New legal landscape for construction businesses FY24

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Navigating legal changes in the construction sector is a time-consuming, yet necessary, distraction from running your business. Construction laws are complex, but they’re also evolving, so it’s important to follow updates.

This is your overview of the changes on the horizon for this financial year. Focus on the national moves as well as those affecting the state or territory in which you do business.

Must-know federal-level changes

Last month, significant changes to consumer laws around unfair contract terms took effect. The Treasury Laws Amendment (More Competition, Better Prices) Act 2022 (Clth) (TLA) has these implications for your business:

Introduces a civil penalty to prohibit businesses from using and relying on unfair contract terms
Expands protections to parties to a small business contract
Spells out factors for courts to consider to determine what is a standard-form contract
Defines courts’ powers to assign a remedy for breaches of unfair contracts
Clarifies which contractual provisions are included and excluded by federal, state and territory laws, and
Sets up new contract categories that aren’t part of the federal unfair contract terms regime.

The TLA has amended the Australian Securities and Investments Commission Act 2001 (Clth) (ASIC Act).

Be sure to revise your contracts for compliance per the above changes. Flag these terms and clauses as possibly unfair: liquidated damages regimes, time bars on claims and terminating for convenience without compensation.

The Australian Capital Territory – all about confidence

In March, the ACT’s legislative assembly passed the Professional Engineers Act 2023 (ACT Act). It aims to give consumers in the territory more confidence when dealing with engineers. Here’s what it does:

Sets up a mandatory registration scheme for professional engineers
Creates powers of monitoring and enforcement, and
Applies to civil, structural, mechanical, electrical, and fire safety engineering, with more areas to be covered.

The changes help ensure professional engineers carry out, direct, or have oversight of professional engineering services. Expect the scheme to be fully implemented by 12 October next year.

Meanwhile, anyone doing or supervising work in a construction occupation must be licensed. Proposed changes will consolidate the two current qualifications declarations, with the introduction of the Construction Occupations (Licensing) Qualifications) Declaration 2023, which is now in force. There are 62 classes of construction occupation licences in the ACT.

It updates the qualifications information to link to new training packages under the Australian Skills Quality Authority, but only applies to new licence applications for these occupations:

Building assessors
Electricians
Gas fitters and gas appliance workers
Plumbers and plumbing plan certifiers
Drainers
Work assessor licences
Builders, and
Building surveyors.

We’re keen to ensure you comply with these changes if you’re a new licence holder. Note that insurers may likely change their policy fine print in line with these regulations. Be aware of the repercussions of not complying with the licensing regulations. You could risk disciplinary action, risks of registration suspension, or cancellation and criminal prosecution.

New South Wales – changes aplenty

Be alert to changes to building laws in NSW, particularly two major bills – the Building Bill and the Building Compliance and Enforcement Bill.

The Building Legislation Amendment (Building Classes) Regulation 2023 came into force on 3 July. Since then, class 3 (larger shared accommodation buildings) and class 9c buildings (aged care premises) come under the Design and Building Practitioners’ Act 2020 (NSW) (DBP Act) and the Residential Apartment Buildings (Compliance and Enforcement) Act 2020 (NSW). From 1 July next year, alterations and renovations to these two classes of buildings will also be subject to the reforms.
The Building Bill 2022 was created to boost consumer confidence in construction and focuses on fit-for-purpose and less risky buildings. It increases the liability of builders, developers, and others involved in residential and commercial construction so there’s more accountability. The bill is expected to be enacted in 2024, and will mean:
- The statutory duty of care in section 37 of the DBP Act will be expanded to include inspection and certification of building work. Certifiers will be liable to current and future property owners for defects resulting in economic loss.
- The term ‘serious defect’ will replace ‘major defect’. The change is more onerous.
- Defect claims can be lodged up to six years after building work completion – up from two years.

Currently under review, the Building Compliance and Enforcement Bill 2022 is a single legal framework to regulate building compliance and enforcement. When in force, it will increase the exposure of directors, officers and any other ‘person of influence’ of building-related businesses. Be sure to check your insurance cover with us, particularly if you’re a developer and director or someone who’s able to influence a building company’s affairs.

For more info about the changes, visit this website - Landers & Rogers Lawyers. There’s also this – the Legislation Review Digest – 17 October 2023 – Building Legislation Amendment Bill (pages 21-25) that may be of interest.

The Northern Territory – setting the standard

In the Top End, there has been a crackdown on the National Construction Code, third-party peer reviews, and energy efficiency standards.

Changes to the Building Regulations 1993 (NT) came into effect in January last year. They introduced the need for the third-party review of medium complexity or higher buildings, i.e., with three or more storeys. Only a qualified, independent reviewer can complete this before a building certifier can issue a building permit. This change is expected to see more claims against third-party reviewers.

In May, the revised National Construction Code 2022 (NCC) came into effect with these territory-specific variations:

The NT will not adopt increased minimum energy efficiency standards for residential buildings.
In October, the NT introduced energy-efficiency requirements for commercial buildings. Class 3, 5 and 9 buildings will need to comply with such provisions.

There are more changes planned. The NT Government is looking to:

Ensure a registered building practitioner is involved in the construction of all new buildings
Modify the categories of registered commercial building contractors based on building heights
Exclude fit-outs and renovations from registered contractor requirements if no structural changes occur, and
‘Grandfather’ NT builders based on their experience, so they won’t need to meet the tougher qualification rules during the transition period.

Queensland – gearing up for the Olympics

In November 2021, the Queensland Building and Construction Commission (QBCC) commissioned a review that recommended stringent reforms. The state government supported all 17 recommendations in principle. Those changes include shifting the commission’s regulatory role to industry licensing and compliance.

Another major shakeup for construction in Queensland will flow from the Developer Review Panel’s report released in April this year. Its five recommendations include:

Setting up an accreditation, disclosure, and registration framework for developers, who will only be able to sign a contract requiring a trust account if they have current accreditation.
Introducing minimum CPD points for developers
Clarifying developers’ responsibilities for non-conforming building products
Ensuring developers don’t offload risk through onerous contract terms (under changes to the Queensland Building and Construction Commission Act 1991 (QBCC Act), and
Greater use of digital tools to record design and construction information to enhance transparency.

If enacted, those who miss the mark face disciplinary action or for serious or repeated breaches, the risk of accreditation cancellation.

Queensland has also changed the way building certifiers work, thanks to amendments to the Building Regulation 2021 (Qld) became effective in May last year:

They can hold an external cladding-related exclusion on their professional indemnity insurance until their licence expires
Building certifiers can rely on a ‘competent person’ doing an inspection certification for excavation, footing/slab and final stages for single-detached class 1a or relevant class 10 structures
Only registered professional engineers are ‘competent’ to inspect footing system, formwork, and slab reinforcements on a detached class 1a building, and
Building certifies of single detached class 1a and relevant class 10 buildings must sign the inspection certificate after foundations, formwork and reinforcement are placed but before pouring of the concrete or slab.

South Australia – focus on energy and accessibility

There are no major changes expected to the Building Work Contractors Act 1995 nor the Planning Development and Infrastructure Act 2016 (SA).

South Australia has already implemented most of the main provisions relating to the National Construction Code. From 1 October next year, requirements for liveable housing and energy efficiency will come into force. That means new homes must meet a 7-star energy efficiency rating, and improved accessibility standards.

Keep a watch on Construct NSW’s regulatory developments and how the rollout pans out as it may influence future changes in the Festival State.

Tasmania – protecting homes

Tasmania re-introduced its Home Warranty Insurance scheme in January. It covers projects worth more than $20,000, limited to 5% for deposits and 20% for incomplete/defective work up to a $200,000 maximum.

In June, the government tabled its bill to strengthen consumer protections under the scheme. Those amendments to the Residential Building (Miscellaneous Consumer Protection Amendments) Bill came into effect in mid-October, include:

Introduces defective work orders allowing a building surveyor or the regulator to direct the person responsible to repair them at the latter’s cost within 24 months of the building’s completion
Expands the powers of the Tasmanian Civil & Administrative Tribunal to hear and decide on particular residential building matters and introduces compulsory mediation
Allows disciplinary action for failure to comply with orders under the Building Act 2016, Residential Building Contracts and Dispute Resolution Act 2016 or by the administrative tribunal.

Victoria – spotlighting monitoring

Victoria introduced its Building Legislation Amendment Act this year, and it takes effect no later than 24 February. It aims to identify and fix building regulation issues. Key changes include:

Expanded new categories of building practitioners needing registration, such as building consultants, project managers, supervisors and architectural draftspeople
Increased the State Building Surveyor role to make binding determinations on building standards and help stakeholders with technical guidance and training, and
Introduce a way to automatically recognise building practitioners across jurisdictions.

Victoria also created a Building Monitor role as a key advocate for domestic building consumers. They will source and analyse data from government agencies and liaise with a consumer group to work out where more consumer protection is needed. Candidates had until 8 November to apply for the role, which pays up to $401K annually as part of a two-year contract.

Western Australia

In February, amendments to the Building Services (Registration) Act 2011 came into effect to:

Introduce new powers of the Building Services Board to manage building service providers’ commercial conduct and behaviour
Ensure people with an unpaid building services debt cannot be registered or renew their registration
Exclude from registration for three years repeat offenders (individuals, associations or corporations) who ‘phoenix’ – this is a new power of the board, and
Where those involved in phoenixing a business have been removed, then the board cannot exclude non-involved contractors in that business from registration.

Wrapping up

Regulatory changes are a big deal for your business, so make sure you keep watch and stay compliant. Stay in touch with us to ensure you’re adequately insured whatever legal changes the future delivers.

Any financial product advice in this content is provided by cgib AFSL No. 231183. This material is general in nature and has been prepared without taking into account your objectives, financial situation or needs. Accordingly, before acting on it, you should consider its appropriateness to your circumstances. cgib respects your online time and privacy.