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21 Feb 2019

It's a long fall from the top: Building Commissioner to keep an eagle eye on high-rise construction in NSW

By Lina Fischer, Caitlin Oxley

The NSW building industry must now consider how the new obligations under the proposed plan will affect them, including how reporting to the Building Commissioner will affect building timeframes.

The biggest overhaul of building laws in NSW history is coming soon! Building owners, designers, developers and builders need to act now and get ready for the changes that will soon apply to the high-rise construction industry in NSW.

What's the plan for multi-storey residential buildings?

On Sunday February 11th, the Minister for Innovation and Better Regulation Matt Kean announced the NSW Government's plan to appoint a Building Commissioner to oversee and approve construction of new multi-storey residential buildings and to ensure building practitioners are competent.

The plan aims to fix the existing system for ensuring high-rise buildings are constructed safely and in accordance with the National Construction Code (NCC) and will provide important oversight and accountability for the NSW construction industry. The changes are designed to be an important step towards regaining consumers' confidence in their buildings and in the people who design, build and maintain them.

Under the plan, the new Building Commissioner would act as the consolidated building regulator in NSW and would be responsible for:

  • registering, licensing and auditing building practitioners;
  • receiving copies of building plans and conducting audits; and
  • enforcing the new laws to be implemented.

Building practitioners involved in designing buildings will be required to declare that plans are BCA compliant and builders will need to declare that buildings have been constructed in accordance with those plans. This is intended to reduce the current practice of builders making variations from plans and specifications without proper consultation with the consultant team and the certifier. 

A key component of the plan will be amending the existing laws to provide that building practitioners have a duty of care to homeowners and owners corporations, including successors in title, giving affected parties the right to compensation where a building practitioner has been negligent. The aim of this proposal is to send a message to all parties involved in the construction process that they will be held accountable for their particular responsibilities. This represents a significant shift from the current position at law under Brookfield Multiplex Ltd v Owners Corporation Strata Plan 61288, where the High Court found that the builder did not owe a duty of care to the developer or owners corporation

The Shergold-Weir Report

The NSW Government's plan is based on 24 recommendations made in the final report of Professor Peter Shergold AC and Bronwyn Weir (Shergold-Weir Report), who spent six months examining the effectiveness of compliance and enforcement systems for the building and construction industry across Australia.

The Shergold-Weir Report found that there were "significant and concerning" problems with the national construction industry. It concluded that these problems have led to diminishing public confidence that the building and construction industry can deliver compliant, safe buildings which will perform to expected standards over the long term.  

The Report also stated that there had been suggestions that large numbers of practitioners currently operating in the industry either lacked competence, did not properly understand the National Construction Code and/or had never received proper training on the Code's implementation. It found that until relatively recently there had been almost no effective regulatory oversight of the commercial building industry by regulators and that those involved in high-rise construction had been largely left to their own devices. 

Key recommendations from the Shergold-Weir Report that will be supported by the NSW Government include ensuring that:

  1. building designers (including engineers) declare that building plans comply with the Building Code of Australia;
  2. builders declare that buildings have been built according to their plans; and
  3. building designers and builders are registered. 

How to get prepared for the NSW Building Commissioner

The plan to appoint a new Building Commissioner in NSW will have a significant impact on all construction industry participants. The task ahead now for all industry members is to:

  • consider how the new obligations under the proposed plan will affect you, including how reporting to the Building Commissioner will affect building timeframes;
  • understand all existing obligations of building practitioners under the NCC;
  • get ready for the licensing and registration of building designers and builders;
  • conduct an audit of all building products and processes used ‒ you could be held liable under new laws;
  • consider liability and recovery of costs clauses in contracts with building practitioners; and
  • consider the impact of the new regime on the insurance market ‒ including the availability and pricing of professional indemnity insurance.

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Clayton Utz communications are intended to provide commentary and general information. They should not be relied upon as legal advice. Formal legal advice should be sought in particular transactions or on matters of interest arising from this communication. Persons listed may not be admitted in all States and Territories.