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).
  1. 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.
  2. 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".

This publication does not deal with every important topic or change in law and is not intended to be relied upon as a substitute for legal or other advice that may be relevant to the reader's specific circumstances. If you have found this publication of interest and would like to know more or wish to obtain legal advice relevant to your circumstances please contact one of the named individuals listed.