Implications of the new Building and Development Certifiers Regulation 2020 (NSW)
The Building and Development Certifiers Regulation 2020 (NSW) (Regulation) was published in the first week of March 2020 and will come into effect on 1 July 2020. The proposed regulation (which we outlined in a previous edition here) was released for public consultation in late 2019, and the Government indicated that it aimed to publish the regulation in December 2019 to give all stakeholders six months to understand what the changes will mean for them. As it was, the Regulation was published on 4 March 2020, leaving certifiers, builders and other stakeholders affected by the Act and Regulation with only four months to prepare for the changes.
Updates to proposed regulations
There have been a small number of changes from the public consultation draft of the Regulation that was exhibited late last year.
The most substantial change is the introduction of four additional provisions. These provisions are summarised below:
The Regulation makes provision for (among other things) certifier registration, professional indemnity insurance requirements, conflicts of interest relating to registered certifiers, contracts required for certification work, accreditation authorities, record keeping, the classes of registration for certifiers and the qualifications, experience, skills and knowledge required for registration in a class, a code of conduct for certifiers, continuing professional development for certifiers and offences for which penalty notices may be issued. A handful of these requirements are discussed in further detail below.
A number of the Schedules relate to registration for certifiers. Schedule 2 prescribes the minimum qualifications and experience required to be met by any person seeking a certificate as a registered certifier. Schedule 3 sets out the knowledge and skills requirements for assessing the competence of an individual to carry out the functions of a registered certifier. Schedule 4 prescribes continuing professional development requirements for registered certifiers.
Registered certifiers are required to be indemnified under a professional indemnity insurance policy, with all certification work carried out by the individual being indemnified under a professional indemnity policy complying with the Regulation.
A Code of Conduct for certifiers is included in Schedule 5 of the Regulation, setting the standard of conduct and professionalism exceed from registered certifiers when performing certification functions. A failure to comply with the Code of Conduct carries a maximum penalty of $11,000 for an individual and $22,000 for a body corporate.
Clause 24 of the Regulation provides specific scenarios which would be considered to create a conflict of interest, with clause 25 providing specific scenarios that are exempt from the conflict of interest provision. The scenarios under clause 24 are in addition to conflicts of interest provided for under section 29 of the Act.
Impacts for certifiers
The Regulation will have the biggest impact upon private certifiers.
Private certifiers (as distinct from certifiers who work for councils) are responsible for the lion’s share of the certification work in New South Wales.
The publicly available register lists 1,928 currently registered certifiers. The vast majority of those are individuals in private practice. In the context of the NSW planning system complying development accounts for about one third of all planning approvals. Private certifiers issue about 87 per cent of all complying development certificates. In 2017-18 there were 53,749 construction certificates issued. The majority of those, 32,937, by private certifiers. Similarly, with occupation certificate of the 59,160, some 40,094 were issued by private certifiers.
Since the introduction of private certification in 1998, private certifiers have long been the target of government regulation, driven by a desire to better regulate their conduct. The Regulation is only one of a number of legislative initiatives in recent times designed to do this.
Perhaps the most significant change for private certifiers will be the effect of the new conflict of interest provisions. The new provisions providing the conflict of interest scenarios effectively preclude certifiers from both providing professional services for design of the development or in respect of the development application and acting as the principal certifier.
Providing input into the design and acting as the principal certifier is commonplace in the industry, with certifiers claiming that provision of design advice as part of an application assists them to be sufficiently knowledgeable in respect of the project to then provide the principal certifier service.
Further, while both the Act and Regulation have attempted to address conflicts of interest and accountability, they fail to address the commercial interest issue which arises out of an owner paying directly for regulating their construction work, and developers and builders forming business relationships with private certifiers.
While existing provisions in the Planning Act would already seek to prevent contactors and others who will carry out the building work from appointing the principal certifier, one method of further reducing the potential for conflict might be to remove the right for contractors and developers to select their own certifiers in the context of other appointments.
Impacts for project and building owners
Private certifiers will not have had time to properly factor in what these changes will have on both the price and the scope of the certification services that they are now allowed to offer. It is likely that the changes will lead to a constraint on supply of services, which will likely lead to delays and an increase in costs for private certifier service and potential exposure under existing building contracts for delays in certification not due to the builder’s conduct.
In terms of protecting the interests of building owners, the Act and Regulation intend to ensure (along with other legislative requirements in the Planning Act) that the process for assessment, approval, inspection and certification of buildings in NSW promotes and achieves structural and fire safety requirements, among other things. However, in what appears to be a lost opportunity, there has been no consideration of the need for more critical stage inspections which are currently regulated by the Planning Act.
Impact for builders
The most significant impact for builders, at least initially, is likely to be delays arising from the implementation of the changes in such a short period and any arising constraint on the availability of certifiers. Contractors ought to consider how this is addressed in any contracts they enter into.
Four months will not be long enough for private certifiers to adjust to the new regime, in terms of familiarising themselves with their new obligations and coming to terms with new restrictions on being involved in both the design and as the principal certifiers.
The introduction of the Act and Regulation from 1 July 2020, combined with the commencement of the new Part 6 (building and subdivision certification provisions) in the Planning Act which took effect from 1 December 2019.
Those changes combined with the uncertainty caused by the stalling of the proposed Design and Building Practitioners Bill 2019 in the Legislative Council, a further crackdown on private certifiers by Fair Trading and continuing difficulties obtaining professional indemnity insurance all mean that the construction industry is likely to see further disruption in the supply of private certification services until everyone has had an opportunity to adjust to the new normal.
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Merrick v Zhu & Ye  NSWCATAP 35
APPEALS---notice of hearing – procedural fairness
Mr Merrick, the appellant, who is involved in the building industry, appeals from a decision made in his absence on 13 August 2019 ordering him to pay $10,000.00 to the respondents.
Hunter Prestige Childcare Pty Ltd v Ball  NSWCATAP 33
BUILDING AND CONSTRUCTION – contract – breach - consent orders – non-compliance with consent orders – assessment of damages. Civil and Administrative Tribunal Act 2013 (NSW), s 80(2)(b), Sch 4 cl 8(1) and (2).
Omaya Investments Pty Limited v Dean Street Holdings Pty Limited (No 5)  NSWLEC 9
ENVIRONMENT AND PLANNING – construction of development consents and construction certificates – development without development consent – scope and purpose of statutory regime – over excavation of subject site – validity of construction certificates – whether construction certificate was validly modified – whether development was carried out otherwise than in accordance with the construction certificate – development without consent – public notification of voluntary planning agreement – occupation certificates – discretion and relief.
Roude v Helwani
(1) The appeal is dismissed. APPEAL – Local Court Act s 39 – Defendant carried out plumbing and electrical works on plaintiffs’ property under oral contract – Defendant successful in Local Court claim in quantum meruit – Whether there was no evidence of the fair and reasonable cost of the works – Where the builder’s invoices were the only evidence of the cost of the works – Appeal dismissed
Evidence Act 1995 (NSW), s 138; Home Building Act 1989 (NSW), s 3.
Mistrina Pty Ltd v Australian Consulting Engineers Pty Ltd  NSWSC 130
CONSUMER LAW – Trade Practices Act 1974 (Cth) – ss 51(1), 82(1) – misleading and deceptive conduct – defendant structural engineer issued a certificate as to structural soundness of a proposed building which certificate was misleading or deceptive or likely to mislead or deceive – plaintiffs claim damages said to have been caused by this conduct because, after the project was delayed to remedy faulty construction undertaken by the builder in reliance on the certificate, a bank, which had lent them money, appointed receivers and sold their land – necessity for plaintiffs to prove, on the balance of probabilities, that the conduct complained of caused them loss – necessity for the plaintiff to prove that the conduct complained of was a material part of the bank’s motivation – plaintiffs fail to bring evidence of the bank’s motivation – plaintiffs failed to establish that the conduct complained of played any, or any sufficient, role in causing the bank to act – HELD: proceedings dismissed.
Sleiman t/as Perfect Kitchens v Dempsey  NSWCATAP 26
(1) Appeal allowed.
BUILDING AND CONSTRUCTION – Contract – damages for breach of contract
Civil and Administrative Tribunal Act 2013 (NSW); Civil and Administrative Tribunal Rules 2014 (NSW)
Home Building Act 1989 (NSW).
Williams v Blacktown City Council  NSWLEC 1080
BUILDING INFORMATION CERTIFICATE – conciliation conference – agreement between the parties – orders
Proclamations commencing Acts
Building and Development Certifiers Act 2018 No 63 (2020-77) — published LW 4 March 2020
Regulations and other miscellaneous instruments
Building and Development Certifiers Regulation 2020 (2020-78) — published LW 4 March 2020
Environmental Planning and Assessment Amendment (Planning for Bush Fire Protection) Regulation 2020 (2020-64) — published LW 28 February 2020
Bills introduced Government – 04 March 2020
Better Regulation and Customer Service Legislation Amendment (Bushfire Relief) Bill 2020
Better Regulation Legislation Amendment Bill 2020
Proclamations commencing Acts - Reminder
Better Regulation Legislation Amendment Act 2019 No 23 (2019-623) — published LW 16 December 2019
Schedule 1 amends the following Acts—(a)Building and Construction Industry Security of Payment Act 1999 No 46,(b)Building and Development Certifiers Act 2018 No 63,(c)Building Professionals Act 2005 No 115,
Reminder: Proclamation, appoint 23 March 2020 as the day on which Schedule 1.8 and  to that Act commence.
Regulations and other miscellaneous instruments
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.