The NSW Building Products (Safety) Bill

The Bill was introduced on 19 November and moved quickly through parliament to pass on 22 November. It is clear from the Explanatory Note to the Bill that it has been introduced in response to the Grenfell Tower fire, and although not specifically directed at cladding, it anticipates proposed new powers which will be used to combat the use of certain types of external cladding. It is worth remembering that the Bill has no application to asbestos or asbestos products.

Extensive powers granted to prevent unsafe building products

Where there is a safety risk posed by the use of a particular building product in a building, the Bill gives extensive powers to the Fair Trading Secretary to:

• prohibit the use of a specified building product in a building;
• issue an affected building notice for particular buildings;
• issue a general warning about a class of buildings that may be affected buildings.

A relevant enforcement authority (generally a council) will be able to make a building product rectification order for a building requiring the building owner to do such things as are necessary to eliminate or minimise the safety risk and/or to remediate or restore the building following the elimination or minimisation of the safety risk.

A safety risk is posed if any occupants of the building are or will likely be at risk of death or serious injury arising from the use of the building product in the building, including where that risk will only arise in certain circumstances such as where there is a fire.

The Secretary can authorise a building product investigation to determine whether a use of a building product in a building is unsafe, or to ascertain the location of any building in which a building product has been used in a way that is or may be unsafe. The Secretary can also require a product assessment be undertaken to determine whether any reasonably foreseeable use of a building product in a building is unsafe.

For the purposes of building product investigations, product assessments or to otherwise investigate and monitor compliance with the Bill authorised officers may exercise specified information gathering powers and a power to enter premises and require the occupier to provide assistance.

What about where use of a banned product is compliant with the National Construction Code?

The Bill makes it clear that the proposed Act is intended to prevail over the National Construction Code (NCC), so that a building product may be banned even though the product or certain uses of the product complies with the requirements of the NCC. The fact that a building product or its use is compliant with the NCC is not an excuse for contravention of a ban imposed under the Bill.

Bans will not be invalid because the ban happens to cover a safe use which was not, and could not reasonably have been, foreseen at the time the ban was made. It is anticipated by the Second Reading Speech that the potential problem of over inclusive bans would be dealt with by interested persons applying to have the ban amended in light of new, safe uses of a building product that is banned.

What does this mean for manufacturers, suppliers and contractors?

A person can contravene a building product use ban by either:

• causing a building product to be used in a building (including by doing the relevant building work that attaches/incorporates the banned product to the building); and/or
• representing, in trade or commerce, that a building product is suitable for use in a building if such a use would contravene a building product use ban.

Therefore it is possible for a building product use ban to be contravened by manufacturers and suppliers if they represent that a banned building product is suitable for use, as well as by builders who actually undertake the building work installing the banned product.

The contravention of a building product use ban is an offence and an individual may be fined and/or imprisoned, and a corporation may be fined.

Residential buildings – Home Building Act compliance and implications 

For residential building work, a holder of a contractor licence, or a holder of a supervisor or tradesperson certificate would be guilty of improper conduct under s 51 of the Home Building Act 1989 (NSW) if the person contravened a requirement imposed by the Bill.

The use of a building product in contravention of the Bill would constitute a major defect under s 18E of the Home Building Act 1989 (NSW). This would mean that the statutory warranty period would extend from 2 years to 6 years after the completion of the building work.

Implications for building owners and occupiers

Building owners and occupiers will be notified with a building product use ban. Building owners can be required to rectify their building, even where the unsafe building product was installed prior to any building product use ban being implemented. A rectification order may be made even where the relevant enforcement authority has not already received an affected building notice or general building safety notice in respect of that building.

If the building owner does not take the required steps to comply with the building product rectification order:

• a strata information certificate provided by the owners corporation under the Strata Schemes Management Act 2015 would need to include particulars of the outstanding building product rectification order; and
• if the building owner went on to sell the building or the land, it would be an implied warranty of options for purchase of residential property and for contracts for sale of land that there is no outstanding building product rectification order in relation to that land.

Any planning certificates issued by a council under s 149 of the Environmental Planning and Assessment Act 1979 (NSW) will need to include a statement of any affected building notice, any outstanding building product rectification order, or any intention to issue a building product rectification order in respect of the land.

What does this mean for subsequent purchasers of property?

By amending the Conveyancing (Sale of Land) Regulations 2017, the Bill effectively creates an implied warranty that there is no outstanding building product rectification order for residential property under an option for purchase or contracts for sale.

The picture elsewhere in Australia

See here for a summary of some of the broader regulatory responses to the use of combustible cladding in Australia.

Queensland was first off the mark with the Building and Construction Legislation (Non-conforming Building Products – Chain of Responsibility and Other Matters) Amendment Bill 2017 (Qld). Read a detailed MinterEllison post Conform or pay the price: Queensland introduces a bill to tackle non-conforming building products on the Queensland amendment bill. The bill was passed on 24 August 2017 with some amendments.

NSW followed by introducing the Environmental Planning and Assessment Amendment (Fire Safety and Building Certification) Regulation 2017, which introduces new requirements affecting the design, approval, construction and maintenance of fire safety measures and came into effect on 1 October 2017.

At the Federal level, Senator Xenophon introduced the Customs Amendment (Safer Cladding) Bill 2017 (Cth), which is intended to introduce an express prohibition on the importation of 'polyethylene core aluminium composite panels'. The Customs Amendment Bill has not yet progressed past the second reading speech stage since its introduction. MinterEllison discussed the Commonwealth Bill earlier in our update Cladding: To Ban or not to Ban, that is the Question.