Introduction
The Design and Building Practitioners Act 2020 (NSW) establishes significant compliance obligations for the New South Wales building industry, aiming to improve the quality and safety of construction work. This legislation imposes a statutory duty of care and a comprehensive registration system, holding key parties, including design practitioners and builders, responsible for their work to ensure it meets the standards of the Building Code of Australia.
For developers, understanding these requirements is critical, as the duty of care under the Design and Building Practitioners Act 2020 (NSW) extends to any person who has substantive control over the carrying out of building work. This guide provides essential information on a developer’s obligations under this specific Act, but it’s also important to understand what the law says you must do as a developer in NSW more broadly to manage compliance and mitigate risks.
Developer’s Role & Obligations Under the NSW Design & Building Practitioners Act
Defining a Developer’s Substantive Control
Under the Design and Building Practitioners Act 2020 (NSW), a developer’s liability is triggered if they are considered a person who carries out “construction work.” The definition of construction work extends beyond physical building activities to include:
- Supervising building work
- Coordinating construction activities
- Project managing development
- Otherwise having “substantive control” over the carrying out of any building work
This concept of substantive control is crucial for developers in the NSW building industry. The courts have indicated that a developer may have substantive control if they are in a position where they can control how construction work is performed, even if they do not actively exercise that control.
To illustrate this point, the NSW Supreme Court in The Owners – Strata Plan No 84674 v Pafburn Pty Ltd [2022] NSWSC 659 provided an example of a developer who owned all shares in a building company and had common directors. It has been established that developers can be held liable if it is shown they had the ability to exercise substantive control, making them responsible for the duty of care under the design and building practitioners act.
Key Obligations for Developers Under the Building Practitioners Act 2020
Developers have several key obligations under the Design and Building Practitioners Act 2020 (NSW) to ensure compliance and uphold standards throughout a project’s lifecycle. These responsibilities are central to the act’s goal of improving the quality of building work in New South Wales.
A developer’s primary obligations include:
Obligation | Description & Key Requirements |
---|---|
Ensuring Practitioner Registration | Developers must verify that all design practitioners, professional engineers, and building practitioners engaged for a project are properly registered under the Act. |
Overseeing Compliance Declarations | Responsible for managing the entire compliance declaration process, including ensuring registered design practitioners provide design compliance declarations before work commences and verifying the building practitioner provides a final building compliance declaration before an occupation certificate application. |
Managing the Occupation Certificate Process | Developers must provide notice to the Secretary of the Department of Customer Service of their intention to apply for an occupation certificate. This notice must be given at least six months before, and not more than twelve months before, the application is submitted. |
Failure to comply with these obligations can result in significant fines and orders prohibiting the issuance of the occupation certificate.
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The Statutory Duty of Care for Developers in NSW
What the Non-Delegable Duty of Care Means for Your Building Work
The statutory duty of care established by the Design and Building Practitioners Act 2020 (NSW) is non-delegable. This means a developer who owes this duty cannot transfer or assign that responsibility to another party, such as a builder, subcontractor, or consultant.
The developer remains ultimately liable for ensuring reasonable care is taken to avoid economic loss from defects. This principle was confirmed by the High Court in the case of Pafburn Pty Ltd v The Owners – Strata Plan No 84674.
The court determined that because the duty of care under the Design and Building Practitioners Act 2020 (NSW) is non-delegable, developers cannot rely on the proportionate liability provisions found in the Civil Liability Act 2002 (NSW). Consequently, a developer cannot reduce their liability by arguing that other parties, like contractors or engineers, were also responsible for the defective building work, a common issue addressed through commercial litigation.
The practical implications for developers are significant:
- You cannot discharge your duty of care simply by exercising reasonable care in selecting a competent head contractor or consultant
- If a subcontractor performs defective work, the developer can be held vicariously liable for the resulting economic loss
- This places the responsibility squarely on the developer to manage the entire construction process and ensure the work performed by all parties meets the required standards
Who Benefits from the Duty of Care & Its Retrospective Application
The duty of care under the Design and Building Practitioners Act 2020 (NSW) is owed to both the current and all subsequent owners of the land where the construction work was performed. This ensures that the protection against economic loss caused by defects passes from one property owner to the next, providing long-term accountability within the NSW building industry.
A crucial aspect of this duty is its retrospective application. This means it extends to work completed before the legislation was enacted. An owner can make a claim for economic loss resulting from a breach of this duty under specific conditions.
The duty of care applies if the economic loss:
- First became apparent within the 10 years immediately before 11 June 2020
- First becomes apparent on or after 11 June 2020
For these purposes, a loss is considered to have “become apparent” when an owner first becomes aware, or reasonably should have become aware, of the loss. This retrospective reach significantly expands the potential liability for developers, covering defects in projects completed up to a decade before the law commenced.
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Managing Regulated Designs & Compliance Declarations for Building Practitioners Act Compliance
The Process Before Building Work Starts
Before any building work can commence on a project, the Design and Building Practitioners Act 2020 (NSW) mandates a strict documentation and lodgement process. A registered building practitioner must lodge all required designs and declarations on the NSW Planning Portal. This critical first step ensures designs are compliant before construction begins.
It’s important to note that a certifier cannot issue a construction certificate or complying development certificate until these obligations are met. The building practitioner, or a nominated ‘appropriate practitioner,’ must lodge a complete package of documents that serves as the foundation for compliance throughout the project.
The key documents required at this stage include:
Document | Description |
---|---|
Construction-Issued Regulated Designs | A copy of every regulated design that has been issued for construction. |
Design Compliance Declarations | A separate declaration from a registered design practitioner for each regulated design, confirming it complies with the Building Code of Australia and other relevant standards. |
Principal Compliance Declaration | If a principal design practitioner is appointed to oversee the design process, their declaration must also be included. |
Ground Anchor Documentation | If the work involves ground anchors on neighbouring land, a document confirming the right to install them must be provided. |
Handling Variations During Construction
The Design and Building Practitioners Act 2020 (NSW) establishes a time-sensitive procedure for managing changes to designs once construction is underway. If a variation involves a critical building element or a performance solution, work on that variation cannot proceed until a new, compliant design is prepared and declared. This ensures that even mid-project changes are properly scrutinised by design practitioners.
According to section 20 of the Design and Building Practitioners Act 2020 (NSW), the building practitioner must lodge the new regulated design and its corresponding design compliance declaration on the NSW Planning Portal no later than one day after the variation work commences. This tight timeframe may require work to pause to ensure compliance.
It is important to note that variations not affecting a building element or performance solution do not require a new declaration but must still be recorded by the building practitioner.
Steps Before Applying for an Occupation Certificate
The final stage of documentation under the Design and Building Practitioners Act 2020 (NSW) occurs just before an application for an occupation certificate is made. The building practitioner must prepare and lodge a building compliance declaration, which is a comprehensive statement confirming the integrity of the completed construction. This declaration is a prerequisite for the certifier to consider issuing an occupation certificate.
The building compliance declaration confirms several key points about the building work, including:
Confirmation Point | Details |
---|---|
Compliance with Building Code | Confirms that the work complies with the requirements of the Building Code of Australia. |
Construction Accordance | Confirms that the building work was constructed in accordance with the final, declared regulated designs. |
Declaration Collection | Confirms that design compliance declarations were obtained for all regulated designs used in the project. |
Alongside the building compliance declaration, the building practitioner must also lodge final ‘as-built’ designs and any other required documents, such as a contractor document and variation statements, on the NSW Planning Portal. This final submission provides a complete record of the project as constructed.
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Ensuring Practitioner Registration & Insurance
Verifying Practitioner Registration
Under the Design and Building Practitioners Act 2020 (NSW), developers have a crucial responsibility to ensure that all practitioners engaged on a project are appropriately registered. This registration regime is a cornerstone of the Act, designed to ensure that individuals and companies possess the necessary qualifications, experience, and skills to perform their roles competently.
It is an offence for a person to carry out work requiring registration if they are not registered. Developers must verify the registration status of several key parties before engaging them for building work on class 2, 3, or 9c buildings.
The primary categories of practitioners who must be registered include:
Practitioner Category | Description/Role |
---|---|
Design Practitioners | Individuals or bodies corporate responsible for preparing regulated designs. |
Principal Design Practitioners | An optional role to coordinate design compliance declarations on complex projects. |
Building Practitioners | The principal contractor responsible for carrying out the building work. |
Professional Engineers | Individuals who carry out professional engineering work in prescribed fields such as structural, civil, mechanical, electrical, fire safety, and geotechnical engineering. |
Engaging unregistered practitioners not only exposes a project to significant compliance risks but also undermines the quality assurance objectives of the Design and Building Practitioners Act 2020 (NSW).
Understanding Mandatory Insurance Requirements
A fundamental condition of registration under the Design and Building Practitioners Act 2020 (NSW) is the requirement for practitioners to hold adequate insurance. As part of their due diligence, developers must confirm that all engaged practitioners are compliant with these mandatory insurance obligations. This serves as a critical risk management measure, providing a layer of financial protection against potential liabilities arising from defective work.
The insurance requirements apply to different types of practitioners:
Practitioner(s) | Insurance Requirement |
---|---|
Registered design practitioners, principal design practitioners, and professional engineers | Must be indemnified under a professional indemnity insurance policy. |
Registered building practitioners | Must also hold adequate insurance coverage. |
According to the legislation, the policy must provide for an “adequate level of indemnity” for liability that could be incurred by the practitioner while carrying out their work. While the practitioner must form a reasonable opinion on what constitutes an adequate level, developers should ensure this coverage is in place to safeguard the project and future owners from economic loss.
Enforcement Powers & Penalties for Non-Compliance
Understanding Stop Work & Rectification Orders
The Design and Building Practitioners Act 2020 (NSW) grants the Secretary of the Department of Customer Service significant enforcement powers to address non-compliant or unsafe building work. These powers are designed to intervene in projects where there is a risk of harm or loss, potentially causing serious delays and costs for a developer.
The Secretary can issue several types of orders, including:
Order Type | Description & Authority |
---|---|
Stop Work Orders | Issued under section 89 of the Act if work is non-compliant and could result in significant harm, loss, or damage. Can remain in force for up to 12 months. |
Building Work Rectification Orders | The Secretary has the authority to order a developer or builder to rectify defective work. If the order is not complied with, the Secretary may carry out the work and recover costs from the developer. |
A person who receives a stop work order has the right to appeal the decision to the Land and Environment Court within 30 days of being served the notice, as permitted by section 90 of the Design and Building Practitioners Act 2020 (NSW).
Financial Penalties & Disciplinary Actions
Non-compliance with the Design and Building Practitioners Act 2020 (NSW) can lead to severe financial penalties and disciplinary actions against registered practitioners and, in some cases, the directors of a development company. The Secretary has broad powers to enforce the legislation and ensure accountability within the NSW building industry.
According to section 66 of the Design and Building Practitioners Act 2020 (NSW), if a ground for disciplinary action is established, the Secretary may take one or more of the following actions:
Disciplinary Action | Description/Example |
---|---|
Caution or Reprimand | The practitioner is formally cautioned or reprimanded. |
Monetary Penalty | A significant fine is imposed, with maximums up to $220,000 for a body corporate and $110,000 for an individual. |
Registration Conditions | Conditions are placed on a practitioner’s registration, such as requiring further education or training. |
Suspension or Cancellation | A practitioner’s registration is suspended or cancelled entirely. |
Disqualification | A practitioner, or a director of a registered body corporate, is disqualified from being registered either temporarily or permanently. |
Furthermore, specific contraventions carry their own substantial penalties. For instance, failing to comply with a stop work order can result in fines of up to 3,000 penalty units for a body corporate and 1,000 penalty units for an individual, with additional daily penalties for continuing offences.
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Conclusion
The Design and Building Practitioners Act 2020 (NSW) places significant compliance obligations on developers, including a non-delegable statutory duty of care to prevent economic loss from building defects for current and future property owners. Proactive management of regulated designs, practitioner registration, and insurance is essential to meet these requirements and avoid substantial penalties.
Managing these extensive legal duties requires careful planning and expert legal oversight from our property development and planning lawyers to mitigate risk. For specialised advice on ensuring compliance with the Design and Building Practitioners Act 2020 (NSW), contact our expert conveyancing lawyers for property developers at LawBridge to ensure your project is protected.
Frequently Asked Questions
Yes, a developer owes the duty of care if they have ‘substantive control’ over the construction work. This can include situations where a developer has the ability to control how work is carried out, even if they do not exercise that control directly.
Yes, directors can be held personally liable for a breach of the statutory duty of care if it is found they had substantive control over how the construction work was carried out. This was confirmed in the case of Kazzi v KR Properties Global Pty Ltd.
Yes, the statutory duty of care under Part 4 of the Design and Building Practitioners Act 2020 (NSW) applies to all classes of buildings, including commercial and mixed-use developments. While many registration and declaration requirements initially focused on residential buildings, the duty of care has a broader application.
If a variation to a regulated design for a building element or performance solution is required after work starts, a new regulated design must be prepared and declared by a registered design practitioner before the varied work commences. The building practitioner must then lodge this new declared design on the NSW Planning Portal no later than one day after the work on the variation begins.
A regulated design under the Design and Building Practitioners Act 2020 (NSW) is a design prepared for a critical building element or a performance solution for building work. Building elements include fire safety systems, waterproofing, load-bearing components, the building enclosure, and essential mechanical, plumbing, and electrical services.
A design compliance declaration is made by a registered design practitioner to confirm their regulated design complies with the Building Code of Australia and other standards. In contrast, a building compliance declaration is made by the registered building practitioner before applying for an occupation certificate, confirming the completed building work was constructed in accordance with the declared designs.
Yes, some work is excluded from the design requirements, such as work classified as ‘exempt development’ under the State Environmental Planning Policy (Exempt and Complying Development Codes) 2008, although exceptions apply, particularly for waterproofing. A full list of excluded work can be found in clause 13 of the Design and Building Practitioners Regulation 2021 (NSW).
No, you cannot use a builder’s negligence as a defence to reduce your liability for defects, a key principle that often shapes the strategy in commercial litigation arising from the Design and Building Practitioners Act 2020 (NSW). The High Court confirmed in Pafburn Pty Ltd v The Owners – Strata Plan No 84674 that the duty of care is non-delegable, meaning the proportionate liability provisions of the Civil Liability Act 2002 (NSW) do not apply.
The duty of care applies retrospectively to economic loss from defects. An owner can make a claim if the loss first became apparent within the 10 years immediately before 11 June 2020, or if it becomes apparent on or after that date.