NSW Design and Building Practitioners Act: What Developers Need to Know

Key Takeaways

  • Broad Legal Definition: Under NSW law, a developer includes not just the landowner but also those who arrange, facilitate, or control building work, including principal contractors and strata scheme developers.

  • Strict Compliance Obligations: Developers must ensure proper licensing, insurance (HBC Scheme), and pre-construction documentation (e.g., Expected Completion Notices, strata building bonds) to avoid penalties and project delays.

  • Non-Delegable Liability: Developers bear 100% responsibility for defects under the statutory duty of care, regardless of subcontractor involvement, and cannot reduce liability through proportionate claims.

  • Enforcement Risks: The NSW Building Commissioner can issue Rectification Orders, Stop Work Orders, or Prohibition Orders, which may halt projects, invalidate occupation certificates, and impose heavy fines for non-compliance.

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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:

ObligationDescription & Key Requirements
Ensuring Practitioner RegistrationDevelopers must verify that all design practitioners, professional engineers, and building practitioners engaged for a project are properly registered under the Act.
Overseeing Compliance DeclarationsResponsible 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 ProcessDevelopers 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.

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.

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:

DocumentDescription
Construction-Issued Regulated DesignsA copy of every regulated design that has been issued for construction.
Design Compliance DeclarationsA 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 DeclarationIf a principal design practitioner is appointed to oversee the design process, their declaration must also be included.
Ground Anchor DocumentationIf 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 PointDetails
Compliance with Building CodeConfirms that the work complies with the requirements of the Building Code of Australia.
Construction AccordanceConfirms that the building work was constructed in accordance with the final, declared regulated designs.
Declaration CollectionConfirms 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.

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 CategoryDescription/Role
Design PractitionersIndividuals or bodies corporate responsible for preparing regulated designs.
Principal Design PractitionersAn optional role to coordinate design compliance declarations on complex projects.
Building PractitionersThe principal contractor responsible for carrying out the building work.
Professional EngineersIndividuals 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 engineersMust be indemnified under a professional indemnity insurance policy.
Registered building practitionersMust 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 TypeDescription & Authority
Stop Work OrdersIssued 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 OrdersThe 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 ActionDescription/Example
Caution or ReprimandThe practitioner is formally cautioned or reprimanded.
Monetary PenaltyA significant fine is imposed, with maximums up to $220,000 for a body corporate and $110,000 for an individual.
Registration ConditionsConditions are placed on a practitioner’s registration, such as requiring further education or training.
Suspension or CancellationA practitioner’s registration is suspended or cancelled entirely.
DisqualificationA 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.

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

Published By
Ramia Sultan
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