Design and Building Practitioners Act 2020 (NSW)

This article has been prepared by Colin Biggers & Paisley Lawyers.

The Design and Building Practitioners Act 2020 (NSW) commenced in part on 11 June 2020 and has the potential to significantly affect building and construction professionals operating in New South Wales, in at least two respects.

1. First, the Act imposes a new duty of care on the part of building practitioners, including building design professionals, involved in construction work in favour of building owners in relation to the cost of rectifying defects. The decision of the High Court in Brookfield Multiplex Ltd v Owners Corp Strata Plan 61288 (2014) 254 CLR 185, in which it was found that a builder did not owe a duty of care to an owners’ corporation created after the construction of an apartment building, had raised questions about the existence of such duties. The accompanying Regulations, which have been released in draft form, suggest that the duty of care will apply in relation to residential and mixed-use buildings.

The statutory duty of care is also retrospective and applies to losses that first became apparent in the 10 years immediately prior to 11 June 2020. A natural consequence of this is that many potential claims against insured building professionals, which had not been pursued by virtue of the Brookfield decision, may be revisited. This has the potential to further increase the long-tail liability of existing insurance policies.

• Second, from 1 July 2021, the Act will impose new insurance requirements that “registered design practitioners”, “registered principal design practitioners”, “registered building practitioners” and “registered professional engineers” be “adequately insured”. The period, amount and risks for which a building professional is required to be insured will be determined by the Regulations.

Businesses should review the requirements to ensure that their insurance is compliant prior to 1 July 2021, once the regulations become law.

Disclaimer: This is commentary published by Colin Biggers & Paisley for general information purposes only. This should not be relied on as specific advice. You should seek your own legal and other advice for any question, or for any specific situation or proposal, before making any final decision. The content also is subject to change. A person listed may not be admitted as a lawyer in all States and Territories.
© Colin Biggers & Paisley, Australia 2021.