Building Products (Safety) Bill 2017

The NSW Government has introduced the Building Products (Safety) Bill 2017 (Bill) to address safety risks arising from the use of non-conforming building products in the state. The Bill: 

  • enables the Fair Trading Commissioner to ban the use of unsafe building products and to issue affected building notices
  • permits enforcement authorities to make building product rectification orders
  • confers a raft of investigatory powers on authorities to support the identification and elimination of unsafe building products.

Read more...

 

Coming, ready or not? Strata building bond and defect inspection scheme to come into effect in NSW on 1 January 2018

We are rapidly approaching 1 January 2018, the commencement of the long-awaited (and twice deferred) strata building bond and defect inspection scheme, which will complete the NSW Government’s most significant overhaul of strata law in decades.

This aspect of the reforms is intended to incentivise developers to address building defects early and quickly to avoid litigation.

The scheme requires developers to pay a building bond equivalent to 2% of the contract price for the building work to the Secretary of the Department of Finance, in order to secure funding for the rectification of any building defects. The bond is held by the Department for a period of two years. A building inspector (who must be completely independent from the developer) is appointed at the cost of the developer to conduct inspections within that period. The interim inspection takes place at 15-18 months after the completion of the work. If defects are identified in the interim report and remain unrectified at the final inspection at 21-24 months, the owners corporation may access the bond for the purpose of rectifying those defects.

Subject to any further commencement delay, building contracts entered into from 1 January 2018 for new residential or mixed strata properties of four storeys in height or above will be subject to the new scheme.

Industry participants should consider the impact of the changes. Developers would be well advised, when entering into building contracts from 1 January 2018, to ensure that the defects liability period extends to the expiry of the period within which the building bond under the new regime can be accessed by the future owners’ corporation. Developers should also consider requiring builders to provide back-to-back security to mirror the 2 per cent building bond. Main contractors should equally consider passing risk down the chain. 

We have speculated previously about the potential for a rush of contracts being signed in the lead up to the commencement date, however with the commencement date twice deferred already, it may now have little impact in terms of generating avoidance behaviour.

The impacts on end users and those advising them, including the building inspectors appointed under the inspection regime, will not be felt for another two to three years. Strata managers could well use this time to consider establishing a communication regime to inform owners of key dates and to consider how to effectively manage the interaction and overlap with enforcing rights under the s.18B Home Building Act statutory warranties.

Editorial: Joshua Clarke

In the media

Director of builder that went bust fails to provide records because of 'mental conditions'
Subcontractors like Beau Hartshorn say they’ve lost hundreds of thousands of dollars in the collapse of building giant Walton Construction. Now, a confidential liquidator’s report obtained by the ABC claims the company's director knowingly traded while insolvent — but the director denies any breach of duties (17 November 2017).  More...

Government bans use of dangerous cladding
Fire safety in high-rise buildings will be enhanced by new powers to crack down on the dangerous use of building products, Minister for Better Regulation Matt Kean announced today.  Breaches of the new bans will render offenders liable to fines of more than $1 million for companies, and more than $200,000 for individuals (16 November 2017).  More...

HIA: Changes to Planning Rules will cause more pain for new Homebuyers
The package of amendments made today to the NSW Planning Act will add more cost and further delays to new home buyers says the Housing Industry Association (14 November 2017).  More...

Man fined over illegal construction
A Sydney man who conned householders into believing he was licensed to build granny flats and carry out domestic renovations has been ordered to pay more than $110,000 in fines, costs and consumer compensation. Minister for Better Regulation Matt Kean said Samer Hraiki, 41, of Ashbury, was sentenced in Parramatta Local Court on 13 November after being convicted of 15 offences under the Home Building Act 1989 and the Australian Consumer Law (15 November 2017).  More...

Construction company fined over worker's spinal injuries
A Sydney construction company has been fined $300,000 for failing to properly manage a faulty gate which fell on a worker, fracturing her lower spine and pelvis, Minister for Better Regulation Matt Kean said. It is the third time SafeWork NSW has prosecuted Ceerose Pty Ltd for failures in workplace safety, including one incident which resulted in a worker’s death in 2013 (14 November 2017).  More...

Lendlease reveals plans for second engineered timber building at Barangaroo
Lendlease is seeking planning approval for another engineered timber office building at Barangaroo South – a seven-storey “sister building” to the already completed International House Sydney (13 November 2017).  More...

Practice and courts

Australian Cladding and Building Standards Summit 2017
The Australian Cladding & Building Standards Summit, 7-8 Dec 2017, Melbourne, will address issues of safety standards and non-conforming building products.  More...

NSW BPB: EP&A Act amendments passed Parliament
The Environmental Planning and Assessment (EP&A) Amendment Bill passed Parliament on 15 November. Part 6, which consolidates and revises provisions related to building and subdivision certification, is proposed to be administered by the Minister for Innovation and Better Regulation (17 November 2017).  More...

NSW BPB:  EP&A Regulation under review – comments invited by 24 November
The Department of Planning and Environment is reviewing the Environmental Planning and Assessment Regulation 2000 (EP&A Regulation).  More...

NSW BPB: ‘Get the Site Right’ campaign this month to reduce building site erosion
‘Get the Site Right’ is an ongoing compliance campaign targeting erosion and sediment control on building sites (02 November 2017).  More...

NSW BPB: Strata building bond scheme now commences 1 January 2018
The new strata building bond and inspection scheme will now commence on 1 January 2018.  More...

Cases

Elias v Alloha Formwork & Construction Pty Ltd [2017] NSWSC 1546
1. Judgment in favour of the plaintiffs against the first defendant in the sum of $804,703.55.
2. Judgment in favour of the plaintiffs against the second defendant in the sum of $477,013.45.
3. Judgment in favour of the plaintiffs against the third defendant in the sum of $467,950.00.
BUILDING AND CONSTRUCTION – Home Building Act 1989 – Statutory warranties – Breach – Calculation of damages for cost of rectification of defects – Calculation of delay costs.
CONSUMER LAW – Australian Consumer Law s 18 – Misleading or deceptive conduct – Whether defendants made representations – Whether representations were misleading or deceptive – Whether plaintiffs relied on representations.
CONTRACTS – Breach of contract – Consequences of breach – Right to damages – Whether plaintiff entitled to costs of rectifying defects in building or cost of demolition and rebuild.
CONTRACTS – Building and construction – Formation – Whether first defendant entered into contract with plaintiffs – Whether contract varied by agreement.
CONTRACTS – Remedies – Damages – Remoteness of damage – Whether plaintiff’s impecuniosity must be taken into account in determining what loss is reasonably foreseeable.
CONTRACTS – Termination of contract – Repudiation – Whether first defendant repudiated contract – Whether plaintiffs accepted repudiation.
NEGLIGENCE – Duty of care – Breach – Whether third defendant breached duty of care in issuing construction certificates – Whether plaintiffs suffered loss as consequence of defendants’ breach.
Australian Consumer Law s 18; Environmental Planning and Assessment Act 1979 (NSW); Environmental Planning and Assessment Regulation 2000 (NSW); Home Building Act 1989 (NSW).

Matterson v Sunrise Pools Australia Pty Ltd [2017] NSWCATAP 211
APPEAL- home building contract-new evidence from tests about defects carried out after the hearing– tests damaging to works - whether new evidence reasonably available- adequacy of reasons as to one issue- lack of proof of defects – construction of the contract concerning the height of the spa.

Legislation

NSW

Bills introduced Government – 20 November 2017
Building Products (Safety) Bill 2017
Building Products (Safety) Bill 2017 – Explanatory Note
Building Products (Safety) Bill 2017 – Second Reading Speech

Non-Government
Snowy Hydro Corporatisation Amendment (Restriction on Sale) Bill 2017

Bills passed by both Houses of Parliament
Electricity Supply Amendment (Emergency Management) Bill 2017
Environmental Planning and Assessment Amendment Bill 2017

 

Contacts:

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

Cameron Sheather, Partner - Planning, Property & Environment 
T: +61 2 8083 0461 
E: cameron.sheather@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 publication is accurate at the date it is received or that it will continue to be accurate in the future. We are not responsible for the information of any source to which a link is provided or reference is made and exclude all liability in connection with use of these sources.

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