Australia: An update to the NSW construction industry reforms

On 1 July 2021, the Design and Building Practitioners Regulation 2021 (NSW) (Regulation) will commence as will certain provisions of the Design and Building Practitioners Act 2020 (NSW) (Act) which are yet to take effect. In this article, we take a brief look at some of the key issues arising out of the Regulation and the Act which design and building practitioners should be aware of.

A Refresher

Last year, we wrote about the introduction of the new duty of care provision contained in Part 4 of the Act, which imposed a statutory duty of care on persons who carry out construction work to avoid economic loss caused by defects. The new duty of care allows land owners to make claims against parties beyond just the builder or developer, with architects, engineers, individual subcontractors and suppliers now also in the firing line for defective work.

We also foreshadowed the introduction of registration requirements for design and building practitioners from 1 July 2021 to ensure that practitioners involved in the building and construction process are competent, qualified and suitably insured.

The Regulations confirm that the Act applies to building work for the construction, making of alterations or additions or the repair, renovation or protective treatment of class 2 buildings. Under the Regulations, before building work can commence on a class 2 building, a building practitioner must lodge on the NSW planning portal the following:

For the purposes of the Act, a regulated design means:

The Act provides for declarations which are to be made by practitioners including design compliance declarations, principal compliance declarations and building compliance declarations. In summary, these declarations require a registered practitioner to declare that the work completed (being design work or building work) complies with the various requirements of the Act, including compliance with the Building Code of Australia and the Regulations.

Registration

The Act and the Regulations require registration for building and design practitioners for a number of provisions, including in relation to supplying design compliance declarations, giving notice of the commencement of building work and carrying out professional engineering work.

The Regulations provide for the process of registration, meaning that relevant practitioners will need to be registered by 1 July 2021. However, a person who applies for registration between 1 July 2021 and 31 December 2021 will be deemed to be registered provided they satisfy certain conditions. Practitioners should ensure they apply for registration prior to commencing any regulated work to enjoy the benefit of deemed registration and to be protected from prosecution. A grace period of one week will operate from 1 July 2021 to 7 July 2021, allowing practitioners to undertake work in that first week without the threat of prosecution, provided they apply for registration by 7 July 2021.

Lodgment of Designs and Compliance Declarations

Under the Regulations, practitioners are required to lodge certain documents at different stages throughout the construction process through the NSW Planning Portal. The portal will therefore operate as a central register for designs and declarations relating to construction work carried out on and from 1 July 2021. Some of the key documents to be lodged, and the time for lodgment, are as follows:

• Before building work commences
• • copies of the construction issued regulated design for the building work
  • copies of the design compliance declarations, made by a suitably authorised registered design practitioner for each of the construction issued regulated designs
  • if a registered principal design practitioner is appointed for the building work - a principal compliance declaration, made by a suitably authorised design practitioner, for the construction issued regulated designs.
• After building work commences
• • a copy of each design compliance declaration given under the Act for a varied regulated design
  • a copy of the varied regulated design
  • a copy of each design compliance declaration obtained under the Act for a new building element or performance solution
  • a copy of the regulated design for the new building element or performance solutions.
• Before issue of occupation certificate
• • building compliance declaration
  • a contractor document, which includes, among other things, a list of the builder's subcontractors, a list of other persons who have undertaken building work and a list of the work done by subcontractors
  • a copy of each variation statement required for the building work
  • a copy of each regulated design containing additional details not reflected in the construction issued regulated design
  • if a principal design practitioner is appointed for building work - the principal compliance declaration for all regulated designs.
• Within 90 days of issue of occupation certificate
• • each regulated design for which a design compliance declaration has been provided that reflects the building work that has been carried out
  • any documents previously lodged which have since been modified, including any compliance declarations.

CPD Requirements

Finally, practitioners should be aware that the Regulations prescribe that they are required to undertake continuing professional development activities annually. However, the requirements are minimal, as practitioners are only required to complete 3 hours of relevant education and training.

On the contrary, registered professional engineers are required to satisfy the standards of the professional body they are a member of or otherwise at least 50 hours of relevant education and training.

Practitioners must keep a written record of how they have satisfied their continuing professional development requirements for at least 5 years.

Litigation Impacts

Whilst there is presently very little in the way of authoritative case law on the application of the Act, many litigants are availing themselves of pleading breach of the statutory duty imposed under the Act, as an alternative to the Home Building Act 1989 warranties and other common law claims. Upon commencement of the Regulations, it will be interesting to see what role regulated designs and compliance declarations in evidencing compliance, or perhaps non-compliance, with the statutory duty of care.

While the Act has had little treatment by the Courts to date, it is clear that the duty of care applies in addition to the duties, statutory warranties and other obligations imposed under the Home Building Act 1989, other Acts and the common law. As with other statutory provisions regarding building design and construction work, a person is not able to contract out of, or otherwise avoid, the statutory duty of care.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.