By Aaron Gadiel, Partner

The NSW Government Building Commissioner, David Chandler, has been out in the media highlighting the ‘hard line’ being taken on builders who ignore ‘critical details in design drawings’.  Mr Chandler is armed with new powers under the Residential Apartment Buildings (Compliance and Enforcement Powers) Act 2020 (the RABCE Act).

As Building Commissioner, Mr Chandler heads-up a relatively new agency that has been established within the NSW Department of Customer Service.

Mr Chandler says that he is ‘absolutely serious’.

‘I want consumers to understand that I am their dog in the fight. I will be out there every single day to make sure they are getting what they paid for. We need to get consumers back into the market,’ he said.

Mr Chandler says that he will not  hesitate using his strongest powers to stamp out shoddy work in the construction industry.

According to the media reports, the Building Commissioner has recently issued prohibition orders to developers of four buildings in Sydney and Forster, north of Newcastle —  stopping them gaining occupation certificates until ‘defects have been fixed’.

Many developers and builders may be unaware of the full extent of the Building Commissioner’s powers — and their legal rights if confronted with accusations from his office.  The accusations levelled by the Building Commissioner’s office may not always be correct.

New powers to issue orders

The Building Commissioner has the power to issue a prohibition order and a building rectification order.

A prohibition order may be (relevantly) given if the Commissioner is satisfied that a ‘serious defect’ in the building exists.  A prohibition order prevents the issue of an occupation certificate.

A building work rectification order may be given if (relevantly) the Commissioner has a reasonable belief that building work was carried out in a manner that could result in a ‘serious defect’ in relation to a residential apartment building.

A building work rectification order may require the developer to carry out building work or refrain from carrying out such work ‘to eliminate, minimise or remediate the serious defect or potential serious defect’.

A building work rectification order must be considered by the Civil and Administrative Tribunal when determining a building claim under Part 3A of the Home Building Act 1989 and by any other court in proceedings relating to the building work the subject of the order (if the order is brought to the attention of the Tribunal or the court)

Both types of orders can be issued at the same time or separately.

Appeal rights

If a building work rectification order and/or a prohibition order is issued, the order may be appealed in the Land and Environment Court within 30 days.   The Court has the power to revoke the orders.   Where there are significant costs (and a risk of a completed building remaining idle for an extended period) a developer or builder may want to make an application to expedite the proceedings.

This type of Court proceedings is a merit appeal.  The Court consider both legal issues and how any discretion should be exercised.

In addition to a merit appeal, there is also a separate right to bring judicial review proceedings in the Supreme Court.  This can be done (for example) if the Commissioner, in reaching a state of satisfaction/opinion as to what is (or would be) a ‘serious defect’  the Commissioner has an incorrect understanding of the law.

A decision may be legally unreasonable (and therefore struck down in the Supreme Court) if it encompasses, for example, a misunderstanding by the Commissioner of his or her statutory obligation. What must be evident is that some legal error has been made in forming the opinion or state of satisfaction.

If judicial review proceedings are to be commenced, they should be commenced within three months of the order (after that time, special permission is required for the commencement of the proceedings).

Most of the time appeals in the Land and Environment Court are likely to be sufficient to resolve the matter.  However, judicial review proceedings may also be desirable if (for example) there are extreme financial consequences from the issue of (legally defective) orders.

‘Serious defect’

The power for the Commissioner to issue orders is linked to whether he/she considers that there is (or the potential for) a ‘serious defect’.

A ‘serious defect’ can be one (or both) of two things.

Firstly, a serious defect will exist if there is a defect in a building element that is attributable to a failure to comply with the performance requirements of either:

• the Building Code of Australia;
• the relevant Australian Standards; or
• the relevant approved plans.

In most cases the ‘relevant approved plans’ will be the approved construction certificate plans and specifications.

Secondly, a serious defect will exist if there is a defect in a building product or building element that is attributable to defective design, defective or faulty workmanship or defective materials, but only if it causes (or is likely to cause):

• the inability to inhabit or use the building (or part of the building) for its intended purpose;
• the destruction of the building or any part of the building;
• a threat of collapse of the building or any part of the building; or
• the use of a building product in contravention of the Building Products (Safety) Act 2017.

Risks on two fronts

Developers and builders completing new residential apartment buildings now face regulatory pressure from two separate public authorities.

Local councils have retained (and continue to use) their long-standing powers to issue development control orders.  The orders can require work to cease (or be done differently).

However, on top of that, developers and builders now face the risk of similar orders being issued by the state government, through the Building Commissioner.

The impact on some developers and builders of, for example, a prohibition order being issued, may be considerable.  If an alleged problem is not able to be easily addressed, there may be a significant delay before an occupation certificate can be issued.

Mills Oakley

The Mills Oakley Sydney planning and environment team plays a leading role in representing developers, builders and landowners in Land and Environment Court proceedings.

Please do not hesitate to contact us if you need advice about a threatened or actual prohibition order or building work rectification order.