The NSW Government is working to increase confidence in the NSW building industry by creating a new foundation for construction, by looking at improvement of laws and consumers/workers protection.

How to Have Your Say!

To have your say on the proposed building laws reform in NSW you can:

• Complete the all-in-one survey which allows you to skip through all topics to those that are of interest to you or;
• If you are only interested in a single topic, you may complete one or more of the 7 individual survey topics
• You may also make a submission which allows you to give detailed feedback or respond directly to the questions in the regulatory impact statements

Deadline for Your Feedback

To provide feedback please Friday 25 November 2022.

For more information, please refer to the NSW Government here.

Contact Us

For all strata law advice including by-laws, building defects and levy collections contact our specialist NSW and Sydney strata lawyers here or call 02 9562 1266, we’re happy to assist.

Building Defects – Who is Liable?

Can the director of a building company that is responsible for the construction of a new strata building be held personally liable for defects in the building?

The Design and Building Practitioners Act 2020 (Act) was introduced in 2020 and provides that a duty of care is owed by “a person who carries out construction work” to an owners corporation to avoid defects in the construction of the building. But who exactly is classified as “a person who carries out construction work”?

Is “a person who carries out construction work” limited to the entity that was contracted to do the work such as the builder or does it also include all persons involved in completing the project such as a supervisor, project manager and even the director of the builder’s company or the developer?

Personal Liability of Project Manager

A recent decision by the Supreme Court of NSW has found that the husband of a director of a building company was personally liable for defective building works done by the builder under the Act because he acted as the project manager and supervisor of the builder: see Goodwin Street Developments Pty Ltd atf Jesmond Unit Trust v DSD Builders Pty Ltd (in liq) [2022] NSWSC 624.

In this case, the builder was placed into liquidation and the developer brought proceedings against Mr Roberts the husband of a director of the builder.  According to the Court, Mr Roberts was a project manager of the builder, supervising construction works for the project. Therefore, Mr Roberts was found to be “a person who carried out construction work” under the Act and was found liable for the defects.

Liability of Developer

In another recent Supreme Court case, an owners corporation sued the builder and developer for damages arising from defects.

The Court found, among other things, that a developer could be held liable for defects under the Act as a person who carried out construction work.

The Court also said that under the Act, a person could be liable for defects if they could (but did not necessarily) have control of the building works: see The Owners – Strata Plan No 84674 v Pafburn Pty Ltd [2022] NSWSC 659.

Conclusion

These cases have far reaching consequences for directors, supervisors, project managers, developers and sub-contractors involved in construction work who all could be liable to owners corporations for defects under the Act, even for work done up to 10 years ago (as the Act is retrospective). However, for those persons to be liable, it must be proven that they have had or could have had some control over the building works.

Contact Us

For all strata law advice including by-laws, building defects and levy collections contact our specialist NSW and Sydney strata lawyers here or call 02 9562 1266, we’re happy to assist.

At the commencement of 2018 the new strata building bond and inspection scheme started.

The strata building bond and inspection scheme is designed to incentivise developers ensuring that there is a clear process for builders to minimise any building defect issues in new residential high-rise strata blocks.

 Proposed regulations and Amendments

Proposed amendments to the Strata Building Bond and Inspection Scheme have recently been announced.

Currently, under the scheme developers are required to lodge a bond of 2% for residential and mixed-use high-rise strata buildings of 4 or more storeys.

The proposed amendments to the strata building bond and inspection scheme seek to enhance the ability of Fair Trading to verify the building contract price (on which the 2% building bond is based) and to clarify the role of the building inspector in the scheme.

So, what are the specific proposed amendments?

• Developers must lodge a building bond before applying for the occupation certificate (rather than at any time before an occupation certificate is issued, as is currently required)
• The owners corporation and the developer must agree on the amount to be released from the bond to meet the costs of fixing identified building defects. If they cannot agree, the Secretary will determine this amount
• New investigative powers for Fair Trading to enable verification of the amount of the contract price or building bond, including new entry to premises and search warrant powers
• An increase in the maximum penalty for a developer failing to lodge the building bond from 200 penalty units ($22,000) to 10,000 penalty units ($1.1 million)
• An offence for developers to provide false or misleading information to the Secretary in relation to the contract price or the building bond
• A new ‘good faith’ liability protection for building inspectors, and the professional associations that appointed them, which excludes them from liability for anything done (or omitted to be done) in ‘good faith’ in conducting an inspection

 Have your say!

The deadline to have your say on the proposed Bill and/or Regulation amendments is 11 May 2018, visit NSW Fair Trading to have your say.

For NSW strata legal or levy collection advice please contact us here or call 02 9562 1266, we’re happy to assist.