Are you ready for a statutory duty of care in NSW and phase 2 of Project Trust Accounts in QLD?

New South Wales

In our update published in June 2020, we discussed the key provisions of the Design and Building Practitioners Act 2020 (NSW) (the Act). Apart from the statutory duty of care that came into force on 11 June 2020, the remaining provisions are set to begin on 1 July 2021.

The aim of the Act and the supplementary Design and Building Practitioners Regulation 2021 (NSW) (The Regulation) is to raise industry standards and restore community confidence by eradicating ‘design on the run’ and ensure that buildings are designed and constructed in accordance with the Building Code of Australia (BCA).

In a nutshell, the Act:

  1. creates a statutory duty of care on any person who carries out construction work to exercise ‘reasonable care’ to avoid economic loss caused by defects in or related to a building;
  2. requires designers, builders and engineers to be registered under a new statutory registration scheme;
  3. establishes a scheme for the proviso of compliance declarations to be made by designers and builders in respect of their work; and
  4. creates a mandatory obligation for registered practitioners in respect of insurance coverage for their work. The Regulation has deferred the commencement of the insurance requirements until 1 July 2023 to allow more time for insurance products to be developed and ensure that practitioners have time to prepare.

What building work is covered by the Act and Regulations?

The Act and Regulation will apply to all building work on buildings classified as Class 2 in the BCA (buildings containing 2 or more units, being residential apartment) or buildings containing a Class 2 element (mixed-use buildings), including alterations or renovations.

Compliance declaration scheme

Design compliance declaration: A registered design practitioner (i.e. architects or engineers) must provide a design compliance declaration for regulated designs before work commences, during the works (for variations) and before the issue of an occupation certificate (OC).

Building compliance declaration: A registered building practitioner (i.e. principal contractor) must lodge a building compliance declaration, contractor documents and other required documents (i.e. variation statements, regulated designs, principal compliance declaration) on the NSW Planning Portal before an application is made for an OC.

Transitional arrangements for lodgement of declarations

The following arrangements have been implemented to facilitate a smooth transition of the new reforms:

If the regulated building work is authorised to be carried out by a construction certificate or complying developments certificate and some of the work commences before 1 July 2021:

(a)  the design practitioners are not required to give a design compliance declaration with respect to the design;

(b)  no person is required to be registered under the Act before carrying out the regulated building work; and

(c)  there is no need for a building compliance declaration to be prepared for the regulated building work.

2. As above, insurance requirements have been deferred to 1 July 2023.

Queensland

In our previous update, we set out the now confirmed commencement dates for the remaining phases of the Project Trust Account regime set out in Part 2 of the Building Industry Fairness (Security of Payment) Act 2017 (Qld).

On 1 July 2021, the second phase of the Project Trust Account regime will come into effect extending the scope of the regime to include:

  1. all State Government projects worth $1Mil or more;
  2. all hospital and Queensland Health Services projects worth $1Mil or more (the upper cap of $10Mil has been removed); and
  3. all State authority projects of $1Mil or more.

On 30 June 2021, we will release our update on the forthcoming ‘Retention Trust Account’ changes under the Project Trust Account Regime.

 

Key contacts:

Stephen Pyman- Director

 

 

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