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Residential Focus

03 July 2019

#Property & Real Estate

Christine Jones

Published by Christine Jones

Residential Focus

The NSW Government’s plan to build stronger foundations

The New South Wales Government has heightened its crack down on compliance and standards in the building industry in the wake of Mascot Towers, by revealing proposed legislation as part of the Government’s Building Stronger Foundations Discussion Paper (Discussion Paper). 

Recent high profile instances of building defects have pressed the Government to grapple with long standing concerns of accountability and quality of work in the building industry. 

The Government’s response, as set out in the Discussion Paper released on 26 June 2019, proposes four key reforms designed to deliver a more robust regulatory and enforcement framework.

The proposed reforms seek to implement various recommendations from the Shergold-Weir report, commissioned by the Building Ministers’ Forum to improve the national best practice model for effectively implementing building regulation and the National Construction Code.

The four key reforms:

1. a requirement for buildings to be designed and constructed to plans that fully comply with the Building Code of Australia (BCA). This involves the introduction of the term ‘building designers’ in NSW legislation and legislatively enshrined obligations on ‘building designers’ to declare that design documentation is compliant with the BCA, and for such documentation to be made available to the building regulator on request.  It is intended for ‘building designers’ to encompass architects, engineers, draftspersons or other building practitioners involved in the preparation and provision of the plan and specifications

2. a requirement for building practitioners to be registered as a 'building designer' to sign off plans and make declarations of BCA compliance
To register, building designers are required to complete an application form, pay a registration fee and certify that they:

  • are fit and proper to carry out designing work
  • have the necessary qualifications, skills, knowledge or experience required to carry out designing work
  • hold the minimum insurance required to protect them where a loss is suffered as a result of breach of duty (which could be difficult in the context of the tightening market for professional indemnity insurance products).

3. introduction of a new industry-wide principle of duty of care, enabling home owners to seek compensation if a building practitioner or ‘building designer’ has been negligent.
This reform would in effect reverse the High Court landmark decisions of Brookfield Multiplex Ltd v Owners Corporation Strata Plan 61288 and Woolcock Street Investments Pty Ltd v CDG Pty Ltd. Often criticised for eroding the rights of consumers, these cases generally held that builders or engineers did not owe a duty of care in negligence to an owners’ corporation or subsequent purchasers where there is protection provided in contract.
The NSW Government is concerned that these cases erode the degree of protection afforded to property owners and therefore intends to enact a law that ensures an industry wide duty of care to homeowners, owners’ corporations, subsequent titleholders and small businesses.

4. appoint a Building Commissioner who regulates all aspects of NSW building industry, including compliance with the proposed reforms.
The Building Commissioner would be vested with the power to investigate and take disciplinary action for improper conduct, including cancelling the registration of ‘building designers’.  Building designers may seek administrative review of decisions on the Building Commissioner in the Tribunal.

The consultation period for the proposed reforms with industry and community stakeholders will continue to 23 July 2019. Consequently the reforms are not likely to take effect until late 2019 or 2020. It has, however, been reported that the Building Commissioner will be appointed in the “coming weeks”.   

Author: Christine Jones , Divya Chaddha & Jeffery Shi
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In the media

PCA: Federal leadership needed to resolve looming insurance crisis
The Property Council of Australia is calling for the Commonwealth, state and territory governments to immediately convene an industry roundtable on resolving the insurance crisis. Insurers around the world have withdrawn exclusion-free professional indemnity insurance for building certifiers and other professionals including engineers and architects in the aftermath of fires involving combustible cladding products (28 June 2019).  More... 

MBA: Fast Track for Infrastructure Needed As Civil Construction Activity Hits Two Year Low
New figures show that the volume of civil/engineering construction work done across Australia fell to a two-year low during the March 2019 quarter. The amount of work done in this part of the construction sector fell by 4.9% during the quarter and has now lost 13.5% over the past year (26 June 2019).  More... 

Australia is still building 4 in every 5 new houses to no more than the minimum energy standard
Many new houses in Australia fall short of what is optimal in terms of environment, economic, and social outcomes, and are well below minimum standards set by many other countries, according to expert research (25 June 2019).  More...    

MBA: Governments Must Act Now On Building Certifier Insurance Crisis
Construction industry leaders met in Canberra to urge the Federal, State and Territory Governments to act now to address the building certifier insurance crisis that has potential to bring building and construction activity to a halt (25 June 2019).  More... 

Infrastructure boom offsets apartment bust for construction workers
First Australia had the mining boom, then the east coast housing boom, now the nation's economic hopes are pinned to its biggest ever infrastructure boom (24 June 2019).  More... 

Most tower blocks defective, study finds
An analysis of 212 building audits in three states has found more than half of high-rise blocks have at least one defect, prompting calls for an insurance overhaul to address the problem (24 June 2019).  More... 

Building Regulation Reforms Essential for Industry Confidence
The NSW Government Discussion Paper ‘Building Stronger Foundations” sets out important reforms for the building industry, says the Urban Taskforce. While the key recommendations to register all building practitioners, the introduction of a duty of care and the appointment of a Building Commissioner are useful, they need to be tested against the two recent structural defect projects (26 June 2019).  More... 

Next Steps in Building Regulation Reforms
The NSW Government has taken the next step in reforming the building and construction industry by providing the first in-depth look at proposed legislation as part of the Building Stronger Foundations discussion paper (26 June 2019).  More...  

Emergency Assistance for Mascot Towers Residents
Residents whose homes in the Mascot Towers are unsafe to occupy will be able to access temporary residential accommodation assistance following a decision by the NSW Government to supply emergency financial support to the Mascot Towers Owners Corporation (23 June 2019).  More... 

NSW building industry facing 'crisis of confidence' after second apartment block evacuation
There is a "crisis of confidence" in the NSW building industry following the second emergency evacuation of an apartment block in Sydney in six months, the Insurance Council of Australia and Federal Government warns (19 June 2019).  More... 

Published - articles, papers, reports

Improving the thermal performance of dwellings for carbon positive and healthy homes
Anir Kumar Upadhyay, Krishna Munsami, Chris Lockhart Smith
CRC for Low Carbon Living: 23 June 2019
Energy consumption in the building sector is significant as people are spending a considerable amount of time indoors. The share of the residential sector’s energy consumption is around 11% of the total energy consumed in Australia to fulfil household energy requirements. The largest share of that energy consumption is used to maintain indoor thermal comfort.  More... 

Build4Life business model analysis: sustainability publishing and peer to peer advice service
James McGregor; CRC for Low Carbon Living: 21 June 2019
The purpose of this report is to summarise the development of the preferred business model identified for Build4Life by reporting of the key activities of the customer discovery phase of Build4Life.  More... 

Guide to low carbon landscapes
Sara Padgett Kjaersgaard, Catherine Evans, Mike S. Harris
CRC for Low Carbon Living: 20 June 2019
This guide is an introduction that offers practical insights for homeowners, builders and designers to illustrate what low carbon landscapes are, how they function and the benefits they provide.  More... 

Australian Bureau of Statistics
26/06/2019 Engineering Construction Activity, Australia, Mar 2019 (cat no. 8762.0)

Practice and courts

AIBS:  Member Communique Professional Indemnity Insurance Update
AIBS has released a statement regarding the availability of PI Insurance for building surveyors in Australia (25 June 2019).  More...  

New Australian Standards

SA MP 103:2019
Modelling of space heating and cooling and ventilation systems, using TRNSYS
Standards Australia.  More... 

AS 3959:2018/Amdt 1:2019
Construction of buildings in bushfire-prone areas
Standards Australia.  More... 

Building Stronger Foundations
Consultation period: 26/06/2019 to 24/07/2019
The NSW Government is implementing four key reforms to deliver a more robust regulatory framework for the construction of buildings. The consultation period is open until 23 July 2019. The appointment of the Building Commissioner is expected to be finalised in coming weeks.  More... 

NSW BPB: Read our Cert Alert newsletter issue 11
27 June 2019 - Consultation on major building industry reforms; new web app available for certification data reporting; practice advice and more. Read our Cert Alert newsletter issue 11 here

Mascot Towers - Information for residents and landlords:  Fair Trading NSW
18 June, 2019 - Mascot Towers, 1-5 Bourke St, Mascot – Information for residents and landlords.  More... 

New dates for Environmental Planning & Assessment Act Updates
Councils, certifiers and other industry practitioners have more time to implement some of the recent EP&A Act updates. Changes affect new provisions for building and subdivision certification, local strategic planning statements for councils in the Greater Sydney Region and community participation plans. There will be a number of other changes that will involve further design and consultation from mid to late 2018. 

Cases

Slotwinski v Nutek Constructions Pty Ltd; Nutek Constructions Pty Ltd v Slotwinski [2019] NSWCATAP
(5) Remits the proceedings to the Consumer and Commercial Division of the Tribunal for further determination
Appeal – Determination of quantum meruit claim – Failure to consider expert evidence relevant to the assessment of a builder’s quantum meruit claim – quantification of quantum meruit entitlement - Leave to appeal granted – Appeal allowed – remittal for further consideration of quantum meruit claim.
Civil and Administrative Tribunal Act 2013 ss36, 38; Home Building Act 1989 ss 48K, 94; Law Reform (Law and Equity) Act 1972, s 6; Civil and Administrative Tribunal Rules 2014 (NSW), r 29

Taouk v Ho [2019] NSWCA 156
APPEAL – leave to appeal – building and construction dispute – appeal from Local Court to Supreme Court on a question of law – primary judge found that respondent not bound by releases and bars to action in the settlement deed – where deed delivered to applicant’s solicitors – where applicant disclaimed deed without executing it – whether injustice to applicant in refusing leave to appeal

Indorato v Ottaviano t/as Transbuild Construction [2019] NSWCATAP 156
Costs - The application for an order for costs of the appeal to be paid by the appellant is refused.

Michael v Hunters Hill Council [2019] NSWLEC 1281
BUILDING CERTIFICATE APPLICATION – conciliation conference – agreement between the parties – orders

The Owners – Strata Plan 89041 v Galyan Pty Ltd (No 2) [2019] NSWSC 788
Defendants to pay the plaintiff’s costs of the proceedings including the costs of the references
COSTS – party/party – proper construction of Heads of Agreement concerning costs – whether agreement to share equally the costs of the referees was subject to agreement as how costs of the proceedings were to be resolved. Civil Procedure Act 2005 (NSW); Home Building Act 1989 (NSW); Uniform Civil Procedure Rules (2005) NSW - determined that the Builder had not established that it was unreasonable for the Owners Corporation to refuse to allow the Builder back on site to carry out remedial work and, accordingly, the Builder should pay the Owners Corporation’s costs. 

Hodder v Fair Trading [2019] NSWCATOD 95
PROFESSIONS AND TRADES – licensing and regulation – contractor license – required experience in residential building work 

Alliance Project Group Pty Ltd v The Owners – Strata Plan No. 92334 [2019] NSWCATAP 154
PRACTICE AND PROCEDURE – Leave to appeal – dismissal of application for summary dismissal – abuse of process – failure to enquire about the value of works for which a work order is sought under the Home Building Act prior to the commencement of proceedings. 

Matterson v Sunrise Pools Australia Pty Ltd (No. 2) [2019] NSWCATAP 152
COSTS – costs of appeal – each party enjoyed success on the appeal – where appellant successful on a new ground permitted at hearing of appeal – indemnity costs sought - measurement of success on appeal– costs of hearing at first instance when second trial of one issue led to a different result than at first trial - fresh evidence at second trial. 

Solar SG Pty Ltd t/as Solar Service Group v Hufton [2019] NSWCATAP 147
APPEAL – Leave to appeal on a ground other than a question of law – Whether Tribunal’s decision fair and equitable – Whether Tribunal’s decision against the weight of evidence – Whether significant new evidence had arisen since the hearing below – Whether leave should be given to admit evidence available below

Parry v Andrews [2019] NSWLEC 86
APPEAL – appeal from Local Court – appeal against conviction for environmental offence – carry out reclamation work without permit – construction of retaining wall and concrete boat ramp on water land – whether involved “reclamation work” – meaning of “reclamation work” – whether works proved to involve reclamation work

Nationwide Builders Pty Ltd v Castelino [2019] NSWCATAP 157
APPEAL – no error of law – leave to appeal refused – no question of principle

The Owners - Strata Plan No 60182 v Bornzin [2019] NSWCATCD 30
STRATA SCHEMES---Orders under Strata Scheme Management Act 1996 (NSW)---Operation of savings and transitional provisions under Strata Schemes Management Act 2015 (NSW)---Whether orders expired---Whether Lot owner had failed to comply with orders---Whether owners corporation should be granted access to perform work

Pollak v Yapp [2019] NSWCA 150
Appeal dismissed with costs. CONTRACTS — Construction — Interpretation — Contract for sale of land — Special condition in contract required vendor to ensure all development conditions complied with prior to completion — Whether warranty had effect of requiring all works subject of development approval to be completed —Special condition contained disclosure that some works were carried out in conformity with development consent but lower staircase requires replacement — Whether disclosure amounts to warranty that all works subject of development approval have been completed — Where some but not all works the subject of development approval in fact completed —— Whether provision of interim occupation certificate capable of satisfying vendors’ obligation to provide an occupation certificate
BUILDING AND CONSTRUCTION — Occupation certificates — Whether interim occupation certificate that certifies some but not all of works the subject of development approval means that whole premises cannot be lawfully occupied — Whether occupation certificate relates to entire property or merely part of property on which certified works situated — Meaning of “altered portion” of existing building
(iv)   please provide details of insurance under the Home Building Act 1989.”  

Pascali v Carr [2019] NSWCA 151
Appeal dismissed with costs. TORT – sale of residential property – special condition for provision of evidence concerning home warranty insurance and compliance with council requirements in relation to building works – implied fraudulent representations in relation to evidence referable to fulfilment of special condition – whether representations made and relied upon
Notwithstanding that the Vendor was not party to the building contract, Section 92C of the Home Building Act 1989(NSW), entitles him to the benefit of the Policy. 

Legislation

NSW

Regulations and other miscellaneous instruments
Building Professionals Amendment (Insurance) Regulation 2019 (2019-277) — published LW 28 June 2019
Coal Mine Subsidence Compensation Amendment (Miscellaneous) Regulation 2019 (2019-278) — published LW 28 June 2019

Contacts:
Christine Jones, Partner - Construction & Infrastructure (Dispute Resolution) 
T: +61 2 8083 0477 
E: Christine.Jones@holdingredlich.com

Divya Chaddha, Associate 
T: +61 2 8083 0457
E: Divya.Chaddha@holdingredlich.com

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.

Christine Jones

Published by Christine Jones

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