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Residential Focus

20 October 2021

#Property, Planning & Development, #Construction, Infrastructure & Projects

Published by:

Stephanie Tan, Simona Njaim

Residential Focus

Design and Building Practitioners Act 2020 (NSW) – issues for contracting

The Design and Building Practitioners Act 2020 (NSW) (Act) and the Design and Building Practitioners Regulation 2021 (Regulation) has introduced new obligations for many industry participants in the Class 2 (or Class 2 containing) space. While the last few months have seen industry participants grapple with understanding their new obligations, many are yet to consider whether their contracts need to recognise and accommodate those obligations.

Some of the key areas for recognition and accommodation are the:

  • new concepts introduced by the new legislation
  • obligation to be registered
  • outputs to be delivered and the impacts on time and cost.

A light-touch approach would involve an obligation to do all things to comply with the contractor’s or consultant’s role under the new legislation, whether that be as a Registered Building Practitioner, Registered Design Practitioner or a Principal Design Practitioner. 

A heavier touch would be to consider some of the typical and key contractual clauses which would be impacted by the new obligations arising under the Act, or by potential non-compliance with the Act and the appropriate allocation of risk. This may include:

  • the obligation to remain registered under the Act for the duration of the contract (and perhaps the DLP) and implications for lapsing or deregistration, for example, as a serious breach for the purpose of a termination clause
  • warranties, in terms of registration and compliance (which may include consideration of warranties from the principal in a non-D&C context)
  • entitlement to commence, in terms of Design Compliance Declarations being recognised as essential preconditions
  • variations, to the extent they require a variation statement under the Regulation and a Design Compliance Declaration for the varied design
  • delay, particularly in terms of the impact of compliance with the Act and Regulation around variations
  • where there is an obligation on a party to obtain an OC (or to assist in that process), recognising the workflow impacts of the new legislation and who is contractually required to meet those.

Principals will have an interest in requiring adherence with the obligations arising under the new legislation as a matter of contract, whereas contractors and consultants will wish to limit their obligations where possible and for remuneration to reflect the additional workflow and risk.

If you have any questions or would like to discuss the impact of the new legislation on your contracts, please speak to us or contact us here.

Authors: Christine Jones, Stephanie Tan & Simona Njaim

In the media

New home sales strengthen in September
"Sales of new detached houses increased by 2.3 per cent in September compared to the previous month," stated HIA Economist Tom Devitt. In the six months from April to September, new home sales were 9.3 per cent above the same period in 2019 and 0.8 per cent above the same period in 2018 (12 October 2021).  More...

Construction loans remain elevated in August
"The number of loans for the construction of a new dwelling fell by 4.9 per cent in August but remains elevated compared to pre-COVID levels," stated HIA Economist, Tom Devitt. This will ensure a solid pipeline of home building work and associated employment well into the second half of 2022 (01 October 2021).  More...

Opinion: Risky tower developers know their number’s up
The NSW Building Commissioner writes that reforms will have a big impact on shoddy builders (16 October 2021).  More...

Opinion: Building defects in strata units: Unstoppable force meets immovable object
Failure by government to come to terms with this repetitive problem is treating our construction industry as a protected species while stealing the future of the people convinced to buy apartments off the plan. During the 2020 public consultation process for the Design and Building Practitioners Act, the Owners Corporation Network pointed out a number of procedural defects in the process giving birth to our strata schemes (14 October 2021).  More...

More than a quarter of new Sydney apartment blocks have defects, report suggests
More than one in four apartment blocks in Sydney built in the decade to 2017 likely have defects, although the true scope of the issue is unknown due to an “information vacuum”, a new report from the University of New South Wales’ City Futures Research Centre suggests (14 October 2021).  More...

Sole trader convicted, fined and placed on community corrections order
Sydney man Matthew Peterson has been fined $12,500 and ordered to pay $21,715 in compensation for offences including engaging in residential building work when unlicensed and using false documents to obtain financial advantage (08 October 2021).  More...

Published – articles, papers, reports

Australian Bureau of Statistics
13 October 2021: Dwelling commencements rise in June
08 October 2021: Building approvals data for small geographic areas

Practice and courts

ABCB WMTS: 535–2021: Public comment draft round one
For public comment technical specification for the WaterMark Certification Scheme. This specification includes requirements for air valves for plumbing applications. Closes 2 December 2021. Click here for more information.

ABCB: Residential energy efficiency consultation RIS now open for comment
We are now seeking comment on a CRIS providing an analysis of proposed amendments to the residential energy efficiency provisions included in stage two of NCC 2022 public comment draft. The CRIS will be available for comment until 7 November 2021. Click here for more information.

ABCB: National Construction Code 2022 public comment draft (stage two)
The National Construction Code is updated every three years, based on industry research, public feedback and policy directions from governments to the ABCB between publishing cycles. The ABCB seeks comment on proposed amendments to energy efficiency and condensation technical provisions, via this second and final stage of public consultation, closing 17 October 2021. Click here for more information.

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.

Cases

Welsh v Lawbeach Pty Ltd [2021] NSWCATAP 313
“Lawbeach Pty Ltd trading as Tonka Mini Excavators and Landscaping is to pay Michael Welch the sum of $11,320 within 28 days of the date of publication of these orders.”
APPEAL – extension of time to lodge notice of appeal – significant new evidence – home building – jurisdiction – whether claim is a building claim – whether materials supplied by homeowner are included in calculating reasonable market value of labour and materials involved in the work – consumer claim – breach of guarantee as to due care and skill – incorrect approach to assessment of damages.
Australian Consumer Law 2010; Civil and Administrative Tribunal Act 2013; Civil and Administrative Tribunal Rules 2014; Fair Trading Act 1987; Home Building Act 1989; Home Building Regulation 2014.

Willoughby Homes Pty Ltd v Pawar [2021] NSWCATAP 308
APPEAL – that costs order inadequate – held appellant conducted proceedings in a manner which disentitled it to a full costs order – appeal dismissed – home building contract. Differences arose between the parties concerning allegations by the respondent that certain work had not been completed by the appellant and that some of the work carried out required rectification.

Taylor Construction Group Pty Ltd v Strata Plan 92888 t/as The Owners Strata Plan 92888 [2021] NSWSC 1315
ADMINISTRATIVE LAW – appeal pursuant to section 83 of the Civil and Administrative Tribunal Act 2013 (NSW) – decision of Appeal Panel of Civil and Administrative Tribunal that use of “Biowood” attachments to external walls of multi-storey residential buildings constitutes undue risk of fire spread – whether incorrect formulation and application of proper test and the Building Code of Australia – whether finding of undue risk made in absence of evidence – appeal dismissed.

Strata Plan 94417 trading as The Owners-Strata Plan 94417 v TC Build [2021] NSWSC 1284
COSTS – security for costs – whether security should be ordered against an Owners Corporation.

AGC Roof Maintenance Northern Division Pty Ltd v Chief Commissioner of State Revenue [2021] NSWCATAD 199
TAXES AND DUTIES – payroll tax – independent contractor – common law employee – relevant contract – 90-day exemption – services to the public exemption – two-person exemption.

Insurance Australia Ltd v Holden & Ors [2021] NSWDC 142
CONSTRUCTION OF INSURANCE POLICY – Home Owners Warranty insurance policies issued by insurer to a building company on basis that deeds of guarantee and indemnity would be executed – whether the first defendant entered into a valid deed of guarantee and indemnity.
CONSTRUCTION OF A GUARANTEE – whether the first defendant is bound by first and/or second deeds of guarantee and indemnity – whether deeds of guarantee and indemnity are enforceable.
CONSTRUCTION OF DEED OF RELEASE – whether bringing of proceedings by the plaintiff against the first defendant was a breach of a covenant not to sue in release deed signed by the parties.
UNJUST CONTRACTS – whether guarantee is an unjust contract pursuant to section 7 of the Contracts Review Act 1980 (NSW).
UNCONSCIONABILITY – whether an independent and adequate explanation of the legal effect of executing a guarantee was provided – whether the first defendant acted in reliance upon statements from her husband, family members and/or insurer.
UNCONSCIONABLE CONDUCT – equitable doctrine of unconscionable dealing – meaning and scope of unconscionability under section 21 of the Australian Consumer Law – whether the section 22 factors that assist in determining if a person has engaged in unconscionable conduct are relevant to the relationship between an insurer and a guarantor – whether the section 22 factors are restricted to the relationship between the insurer as the “supplier” and the insured business as a “customer”.
EVIDENCE – absence of handwriting expert evidence – no evidence presented that first defendant did not understand the purport and effect of the transaction.

SafeWork NSW v Ultra Refrigeration Pty Limited; SafeWork NSW v Romolo Prestia [2021] NSWDC 149
CRIME – work health and safety – risk of death or serious injury – duty of persons undertaking a business or undertaking.
PROCEDURAL – reasonably practicable – likelihood of risk – knowledge of risk – what the defendant ought reasonably have known.
SENTENCE – 25 per cent reduction for the utility of the plea.

Legislation

Commonwealth

Building and Construction Industry (Improving Productivity) Act 2016
12/10/2021 – Act No. 87 of 2016 as amended.

NSW

Regulations and other miscellaneous instruments
Uniform Civil Procedure (Amendment No 98) Rule 2021 (2021–585) – published LW 8 October 2021.

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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