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19 Jun 17
Non-conforming building products: Are you going to be personally liable for them?

WHO SHOULD READ THIS

  • Building industry participants including designers, manufacturers, importers, suppliers and installers of building products.

THINGS YOU NEED TO KNOW

  • If the Bill is passed, those involved in the supply chain of building products will be required to ensure a product is safe and fit for purpose.

WHAT YOU NEED TO DO

  • Review your position in the supply chain and ensure that any products being supplied by you, or to you, do not fall foul of the non-conforming building product requirements.

The recent and very tragic Grenfell Tower fire in London brings to the forefront concerns on a domestic level as to the quality of the building products used in Australia.  It also draws attention to audits conducted in various states regarding non-conforming building products, such as the External Wall Cladding Audit conducted by the Victorian Building Authority last year.  This audit found that a large number of high-rise buildings had non-compliant and potentially combustible cladding and urged all building industry participants to ensure that the building products used on their projects conform to the National Construction Code (NCC).  

Relevantly, the Queensland Government has recently introduced the Building and Construction Legislation (Non-conforming Building Products – Chain of Responsibility and Other Matters) Amendment Bill 2017 (Qld) (Bill) which, if passed, would impose responsibility on building product suppliers to ensure that building products are conforming and safe for use.  The Bill would create a duty of ‘due diligence’ which applies personally to executive officers of companies involved in the design, manufacture, importing, supply and installation of building products.

Background
The Bill was introduced to address perceived shortcomings in the current building product regulatory framework and, in particular, the building product supply chain.  The explanatory memorandum to the Bill provides that, currently, heavy responsibility is placed on installers and building licensees to ensure a building product is safe and fit for purpose, whereas other participants in the supply chain, such as manufacturers and suppliers, have less legislative accountability.

In response to these concerns, the amendments aim to confer responsibility on all participants within the supply chain to promote safety and raise the standard of building products.

The Bill has been referred to the Public Works and Utilities Committee for detailed consideration. A report from the committee is due by 7 August 2017.

Key amendments
A summary of how the Bill would amend the Queensland Building and Construction Commission Act 1991 (Qld) is set out below: 

  • Each person in the chain of responsibility has the primary duty to ensure that a building product is conforming with the NCC and that the product is safe and fit for its intended purposes. The ‘chain of responsibility’ includes those who design, manufacture, import or supply the building product and knows, or is reasonably expected to know, the product will or is likely to be associated with a building, as well as a person who installs the building product into the building.
  • A duty is placed on executive officers of companies involved in the supply chain to exercise ‘due diligence’ (which is a positive obligation to take reasonable steps to ensure they comply with the legislation).  The executive officer may be proceeded against and convicted of an offence (whether or not the company is also the subject of proceedings).
  • The proposed term ‘non-conforming building product’ is broad and includes any product or material or other thing associated with a building that:
    • claims to be something it is not
    • does not meet the required standards for the use in which it is intended, or
    • is marketed or supplied with the intent to deceive those who use it.
  • An advisory committee on building products will be established.
  • The Bill will give the Queensland Building and Construction Commission (QBCC) greater enforcement powers including power to enter places (either with consent or under a warrant) to require the production of documents (without the protection of the privilege of self-incrimination), and to obtain and share information with other regulatory agencies.
  • The Bill imposes a duty on a person within the chain of responsibility to notify the QBCC if there is a reasonable suspicion or knowledge that a building product is a non-conforming building product (notification must be as soon as practicable but within two days).
  • Offences and penalties are introduced, including for the failure to comply with the primary duty to ensure a building product is not a ‘non-conforming building product’ (which includes a maximum penalty of $121,9001 (1,000 penalty units)).

Impacts
The explanatory memorandum for the Bill provides that the Bill is not expected to significantly impose greater costs on businesses, as businesses should already be ensuring that building products are safe, fit for the intended use and comply with the relevant building assessment provisions.

The Bill is expected to increase safety and accountability, lower costs relating to rectifying damage or defects and raise the standards of building products.

We can help those involved in the supply chain of building products to review their quality assurance systems and contractual arrangements so as to ensure they have adequate measures in place to address the compliance requirements of the Bill.

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1 Penalties and Sentences Regulation 2015 (Qld)

 

Focus covers legal and technical issues in a general way.  It is not designed to express opinions on specific cases.  Focus is intended for information purposes only and should not be regarded as legal advice.  Further advice should be obtained before taking action on any issue dealt with in this publication.

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