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Residential Focus

17 November 2021

#Property, Planning & Development

Published by:

Stephanie Tan, Simona Njaim

Residential Focus

The Building Assurance Solution – the shiny new tool to fix class 2

The NSW Government has announced the development of a risk rating tool that will assist insurers and purchasers in assessing the trustworthiness of building practitioners and the construction quality of Class 2 buildings.

Background

The Office of the Building Commissioner developed the Construct NSW strategy to improve the construction quality of residential apartment buildings and restore consumer confidence in the construction industry.

As part of Construct NSW, six main pillars of reform were established:

  1. customer-focused regulatory framework
  2. ratings systems to provide greater information transparency
  3. lifting skills and capabilities
  4. strengthening contracts and standards
  5. using digital platforms to drive enhanced accountability
  6. using data and research to deliver continual improvement.

In February, Construct NSW released a report with an update on the pillars. Relevant to the second pillar, the subject of this piece, the report stated that the Office of the Building Commissioner was “working with insurers, financiers, risk rating agencies and building industry practitioners to help develop new products that can evaluate the trustworthiness of developers and other industry practitioners”.

In June, the NSW Government, in collaboration with the Centre for Smart Modern Construction at Western Sydney University, released an Industry Report on the Digitalisation of Design and Construction of Class 2 Buildings in NSW. As part of the report, builders and designers were asked which drivers they believe are most important for the digitalisation of the construction industry. The two highest-rated drivers were “achieving greater level of accuracy and trustworthiness” and “improving quality and standards in construction”. These drivers, as rated by the industry, can be seen to align with the Office of the Building Commissioner’s goal to develop a quality assurance rating system.  

The Building Assurance Solution

In July, the Minister for Better Regulation and Innovation published a media release announcing a new tool to determine the quality and trustworthiness of NSW residential buildings, known as the Building Assurance Solution (BAS). The BAS will utilise “multiple data points to help Fair Trading and the insurance industry to access a residential apartment building’s quality and compliance with construction standards”.

The BAS will be implemented as part of the NSW Project Remediate program and will apply to residential apartment buildings (Class 2), including mixed-use buildings with a residential component.

It is a risk rating tool that will create a “digital DNA” for residential buildings, providing information on:

  • the building materials
  • the manufacturer of the building materials
  • the relevant testing certifications of the building
  • who installed and certified the building work.

The BAS will allow insurers and purchasers to access and compare buildings and will act as a portal for keeping detailed records. Digital records will also be kept for all phases of the building work. The objective is to provide purchasers and insurers with transparency and traceability from manufacturing to installation.

The system will assist regulators in identifying potential “risky” practitioners and facilitating the comparison of compliant and non-compliant buildings. This comes as no surprise given the Office of the Building Commissioner’s focus on improving the quality of residential apartment buildings and restoring trust in the construction industry through the Construct NSW strategy. NSW Fair Trading, SafeWork NSW and other agencies will also have access to the BAS to assist them with identifying defective work and products.

A Project Remediate Briefing on “Assuring remediated buildings using smart technology” in September confirmed that the BAS will be used to record whether buildings are compliant with applicable building regulations by providing copies of certifications, material traceability and a risk rating for building practitioners.

A consortium of KPMG, Microsoft, Mirvac, ASX and Western Sydney University won the contract for building the BAS. KPMG is developing the tool and a Mirvac project will be used during the pilot. A working model of the platform is planned to be available by the end of 2021.

Benefit to industry participants and owners

The BAS tool will enable insurers, industry purchasers of goods and services, end-user purchasers and owners to access a depth of information not otherwise readily accessible. This information empowers better decision making and accountability. It will also assist in the event of defects, for example, in identifying those involved in the chain.

Should insurers embrace the tool, it may improve building and professional indemnity insurance, availability and affordability for buildings and practitioners whom the data reflects well on (and vice versa of course).

The Insurance Council of Australia has endorsed the BAS for its potential to benefit consumers and is open to working with the NSW Government to provide insight on areas for data collection.

Authors: Simona Njaim, Stephanie Tan & Christine Jones

In the media

Building trades shortage worsens
The HIA Trades Availability Index deteriorated further in the September 2021 quarter indicating that the industry is experiencing the most significant skills shortage since the inception of the report in 2003 (05 November 2021).  More...

Building approvals remained elevated in September
“Detached building approvals continue to suggest there is still strong demand for housing six months after the HomeBuilder stimulus ended in March,” stated HIA Economist Tom Devitt (03 November 2021).  More...

New data shows digital boost needed for builders and tradies to build back better
New data confirms the impact lockdowns have had on small businesses in the building and construction sector and shows the need for measures to support increased digital uptake and capacity building to accelerate recovery from COVID lockdowns (03 November 2021).  More...

NSW work health and safety management systems to integrate BIM
The New South Wales Government’s Centre for Work Health and Safety is conducting research on integrating building information modelling into workplace health and safety management systems in the construction industry (10 November 2021).  More...

Published – articles, papers, reports

Australian Bureau of Statistics
03 November 2021: Building approvals, Australia

Practice and courts

HIA submission
Proposal to increase residential buildings energy efficiency requirements – consultation RIS
8 November 2021 – HIA has made a substantive submission to the Australian Building Codes Board consultation regulation impact statement on the NCC 2022 energy efficiency changes.

Residential Apartment Buildings (Compliance and Enforcement Powers) Act orders register
Orders are issued by the Building Commissioner under the Residential Apartment Buildings (Compliance and Enforcement Powers) Act 2020. The register is updated to 22 October 2021. Click here for more information.

Cases

NSW

Storer v Commissioner for Fair Trading [2021] NSWCATAD 331
REVIEW OF DECISION BY EXTERNAL DECISION-MAKER – decision to cancel registration as a certifiers pursuant to section 48 of the Building Professionals Certifiers Act 2018 (NSW).
PRACTICE AND PROCEDURE – interlocutory order – application for stay – factors relevant to exercise of the power to stay decision under section 60 of the Administrative Decisions Review Act 1997 (NSW).

De Marco v Macey (No 2) [2021] NSWCATAP 354
(1) Order that the appellant pay the respondents’ costs of the appeal on the ordinary basis as agreed or assessed.
COSTS – party/party – appeals – application for indemnity costs – no reasonable prospects of success.
Civil and Administrative Tribunal Act 2013 (NSW); Civil and Administrative Tribunal Rules 2014 (NSW) Act NDW; Home Building Act 1989 (NSW).

Patel v Redmyre Group Pty Limited [2021] NSWCATAP 351
1. Leave to appeal is refused. Appeal dismissed.
COSTS – party/party – appeals.
Civil and Administrative Tribunal Act 2013, sections 50(2), 60; Civil and Administrative Tribunal Rules 2014, rule 38.
A claim (proceedings HB19/17685) by the appellants, as owners, against the respondent, as builder, under which they sought compensation in the amount of $345,683 in respect of alleged breaches by the respondent of certain express terms of, and statutory warranties in relation to, a contract between the appellants and the respondent for the performance by the respondent of residential building work (the contract).

Reid & Robinson Builders Pty Limited trading as John Robinson Elite Constructions v Cleal [2021] NSWCATAP 348
APPEAL – order transferring proceedings to district court – extension of time to appeal required – whether decision under appeal “interlocutory” or “ancillary” – whether, if required, leave should be granted – respondents’ claim in substantive proceedings held to be “otherwise maintainable at law” – time to appeal not extended – leave to appeal refused – appeal dismissed.
Australian Consumer Law 2010 (Cth); Civil and Administrative Tribunal Act 2013 (NSW); Civil and Administrative Tribunal Rules 2014 (NSW); Fair Trading Act 1987 (NSW); Home Building Act 1989 (NSW).

Dunn & Pilcher Constructions Pty Ltd v Woodos Australia Pty Ltd [2021] NSWCATAP 347
(1) Appeal dismissed. (4) The parties’ submissions should address whether the question of costs of the appeal may be determined by the appeal panel on the papers by dispensing with a hearing on costs.
Home Building Act, 1989 (NSW); Law Reform (Miscellaneous Provisions) Act 1948.

Tang v Mawad Group Pty Ltd (No 2) [2021] NSWCATAP 345
(2) The builder’s application for costs of the appeal since 16 March 2021 is dismissed.
COSTS – costs on appeal – special circumstances – exercise of discretion.
Civil and Administrative Tribunal Act 2013 (NSW).

Everson v Barazi [2021] NSWCATAP 341
APPEAL – orders made in absence of appellant – appellant failing to comply with directions for the preparation of the hearing – appellant failing to attend hearing – principles to be applied where a party seeks a second hearing. The appellant (Everson) appeals a decision of the Tribunal made on 12 May 2021 pursuant to which the tribunal ordered Everson to pay to the respondent the amount of $20,658.60 (refund for services not provided with due care and skill and not fit for purpose, cost of rectifying damaged underside, building report).

Kumar v RSK Constructions Pty Ltd [2021] NSWCATAP 342
APPEALS – applications brought before consumer and commercial division – failure by parties to raise issues identified in directions hearings – failure by tribunal to consider fundamental issues including identification of contracting parties, the contract and compliance with statutory requirements – failure to accord procedural fairness – held proceedings miscarried – orders set aside and proceedings remitted for reconsideration before tribunal differently constituted. 

David Kenneth Costin trading as DC Build Construct v Catherine Maree Parer in her capacity as administrator of the deceased estate of Christopher Charles Musgrave No.1 [2021] NSWDC 564
Breach of contract – building contract.

Impressive Builders Pty Ltd v Cleary [2021] NSWCATAP 331
APPEALS – whether error of law – whether leave to appeal should be granted.

Scott v Stewart [2021] NSWCATAP 326
CONTRACT LAW – termination on notice – substantial breach – meaning of “substantial”.

Legislation

Regulations and other miscellaneous instruments
Electricity Infrastructure Investment Amendment (Safeguard) Regulation 2021 (2021–659) – published LW 12 November 2021
Environmental Planning and Assessment Amendment (Norwest Innovation Precinct) Regulation 2021 (2021–660) – published LW 12 November 2021

Environmental planning instruments
State Environmental Planning Policy (Three Ports) Further Amendment (Shipping Containers) 2021 (2021–667) – published LW 12 November 2021

Bills assented to
Better Regulation Legislation Amendment (Miscellaneous) Act 2021 No 23 – assented to 01 November 2021
Schedule 1 amends the following acts and instrument – (c) Building and Construction Industry Long Service Payments Act 1986 No 19, (d) Building Products (Safety) Act 2017 No 69, (f) Design and Building Practitioners Act 2020 No 7, (k) Home Building Act 1989 No 147.

Disclaimer
The information in this publication is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavour to provide accurate and timely information, we do not guarantee that the information in this article is accurate at the date it is received or that it will continue to be accurate in the future.

Published by:

Stephanie Tan, Simona Njaim

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