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NSW Proposed Reforms to the Building Industry

In February 2019 the NSW Government released its response to the Shergold Weir Building Confidence Report (“NSW Response”).1

In February 2018 Peter Shergold and Bronwyn Weir released their report entitled “Building Confidence: Improving the effectiveness of compliance and enforcement systems for the building industry across Australia” (“Building Confidence Report”).2

This Building Confidence report was commissioned by the Building Ministers’ Forum which is a group of Australian, State and Territory Ministers that have responsibility for construction and building matters. The Report responded to various recent construction related incidents including the Lacrosse building in Melbourne (click here to read earlier articles) and the Opal Tower building in Sydney Olympic Park.

The Report did cover commercial construction as well as high rise residential construction so the changes the NSW Government intends to implement now will have a wide effect.

RECOMMENDATIONS MADE

The Building Confidence Report made 24 recommendations and reviews compliance issues in the construction industry at state, national and international levels. The NSW Government has prepared its response in order to implement the following relevant changes for NSW:-

  1. Appoint a Building Commissioner
  2. Overhaul Compliance Reporting
  3. Require building practitioners with reporting obligations to be registered:
  4. Ensure that there is an industry wide duty of care to homeowners

Appointment of a Building Commissioner

The Response confirms that the NSW Government intended to appoint a Building Commissioner who will act as the consolidated building regulator in NSW and administer all building laws, including:-

  • licensing and authorisation of building practitioners;
  • residential building investigations;
  • building plan regulation and audit;
  • residential building inspections and dispute resolution;
  • plumbing regulation;
  • electrical and gas safety regulation;
  • strata building bond scheme;
  • building product safety;
  • building and construction security of payment scheme; and
  • engagement and strategic collaboration with local government.

The Building Commissioner will have strong investigative powers to scrutinise any wrongdoing in the industry as well as disciplinary powers and conduct risk based audits of practitioners and documents.

Overhaul Compliance Reporting

All building practitioners will be required to submit all building plans to the new Building Commissioner. Those building practitioners will have to declare that their plans comply with the BCA. It will be an offence to dishonestly or recklessly declare inaccurate plans or fail to lodge documents in time.

“Building Practitioners” includes building designers, architects, engineers and other persons who provide final designs and / or specifications of elements of buildings.

Whilst certifiers, architects and residential trades are generally certified in NSW – engineers, draftsmen and commercial builders and trades are not currently subject to any registration schemes.

Certifier laws were recently strengthened by enacting the Building and Development Certifiers Act 2018 (NSW)3. The NSW Response will go beyond certifiers alone in order to improve compliance with the BCA as inspections alone are not sufficient to ensure compliance.

Require building practitioners with reporting obligations to be registered

The NSW Response confirm that building practitioners will need to be registered and those practitioners will have to maintain the necessary skills and insurance to meet registration requirements.

Only authorised practitioners will be entitled to declare plans comply with the BCA to the Building Commissioner.

Ensure that there is an industry wide duty of care to homeowners

The NSW Government Response also confirms that it will ensure that building practitioners owe a common law duty of care to owners’ corporations and subsequent residential homeowners as well as unsophisticated development clients.

Whilst it is established that residential building owners have protections for damage suffered as a result of a failure to exercise a duty of care during construction there is a ambiguity arising from High Court decision of Brookfield Multiplex Ltd v Owners Corporation Strata Plan 61288 [2014] HCA 36 (8 October 2014)3 as to whether builders and designers owe a common law duty of care to residential owners corporations and purchasers for defects. The proposed changes are intended to rectify this ambiguity and protect all owners uniformly where any building practitioner fails to take reasonable steps to prevent foreseeable risks of damage arising from defects in a building.

Summary

The NSW Government is going to conduct further consultation with industry and community stakeholders re the proposed reforms.

The proposed reforms are going to result in extensive changes for various building practitioners with the requirement to be registered and the requirement to report to the Building Commissioner to be appointed.  The increased scrutiny and reporting and registrations requirements will be rigorous and all building professionals should keep abreast of the imminent reforms.

David Glinatsis (Director, Kreisson) and Catherine Lucas (Solicitor).

For more information, contact us at excellence@kreisson.com.au or on 02 8239 6500.

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This communication is sent by Kreisson Legal Pty Limited (ACN 113 986 824). This communication has been prepared for the general information of clients and professional associates of Kreisson Legal. You should not rely on the contents. It is not legal advice and should not be regarded as a substitute for legal advice. The contents may contain copyright.


1 https://www.fairtrading.nsw.gov.au/__data/assets/pdf_file/0007/451375/Response-to-Shergold-Weir-Building-Confidence-Report.pdf

2https://www.industry.gov.au/sites/default/files/July%202018/document/pdf/building_ministers_forum_expert_assessment_-_building_confidence.pdf

3https://www.austlii.edu.au/cgi-bin/viewdoc/au/cases/cth/HCA/2014/36.html?context=1;query=Brookfield%20Multiplex%2061288;mask_path=