The NSW Parliament passed the Design and Building Practitioners Act 2020 (NSW) (the Act) on 11 June 2020 as part of series of reforms to laws impacting the construction industry following recent high-profile incidents of building defects across Sydney.
Most of the Act’s provisions will commence on 1 July 2021 (or a date to be appointed by proclamation) but the significant reform of extended duty of care has already commenced.
Key reforms brought about by the Act are:
- Statutory duty of care: Establishment of a duty of care owed by persons carrying out construction work relating to certain buildings to take reasonable care to avoid economic loss caused by defects arising from the work.
- Compliance declaration: Imposition of obligations on registered building practitioners who carry out applicable building work to take all reasonable steps to provide building compliance declarations and to obtain compliance declarations for regulated designs.
- Registration scheme: Establishment of a registration scheme for design practitioners, principal design practitioners and building practitioners who are subject to compliance declaration requirements and to establish insurance requirements for registered practitioners.
- Enforcement: Providing for enforcement of the Act.
Regulation setting out further detail on the Act is anticipated to be introduced in late 2020.
Extended duty of care
What is the new extended duty of care?
Under the Act, a person who carries out construction work has a duty to exercise reasonable care to avoid economic loss caused by defects in or related to a building for which the work is done and arising from the construction work. This duty of care is owed to the owner of the land in relation to which the construction work is carried out and to each subsequent owner. A breach of the duty would entitle the owner (or subsequent owner as the case may be) to damages.
The duty of care is not only owed to individual owners but where the building forms part of a strata or community title, an owners corporation or association is taken to have suffered economic loss if they bear the cost of rectifying defects (including damage caused by defects) that are the subject of a breach of the duty of care. The economic loss suffered for their purposes includes the reasonable costs of providing alternative accommodation where necessary.
What type of construction work does it apply to?
The type of construction work to which this duty applies are:
- Building work (including residential building work within the meaning of the Home Building Act 1989 (NSW))
- Preparation of regulated designs and other design for building work
- Manufacture or supply of building product used for building work
- Supervising, coordinating, project managing or otherwise having substantive control over the carrying out of any of the above
Retrospective application and limitation periods
The Act sets out that the duty of care applies to construction work carried out before the Act commenced as if the duty of care was owed by the person who carried out the construction work to the owner of the land and to subsequent owners when the construction work was carried out. It applies to economic loss caused by a breach of the duty of care if the loss first became apparent within 10 years immediately before 11 June 2020 or the loss first becomes apparent on or after the commencement of that section. This extended duty of care is subject to the ordinary limitation periods applicable in NSW, including the 10 year limitation on time when action for defective building works may be brought under clause 6.20 of the Environmental Planning and Assessment Act 1979 (NSW).
How does it work with existing duties of care and law?
The Act makes clear that the extended duty of care is in addition to the duties, statutory warranties or other obligations imposed under the Home Building Act 1989 (NSW), other Acts or common law. Further a contract or agreement may not contract out of the operation of this Act and this extends to contract which predates the commencement of the Act.
Other key amendments
Other key amendments introduced by the Act which has not yet commenced are as follows:
- Regulated design: The Act introduces ‘regulated design’, being design prepared for a building element for a building work, prepared for a performance solution for building work (including building element) or any other design of a class prescribed by regulation that is prepared for building work. Building elements include a fire safety system, waterproofing, load-bearing component of a building, component of a building that is part of a building enclosure, aspects of mechanical, plumbing and electrical services for building required to achieve compliance with the Building Code of Australia (BCA) and other things prescribed by regulations.
- Compliance declarations: Registered design practitioner, principal design practitioners and building practitioners must provide a compliance declaration to a person. A designer’s compliance declaration provides that the design complies with the BCA. A designer must be insured with respect to the declaration and work. A builder must (amongst other things) take reasonable steps to ensure that each regulated design for the building work is prepared by a registered design practitioner, a design compliance certificate is obtained, if a principal design practitioner has been appointed, a principal compliance declaration is obtained for all those design and take all reasonable steps to ensure that the building work complies with the BCA applicable.
- Engineering work and specialist work: The Act also requires that professional engineering work and specialist works only be carried out by a professional engineers or registered specialist practitioner respectively.
- Registration of practitioners: Designers, engineers and builders must register through the process set out in the Act.
- Enforcement: The Act gives the Secretary power to make a stop work order to ensure that building work, professional engineering work or specialist work stops carrying out the work or stops the owner of the land on which the work is being carried out, where if it is of the opinion that the work is (or likely will be) carried out in contravention of the Act and the contravention could result in significant harm or loss to the public or occupiers or potential occupiers of the building or significant damage to the property. Further, proceedings for an offence against this Act may be taken before the Local Court or the Land and Environment Court in its summary jurisdiction.
Please contact a member of our construction team in Australia for further information on the Design and Building Practitioners Act 2020 (NSW), and how it may affect your project and / or business.
- Design and Building Practitioners Act 2020 (NSW) s 2 ↩
- Ibid s 37(1) ↩
- Ibid s 37(2) ↩
- Ibid s 37(3) ↩
- Ibid s 38(1) ↩
- Ibid s 37(3) ↩
- Ibid s 36 ↩
- Ibid Schedule 1, s 5(1) ↩
- Ibid Schedule 1, s 5(2) ↩
- Ibid s 41(1) ↩
- Ibid s 40 ↩
- Ibid s 5(1) ↩
- Ibid 6(1) ↩
- Ibid ss 9, 12 & 17 ↩
- Ibid s 9 ↩
- Ibid s 11 ↩
- Ibid ss 18 & 20 ↩
- Ibid ss 32 & 35 ↩
- Ibid Part 5 ↩
- Ibid s 89↩
- Ibid s 93 ↩