If you work in construction, you may think that having your rights and duties laid out in a statute is simpler to comprehend and apply. However, the reality is that statutes are always open for interpretation and the breadth of your duties and entitlements can often change.
Statutory Widening
There is no set way in which your legal rights and obligations can change either. In some circumstances, courts can interpret legislation to broaden the horizons to give more flexibility to a statute such as in the recent case of EnerMech Pty Ltd v Acciona Infrastructure Projects Australia Pty Ltd [2024] NSWCA 162 opening up bank guarantees to be within the reach of the Building and Construction Industry Security of Payment Act 1999 (NSW) (read more here).
Statutory Restriction
Alternatively, laws can be interpreted to be far more restrictive. On its face, it appeared that section 37 of the Design and Building Practitioners Act 2020 NSW (DBPA), which imposes a duty of care on construction workers to avoid economic loss resulting from defective work, would operate like any other duty of care in accordance with the provisions of the Civil Liability Act 2005 NSW. Alarmingly, the High Court steered the duty of care to bear down directly onto contractors and restricted their ability to apportion liability to subcontractors and consultants (read more here).
Though this change to the DBPA was only made in December last year, the law never stands still for long. There are some further key changes coming in the near future to the DBPA surrounding insurance requirements and potentially a complete re-write of the entire construction statutory scheme.
Insurance Changes to the DBPA
A big change is only a few months away for the insurance requirements under section 24 of the DBPA. Section 24 sets out a mandatory requirement for building practitioners to have insurance for all potential liability arising from construction work. However, the DBPA also allows for building practitioners to be exempt from this insurance requirement if permitted by the Design and Building Practitioner Regulations 2021 NSW (DBPA Regulations).
Originally, section 106 of the DPBA Regulations stated that all building practitioners are exempt from the insurance requirements until 30 June 2024, but the NSW Government has extended the exemption until 30 June 2025. The level of insurance that is required under section 24 covers such a broad scope of work and liability that most insurers aren’t willing to provide the cover. This means there simply is not enough market participation for the Government to allow section 24 to come in full force, meaning the Government will likely extend the date of exemption under the DBPA Regulations until insurers are more willing to take on the risk.
Consolidating building legislation
Even with all the above-mentioned action involving the DBPA, there is potential the whole of the DBPA to be scrapped to become part of a singular consolidated building act to govern the construction industry.
The Building Bill 2024 (Building Bill) is currently being discussed by the NSW Parliament to consolidate all the overlaying legislation, including the DBPA, Home Building Act 1989 NSW and Residential Apartment Buildings (compliance and Enforcement Powers) Act 2020 NSW into one legislative document that controls the construction industry. This will help consolidate definitions and create a one stop shop for people in the construction industry to understand its obligations.
As it is still in parliament no one is sure when the Building Bill will pass (if at all), but we expect to see the progression of the Building Bill in the near future.
Key takeaway
The law is never stagnate. The courts will always continue the reshape legal landscape by stretching or tightening the meaning of statutes and Parliament will always look for new ways to regulate the construction industry.
We advise, always keep one eye one the law, because what looks like a swan one day can be a duck the next.
If you would like to discuss this article with us, please contact Brett Vincent, partner, or Ben Guven, Paralegal on (02) 9261 5900.