Significant new laws proposed for NSW construction industry including industry-wide duty of care reform

The “combustible cladding crisis” together with the recent evacuations of Sydney’s Opal and Mascot Towers has seen a hastening by State Governments to amend existing laws and regulations to improve compliance and enforcement in the construction industry to ensure the safety of buildings across Australia.

In response to the Shergold Weir Building Confidence Report, which identified serious compliance and enforcement failures and made 24 recommendations to address those failures, the NSW Government released the Building Stronger Foundations: Discussion Paper, which proposes legislative reforms directed at achieving “a more robust regulatory framework for building and construction”. If adopted, these reforms will have significant impact on NSW’s building and construction industry.

Duty of Care for building practitioners

The NSW Government has now announced that it is planning to introduce new laws which will impose on building practitioners, an industry-wide duty of care owed to owners’ corporations, subsequent homeowners and unsophisticated development clients. As the law currently stands, it is likely that a duty of care (in negligence) will only exist where the owner is ‘vulnerable’ and unable to protect themselves from a lack of reasonable care by a building practitioner. The proposed reforms serve to offer protection to owners and others which otherwise may not exist, as a result of the decisions of the High Court in:

  • Brookfield Multiplex Ltd v Owners Corporation Strata Plan 61288 (2014) 254 CLR 185 where it was held that the builder did not owe a duty of care to an owner’s corporation of a serviced apartment scheme for latent defects causing economic loss; and
  • Woolcock Street Investments Pty Ltd v CDG Pty Ltd (2004) 216 CLR 515 where it was held that an engineer did not owe a duty of care to subsequent purchasers of a commercial property for latent defects causing economic loss.

Further proposed changes

The NSW Government has also proposed to introduce:

  • a requirement that ‘building designers’ (such as architects and engineers) formally declare that plans, specifications and performance solutions they provide are compliant with the Building Code of Australia, and that builders declare that buildings are built according to the those plans;
  • a new registration scheme for designers and builders who intend to make those declarations; and
  • a Building Commissioner to act as the consolidated regulator for the construction industry, with powers to investigate and take disciplinary action against building practitioners that engage in improper conduct.

What does this mean for you?

If the proposed amendments are implemented, builders, developers, building designers, architects, contractors and other building practitioners, will owe a clear duty of care for defective works to owners’ corporations, subsequent homeowners and unsophisticated development clients.

The NSW Government plans to introduce the enabling legislation into Parliament by the end of 2019. We will keep you informed of developments as further details come to light regarding the overhaul of NSW’s building laws.

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.

Key contacts:

Stephen Pyman – Director | Principal
Christopher Rowden – Principal


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