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New Rules for Designers and Builders in NSW

Goran Gelic, Jos Mulcahy, Chantal Reigo, Kailee Shurmer

The highly anticipated Design and Building Practitioners Regulation 2021 (Regulations) have been released and has taken effect. These Regulations will work with the Design and Building Practitioners Act 2020 (NSW) (Act) to provide guidance around the new obligations imposed on builders, designers, and engineers of NCC Class 2 (residential apartments) Buildings.

You can view the Regulations here

 


Key Takeaways

  • Builders, engineers and design practitioners of Class 2 buildings (residential apartments) can apply to be registered on the NSW Planning Portal from 1 July 2021.
  • Mandatory insurance requirements will commence for registered practitioners from 1 July 2022.
  • From 1 July 2021 building work on Class 2 buildings cannot commence until regulated designs and design compliance declarations are lodged on NSW Planning Portal.
  • The following registered practitioners will be required to make compliance declarations in relation to the regulated designs:
    • Design Practitioners – design compliance declarations;
    • Principal Design Practitioners - principal compliance declarations; and
    • Where there is no Principal Design Practitioner, a Building Practitioner – a building compliance declaration.
  • The relevant standard form declarations can be found here.
  • Class 2 Building work commenced prior to 1 July 2021 – declarations are not required to be made by a practitioner however the building practitioner must lodge on the NSW Planning Portal, a copy of all designs relied on to carry out the building work before applying for an Occupation Certificate.

Background

On 11 June 2020, the Act was released. The aim of both the Act and Regulations are to raise the standards of the building and construction industry and to restore community confidence by ensuring that buildings being constructed are designed and constructed in accordance with the Building Code of Australia (BCA).

The Act establishes a statutory duty of care on anyone who carries out construction work to exercise ‘reasonable care’ to avoid economic loss caused by defects in or related to a building.

On and from 1 July 2021, the following additional elements of the Act have come into force:

  1. the requirement for designers, builders and engineers to be registered under a new statutory registration scheme;
  2. a new scheme where compliance declarations will be made by designers and builders in respect of their work; and
  3. the introduction of a mandatory obligation for registered practitioners in respect of insurance coverage for their work.

Registration and CPD Requirements

The Act creates a registration scheme mandating that certain practitioners apply to be registered if they intend to declare that their ‘regulated designs’ or building work comply with the BCA.

The Regulations have clarified that the registration scheme only applies to ‘building work’ and ‘professional engineering work’ (as defined by sections 4 and 31 of the Act) carried out for ‘Class 2’ buildings under the BCA. 

The Regulation provides for a transitional registration period between 1 July 2021 and 31 December 2021 in which practitioners who apply (within time) to be registered in a particular Class of registration will be afforded “deemed registration” in their applicable class.

What is a Class 2 Building?

A Class 2 building is an apartment building or a building that contains two or more sole-occupancy units, with each sole-occupancy unit being a separate dwelling. 

Mixed-use buildings containing a Class 2 component are also included. This means that the requirements apply to work on all parts of the building, not just the Class 2 part. For example, an apartment building with a carpark, or an apartment building with commercial shops on ground level.

What practitioners need to become registered?

On and from 1 July 2021, the following practitioners need to become registered in order to make compliance declarations, perform professional engineering work, or perform other work requiring registration under the Act:

  • design practitioners;
  • principal design practitioners;
  • building practitioners; and
  • engineers.

Compliance declarations

Under the Regulations, building work on Class 2 buildings cannot commence until “regulated designs” and the compliance declarations are lodged on the NSW Planning Portal.

“Regulated designs” means designs prepared for a building element or a performance solution, for building work.

A “building element” is any of the following:

  • fire safety systems;
  • waterproofing;
  • building structure;
  • building enclosure; and
  • building services.

A “performance solution” is an alternative assessment method of achieving compliance with the BCA

The Regulations stipulate the form and content of the compliance declarations, standard form declarations can be found here.

Practitioners will be required to make the following compliance declarations:

 


Practitioner


Required Compliance Declaration


Timing of Compliance Declaration

Design Practitioners (e.g. architects or engineers)

Responsible for making design compliance declarations – declare that designs comply with the BCA and other relevant standards.

Before building work commences, during the works (for variations) and before the occupation certificate is issued.

Principal Design Practitioners (e.g. superintendent)

An optional role which may be required for more complex projects. The principal design practitioner coordinates and collects designs and declarations from other practitioners and can lodge on the building practitioner’s behalf. Where one is appointed, they are responsible for making principal compliance declarations.

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 occupation certificate.

Building Practitioners

Person responsible for overseeing the building work. Where there is more than one builder, the Building Practitioner is the principal contractor.

Where there is not a Principal Design Practitioner, the Building Practitioner 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 occupation certificate.

 

Non-compliance with these requirements can attract a fine of up to 200 penalty units ($22,000) for a company and 100 penalty units ($11,000) for an individual.

Variations

All variations to regulated designs must be declared for compliance. Variations can be declared using the same form to make a design compliance declaration. Registered building practitioners must lodge each varied design and declaration within 1 day of carrying out the variation work.

The requirement to declare and lodge a variation only applies to a variation to a building element or a performance solution. Other variations to building work, which do not relate to a building element or performance solution, only require the building practitioner to record the variation in a variation statement.

Any variations after an occupation certificate is issue must also be declared. Registered building practitioners must lodge regulated designs showing any variations to building work within 90 days of the OC being issued or confirm that no variations have been made.

Penalties

Any practitioner failing to make a declaration or who makes a declaration when unregistered will face a maximum penalty of $165,000 as a body corporate or $55,000 in any other case. Any practitioner that makes a knowingly false or misleading declaration will face a maximum penalty of $220,000 and/or two years imprisonment.

Insurance requirements

Mandatory insurance requirements will commence for practitioners from 1 July 2022. There is a transitional period between 1 July 2021 to 30 June 2022, which means during this period, insurance will not be mandated as a condition of registration.

From 1 July 2022, the Act requires all registered practitioners to be ‘adequately insured’. ‘Adequately insured’ means, that a practitioner is required to have an adequate level of indemnity for the liability that could be incurred by the practitioner in the course of their work (Part 6 of the Regulation). 

Design practitioners, principal design practitioners and professional engineers are required to have a professional indemnity policy. Building practitioners must be indemnified under an insurance policy however, they do not strictly have to be covered by a professional indemnity policy.

The Regulation clarifies that it does not require a practitioner to hold insurance in relation to any work which predates the practitioner’s registration.

Registered practitioners are also required to keep records specifying how they have determined that a policy they hold provides for an adequate level of indemnity.  Those records are to be maintained for a period of five years.

Work commenced prior to 1 July 2021

If building work on Class 2 buildings is authorised to be carried out by a construction certificate or complying development certificate and the work commences before 1 July 2021:

  • design practitioners are not required to give a design compliance declaration with respect to the designs;
  • practitioners and engineers are not required to be registered under the Act before carrying out Class 2 work; and
  • a building compliance declaration is not required.

However, the building practitioner on Class 2 buildings must still lodge on the NSW Planning Portal, a copy of all designs relied on to carry out the building work before applying for an OC. A certifier must not issue an OC unless this has been done.

What you need to do

Builders, engineers and design practitioners of residential apartment complexes should:

  1. become familiar with the requirements of the Regulations and the prescribed declarations – seek legal advice where you are uncertain;
  2. conduct a review of all existing contracts to ensure the contract is consistent with the Act and the Regulations;
  3. within your organisation, identify each individual’s Class of registration and apply to be registered through the NSW Planning Portal;
  4. keep internal records of each employee’s CPD requirements;
  5. implement training to employees for the new variations regime and the process when applying for an occupation certificate; and
  6. for new projects starting after 1 July 2021, ensure all Regulated Designs required to be lodged before commencing construction work on site have been lodged. 

How we can help?

Our building and construction experts at Russell Kennedy Lawyers can assist you by providing tailored advice specific to your business to ensure you are complying with the Act and the Regulations.

For more information, please contact Goran Gelic, Chantal Reigo, Jos Mulcahy, or Kailee Shurmer from our our Dispute Resolution (Infrastructure, Building and Construction) team.

If you would like to stay up to date with alerts, news and Insights from our NSW Construction and Infrastructure team, you can subscribe to our mailing list here.

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