Australia: Liabilities For Body Corporates And Nominated Building Practitioners Under The Design And Building Practitioners Act 2020 (NSW) (Act)

On 1 July 2021, the following sections of the Act commenced operation:

1. Part 2;
2. Division 1 of Part 3;
3. Parts 5 to 9; and
4. Clauses 2 to 4 of Schedule 1.

The commencement of these sections introduces the Act in its full operation, except for the requirements as to specialist work under Division 2 of Part 3 of the Act.

This commencement also raises a number of untested issues in relation to liabilities for practitioners and bodies corporate under the Act.

This article will discuss the following topics:

1. What is a body corporate in the context of the Act?
2. Who makes a declaration when a body corporate nominates a building practitioner under the Act?
3. Are both the body corporate and a nominated individual required to hold insurance as building practitioners under the Act?
4. Are both the body corporate and a nominated individual liable for building compliance declarations?

Analysis

Importantly, the Act only applies to construction work performed on buildings which are Class 2, or contain a Class 2 part, in accordance with the National Construction Code. Class 2 buildings are typically multi-unit residential buildings which contain a number of sole occupancy units (SOU). These SOUs will typically share parts of the building which are considered common property.

1. What is a body corporate under the Act?

1. "Body corporate" is not defined under the Act. It therefore takes its ordinary meaning at common law of incorporated persons, including a company.

2. The term "body corporate" has previously been used colloquially to describe the statutory body now known as an 'Owners Corporation', being the legal entity which administers the common property, among other responsibilities, for strata title properties.

3. However, references to a 'body corporate' under the Act are not limited to an 'Owners Corporation' because "body corporate" has a wider meaning at common law.

4. A comparison can be made to the extended definition under Section 9 of the CA, which sets out definitions for a body, a body corporate and a company:

5. As seen above, the CA does not explicitly define a body corporate as including a company.

6. However the definition of 'deregistered' as set out below (emphasis added) provides a strong indication that a body corporate as defined under the CA includes a company, as the definition appears to draw a distinction between a company and other types of bodies corporate:

7. In the same way, the term "body corporate" can be expected to take its ordinary extended meaning of any incorporated person, including a company, under the Act.

8. The intention of not explicitly defining a 'body corporate' for the purpose of registration under the Act is not clear, even upon review of the second readings speeches for the Act.¹ This terminology allows for inclusion of a variety of incorporated entities which act within the construction industry. This may be considered an attempt to not exclusively engage with the current industry norm of limited liability companies who design and construct residential apartments.

2. Building compliance declarations by a body corporate under the Act

9. Building compliance declarations are made on behalf of a body corporate (who must be a registered building practitioner under the Act) by way of a nominated individual (who also must be a registered building practitioner).

10. Registration is required for both bodies corporate and individuals before they can provide building compliance declarations under the Act.

Footnote

1 Legislative Assembly Hansard, 'Design and Building Practitioners Bill 2019 Second Reading Speech', 23 October 2019; Legislative Council Hansard, 'Design and Building Practitioners Bill 2019 Second Reading Speech', 19 November 2019

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