14 August 2020
Developers and builders will need to carefully consider their liabilities and obligations under current and impending legislative requirements which govern the building and construction sector in NSW.
This will include making assumptions about the status of occupation certificates as endorsements that building work has been accepted by authorities as undertaken in accordance with the relevant building standards.
This assumption has been clarified earlier this month in a case where the NSW Civil and Administrative Tribunal (NCAT) dismissed an appeal by the developer and builder against an initial decision involving the replacement of combustible cladding on a building where an occupation certificate had been granted by the relevant authorities.
In November 2019, NCAT had earlier found that the use of external ’Biowood’ cladding installed on the façade of the apartment building was not compliant with clause 2.4 of the Building Code of Australia (BCA) Specification C1.1 as it was “indisputably combustible” and caused “undue risk” of fire spread between different levels of the building.
As a result, the use of Biowood cladding was found to be in breach of the statutory warranties under section 18B of the Home Building Act (NSW) (HBA) at the time the building work was carried out. Both the builder that carried out the residential building work, and the developer, were ordered to rectify the breach of the statutory warranties by removing the Biowood cladding and replace it with materials that complied with the codes, standards and statutory warranties.
The builder and the developer had argued that the issuing of an Interim Occupation Certificate (IOC) signified that the cladding material was BCA compliant, consistent with Section 6.30 of the Environmental Planning and Assessment Act 1979 (NSW) (EP&A Act).
However, NCAT was not satisfied that the issuing of an IOC created an “irrebuttable presumption” that building materials complied with the BCA and HBA, holding that NCAT has the power to determine whether building material complies with the BCA, regardless of whether an IOC has been issued.
Recent legislative changes now mean that developers and builders and designers will be required to implement a more stringent quality assurance framework and governance structure in particular, to comply with the Design and Building Practitioners Act(NSW) (DBP Act) and the Residential Apartment Building (Compliance and Enforcement Powers) Act (NSW) (RAB Act) - which also takes into account the Building Products (Safety) Act (NSW) (BPS Act).
As part of the DBP Act, design and building practitioners will be required to issue ‘compliance declarations’ at various levels of the building cycle. These compliance declarations will require design and building practitioners to confirm the building work they have undertaken and the building elements which they have used complies with the required industry standards, including the requirements imposed by the BCA.
The DBP Act will have broad application in the sector, with building and design practitioners, building elements and building work broadly defined as follows:
The DBP Act also requires the registration of design and principal design practitioners, building practitioners, professional engineers and specialist practitioners, and imposes insurance obligations as a criteria for registration. The changes are designed to ensure accountability is more readily achieved in the industry.
The NSW Government is creating a regulatory framework with proactive building assurance to ensure that proper consideration given to building standards throughout the building cycle, rather than waiting for a project to be completed before compliance and enforcement mechanisms are put in place.
Principal certifiers will be required to obtain all the necessary compliance declarations for the relevant building work from all design and building practitioners involved in the project before granting occupation certificates.
The RAB Act requires that developers notify the Secretary of the Department of Customer Service 6-12 months prior to applying for an occupation certificate that they have an intention to apply for the certificate. This change will enable government to undertake quality assurance checks, before occupation certificates are issued, in an attempt to prevent defective building work from being discovered in the future.
The changes will also enable the Department to issue prohibition orders prohibiting the issuing of an occupation certificate where:
Under the RAB Act, a new defect category of ‘serious defect’ has also been established, which includes:
It is likely that had the RAB Act been in place when the interim occupation certificate was issued in the Taylor case, the Biowood combustible cladding would likely have been considered a ‘serious defect’ under the RAB Act. This would have prevented an Occupation Certificate from being granted. This highlights the practical implications the new regulatory framework is likely to have on developers and builder.
 Taylor Construction Group Pty Ltd v The Owners - Strata Plan No 92888  NSWCATAP 163
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