Strata governed buildings and associated building law undergoing most significant changes in NSW history

Until recently, decisions like Brookfield Multiplex Ltd v Owners Corporation Strata Plan 61288 (2014) 254 CLR 185 and Woolcock Street Investments Pty Ltd v CDG Pty Ltd (2004) 216 CLR 515, in which the High Court held that builders and engineers do not owe a duty of care to owners’ corporations or to purchasers of commercial property, resulted in strata schemes and apartment owners bearing the cost of fixing major building and design issues.

However, combustible cladding scandals at home and abroad (notably the Grenfell Towers disaster in London) have put pressure on governments to address the allocation of responsibility for these sorts of design failures.

That pressure has resulted in the Design and Buildings Practitioners Act 2020 and Regulation 2021 (NSW), which have been described by NSW Minister for Innovation and Better Regulation, Matthew Kean, as the most significant changes in building-related law in NSW’s history.

Taking effect on 11 June 2020, the new Act and Regulations impose a duty of care on builders, developers and engineers to avoid economic loss caused by defects in the design and construction of buildings. The Act also introduces a comprehensive registration regime for building designers and engineers, and now requires design and building practitioners to provide declarations that the building work complies with the Building Code of Australia before an occupation certificate can be issued.  The Building Commissioner oversees the implementation of the Act and Regulations.

Critics of the new legislation have suggested that increased regulation will result in higher insurance premiums for builders, that ultimately will be passed onto property purchasers, worsening the housing affordability crisis in NSW. The NSW Government argues, however, that the new legislation reflects community attitudes that vulnerable apartment purchasers should be entitled to rely on the quality of the work done by designers and builders, and should be protected from the economic consequences of design and construction defects.

To learn more about strata schemes generally, listen to Episode 3 of Hearsay with Samantha Saw, partner at Speirs Ryan.