The statutory duty of care in the construction industry commences: Design and Building Practitioners Act 2020

Australia Publication June 2020

On 11 June 2020, the Design and Building Practitioners Act 2020 (NSW) (Act) received Royal Assent. The Act is part of the NSW Government’s response to the Building Confidence report authored by Professor Peter Shergold AC and Ms Bronwyn Weir.

The Act delivers on the NSW Government’s commitment to better regulate the design and building sector and provide greater protections to consumers against defective building works, an issue which has received heightened political attention in the wake of recent incidents of defects discovered in apartment buildings across New South Wales.

Many of the reforms in the Act will commence on 1 July 2021 or on a date to be proclaimed, but the key statutory duty of care reform commenced on and from 11 June 2020.1

The Act introduces a number of important reforms to achieve these ends, some of which are set out below:

  1. imposing a statutory duty of care on builders (including project managers, supervisors and co-ordinators), consultants and manufacturers or suppliers of building products2 to exercise reasonable care to avoid economic loss caused by defective building work. This duty:

    a. is owed to owners and subsequent owners of the subject land, but remains subject to the ordinary limitation periods in New South Wales (including the 10 year long-stop pursuant to section 6.20 of the Environmental Planning and Assessment Act 1979 (NSW));

    b. applies to residential building work as defined in the Home Building Act 1989 (NSW) at a minimum, but additional classes of buildings to which the duty applies may be added in future regulations;

    c. is in addition to the duties, warranties and other obligations imposed under the Home Building Act 1989 (NSW), other legislation and common law duties;

    d. cannot be delegated or contracted out of; and

    e. will have retrospective effect, subject to the loss first becoming apparent within 10 years immediately before the commencement of the duty of care provisions. This means that there is an ability to advance a statutory duty of care claim in existing proceedings which commenced before the commencement of this provision;

  2. the introduction of registration and particular insurance requirements for designers, builders, and professional engineers. Those who carry out specialist work3 also must be registered as a specialist practitioner;

  3. the introduction of a requirement for designers and builders to issue compliance declarations which effectively state whether a regulated design or building work (as applicable) complies with the requirements of the Building Code of Australia (BCA) and, in the case of building work, whether the building work was built in accordance with the design. Only registered building practitioners and registered design practitioners can provide these compliance declarations;

  4. the imposition of numerous obligations on building practitioners in respect of building work, including:

    a. to ensure that relevant documents for building work are provided to the Secretary of the Department of Customer Services (Secretary) no later than 90 days after an occupation certificate is issued for the building or part of the building;

    b. to notify each registered building practitioner who did building work of its intention to apply for an occupation certificate before making the application, as well as providing notification after making the application;

    c. to provide a building compliance declaration (declaring that the building work complies with the BCA) and other information and documents to the person for whom the practitioner is doing the work before applying for an occupation certificate (who is then to give this declaration to the principal certifier);

    d. taking all reasonable steps to ensure that designers have complied with their compliance declaration obligations;

    e. not to carry out building work for which a regulated design is to be used unless the practitioner has obtained a design from a registered design practitioner and a design compliance declaration, and the declaration states that the design complies with the BCA;

    f. to comply with certain obligations in relation to variations after building work commences (including obtaining design compliance declarations for the varied design in certain instances);

    g. to take all reasonable steps to ensure that building work relating to a building element or performance solution is carried out in accordance with a design for which a design compliance declaration has been obtained; and

    h. to take all reasonable steps to ensure that building work complies with the BCA; and
  5. conferring on the Secretary various investigation and enforcement powers (including the ability to issue stop work orders).

There are several aspects of the reforms which appear to be dependent on supporting regulations which will be introduced later this year. We will be providing a more comprehensive summary of the reforms after the supporting regulations are introduced.

Norton Rose Fulbright’s national construction and engineering team is one of the leading practices in the market. Asia Pacific’s preeminent companies choose our team for its transactional experts, project delivery service and highly specialist disputes practice and outstanding track record. Unlike many project teams, our experienced team provide an end-to-end service across the lifespan of construction and infrastructure projects, advising from front-end procurement strategy and contract negotiation and preparation, through to project delivery, claims and disputes. With deep experience advising on large-scale infrastructure, property, energy and resources projects, we offer clients a legal team with unrivalled strength as well as access to specialists in other areas including planning, environment, real estate and insurance. Should you require assistance on your projects, please feel free to reach out to a member of our team below.

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