NSW defect reform | 10 year retrospective duty of care introduced

The Building and Design Practitioners Act 2020 (NSW) (Act) has commenced. The Act is part of the wider suite of reforms the NSW Government is introducing following recommendations made in the 2018 Shergold and Weir Building Confidence Report.

Duty of care on builders

The Act creates a statutory duty of care on residential builders to owners of land and each subsequent owner of the land (owners corporations and lot owners) over and above the statutory warranties provided under the Home Building Act 1989 (NSW).

The duty requires the exercise of reasonable care to avoid economic loss caused by defects. If the duty is breached the owner (and subsequent owners) can claim damages against the builder as if the duty of care were established at common law.

An owners corporation is taken to suffer economic loss under the Act if it bears the costs of rectifying defects (including damage caused by defects) that are the subject of a breach of the duty of care. Economic loss includes the reasonable costs of providing alternate accommodation.

The duty is retrospective. It extends to construction work carried out before the Act commenced if the loss first became apparent within 10 years immediately prior to the Act commencing (11 June 2020).

Regulation of designers  

Additionally, from 1 July 2021, design practitioners will need to be registered and adequately insured, provide declarations that their designs comply with the Building Code of Australia and will be subject to new investigatory and audit powers of the Secretary of the Department of Customer Service. Penalties for non-compliance may also be imposed by the Department.

A copy of the Act can be found here.

For further information, contact Mark Irwin– Partner:

E  mark.irwin@vincentyoung.com.au

T  +61 2 9261 5900