August 10, 2020

In early June 2020, the Design and Building Practitioners Act 2020 (NSW) (the Act) took effect. The Act is part of the NSW Government’s response to the Shergold Weir Report, which examined the effectiveness of the National Construction Code in Australia following concerns regarding combustible cladding and building defects in high profile developments.

The Act contains a suite of new obligations that contractors, designers and engineers must comply with when undertaking certain construction works in NSW.

Under the Act, ‘construction work’ is limited to:

  •   building work (including residential building work within the meaning of the Home Building Act 1989);
  •   preparing regulated designs and other designs for building work;
  •   manufacturing or supplying building products used for building work; and/or supervising, coordinating, project managing or otherwise having substantive control over the carrying out of the above works.

The most notable changes the Act introduces include:

  •   new compliance declarations and certificates for regulated designs for building works, including the provision of compliance declarations from design practitioners as a mandatory prerequisite to the granting of an occupation certificate;
  •   a positive obligation on building practitioners to obtain the required regulated design and compliance declarations, and ensure that building work complies with the Building Code of Australia;
  •   a new registration scheme for design and building practitioners and a requirement that all registered practitioners hold insurance for the purpose of undertaking building work; and
  •   establishing a statutory duty on persons carrying out construction work to exercise reasonable care to avoid economic loss caused by defective work.

The statutory duty of care is owed to both current owners of the land on which the construction work is being carried out, and to subsequent owners. It applies retrospectively to all building work undertaken in the previous ten years, enabling owners and subsequent owners to make a claim under the Act for economic loss arising from a breach of the duty, where that loss first became apparent within the stipulated period. Importantly, the statutory duty of care will be subject to existing limitation periods, which require that proceedings must be commenced:

  •   within six years of the date the cause of action accrues under the Limitation Act 1969 (NSW); and
  •   within ten years of the date of completion of the work under section 6.20 of the Environmental Planning and Assessment Act 1979 (NSW).

Whilst the new statutory duty of care has immediate effect, the remaining provisions under the Act will come into force on 1 July 2021.

It will be interesting to see whether the other ‘east coast’ jurisdictions (VIC, SA, QLD, ACT and TAS) follow a similar approach to NSW.

A full version of the Act can be found here.

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