Major reforms for the NSW construction industry
Article By: Joey Tass, Lawyer Cappello Rowe Lawyers Sydney
The problems currently experienced in the construction industry, including the recent troubling high-profile cases of the Opal and Mascot towers in Sydney, has prompted reform by the NSW Government. Following the recommendations of the 2018 Shergold-Weir Report, and in recognizing the need to lift standards and accountability in the building sector, the NSW Government has passed through parliament the Design and Building Practitioners Act 2020 (NSW) (DBP Act) and the Residential Apartment Buildings (Compliance and Enforcement Powers) Act 2020 (NSW) (RAB Act). The below are some changes that have been implemented by the new pieces of legislation.
Perhaps the most significant change arising from the DBP Act is that it creates a statutory duty of care over and above the statutory warranties provided under the Home Building Act 1989 (NSW). The duty requires the exercise of reasonable care to avoid economic loss by defects, owed by builders, designers, manufacturers and project managers.
This duty is retrospective, which means it extends to construction work carried out before the DBP Act commenced if the loss first became apparent within 10 years immediately prior to the DBP Act commencing (11 June 2020).
The DBP Act introduces “regulated designs” to come into effect on 1 July 2021, which are designs prepared for a building element (structural elements, waterproofing, etc.) or a design prepared for a performance solution under the Building Code of Australia (BCA). Design practitioners are required to be sufficiently qualified, registered and adequately insured, provide declarations that their designs comply with the BCA and will be subject to new investigatory and audit checks.
The RAB Act includes provisions aimed to prevent developers from carrying out construction works that may result in building defects. The RAB Act establishes a scheme for developers to give notice to the Secretary of the Department of Customer Service (Department) of intended completion of building work.
The Department will have powers to:
- Investigate building works (serious defects and compliance with BCA and Australian Standards);
- Issue developers stop work orders and building rectification orders;
- Prevent the issue of an occupation certificate or registration of a strata plan;
- Require developers to pay the Departments compliance costs in relation to building rectification orders.
Obstruction or interference with the Departments investigative powers, or failures to comply with a direction carries fines up to $110,000 for body corporates, or $22,000 in any other case. Failure of compliance with stop work or rectification orders carries a penalty of up to $110,000 for developers, with an additional fine of $11,000 for each day the offence continues. For body corporates, the penalty increases to $330,000, with an additional fine of $33,000 for each day the offence continues.
It is clear that the above reforms have been implemented by the NSW Government targeted to improve the quality of construction and provide better protections for consumers against defective building works.
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