Design and Building Practitioners Bill 2020

Design and Building Practitioners Bill 2020

This Bill has now been passed by both Houses in NSW which may have a large impact on your business. The Bill is designed to address the drop in consumer confidence in the multiunit homeowner market in the wake of the Opal and Mascot Towers media blitz, however has wide reaching implications into the Construction and Allied Trade Industries. Of course, we are communicating this from an Insurance point of view, however the Insurance plays a major role in this Bill. In summary it means that a lot more of the Industry will have to carry adequate Professional Indemnity Insurance.
It is to provide,

1. A new statutory duty of care for the benefit of the homeowner and,
2. A new system for regulating design and building work, including registration of designers, engineers, builders and other specialist Practioners.

Where a duty of care has been breached, it will allow owners to claim damages as if it were common law duty, irrespective of whether the owner was a party to the construction contract. The new duty of care is in addition to obligations currently overseen under the Home Building Act and other related legislation.

As the Bill has just been released, this initial newsletter is an alert to its passing. SHC will be seeking legal counsel and advising its clients shortly on how exactly it may affect your business. Initially we have some important insights for your consideration.

For a complete copy of the Bill, please click here.

Professionals and Trades Affected

Furthermore: A Builder may not carry out any work unless they have obtained a design from a registered design practioner and received a declaration. In addition, a Builder will require a new declaration after any subsequent variations to the original design.

Legislative Sections that cover the insurance aspect of this Bill.

24 Registered building practitioners to be indemnified;

1. A registered building practitioner must not—

(a) provide a building compliance declaration or do related building work, or
(b) hold out that the practitioner is adequately insured with respect to the provision of the declaration or doing the work, unless the practitioner is adequately insured with respect to the declaration and work.

Maximum penalty—300 penalty units (in the case of a body corporate) or 100 penalty units (in any other case). Page 14 Design and Building Practitioners Bill 2020 [NSW] Part 2 Regulated designs and building work

For the purposes of this section, a registered building practitioner is adequately insured with respect to a declaration and work if the practitioner— 
(a) is indemnified by insurance that complies with the regulations against any liability to which the practitioner may become subject as a result of providing the declaration or doing the work, or
(b) is part of some other arrangement approved by the regulations that provides indemnity against the liability.
 
(3) It is a condition of registration that a registered building practitioner must provide to the Secretary, in the time specified by the Secretary, information that the Secretary may require to satisfy the Secretary that the practitioner is adequately insured in accordance with this section.

(4) The regulations may exempt a practitioner or class of practitioner from the operation of this section.

30 Regulations relating to insurance requirements The regulations may make provision for or with respect to the following for the purposes of insurance requirements under this Act —

(a) the persons or bodies who may provide indemnity,
(b) the period for which a practitioner is to be indemnified,
(c) the amount for which a practitioner is to be indemnified,
(d) the risks for which a practitioner is to be indemnified,
(e) the nature and terms of any insurance or arrangement,
(f) the obligations on a person or body who provides indemnity,
(g) the issue of indemnity for liability incurred by a person who was formerly a design practitioner or building practitioner.

There is no doubt that this Bill covers, promotes and enforces a new system of certificates and declarations around the provision of additional insurances. However, there are a great many aspects to the Bill that require clarification and SHC is in the process of seeking further legal counsel on the following questions;

• Who exactly qualifies under this Bill and in what capacity.
• Exactly what Certificates and Declaration are required.
• Exactly what Insurances are needed, for whom, amounts and policy wordings required to comply.
• Confirm the date the new requirements required by. (Stated July 1st and may be retrospective, however perhaps enacted later in the year)
• Definitions (like ‘adequately insured’) cleared.
• Others that may affect our advice of insurance for the Industry going forward.
• How it ties in with Home Warranty and Latent Defects Insurance.

We estimate it will take approximately 1-2 weeks for our legal counsel to respond. In the interim, please be aware of the Bill’s passing (attached for your perusal) and look out for our next newsletter with this vital additional information.