Tag Archive for: NSW Government

Change on the horizon for the NSW building and construction industry

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The NSW Government has proposed three bills to reform the building and construction industry. The bills introduce new changes and consolidate existing legislation, with the aim of promoting safety, quality, and transparency in the industry. The draft bills and the key changes associated with each are as follows:

  • the Draft Building Bill 2022 (Building Bill);[1]
    • repeals and replaces the Home Building Act 1989 (NSW) (HBA);
    • introduces further licencing requirements for building professionals;
    • consolidates the statutory duty of care provisions;
  • the Draft Building Compliance and Enforcement Bill 2022 (BCE);[2]
    • repeals and replaces the Residential Apartment Buildings (Compliance and Enforcement Powers) Act 2020 (NSW) (RAB Act);
    • introduces further regulatory and enforcement powers;
    • expands existing powers for class 2 buildings to all building work;
  • the Draft Building and Construction Legislation Amendment Bill 2022[3] and the Draft Building and Construction Legislation Amendment Regulation 2022 (BCLA)[4];
    • amend various NSW Acts and Regulations; and
    • introduce duties to avoid intentional phoenix activity.

The objects of the reforms

The NSW Government has identified seven key objects to be achieved by the reforms. These are:

  1. making home building fairer and easier;
  2. securing prompt and fair payment for building work;
  3. strengthening building compliance and enforcement;
  4. licensing commercial and home building work;
  5. supplying and using safer building products;
  6. upskilling the building and construction industry; and
  7. regulating prefabricated and manufactured homes.

We discuss how the bills deal with each of these objects below.

  1. Making home building fairer and easier

The Building Bill and the BCLA aim to protect consumers from loss caused by defective building works by:

  • Consolidating the duty of care provisions under the Design and Building Practitioners Act 2020 (NSW) (DBP Act) and Environmental Planning and Assessment Act 1979 (NSW) (EPA Act).
    • This consolidation of the duty of care provisions achieves consistency across NSW building legislation and reflects Justice Stevenson’s interpretation of the DBP Act duty of care in Goodwin Street Developments Pty Ltd atf Jesmond Unit Trust v DSD Builders Pty Ltd (in liq).[5]
    • The duty of care is further expanded to subdivision work.[6]
    • The Building Bill specifies a 10-year limitation period for civil actions for loss or damage arising out of or in connection with defective building work.[7] This will displace the typical 6-year limitation period for breach of contract claims but may be subject to shorter limitation period for breaches of statutory warranties.[8]
  • Expanding on the HBA regime for home building works.
    • The concept of ‘major defect’ is replaced by ‘serious defect’, a broader definition including (for example) a failure to comply with the National Construction Code, relevant standards, or relevant approved plans.[9]
    • Certain statutory warranties are cast more broadly.[10]
    • The definition of a developer is expanded to parties which do not own land but have nonetheless contracted for, arranged, or facilitated the building work.
    • The NSW Government is considering extending the limitation periods for breach of the statutory warranties to 10 years for serious defects (previously 6 years) and 3 years for minor defects (previously 2 years).[11]
  • Requiring that payment claims served on residential owner-occupiers under the Building and Construction Industry Security of Payment Act 1999 (NSW) (SOPA) include a “Homeowners Notice” document explaining the effect of and possible responses to a payment claim under SOPA.[12]
  1. Securing prompt and fair payment for building work

The BCLA introduces reforms to the Building and Construction Industry Security of Payment Act 1999 (NSW) (SOPA) to ensure builders and tradespeople are paid more quickly and fairly. These reforms include:

  • Granting broader powers to adjudicators under SOPA including a power to obtain expert evidence and testing to resolve disputed factual issues.[13]
  • Creating ‘review adjudicators’ which are empowered to review SOPA adjudication determinations.[14] This is designed to operate as a new review mechanism of adjudication determinations which avoids the cost and delay associated with seeking judicial review of adjudication determinations in court.
  1. Strengthening building compliance and enforcement

The BCE introduces a consistent regulatory framework for the building and construction industry, by:

  • Repealing the RAB Act.
  • Expanding the NSW Building Commissioner and Secretary’s compliance and enforcement powers.[15]
    • Expanded powers include the ability to carry out investigations, require remedial action and/or rectification of serious defects, dispute resolution powers, and disciplinary action powers.
    • Existing compliance and enforcement powers for class 2 buildings will apply to all building work.
    • Promoting NSW Fair Trading as a body empowered to resolve building disputes.
    • Introducing a demerit points scheme to deter building licence holders from committing offences under building enforcement legislation.[16]
  • Establishing personal liability for directors and other ‘influential’ individuals for offences by the corporation.[17]
    • Directors or other individuals involved in the management of a corporation may be held personally liable for offences committed by the corporation/contracting entity. This shifting of liability acts as a significant deterrent for unauthorised behaviour and exposes individuals to harsh penalties.
    • This shift follows decisions of the NSW Supreme Court which indicate that the DBP Act duty of care is owed by directors or other individuals exercising ‘substantive control’ over building works.[18]
  • Regulating intentional phoenix activity, i.e., the liquidation of a company to avoid payment of debts and establishment of a new company in its place.[19]
    • The BCE and BCLA propose a duty for licence holders, registered certifiers, registered design practitioners, and other building professionals to take reasonable steps to avoid engaging with persons involved in intentional phoenix activity.
  1. Licensing commercial and home building work

The Building Bill streamlines and expands licencing requirements for building work. The reforms include:

  • Expanding licencing requirements from home building works to also:[20]
    • commercial works;
    • intellectual works, e.g., design works; and
    • other miscellaneous works, e.g., fire safety works and engineering works.
  • Holding directors responsible for supervising compliance with licencing requirements. A failure to properly supervise regulated works will result in heavy penalties for directors.[21]
  1. Supplying and using safer building products

The BCLA proposes changes to improve the safety and quality of building products.[22] These include:

  • Proposing amendments to the Building Product (Safety) Act 2017 (NSW).
  • Establishing various mechanisms to prevent the use of defective building products, including building product use bans, building product supply bans, and building product recalls.
  • Introducing a chain of responsibility for developers, building professionals, and manufacturers in respect of defective building work and products.
    • Each participant in the chain owes multiple and concurrent duties which relate to their involvement in the supply/installation of the defective building product, and relevant risk management factors.
    • Each participant may be liable for offences relating to using/supply a building product in contravention of a building product use ban, building product supply ban, or building product recall.
  1. Upskilling the building and construction industry

The Building Bill and BCLA introduce reforms aimed at promoting the technical competence of building professionals, including:

  • Introducing standardised guidelines for continuing professional development of builders, specialist tradespeople, engineers, building designers, and other professionals.[23]
  • Permitting penalty notice officers to issue education and training notices. These introduce training or education as an alternative to disciplinary action.[24]
  • Expanding skills assessments for contractor licence holders.[25]
  1. Regulating prefabricated and manufactured homes

The Building Bill introduces provisions specifically targeting ‘kit homes’, i.e., pre-fabricated or manufactured homes, including:[26]

  • Introducing new regulations for kit homes to improve building quality.
  • Emphasising that certain consumer protections for owner-builder and contractor work extend to kit homes. This ensures that purchasers of kit homes are adequately protected from loss caused by defective manufacture/construction of kit homes.

Take home tips

The amendments which may be of most interest to you are set out below:

If you are a… You may be particularly affected by…
Residential owner Consolidated duty of care provisions and HBA regime (item 1)
Developer Consolidated duty of care provisions and HBA regime (item 1)

SOPA reforms (item 2)

Personal liability for directors (item 3)
Builder Consolidated duty of care provisions and HBA regime (item 1)

SOPA reforms (item 2)

Personal liability for directors (item 3)

Licensing requirements (item 4)
Specialist tradesperson Consolidated duty of care provisions and HBA regime (item 1)

SOPA reforms (item 2)

Licensing requirements (item 4)

Reforms to safer building products (item 5)
Architect Consolidated duty of care provisions and HBA regime (item 1)

Licensing requirements (item 4)

Reforms to safer building products (item 5)
Certifier Consolidated duty of care provisions and HBA regime (item 1)

Licensing requirements (item 4)
Building product supplier or manufacturer Reforms to safer building products (item 5)

 

The draft bills closed for submissions on 25 November 2022. The NSW Government will now consider further amendments. The bills will be implemented following public consultation, likely in 2024. For personalised advice on how you may be impacted by and can best prepare for the implementation of the reforms, please contact Bradbury Legal by phone on (02) 9030 7400 or by email at info@bradburylegal.com.au.

 

[1] See full text of the Draft Building Bill 2022 here.

[2] See full text of the Draft Building Compliance and Enforcement Bill 2022 here.

[3] See full text of the Draft Building and Construction Legislation Amendment Bill 2022 here.

[4] See full text of the Draft Building and Construction Legislation Amendment Regulation 2022 here.

[5] Goodwin Street Developments Pty Ltd atf Jesmond Unit Trust v DSD Builders Pty Ltd (in liq) [2022] NSWSC 624. For further detail, see our article on this decision here.

[6] Draft Building Bill 2022 (NSW) s 216.

[7] Draft Building Bill 2022 (NSW) s 217.

[8] Limitation Act 1969 (NSW) ss 7, 14(1)(a).

[9] Draft Building Bill 2022 (NSW) s 76; Draft Building Compliance and Enforcement Bill 2022 (NSW) Schedule 2.

[10] Draft Building Bill 2022 (NSW) s 75.

[11] Regulatory Impact Statement Part 3 for the Draft Building Bill 2022, accessible here.

[12] Draft Building Bill and Construction Legislation Amendment Regulation 2022 (NSW) Schedule 2 item [5].

[13] Draft Building Bill and Construction Legislation Amendment Bill 2022 (NSW) Schedule 3 item [5].

[14] Draft Building Compliance and Enforcement Bill 2022 (NSW) Schedule 3 item [7].

[15] Draft Building Compliance and Enforcement Bill 2022 (NSW) Parts 2–6.

[16] Draft Building Compliance and Enforcement Bill 2022 (NSW) Part 7.

[17] Draft Building Compliance and Enforcement Bill 2022 (NSW) Part 8 Division 4.

[18] Goodwin Street Developments Pty Ltd atf Jesmond Unit Trust v DSD Builders Pty Ltd (in liq) [2022] NSWSC 624; The Owners – Strata Plan No 84674 v Pafburn Pty Ltd [2022] NSWSC 659. See our previous articles here and here.

[19] Draft Building Compliance and Enforcement Bill 2022 (NSW) Part 6; Draft Building and Construction Legislation Amendment Bill 2022 (NSW) Schedule 10.

[20] Draft Building Bill 2022 (NSW) Parts 1–3.

[21] Draft Building Bill 2022 (NSW) Part 3 Division 3.

[22] Draft Building and Construction Legislation Amendment Bill 2022 (NSW) Schedule 1.

[23] Draft Building and Construction Legislation Amendment Bill 2022 (NSW) Schedule 11.

[24] Draft Building and Construction Legislation Amendment Bill 2022 (NSW) Schedule 9.

[25] Draft Building Bill 2022 (NSW) Part 3 Division 2.

[26] Draft Building Bill 2022 (NSW) Parts 2, 4.

One small stroke of a pen, one giant leap for legal procedure

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On 22 April 2020, the NSW government enacted the Electronic Transactions Amendment (COVID-19 Witnessing of Documents) Regulation 2020 (COVID-19 Regulation), which can found here.

Anyone who under NSW law must witness signatures for the documents below, take note: the signature may now be witnessed by audio visual link.

The COVID-19 Regulation affects witnesses of those signing documents, including:

  • a will;
  • a power of attorney or an enduring power of attorney;
  • a deed or agreement;
  • an enduring guardianship appointment;
  • an affidavit including annexures or exhibits; and
  • statutory declarations.

The regulations commenced on 22 April 2020, and this brave new world is expected to last for a minimum of six months.

The essential steps are as follows:

  1. The witness and the person making the statement must have a real time “audio visual link”; and
  2. The witness must observe the person signing the document in real time; and
  3. The witness must themselves sign the document as soon as practicable after the link; and
  4. The witness must endorse the document with a statement about the method of witnessing the signature, and state that it was witnessed in accordance with the Electronic Transactions Amendment (COVID-19 Witnessing of Documents) Regulation 2020.

The link must be audio and visual, and it must be “continuous and contemporaneous”. Video conferencing is the prime example.

A witness does not need to sign the same hard copy document. They can either (a) sign a separate counterpart, or (b) sign a scanned version of the document that they witnessed being signed. Whatever they choose, they would do well to carefully store all original copies of signed documents, and prepare a file note of the experience.

Readers should be aware that the COVID-19 Regulation does not change what actually needs to be signed and how it is to be signed. Certain documents, such as wills, have very particular requirements that still must be followed.

Nevertheless, another face-to-face process has been put on pause to keep society safe.

 

Regulatory Overhaul and Reform Pillars: building confidence and stronger foundations for the NSW building and construction industry

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Transparency, accountability and quality of work are always issues at the forefront of the building and construction industry. In the wake of many high profile instances of defects in newly built developments, these are also the big issues that the NSW Government is tackling in 2020.

Where it began: the Shergold Weir Building Confidence Report

Back tracking to early 2018, the Shergold Weir Building Confidence Report recommended the implementation of a national best practice model. The purpose of this was to enhance public trust in the building and construction industry and strengthen the effective implementation of the National Construction Code. The best practice model comprises 24 recommendations relating to:

  • registration and training of practitioners;
  • roles and responsibilities of regulators;
  • the role of fire authorities;
  • integrity of private building surveyors;
  • collecting and sharing building information and intelligence;
  • adequacy of documentation and record keeping;
  • inspection regimes;
  • post-construction information management;
  • building product safety; and
  • how the above recommendations will be implemented.

The NSW Government’s Response: Building Stronger Foundations Discussion Paper

The NSW Government welcomed the Shergold Weir Report and announced that it is committed to improving the building and construction industry through a number of new reforms. In June 2019, the NSW Government presented its Building Stronger Foundations Discussion Paper seeking input from stakeholders on its four key reforms. These reforms are:

  1. requiring practitioners defined as ‘building designers’ (e.g. architects, engineers) to declare that their building plans/specifications/solutions are compliant with building regulations, including the Building Code of Australia;
  2. introducing a registration scheme for ‘building designers’ who will be making declarations;
  3. ensuring that building practitioners owe a duty of care to owners’ corporations and subsequent residential homeowners; and
  4. appointing a Building Commissioner who is a consolidated regulator for the whole of the NSW building and construction industry.

What to expect in 2020 and beyond

It has been just over a year since the NSW Government committed to implementing regulatory reform and six months since it consulted with stakeholders to shape the direction of these reforms. So what progress has been made in that time?

In October 2019, the first tranche of reforms was introduced with the Design and Building Practitioners Bill 2019 (the “Bill”). The Bill seeks to deliver the NSW Government’s first, second and third key reforms by imposing new obligations on design and building practitioners. The Bill is currently before the NSW Upper House. Make sure to read our next newsletter as we will be providing a detailed explanation of the substance of the Bill.

In relation to fourth key reform, the NSW Government has appointed David Chandler OAM as the NSW Building Commissioner. In January 2020, Mr Chandler announced the Six Reform Pillars, which is the public’s first insight into his plans and implementation strategies for the reforms. The Six Reform Pillars are:

Pillar Actions Outcomes
Building a better regulatory framework

 

 Implementing legislation and regulation and transforming the focus of the regulator

 

 Ensure that NSW has a strong customer focused regulatory framework
Building rating systems

 

 Work with ratings agencies, insurers and financiers to assist in better selection of industry participants

 

 Move away from one-size-fits-all participant recognition and better identify risky players

 
Building skills and capabilities

 

 Improve accreditation of construction related programs through improved standard modules

 

 Shared minimum learning content and open source resources for all institutions

 
Building better procurement methods

 

 Establish clear standards for engagement and outputs

 

 Viable risk allocation and performance accountability

 
Building a digital future

 

 Digitise the NSW Building Industry and move away from analogue record keeping

 

 Shared industry wide platforms that build confidence

 
Building the reputation for quality research

 

 Evidence based approach to accessing and closing the gap via case studies and other research

 

 Baseline and measurement against our ability to improve confidence in the industry

 

 

This article provides a snapshot of the NSW Government’s plans to implement effective and wide ranging regulatory reforms of building and construction industry. This summary demonstrates that there is a significant task ahead in implementing these reforms, so watch this space for future updates.

If you or someone you know wants more information or needs help or advice in relation to this article, please contact us on (02) 9248 3450 or email info@bradburylegal.com.au.