The NSW government announced on 10 February 2019 its intention to introduce a wide ranging raft of reforms to the NSW building industry. Minister for Better Regulation, Matt Kean's media release is a response to the findings of the 2018 Shergold Weir report (Report).
The reforms will be based on 24 recommendations in the Report. The authors of the Report found significant problems with Australia's building regulatory systems across all jurisdictions. The recommendations seek to improve Australian building safety and compliance. Matt Kean's response to the report is that NSW adopt most recommendations, including requirements that:
- Building designers, including engineers, declare that building plans specify a building that will comply with the National Construction Code.
- Builders declare that buildings have been built according to their plans.
- Building designers and builders be registered.
A Building Commissioner will also be appointed to act as the consolidated building regulator in NSW with the responsibility of licensing and auditing practitioners.
Duty of care
The Minister has stated that reforms will clarify the law to ensure that there is an industry wide duty of care to homeowners and owners corporations giving them a right to compensation where a building practitioner has been negligent. This indicates a response to the frustration of owners after the High Court decision of Brookfield Multiplex Ltd v Owners Corporation Strata Plan 61288 [2014] HCA 36. The High Court held that Brookfield as the builder did not owe a duty of care to the Owners Corporation for economic loss suffered as a result of latent defects in the common property that arose from the negligent construction of a high-rise apartment building. The scope of a more far reaching duty is presently unclear. We will keep you up to date on developments as they unfold.
Impact on contractors
The Report recommends the registration of building practitioners under categories reflective of their qualifications. A function of the proposed register is to ensure that building and design work may only be conducted by those practitioners appropriately qualified for the job. The term 'building practitioners' is undefined in the Report, but includes a non-exhaustive list of categories including builders, project managers, surveyors and inspectors. Under the categories of architects, engineers, plumbers and fire safety system installers, further subdivision into specific disciplines is recommended. These reforms may impact the scope and type of work that building practitioners may legally engage in.
The Report also recommends that all registered architects, engineers and designers responsible for design work provide a formal declaration of their reasonable belief that their design documentation is compliant with the National Construction Code.
Building Commissioner
The Report recommends that regulators be afforded a broad suite of powers to monitor ongoing building work and enforce compliance through disciplinary action. The appointment of a Building Commissioner appears to be the NSW government's response to this recommendation. The powers of this office outside those relating to licensing and auditing are unclear. If the NSW government has adopted the full scope of the Report's recommendations, additional powers of entry, evacuation, seizure and prosecution will be available.
Impact on developers
Although not mentioned in the media release, the Report recommends the creation of a building compliance process that governs the approval of variations throughout a project. Developers and builders may have to submit design variations and product substitutions to building surveyors for approval before the commencement of the associated work. The Report also contemplates that this varied work, and the work generally, should be subject to mandatory independent inspections at identified notification stages.
What will this mean for you?
All sections of the building industry should be alert to potential liability they may have to owners of residential and commercial buildings. Building practitioners must be prepared for their work to be monitored by an external regulatory regime and to be held accountable for losses that arise from defective work.
