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Residential Focus

02 December 2020

#Property, Planning & Development

Published by:

Divya Chaddha, Clare Giugni

Residential Focus

NSW Government releases draft Design and Building Practitioners Regulations and announces $1 billion package for cladding rectification works

In this edition, we take a look at the NSW Government’s new fix to the cladding crisis with the introduction of Project Remediate and examine the newly released draft Design and Building Practitioners Regulation and what it tells us about the intended scope of the duty of care.

Project Remediate: Combustible cladding response package

The NSW Government has announced a $1 billion combustible cladding response program, Project Remediate (Project), to assist with the removal of unsafe cladding from the 230 residential buildings across the state that the NSW Cladding Taskforce has identified as having high-risk flammable cladding. 

Under the Project, the NSW Government will cover the interest on loans obtained by building owners over the next three years for the purposes of removing combustible cladding in these high-risk residential buildings. It is anticipated that this will incentivise owners to fast-track the removal of the unsafe cladding as they are no longer required to resort to commercial loans which could have interest rates of up to 10 per cent.

To be eligible for an interest-free loan, the owner’s building must be a class 2 residential apartment building and must have received the “high-risk” designation from the council or the department as part of the state-wide audit.

In addition, the NSW Government has allocated $139 million of the package to establish a complimentary project assurance service whereby a managing contractor will be appointed as project manager for each building to offer technical support and in order to ensure the rectification works are completed to an acceptable standard.

The NSW Government has taken a different approach to that of the Victorian Government, the latter directly covering the rectification costs of building owners by means of a $600 million scheme announced earlier this year.

Further specific details of the Project will be announced later this month, with the tender process for a program assurance managing contractor to commence in February 2021. Applications for the Project loans are expected to open to building owners in March 2021.

In the meantime, apartment owners, owners’ corporations and other interested parties may register for updates on the Project through the NSW Government website here.

Draft Design and Building Practitioners Regulations released

The NSW Government is currently seeking feedback on the proposed regulations to support the Design and Building Practitioners Act 2020 (NSW) (Act) and has circulated the proposed Design and Building Practitioners Regulations 2020 (draft Regulations). The deadline for submissions is 11 January 2021. 

To read our article on the key elements in the Act, in particular, the creation of the 10-year statutory duty of care, click here.

The draft Regulations have been highly anticipated as the Act provided that the classes of buildings, which limited the meaning of “building work” to which the Act applies, would be prescribed in the Regulations. This was problematic given that the duty of care provisions of the Act have been in force since June 2020.

Based on the second reading speech made regarding the Act, it had been speculated that the duty of care would apply to construction work in a building that is a class 1, 2, 3 and 10.

The Act itself is less than clear. On one reading of the Act (relying on the definition of “building” in section 36(2) of Part 4), the duty of care applies to all classes of building. On an alternate reading of the Act (relying on the definition of “building work” in section 4, and the extension of the duty to residential building work in section 36) the duty currently applies to residential building work only (not limited by the class of building), with the classes of buildings to which the Act otherwise applies to be prescribed in the Regulations.

What is now clear from the draft Regulations is that, despite the second reading speech, it is proposed that the compliance and disciplinary provisions of the Act will be limited to building work carried out on class 2 residential apartment buildings and buildings that contain a class 2 part. However, there are some exclusions. The most notable of which are work which comprises an exempt development, work carried out under development control orders and maintenance work on fire safety systems and other services.

In addition, the draft Regulations haven’t resolved the question of interpretation between the section 36 approach and the section 4 approach, as regards the classes of buildings to which the duty of care applies. What is beyond doubt is that the draft Regulation would have the duty of care apply to building work carried out to class 2 buildings, which the Act already extends to residential building work more broadly.

Submissions close on 11 January 2021 and the NSW Government intends to commence the draft Regulations by 1 July 2021.

Authors: Christine Jones, Divya Chaddha & Clare Giugni

In the media

HomeBuilder extension a big win for high vis and white collar jobs across Australia
The Property Council of Australia has strongly welcomed the Government’s announcement to extend the HomeBuilder scheme to 31 March 2021 with a 6 month commencement window and adjusted price caps. This is a big win for hi vis construction jobs across Australia and all the white collar jobs that support the sector (29 November 2020).  More...

Work in Progress accounting destroying building companies
New home builders are running out of cash and going bust because they don’t understand how to correctly calculate their work in progress liability and end up paying tax on profits they don’t make, according to Construction Financials Specialist and Co-founder of The Association of Professional Builders (APB) (25 November 2020).  More...

HIA: New housing starts declined in the September quarter
Preliminary figures released by the ABS today on the value of residential construction work done showed a decline in the September 2020 quarter to its lowest level since 2014. This data precedes the positive impact of the HomeBuilder program due to the lag between purchasing a house and commencing construction (25 November 2020).  More...

'We need time to get all these jobs done': Tradies appeal for HomeBuilder extension amid scramble to start work
With the December 31 deadline approaching, tradies are calling on the Federal Government to extend the HomeBuilder grant (25 November 2020).  More...

Responsibility before profit
Increasingly builders are looking to maximise profits to ensure the sustainability of the business. Cost to operate continue to rise and competitors are constantly looking at ways to trump competitor offerings and maintain profit margins (24 November 2020).  More...

New cost prediction standard instils consistency in construction markets
RICS has launched a new global professional statement to support professionals working in cost management and give clients confidence that RICS professionals are working to consistent and high standards of professionalism for construction projects (19 November 2020).  More...

Grocon boss says company is battling for its life, blames NSW Government for insolvency
The head of one of Australia's building giants says the only reason the company is about to enter administration is due to the lengthy legal stoush with the NSW Government over a central Sydney project (19 November 2020).  More...

Iconic builder Grocon declares insolvency and is set to go into administration
Melbourne's casino, Eureka Tower and the Rialto Towers are among the iconic developments Grocon has delivered in recent decades (19 November 2020).  More...

Insurers and builders joining forces to improve Australian homes
Master Builders join with Insurance Council of Australia to map way forward on resilience in Australian homes to natural disasters following Royal Commission (13 November 220).  More...

New campaign shines light on electrical risks
The new campaign will be delivered with a number of industry partners including unions, energy retailers and CHOICE to educate and encourage NSW homeowners to install switches and to undertake regular checks (24 November 2020).  More...

HIA: The abolition of stamp duty in NSW is a necessary step
Stamp duty is an inefficient tax. It represents a significant additional (though artificial) moving cost that discourages the population moving to a more appropriate home (and location) that best suits their changing needs (17 November 2020).  More...

Support for owners to remove high risk cladding
The NSW government will establish Project Remediate, a three-year program to help remove combustible cladding on hundreds of the most at-risk buildings, and pay the interest on loans by commercial lenders to building owners and owners corporations, fast-tracking the removal of unsafe cladding (17 November 2020).  More...

Practice and courts

ABCB: Improvements to the code’s structure and format will be implemented for NCC 2022
To guide users through the changes, the ABCB has developed a range of supporting resources that will be released in stages leading up to the publication of the NCC 2022 Public Comment Draft on 10 May 2021. The first stage of articles and resources are being released here (26 November 2020).

Adoption of NCC 2022 to be delayed
The delayed adoption will also see adjustments to key dates in the amendment cycle process for NCC 2022 to allow stakeholders time to participate. These adjusted dates include:
May – July 2021: NCC 2022 Public Comment Draft released for public consultation.
May 2022: NCC 2022 Preview published here.
If you have any questions regarding the delayed adoption of NCC 2022, please submit an online enquiry.

ABCB consultations

Auditing and Compliance Publication Framework
The Building Confidence Report (BCR), published in 2018, identified there were regulatory and compliance deficiencies in the regulatory oversight of the construction of commercial buildings in Australia. The draft Framework is targeted at state and territory building regulators with primary responsibility for the regulation of the construction of Class 2 – 9 buildings. Closes on 17 January 2020.

Discussion paper: Building Design Acceptance – A response to the Building Confidence Report
In 2017, Building Minsters authorised an assessment of the effectiveness of compliance and enforcement systems for the building and construction industry across Australia. Amongst other recommendations the resulting Building Confidence Report (BCR) recommended that there be a statutory duty. Opens 16 November 2020. Responses to questions on the discussion paper, are invited until 7 February 2021.

2020 National Housing Research Program commences
Research is underway for the suite of projects funded by AHURI as part of the 2020 National Housing Research Program (NHRP). The research will be undertaken by collaborative teams from AHURI’s eight national university research partners. For more details of the 2020 NHRP projects please click here.  More...

New mandatory standards for building rectification
The standard helps all registered certifiers turn the requirements under the Building and Development Certifiers Act and the Environmental Planning Assessment Act into practice. The Guide is already being used to assist certifiers working on projects that are being audited under the new powers that were under the Residential Apartment Buildings (compliance and enforcement powers) Act 2020. The standard will be reviewed and updated prior to the 1 July 2021 commencement of the Government’s game changing building reform agenda underpinned by the Design and Building Practitioners Act 2020. The first Practice Standard will initially apply to certifiers working on residential apartment buildings, where the majority of problems and complaints have been received. The Practice Standard for registered certifiers is available on the Fair Trading NSW website.

Design and Building Practitioners Act 2020: Consultation November 2020
The NSW Design and Building Practitioners Act 2020 was enacted in June 2020, introducing statutory registration for professional engineers. The provisions of the Act will commence on 1 July 2021. The draft Design and Building Practitioners Regulation includes registration schemes for design and building practitioners and engineers who work on multistorey, multi-unit residential apartment buildings. The Government will finalise the Regulations in early 2021, ready to be implemented on 1 July 2021.  More...

Engineers Australia
Now is your opportunity to provide feedback on new laws requiring statutory registration for professional engineers, plus a range of reforms to the process of designing and constructing buildings. Engineers Australia have compiled information compiled information on what's happened so far and a policy paper.

NSW Revenue: HomeBuilder program
HomeBuilder will provide eligible owner-occupiers (including first home buyers) with a grant of $25,000 to build a new home or substantially renovate an existing home where the contract is signed between 4 June 2020 and 31 December 2020. Construction must commence within three months of the contract date.  More...

Cases

Perfax Builders Pty Ltd v Narain [2020] NSWCATAP 252
APPEAL – building claim – decision said to be against the weight of the evidence – evidence excluded by Member sought to be relied upon on appeal – no substantial miscarriage of justice – leave to appeal refused.

Balde v AAI Ltd t/as GIO [2020] NSWSC 1623
ADMINISTRATIVE LAW – decisions made under Motor Accidents Compensation Act 1999 (NSW) – whether third defendant applied incorrect test in determining causation – whether third defendant applied incorrect test in determining whether proposed treatment was reasonable and necessary – whether fourth defendant failed to identify error.

Bandelle Pty Ltd v Sydney Capitol Hotels Pty Ltd [2020] NSWCA 303
BUILDING AND CONSTRUCTION – limitation period – limitation period for actions arising out of defective building work more than ten years after completion of work – limitation period originally contained in s 109ZK of Environmental Planning and Assessment Act 1979 – section renumbered as s 6.20 – as originally enacted, s 109ZK applied only prospectively – defendant’s building work done before enactment of s 109ZK – whether limitation period applied to building work done before section enacted – whether s 6.20 replaced s 109ZK – whether limitation period applied to loss of the kind alleged by the plaintiff. STATUTORY CONSTRUCTION – amending legislation – limitation section renumbered and reworded – transitional and savings regulations – regulations deferred commencement and qualified scope of limitation period – effect of repeal of regulation – further regulations including amended regulations preserving repealed sections and qualifying renumbered section – whether effect of legislation and amendment was a period of time during which limitation period did not apply – whether legislation displaced operation of Interpretation Act 1987 – observations on undesirability of regulations affecting operation of statute.

Duzenli Developments Pty Ltd ACN 623 852 031 trading as Zen Group Constructions v Benuga Pty Ltd ACN 001 131 997 [2020] NSWSC 1667
EQUITY – equitable remedies – injunctions – serious question to be tried – balance of convenience – plaintiff builder executes building work under a building contract with the defendant upon land owned by the defendant – plaintiff’s building work does not reach practical completion – disputes break out about allegedly defective work and the rate of completion of the work – defendant purports to terminate the contract and to exclude the builder from the site – the plaintiff commences proceedings in the NSW Civil and Administrative Tribunal (NCAT) seeking remedies under the Home Building Act 1989 – NCAT gives directions, allowing both parties access to the site with their experts to prepare for a hearing before NCAT – the defendant seeks possession of the site on the basis that the plaintiff’s license to be on the site has been terminated – whether the defendant should be let into possession – whether the parties should both be excluded from the site pending resolution of the NCAT proceedings.

Rawson Homes Pty Ltd v Allianz Australia Insurance Limited [2020] NSWSC 1654
INSURANCE – annual construction insurance policy – where hailstorm caused damage to residential development being constructed by plaintiff – whether one deductible payable for plaintiff’s claim for cover or whether a deductible is payable in respect of each building works contract – meaning of “one event” and “claim” – held that hailstorm was the one event that gave rise to the plaintiff’s claim and one deductible payable. INSURANCE – calculation of interest under s 57 of the Insurance Contracts Act 1984 (Cth) – where defendant rejected plaintiff’s claim for cover to replace damaged tiled roofs until second day of hearing – date from which it was unreasonable for defendant to withhold payment – held that 13 month period to investigate claim and determine position was reasonable and interest payable from 29 March 2018.

CIC Projects Pty Ltd v Eyre Kingston Pty Ltd [2020] NSWSC 1658
CONTRACT – construction – provision in a co-owners agreement, being one of a suite of agreements entered into for the purposes of a large construction project, requiring partition of land representing the residential component and commercial component of the project respectively between the first defendant (joint vehicle) and the second defendant, and requiring the second defendant to pay to the first defendant Expenses incurred in connection with the commercial component – whether the land partition is conditional upon or interdependent with payment of the Expenses – HELD – it is not.

Hammond v Commissioner for Fair Trading [2020] NSWCATOD 132
ADMINISTRATIVE REVIEW – occupational licensing – builders licence – whether offence of demanding property with menaces with intent to steal is an offence involving dishonesty – whether offence should be ignored – whether acts or omissions trivial – whether sufficient passage of time.

Louise Haselhurst v Toyota Motor Corporation Australia Limited trading as Toyota Australia [2020] NSWSC 1607
COSTS – security for costs – appropriate quantum of security – when tranches of security ought to be paid – where applicant is the defendant in one of seven Takata Air Bag Class Action Proceedings – where extent of the evidence and how the remainder of the proceedings will be case managed yet to be determined ­– consideration of conflicting approaches employed by plaintiff ‘s and defendant’s experts.

The Owners – Strata Plan No 94267 v DEC Engineering & Construction Pty Ltd & Anor [2020] NSWSC 1647
Application for security for costs dismissed.
COSTS – security for costs – where developer and builder made cross claims against each other – where builder’s cross claim based on deed of indemnity – where developer’s cross claim sought to impugn that deed – where developer sought security for costs of builder’s cross claim – where security sought was in substance for costs of developer’s cross claim.
Corporations Act 2001 (Cth); Design and Building Practitioners Act 2020 (NSW); Home Building Act 1989 (NSW).
Uniform Civil Procedure Rules 2005 (NSW).

Morgan v Director of Public Prosecutions [2020] NSWSC 1605
ADMINISTRATIVE LAW – whether there has been jurisdictional error – Local Court decision – Magistrate refused application for professional costs – seeks prerogative relief – whether Magistrate failed to correctly apply s 214 Criminal Procedure Act.

Haertsch v Whiteway (No 2) [2020] NSWCA 287
COSTS – party/party – general rule that costs follow the event – application of the rule and discretion – family provision proceedings – where plaintiff successful at first instance but lost on appeal – whether to make no order as to costs of first instance and appeal proceedings.

Application of Rinehart: 2020/142504 [2020] NSWSC 1624
CONFLICTS OF LAWS – trust law – administration of trust – judicial advice – Western Australian trust – inherent equitable jurisdiction – whether New South Wales statutory advice provision applies – court relies on cross-vested Western Australian statutory power.
EQUITY – trusts and trustees – judicial advice – appeal – applicable principles – proposed appeal from judgment referring trustee’s claim to arbitration and otherwise staying proceedings – proposed appeal from adverse costs order.

Thiess Pty Ltd v Sheehan [2020] FCAFC 198
INDUSTRIAL LAW – construction of enterprise agreement project working hours – hours for which an employee should be paid – dispute as to when project working hours ended – whether on departure from crib hut in particular location at which day’s work takes place or on exit through access gates to whole site.
INDUSTRIAL LAW – principles of construction.
PRACTICE AND PROCEDURE – recusal – apprehension of bias – whether prior professional relationship between judge and party should disqualify the former from sitting – whether bias is reasonably apprehended – recusal not appropriate.

Thunder Studios Inc (California) v Kazal (No 11) [2020] FCA 1656 
PRACTICE AND PROCEDURE – application during trial for leave to discontinue cross-claim under r 26.12(2)(c) of the Federal Court Rules 2011 – where cross-claimant did not lead evidence regarding his motivation or reasons for seeking leave to discontinue – where parties had an extensive history of litigation in various courts around the world – principles for exercise of discretion in allowing party to discontinue proceeding where hearing has commenced – not appropriate to grant leave to discontinue – cross-claim dismissed.

CVP16 v Minister for Immigration, Citizenship, Migrant Services and Multicultural Affairs [2020] FCA 1651
MIGRATION – appeal from Federal Circuit Court – where court dismissed application for judicial review of Immigration Assessment Authority (‘the Authority’) decision to uphold delegate’s refusal of protection visa – where Appellant seeks to advance argument not pursued in court below – where Appellant submits Authority erred in not considering new information ‘credible personal information’ under s 473DD(b)(ii) Migration Act 1958 (Cth) – where Appellant submits Authority’s reasoning illogical and irrational – whether leave to advance new ground granted.

Maygood Australia Pty Ltd v The Owners – Strata Plan No 85338 [2020] NSWCATAP 237
BUILDING AND CONSTRUCTION – Home Building Act 1989 (NSW) – building dispute – Tribunal powers – whether the Tribunal had jurisdiction to determine an application which had been accepted despite the absence of an investigation by Fair Trading NSW or a direction by the President. PRACTICE AND PROCEDURE – whether it was an error of law for the Tribunal to refuse a party leave to amend its Points of Defence at the final hearing.

CPB Contractors Pty Limited v Heyday5 Pty Limited [2020] NSWSC 1625
BUILDING AND CONSTRUCTION – Building and Construction Industry Security of Payment Act 1999 (NSW) ss 22(2), (3), (5) – an adjudication determination upheld a claim for a variation of a building contract consisting of a direction by a head contractor to a sub-contractor to provide spotters for mobile elevated work platforms – challenge to the determination on the grounds that it discloses no evident or intelligible justification for upholding the claim and that the adjudicator denied the plaintiffs procedural fairness because he found them on bases not the subject of submission duly made – HELD – challenges not made out – importance of recognising that adjudicators’ determinations are not judgments of a court, that the procedural behaviour of adjudicators and determinations should not be examined with an overcritical or pedantic eye but should be viewed with common sense and without undue legality and should not be scrutinised with a fine-tooth comb approach.

Modaressi v Aarf [2020] NSWSC 1627
CIVIL PROCEDURE – summary disposal – dismissal of proceedings – frivolous or vexatious proceedings – abuse of process – where plaintiff commenced proceedings seeking same relief as prior dismissed proceedings – where prior proceedings were dismissed due to plaintiff’s failure to appear – where plaintiff has not paid costs of earlier proceedings – whether proceedings constitute an abuse of process.

Pursell v Eversham Close Pty Ltd [2020] NSWDC 372
LEASES AND TENANCIES – strata title – leasehold strata scheme – common property – maintenance and repair of common property – obligations of owner and occupiers – continual water damage – renewal of lease despite water damage.
RESIDENTIAL AGREEMENT – purported breach of lease – failure to fix damaged property – whether defendants failed to act reasonably in the circumstances – whether making an application under s 140 of the SSMA Act 1996 would have been a reasonable step in fixing property.

ANMAR & DEMERLY [2020] FCCA 2645
FAMILY LAW – children – parents agree on equal time regime – four discrete issues remain – mother Muslim – father Christian – children raised as Christians – the likely effect of any changes in the children’s circumstances including the likely effect on the children of any separation from their parents – the culture and traditions of the children and the children’s parents – the parents’ co-parenting relationship – extra-curricular participation.
PROPERTY – balance sheet issues – contributions assessed to be equal – disparity in income earning capacity – 60%/40% adjustment to wife – wife to retain home.
DEPARTURE ORDER – departure order made as sought by wife.

Legislation

NSW

Regulations and other miscellaneous instruments
Environmental Planning and Assessment Amendment (Moorebank Avenue Realignment) Order 2020 (2020-675) – published LW 20 November 2020
Planning and Environment Legislation Amendment (COVID-19) Regulation 2020 (2020-672) – published LW 19 November 2020
Water Management (General) Amendment (COVID-19) Regulation 2020 (2020-673) – published LW 19 November 2020

WA

Regulations and other miscellaneous instruments
Building Services (Registration) Regulations 2011 (WA)

Bills revised following amendment in Committee – 19 November 2020
Bushfires Legislation Amendment Bill 2020
Electricity Infrastructure Investment Bill 2020

Bills passed by both Houses of Parliament
Bushfires Legislation Amendment Bill 2020

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 newsletter is accurate at the date it is received or that it will continue to be accurate in the future.

Published by:

Divya Chaddha, Clare Giugni

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