The Design Act commenced on 11 June 2020, with certain parts of the Design Act commencing on that day (including the statutory duty of care explained below), and other provisions commencing on 1 July 2021 or thereafter.
The Design Act will introduce ‘regulated designs’, applicable to a design that is prepared in respect of a performance solution or a certain building element (such as fire safety systems, waterproofing, internal or external load-bearing components, and certain mechanical, plumbing and electrical services).
Under the Design Act, designers will need to be able to provide declarations that their designs comply with the Building Code of Australia.
Further, the Design Act will ensure that builders undertake building work in accordance with these designs and must take all reasonable steps to ensure that their work complies with the Building Code of Australia.
Duty of Care
A person who carries out “construction work” has a duty to exercise reasonable care to avoid economic loss caused by defects in or related to a building for which the work is done, and arising from the construction work.
Construction work is broadly defined in the Design Act to include:
(a) building work (that itself has its own definition),
(b) the preparation of regulated designs and other designs for building work,
(c) the manufacture or supply of a building product used for building work,
(d) supervising, coordinating, project managing or otherwise having substantive control over the carrying out of any work referred to in paragraph (a), (b) or (c).
This duty of care is owed to each owner of the land and each subsequent owner of the land on which the construction work is carried out. Owners are entitled to sue for damages for any breach of duty. An Owners Corporation is presumed to have suffered an economic loss if that Owners Corporation bears the costs of rectifying defects (including damage caused by defects) that are the subject of the breach of duty.
Importantly, the duty of care is retrospective, and applies to economic loss caused by a breach of the duty of care if the loss first became apparent within the 10 years immediately before the commencement of section 37 of the Design Act (being 11 June 2020).
Further, the duty of care is subject to limitation periods under the Limitation Act 1969 (NSW), and section 6.20 of the Environmental Planning and Assessment Act 1979 (NSW) which relates to civil actions relating to certain work. What this means is that any proceedings brought by an owner will need to be commenced within:
(a) six (6) years from the date that economic loss first became apparent; as well as
(b) ten (10) years from the date of completion of the work
One of the key aspects of the Design Act is a requirement for certain practitioners in the building industry to become ‘registered’. The Design Act defines registered practitioners to include:
(a) registered design practitioner,
(b) registered principal design practitioner,
(c) registered professional engineer,
(d) registered specialist practitioner, or
(e) a registered building practitioner.
Registration will generally remain in force for a period of 1, 3 or 5 years, in accordance with the notice provided by the Secretary of the Department of Customer Services (“Secretary”). The Secretary has the power to grant or refuse any application to be registered as a practitioner. An application for registration may be refused by the Secretary, pursuant to s45(3) of the Design Act.
Section 52(1) of the Design Act provides the Secretary with the power to vary, suspend or cancel a practitioner’s registration on a number of ground.
The Design Act will also require the registration of engineers who carry out professional engineering work, being work that requires, or is based on, the application of engineering principles and data to a design or a construction, production, operation or maintenance activity relating to engineering.
If a person who is not registered carries out professional engineering work, no monetary or other forms of consideration is payable for the works and any amount already paid is recoverable as a debt.
Registered engineers must not carry out professional engineering work unless they are adequately insured.
The contents of this publication are for reference purposes only. This publication does not constitute legal advice and should not be relied upon as legal advice. Specific legal advice should always be sought separately before taking any action based on this publication.