December 5, 2019

Building confidence: Legal developments in certification and building standards

The number of high-rise apartments being built in Australia has almost tripled in less than 10 years.[1] Scrutiny of the quality of these buildings has increased after a series of recent incidents where buildings have become uninhabitable due to serious structural defects. Reform is inevitable, and it is important for planners to be aware of how the legislative changes may impact the industry. This article will provide an overview of the progress of legislative reforms and the accountability mechanisms proposed in NSW for the building industry. We will also consider some ways forward for effectively regulating the building industry.

Why does building certification matter? What are the implications for planners?

The reports in the media of serious defects in a number of high profile apartment buildings has put the spotlight on the challenges, costs and uncertainties of rectifying defective works. While the NSW Government has sought to deescalate tensions by providing assistance packages to some impacted residents[2], there has emerged a loss of confidence in the quality and rigour of building works in NSW.

This poses potential commercial or reputational risks to planners. While planners are rarely directly involved in the building certification process, projects which planners have advised on or assessed may receive negative publicity. Any overall loss of confidence in new developments may lead to a decline in demand for new developments.

With the increased public and media scrutiny of the quality of new buildings, the building industry should expect an overhaul of building regulation to require greater independent oversight of construction works, new certification and new registration requirements for engineers and builders.

It will be important for all those involved in the industry to ensure that they keep up to date and comply with the new legal requirements, including ensuring that contractors and consultant engineers are appropriately qualified for the work they will be completing. This will require an increase in due diligence and oversight of the works of the consultants and contractors. This may have implications for construction timetables and overheads. Any increased overheads of new development, may have commercial implications for planning firms, for example if developers are under pressure to ‘squeeze’ on costs of consultants such as planners.

Snapshot of recent legal developments

In early 2018, the Environmental Planning and Assessment Act 1979 (‘EP&A Act’) was updated to reflect the reforms addressed by the Lambert Review, an Independent Review of the Building Professionals Act 2005. Amendments to Part 6 of the EP&A Act have commenced in different stages, to grandfather industry and existing developments.[3] The remaining changes will commence on 1 December 2019 for newly approved developments. This will include;

  • a new standard requirement that all staged occupation certifications must be issued within 5 years, to avoid developers obtaining interim occupation certificates and moving on without complying with all the conditions;
  • the ability of principal certifiers to issue directions to builders, requiring them to remedy works which have not been carried out in accordance with the relevant approval.

In 2018, the Building and Development Certifiers Act 2018 was enacted further to the Lambert Review, intending to tighten obligations on certifiers. This Act will repeal the 2005 Act. The NSW Government recently released a draft regulation to give effect to the new Act. This Regulation provides for minimum qualification and skills necessary to be granted certification registration, and the establishment of a new accreditation authority framework. The proposed regulation is currently open for public comment.[4]

Independent reviews of building and design certification

A number of independent reviews have taken place concerning regulation of the building industry, including the influential Shergold and Weir Report commissioned by National and State Building Ministers.[5] Another report commissioned by the NSW Government into the alleged defects in the Opal Tower similarly made recommendations for improvements to the industry in general.[6] Some of the recommendations emerging from these reviews include:

  • creation of a government Registered Engineers database;
  • independent third party checking and certification of engineering designs and subsequent changes to critical design elements by a Registered Engineer;
  • critical stage, on-site checking and certification by a Registered Engineer; and
  • a Building Structure Review Board is formed, to investigate structurally defective buildings, and make recommendations where appropriate regarding building codes and regulations.

Government response to independent reviews

An inquiry was established on 4 July 2019 by a NSW Government Parliamentary Committee into regulation of building standards, building quality and building disputes. The Committee is expected to report on its findings later in 2019. The NSW Government has also indicated it would implement most of the recommendations contained in the Shergold and Weir Report, and released a discussion paper on its proposed implementation.[7]

The NSW Government appointed building and construction expert David Chandler OAM as Building Commissioner in August 2019 to act as the consolidated regulator for building in NSW. The Building Commissioner will be responsible for investigation and disciplinary action for misconduct in the building industry.

NSW Fair Trading has also recently released a draft Design and Building Practitioners Bill 2019 for public consultation.[8] The Bill implements the Lambert Review, with certain regulated designs required to be certified by a “design practitioner”, who must be registered in accordance with a new regime. The Bill also:

  • requires that building practitioners obtain, rely upon and build in accordance with declared designs, and issue a compliance declaration concerning the Building Code of Australia; and
  • clarify the common law, to specify that people who carry out construction work owe a duty of care to the current and subsequent owners, owners corporation, and other prescribed owners.

The Bill leaves to future regulations the specifics of who will be considered to be “design practitioners”, and what designs will be regulated. This will likely include architects and engineers.

Where to from here – has there been a necessary overhaul or mere tinkering?

The reforms to date have largely assumed a continuation of the status quo, with building and design certifications carried out by private firms. To drive rigour, reforms have focused on increasing the personal liability and professional standards for certain practitioners in the industry, primarily certifiers, builders and engineers. However, it remains to be seen whether this will deal with potential conflicts of interest, for example where practitioners may experience pressure to sign-off works directed by a client.

It is also debateable whether reforms appropriately deal with all participants in the industry. For example, the proposed reforms do not seem at this stage to impose any additional obligations on developers towards the ultimate purchasers of new dwellings. It will be important for the reforms to be clear, and equitable, about the various roles and responsibilities of all who are involved in the industry, including the various regulators and their enforcement powers.

Jacinta Studdert is an environment and planning partner at Clyde & Co., recognised in Best Lawyers, Acritas and Doyles. Jacinta Studdert, Kristyn Glanville and Lauryn Petropoulos regularly advise on project approvals for residential, commercial, and infrastructure projects, as well as compliance, responses to environmental incidents, and EPA/regulator investigations.

1 Australian Bureau of Statistics, 8752.0 Building Activity, Australia, 2017; Shergold and Weir report.
2 See: https://www.fairtrading.nsw.gov.au/news-andupdates/news/mascot-towers-information-for-residentsand-landlords
3 See: https://www.planning.nsw.gov.au/Policy-and-Legislation/Environmental-Planningand-Assessment-Act-updated/Guide-to-theupdated-Environmental-Planning-and-Assessment-
4 See: https://www.fairtrading.nsw.gov.au/consultationtool/building-and-development-certifiers-regulation-2019
5 Shergold, P & Weir, B 2018, Building Confidence Improving the effectiveness of compliance and enforcement systems for the building and construction industry across Australia, Building Ministers’ Forum, Australia.
6 Hoffman, M, Carter, J & Foster, S 2019, Opal Tower Investigation Final Report Independent Advice to NSW Minister for Planning and Housing, Unisearch Expert Opinion Services,  Australia.
7 Department of Finance, Services and Innovation Better Regulation Division 2019, Building Stronger Foundations Discussion Paper Implementing the NSW Government Response to the Shergold Weir Building Confidence Report, Australia.
8 See: https://www.fairtrading.nsw.gov.au/consultationtool/design-and-building-practitioners-bill-2019

 

This article originally appeared in New Planner – the journal of the New South Wales planning profession – published by the Planning Institute of Australia. For more information, please visit: www.planning.org.au/news/new-planner-nsw