By Aaron Gadiel, Partner 

The law regulating the design of multi-dwelling unit (and mixed use) buildings in NSW became fully operational last week (on 1 July 2021).

This means that developers, builders and design professionals will now need to be fully across their obligations under the Design and Building Practitioners Act 2020 and the Design and Building Practitioners Regulation 2021.

This article provides a broad outline of the legislation with a focus on how it interacts with existing planning laws.  It does not deal with every requirement or provision of the new law.  (Some previous Mills Oakley articles focus on other aspects of the law, such as the new statutory duty of care and other construction law issues.)

Background

The new law is a response to the ‘Building Confidence Report’ prepared by Peter Shergold and Bronwyn Weir.

That report was commissioned by the NSW government as a result of:

• concerns about combustible cladding and its involvement in the devastating fire in London’s Grenfell Tower, various high-rise building fires in Dubai and two incidents in the Lacrosse and Neo 200 buildings in Melbourne; and
• building defects in new developments, such as those identified in relation to the Opal Tower development at Sydney Olympic Park.

Registration of practitioners

The new law establishes a system for the registration of:

• ‘design practitioners’ — such as architects, building designers, engineers, hydraulic services designers; and
• ‘building practitioners’ (eg builders),

by the NSW Government’s Department of Customer Service.  The Office of the Building Commissioner is part of this Department.

Developers and builders need to ensure that the designers they used for ‘regulated designs’ going forward hold the appropriate registration.  Similarly, a registered building practitioner is required for projects that require a ‘building design declaration’.

Regulated designs

The new law applies to the design of some ‘building work’.

For the purposes of the new law ‘building work’ is defined as work (including coordinating or supervising work) involving any of the following:

• The construction of any building that includes a ‘class 2’ component (that is, a building that contains two or more sole-occupancy units). This means that all of a mixed-use building that contains at least two dwellings is captured by the new law.
• Alterations or additions to such a building.
• The repair, renovation or protective treatment of such a building.

Some work is excluded from this very broad definition.

The new law regulates certain design work.  A ‘regulated design’ is:

• a design that is prepared for a ‘building element’ for ‘building work’; or
• a design that is prepared for a performance solution for building work — including a building element as well as other building work.

A ‘building element’ is any of the following:

• the fire safety systems for a building under the Building Code of Australia (BCA);
• waterproofing;
• an internal or external load-bearing component of a building that is essential to the stability for any part of the building (such as in-ground and other foundations and footings, floors, walls, roofs, columns and beams);
• a component of a building that physically separates the interior environment of the building from the exterior environment (such as roof systems, above grade and below grade walls, windows and external doors); and
• the mechanical, plumbing and electrical services required to achieve compliance with the BCA.

There will be many components of a ‘class 2’ building that are not ‘building elements’ under the new law.  If there is no performance solution involved for those components, they are not subject to the ‘regulated design’ regime.

The form and content of regulated designs is subject to a series of prescriptive requirements.

These include:

• details of the title block that must appear on design documents the subject of a compliance declaration (this even goes as far as to specify that the title block must be in the top left-hand corner of the page);
• designs prepared for a performance solution for building work;
• fire resisting regulated designs;
• designs for building work for the integration of a ‘vertical transportation product’ (e.g. lifts) into a building;
• specific requirements for shoring, underpinning and ground anchors.

Building practitioners

The new law also regulates ‘building practitioners’.  A building practitioner is:

• a person who agrees under a contract or other arrangement to do building work; or
• if more than one person agrees to do building work — a person who is the principal contractor for the work.

The new law imposes obligations on building practitioners.

A building compliance declaration can only be made by a registered building practitioner.  This will be the principal contractor, when there is more than a building practitioner carrying out the building work.

Compliance declarations

The new law requires various compliance declarations at different stages of the design and building process.

A breach of these obligations is a criminal offence.  Penalties for offences vary, but some key offences (that do not necessarily involve dishonesty) carry maximum fines of $165,000 for corporations and $55,000 for individuals.

Some other offences (where dishonesty is involved) carry a maximum fine of $220,000 or imprisonment for two years, or both.

Prosecutions for breaches may be pursued in the Land and Environment Court.  (The Mills Oakley planning and environment team is experienced in defending criminal prosecutions in the Court.)

The compliance declarations are a ‘design compliance declaration’, a ‘principal compliance declaration’ and a ‘building compliance declaration’.  Each must be made using an official form.

Design compliance declaration

A design compliance declaration must be supplied by a registered design practitioner when a regulated design is:

• prepared by the practitioner; and
• that design is in a form suitable for use in connection with building work.

The Department of Customer Service says :

• A designer may still provide early concept designs to clients and others and these designs do not require a declaration.
• The designs that need to be declared are the ones that are in a suitable form for building work.

A further design compliance declaration must be supplied by a registered design practitioner when a regulated design is varied by the practitioner and the design is in a form suitable for use.

In general terms, a design compliance declaration must say the following:

• whether a regulated design prepared for building work complies with the requirements of the BCA;
• whether the design (as far as is reasonably practicable) integrates details of the other aspects of building work to which the design relates and other regulated designs for the work;
• whether other standards, codes or requirements have been applied in preparing the design;
• whether any building product referred to in the design would, if used in a way that is consistent with the design, achieve compliance with the BCA;
• whether the design to which the compliance declaration relates involves a performance solution;
• whether the design accords with relevant elements of guidance material for regulated designs published by the Department of Customer Service;
• whether specialist advice was sought and considered in preparing the design; and
• for ‘vertical transportation’ — whether the design appropriately integrates a vertical transportation product and achieves compliance with the requirements of the relevant Australian standards.

A building practitioner must take all reasonable steps to ensure that building work (relating to a building element or performance solution for which a regulated design is to be used) is carried out in accordance with the design.

(The building practitioner also has a similar obligation to ensure that the building work complies with the requirements of the BCA.)

Principal compliance declaration

A principal compliance declaration must be supplied by a registered principal design practitioner (if one has been appointed):

• for all of the ‘construction issued regulated designs’ for building work — before the point-in-time that the building practitioner proposes to make a building compliance declaration; and
• for all of the regulated designs for building work other than ‘construction issued regulated designs’ — before the date that the building practitioner has notified as being the date on which an occupation certificate application is intended to be made.

A ‘construction issued regulated design’ is one that contains:

• the necessary detail to produce building work that would achieve compliance with the BCA; and
• can be used by a building practitioner to carry out the work in accordance with the regulated design and the BCA.

The requirements for a principal compliance declaration vary, depending on whether it is issued:

• before the commencement of building work; or
• (after work has been carried out) before occupation of the building.

In general terms, a principal compliance declaration issued before the commencement of building work must say:

• whether a design compliance declaration has been provided for each ‘construction issued regulated design’ prepared for the building work; and
• whether each design compliance declaration for those designs has been given by an appropriate registered design practitioner.

A principal compliance declaration issued after building work has been carried out is (in general terms) required to say:

• whether a design compliance declaration has been provided for each regulated design prepared for the building work;
• whether each design compliance declaration has been provided by an appropriate registered design practitioner.

The Department of Customer Service says the following:

• The principal design practitioner is an optional role. The role was designed with bigger, more complex projects in mind.  On those projects, hundreds or even thousands of designs will need to be lodged.  Where one is appointed, they are responsible for making principal compliance declarations.
• The principal design practitioner coordinates and collects designs and declarations from other practitioners. They can lodge these on the NSW planning portal.
• They serve as an extra checkpoint, verifying that declarations have been provided for relevant designs and were prepared by registered design practitioners in their field of competency.

In a legal sense, the advantage of appointing a principal design practitioner — for a registered building practitioner — is that this person may lodge some documents with the Department of Customer Service (via the NSW planning portal) on behalf of the registered building practitioner.  This does not excuse a registered building practitioner from the obligation to personally lodge a ‘building compliance declaration’.

Building compliance declaration

A building compliance declaration must be supplied by a registered building practitioner before an application is made for an occupation certificate.

This obligation extends to a subsequent application (if the first application is refused because of an instance of non-compliance).

In general terms a building compliance declaration is a declaration as to the following:

• whether the building work complies with the requirements of the BCA;
• whether the building work complies with other applicable requirements prescribed by the regulations for the purposes of this subsection;
• if the building work does not comply with the above — the steps required to be taken to ensure compliance,
• for a regulated design used for the building work — whether the design was prepared by a registered design practitioner and the building work was built in accordance with the design;
• whether a design compliance declaration has been obtained in relation to regulated designs used for the building work;
• whether a registered principal design practitioner was appointed in relation to the building work; and
• whether a principal compliance declaration was obtained in relation to the regulated designs and design compliance declarations relating to the building work.

A building compliance declaration must be accompanied by:

• a list of those who have agreed under a contract or arrangement with the registered building practitioner to do any of the building work;
• a list of the building work done by those persons;
• a copy of each ‘variation statement’ (see below) that is required for building work;
• a copy of each regulated design that contains additional details not reflected in the ‘construction issued regulated design’ (this is only if the additional details do not cause the building work to which the design relates to be varied); and
• if a principal design practitioner is appointed for building work — the principal compliance declaration for all regulated designs from an appropriate registered principal design practitioner.

Variations

If there is to be a variation in relation to a building element or performance solution (from a regulated design) after commencement of the work — a building practitioner must take all reasonable steps to ensure that:

• a design with the variation is prepared by a registered design practitioner;
• the registered design practitioner has the necessary information;
• a design compliance declaration is obtained for the varied design from an appropriate registered design practitioner; and
• if a principal design practitioner has been appointed in relation to the building work — a principal compliance declaration is obtained that includes the varied design.

For other variations to other building work, a building practitioner must take all reasonable steps to ensure that if the building work is varied — after commencement of the work from a regulated design for the work —  a ‘variation statement’ is issued.

A ‘variation statement’ sets out:

• the type and purpose of the variation;
• the part of the building to which the variation relates;
• an explanation of how the variation meets the requirements of the BCA, including a list of the applicable provisions of the code; and
• a list of the other standards or codes that have been applied in carrying out the work to which the variation relates.

Impartiality

A registered practitioner must act impartially in the provision of a compliance declaration.

It is a serious criminal offence for:

• someone to give (or offer, or agree on) a benefit with the intent to have a registered practitioner not act impartially in supplying a compliance declaration; and
• for someone to unduly influence (or attempt to unduly influence) a registered practitioner to prevail on the practitioner to not act impartially in the provision of a compliance declaration.

(The maximum fine is $220,000 or imprisonment for two years, or both.)

One example of ‘unduly influencing’ a registered practitioner is failing to pay (or threatening not to pay) remuneration payable to the practitioner in an effort to pressure a practitioner to provide an incorrect compliance declaration.

Provision of documents by a building practitioner

Before commencing building work

A registered building practitioner must provide the following documents to the Secretary of the Department of Customer Service (via the NSW planning portal) before commencing building work:

• copies of the construction issued regulated designs for the building work;
• copies of the design compliance declarations, made by a suitably authorised registered design practitioner for each of the construction issued regulated designs;
• if a registered principal design practitioner is appointed for the building work — a principal compliance declaration, made by an appropriate registered principal design practitioner, for the construction issued regulated designs.

A registered building practitioner can choose to satisfy the practitioner’s obligation to provide documents by:

• the practitioner giving written authorisation for the documents to be provided on the practitioner’s behalf by an appropriate practitioner; and
• that practitioner provides the documents to the Secretary.

Within one day of commencing a variation to building work

A registered building practitioner must provide the following documents to the Secretary (via the NSW planning portal) no later than one day after commencing a variation to building work:

• a copy of each design compliance declaration for the varied regulated design;
• a copy of the varied regulated design;
• a copy of each design compliance declaration for a new building element or performance solution; and
• a copy of the regulated design for the new building element or performance solution.

A registered building practitioner can choose to satisfy the practitioner’s obligation to provide documents by:

• the practitioner giving written authorisation for the documents to be provided on the practitioner’s behalf by an appropriate practitioner; and
• that practitioner provides the documents to the Secretary.

Before the issue of an occupation certificate

A registered building practitioner must give the Secretary (via the NSW planning portal) a building compliance declaration and the documents required to accompany the declaration (see above) before an application is made for an occupation certificate (for a building to which the building work relates).

No later than 90 days after the issue of an occupation certificate

A registered building practitioner who does building work must provide each regulated design for which a design compliance declaration has been provided that reflects the building work that was carried out to the Secretary (via the NSW planning portal).

This must be done within 90 days of the issue of an occupation certificate for the building (or part of the building to which the building work relates).

Restrictions on the issue of EP&A Act certificates

Construction certificates, complying development certificates

The issue of either:

• a construction certificate under Part 6 of the Environmental Planning and Assessment Act 1979 (the EP&A Act); or
• a complying development certificate,

is prohibited unless the following documents are provided:

• each design compliance declaration to which the building work relates; and
• for each design compliance declaration — each regulated design in relation to which the design compliance declaration is made.

This prohibition does not apply to an application for a certificate that was made prior to 1 July 2021.

It’s worth noting that a construction certificate is not prohibited from being issued merely because a principal compliance declaration is not supplied.

Issue of an occupation certificate

The issue of an occupation certificate (under Part 6 of the EP&A Act) is prohibited unless a building compliance declaration in relation to the building work has been provided.  Again, this prohibition does not apply to an application for a certificate that was made prior to 1 July 2021.

A principal certifier must not decide an application for an occupation certificate unless the certifier is satisfied that all compliance declarations required for the building work have been lodged.

In deciding whether to issue an occupation certificate, a principal certifier must consider any instances of non-compliance specified in the compliance declarations provided to the certifier relating to the building work.

Appeal rights

Existing appeal rights remain in relation to the issue of construction certificates and occupation certificates.

Where an application is made to a local council for a construction certificate, a decision to refuse to issue the construction certificate or occupation certificate can be appealed to the Land and Environment Court (within six months).

If the application for the construction certificate has been lodged with the local council after the relevant development consent has been granted, a ‘deemed refusal’ appeal right arises after 28 days (it expires six months later).

If an application was initially lodged with a private registered certifier, and no certificate has been issued, a proponent can decide to lodge an application with the local council.  A construction certificate does not need to be issued by the principal certifier appointed for a development.

If the application for the occupation certificate has been lodged with the local council a ‘deemed refusal’ appeal right arises after 14 days (it expires six months later).

An occupation certificate can only be issued by a principal certifier.  This means that to access an appeal right  — if a private principal certifier has been appointed —  the process for changing the principal certifier to the local council will need to be invoked.  If the change is made, an application to the local council would then need to be made.

Stop work orders

The Secretary of the Department of Customer Service has the power to issue stop work orders where the Secretary is of the opinion that:

• the work is, or is likely to be, carried out in contravention of the new law; and
• the contravention could result in significant harm or loss to the public or occupiers or potential occupiers of the building to which the work relates or significant damage to property.

In practice this power is likely to be exercised by the Building Commissioner, as a ‘delegate’ of the Secretary.

If a stop work 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 order.  Where there are significant costs (and a risk that a building site will remain idle for an extended period) a developer or builder may want to make an application to expedite the proceedings.

This type of Court proceeding 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 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.

The Building Commissioner has other relevant enforcement powers.  These are outlined in this separate Mills Oakley article.

Transitional arrangements for existing projects

There are special transitional arrangements in place modifying how the new law applies to some existing projects.

Work was commenced prior to 1 July

If:

• the building work (for which a regulated design is required) is authorised to be carried out by a construction certificate (or a complying development certificate);
• some of that building work authorised to be carried out by the certificate has commenced before 1 July 2021; and
• all the regulated building work authorised to be carried out by the certificate was not completed by 1 July 2021,

the following requirements of the new law do not apply to that building work or any design in relation to that work:

• provisions requiring regulated designs to be prepared for the work, including requirements for compliance declarations;
• provisions requiring a person to be registered to carry out the work; and
• provisions requiring a building compliance declaration to be prepared for the work.

However, when this is the case, the building practitioner for the building work (for which a regulated design is required) must provide copies of all designs relied on to carry out the work:

• to the Secretary of the Department of Customer Service (through the official mechanism); and
• this must be done before an application is made for an occupation certificate for which the work relates.

Additionally — when this transitional arrangement applies — a principal certifier is unable to issue an occupation certificate for a building to which the regulated building work relates unless the certifier is satisfied that all designs required to be provided to the Secretary of the Department have been provided.

Design has already been prepared (but work was not commenced prior to 1 July)

If:

• the building work (for which a regulated design is required) is authorised to be carried out by a construction certificate (or a complying development certificate);
• the design was prepared before 1 July 2021;
• the person who prepared the design is not eligible to be registered after 30 June 2021 (in a class that would permit the person to provide a design compliance declaration for the design); and
• the work is commenced after 30 June 2021, but before 1 July 2022,

the design is deemed to be a regulated design for which a design compliance declaration has been given, but only if a registered design practitioner:

• assesses whether the design complies with the requirements of the BCA; and
• issues a certificate in the official form confirming that the design does comply with the requirements.

However, in this situation, the registered building practitioner must not carry out building work under the construction certificate (or complying development certificate) until copies of the design and the registered design practitioner’s certificate are given to the Secretary of the Department of Customer Service (in the official way).

Significantly, if a design that deemed a regulated design is varied on or after 1 July 2021, the transitional arrangement will cease to apply to the design.  That is, a registered design practitioner will be required to prepare the varied design.

Multiple construction certificates

If:

• a development is carried out under more than one construction certificate; and
• building work has commenced under at least one of the construction certificates before 1 July 2022,

a requirement under the new law that copies of all regulated designs and compliance declarations must be provided to the Secretary of the Department before building work commences actually means that the regulated designs and compliance declarations required to carry out the building work under a construction certificate must be provided to the Secretary of the Department before building work commences under that construction certificate.

More regulation, another layer

Developers and builders are now to be confronted by two regimes for the regulation of building detail.  The regimes overlap.

The first regime is the long-standing one. This is where:

• Development consents require compliance with the BCA.
• Registered certifiers issue construction certificates confirming compliance with the relevant version of the Building Code in force at the time that the application for the construction certificate was made. The principal certifier oversees the building work and, where necessary, local councils may issue orders requiring work to cease or be carried out differently.
• A principal certifying authority must refuse to issue an occupation certificate if the building will be a hazard to the health or safety of the occupants of the building and/or if its design and construction is consistent with (or for some historical development consents ‘not inconsistent’ with) what is required by the development consent.

The new law now sets out a second overlapping regime.  It provides for some building work (where two or more sole-occupancy units are involved) to be the subject of an extra layer of regulation.  The scope of the first regime has not been reduced.

There is a clear overlap between the regime for ‘regulated designs’ and the existing system of construction certificates and occupation certificates.  Both are more-or-less doing the same thing.  However, one is overseen by local government and the other is overseen by the Department of Customer Service (via, in part, the Office of the Building Commissioner).

Sitting in between these two government regulators are registered certifiers (a third regulator).

This new hybrid system will not be simple or easy to navigate.