporated the statutory warranties into the contract.[3]

In April 2017, the builder left the property before completing the building works.[4] In August 2019, the owners commenced proceedings against the builder, claiming damages for breach of contract in respect of the incomplete works and certain defects in the completed works.[5] A dispute arose as to the applicable limitation period for the owners’ claim:

  • The builder argued that the defects in the completed works were non-major defects, and therefore that a two-year limitation period applied to the claim under section 18E(1)(b) of the HBA.[6] Since the owners commenced the proceedings 2 years and 4 months after the builder left the site, this would mean that the portion of the claim relating to defects in the completed works would be statute-barred and the owners would be unable to recover.
  • The owners argued that they had framed their claim as breach of contract, not breach of the statutory warranties, so a six-year limitation period should apply.[7]
  • Both parties accepted that the incomplete works constituted major defects, and therefore a six-year limitation period would apply regardless of whether the claim was framed as breach of contract or as breach of statutory warranty.[8]

Limitation period: two years or six years?

Justice Adamson considered that the applicable limitation period for the non-major defects was two years.

Relevant principles from the Limitation Act 1969 (NSW) (Limitation Act)

While the limitation period for breach of contract is typically six years,[9] section 7(a) of the Limitation Act provides that where legislation specifies another limitation period, that other limitation period will apply. Therefore, Justice Adamson held that if the owners claim could be properly characterised as a claim for breach of statutory warranty, the two-year limitation period under section 18E(1)(b) of the HBA would take precedence over the typical six-year limitation period for breach of contract.[10]

Clause 39 of the contract

The owners’ argument that they had framed their claim as breach of contract, not breach of statutory warranty, did not impact the applicable limitation period. Justice Adamson emphasised that a statutory warranty is merely a contractual term which has been implied by statute.[11] The fact that the statutory warranties were expressly incorporated into clause 39 of the contract did not change the nature of the owners’ claim.

Justice Adamson construed clause 39 and held that the parties objectively intended that the statutory warranties would only be given in so far as is required under the HBA, i.e., that the warranties for non-major defects would only be given for two years. This was because:

  • section 7(2)(f) of the HBA requires that the statutory warranties are included in the HBA;[12] and
  • the statutory warranties in clause 39 were expressed subject to the qualification “to the extent required by the Act, the builder warrants that […]”.[13]

Other relevant considerations

Justice Adamson also highlighted section 18G of the HBA, which prevents parties from restricting or removing statutory warranties “to remove the rights of a person”. His Honour emphasised that “a person” in section 18G applies equally to builders as well as owners, and a builder has a right not be sued in respect of non-major defects after the two-year period has expired.[14] Section 18G therefore provided support for the construction that the applicable limitation period in respect of the non-major defects was two years.

Finally, Justice Adamson noted that the contract was in the standard form issued by the HIA. Accordingly, it could not be described as having been “prepared by the builder” and therefore could not be construed against the builder.[15]

Decision

Justice Adamson held that the owners’ claim in respect of the non-major defects, being the defects in the completed works, was governed by the two-year limitation period in section 18E(1)(b). As a result, this portion of the owners’ claim was statute-barred, and the owners could not recover this amount.[16]

Take home tips

In cases involving defective residential building works, owners should avoid delay in commencing proceedings. Even where a contract is in place, a short limitation period may apply if the defects are non-major.

Owners should seek legal advice promptly to preserve their ability to commence proceedings. Bradbury Legal is experienced in advising both owners and builders in respect of defective residential building works, both before and during litigation. For specialist and tailored advice, please contact a member of our team by phone on (02) 9030 7400 or by email at info@bradburylegal.com.au.

[1] Home Building Act 1989 (NSW) s 18B(1)(a).

[2] Onslow v Cullen [2022] NSWSC 1257, [1].

[3] Onslow v Cullen [2022] NSWSC 1257, [10]–[13].

[4] Onslow v Cullen [2022] NSWSC 1257, [1].

[5] Onslow v Cullen [2022] NSWSC 1257, [2].

[6] Onslow v Cullen [2022] NSWSC 1257, [2].

[7] Onslow v Cullen [2022] NSWSC 1257, [29].

[8] For the limitation period for breach of contract, see Limitation Act 1969 (NSW) s 14(1)(a). For the limitation period for breach of statutory warranty which results in a major defect, see Home Building Act 1989 (NSW) s 18E(1)(b).

[9] Limitation Act 1969 (NSW) s 14(1)(a).

[10] Onslow v Cullen [2022] NSWSC 1257, [52].

[11] Onslow v Cullen [2022] NSWSC 1257, [58].

[12] Onslow v Cullen [2022] NSWSC 1257, [55]–[56].

[13] Onslow v Cullen [2022] NSWSC 1257, [56].

[14] Onslow v Cullen [2022] NSWSC 1257, [59]–[60].

[15] Onslow v Cullen [2022] NSWSC 1257, [61]–[62].

[16] Onslow v Cullen [2022] NSWSC 1257, [63].