Roll out the Regulations: Design and Building Practitioners Regulation 2021 (NSW)
On 11 June 2020, the first phase of the Design and Building Practitioners Act 2020 (NSW) (DBP Act) commenced, implementing a new statutory duty of care regime requiring any person who carries out construction work to exercise reasonable care to avoid pure economic loss caused by defects. The DBP Act is part of significant reforms to the New South Wales building and construction industry to improve standards, ensure quality and extend accountability in an industry that has been the subject of a number of catastrophic structural failures in recent years. A summary of key changes brought about by the DBP Act can be found in our previous articles released following the implementation of the first phase, located here and here.
With the recent release of the Design and Building Practitioners Regulation 2021 (NSW) (DBP Regulations) and the commencement of the second phase (being the mandatory registration scheme for certain practitioners) of the DBP Act on 1 July 2021, we take this opportunity to set out the imminent changes that will apply to engineers, building practitioners and design practitioners in New South Wales.
The DBP Act creates a registration scheme mandating that certain practitioners have to apply for and obtain registration if they intend to declare that their ‘regulated designs’ or building work comply with the Building Code of Australia (BCA). From 1 July 2021, the following practitioners will need to become registered in order to make compliance declarations, perform professional engineering work, or perform other work requiring registration under the DBP Act:
- design practitioners;
- principal design practitioners;
- building practitioners; and
The DBP Regulations have clarified that the registration scheme created currently only applies to ‘building work’ and ‘professional engineering work’ (defined by sections 4 and 31 of the DBP Act respectively) carried out for ‘class 2’ buildings under the BCA. A class 2 building is a building that contains two or more sole-occupancy units, with each sole-occupancy unit being a separate dwelling. Therefore, an apartment building falls into this category. The application of the DBP Act extends to buildings with mixed classifications that include class 2 buildings, for instance a building partly containing office space (class 5) and residential apartments (class 2).
The DBP Act requires:
- professional engineering work to be carried out by a registered professional engineer (unless an engineer who is unregistered carries out the work under the direct supervision of a registered professional engineer); and
- building work to be carried out by a registered building practitioner.
The registration scheme includes design practitioners who prepare ‘regulated designs’ for building work, which includes a design that is prepared in relation to a building element or performance solution for building work. The registration scheme also extends to principal design practitioners, who are required to ensure that design compliance declarations are provided for regulated designs prepared for building work and that those declarations have been provided by a registered design practitioner. Further reading regarding the regulated design framework can be found in our earlier article, located here.
Requirements introduced by the DBP Regulations
The DBP Regulations have further clarified the regime being implemented by the DBP Act, with schedules 1 to 3 setting out the different classes of registration, qualifications and experience requirements relevant to each class, and the continuing professional development that registered professionals are required to complete.
Schedule 1 of the DBP Regulations (located here) contains:
- 18 different classes of design practitioner;
- two different classes of principal design practitioner;
- three different classes of building practitioner; and
- six different classes of professional engineer.
Part 2 of Schedule 1 then sets out the different types of work that are authorised to be carried out by a person holding a particular class of registration as a practitioner. The different types of work can also be found in the link above; however, of particular note we distinguish the following building practitioner classes:
- Building practitioner—body corporate;
- Building practitioner—body corporate nominee; and
- Building practitioner—general.
A registered body corporate that holds a ‘building practitioner—body corporate’ class of registration is authorised to make a building compliance declaration for building work, but only by way of a nominated individual. Therefore, the body corporate is required to have a nominated individual that holds either a ‘body corporate nominee’ or ‘general’ building practitioner class of registration. An individual that only holds a ‘body corporate nominee’ class of registration can only make a building compliance declaration for building work or prepare and provide documents required to be prepared by a building practitioner on behalf of the body corporate. An individual that only holds a ‘general’ class of registration can do so on behalf of the body corporate and in their personal capacity.
For each class of licence contained under Schedule 1 of the DBP Regulations, Schedule 2 (located here) sets out the relevant qualifications, experience, knowledge and skills that a person is required to have to be registered.
In addition to Schedule 2, Schedule 3 of the DBP Regulations (located here) specifies the continuing professional development (CPD) requirements of practitioners registered under the DBP Act, which requires three hours to be completed each year. The NSW Department of Customer Service has released guidelines relevant to the completion of the CPD requirements, which can be found here.
Insurance requirements under the DBP Regulations
As set out in our previous update, the new regime established by the DBP Act requires registered practitioners to be ‘adequately insured’. Part 6 of the DBP Regulations (located here) further clarifies what ‘adequately insured’ means, with practitioners being required to have an adequate level of indemnity for the liability that could be incurred by the practitioner in the course of their work. Design practitioners, principal design practitioners and professional engineers are required to have a professional indemnity policy. Building practitioners must be indemnified under an insurance policy; however, this is not strictly required to be a professional indemnity policy.
In determining whether the policy held provides for adequate cover, considerations include:
- the nature and risks associated with the work typically carried out;
- the volume of the work typically carried out;
- the length of time that the practitioner has been registered;
- a reasonable estimate of claims that could be brought against the practitioner in relation to the points raised above;
- the financial capacity of the practitioner; and
- any limits, exceptions, exclusions, terms or conditions of the policy.
The compulsory minimum standards of insurance do not come into force until 1 July 2023 (allowing for a two-year transitional period for the requirement to be ‘adequately insured’ to be met).
Registered practitioners are also required to keep records specifying how they have determined that a policy they hold provides for an adequate level of indemnity. Those records are to be maintained for a period of five years and must be able to be produced upon request.
Transitional period under the DBP Regulations
The registration requirements under the DBP Act for builders, designers and engineers of class 2 buildings commence on 1 July 2021, with practitioners able to apply for registration online via the New South Wales Planning Portal from this date.
Given the serious consequences for non-compliance with DBP Act registration requirements, the DBP Regulations allow for a period of ‘deemed registration’, whereby if a person applies to be registered as a practitioner between 1 July 2021 and 31 December 2021, they are ‘deemed’ to be registered in a particular class from the date of their application. This allows for a transitional period for the registration process under the DBP Act to take effect, with deemed practitioners able to perform functions of a particular class of registration, for example the preparation of registered designs or the carrying out of building work, while their application is being processed. The registration of the application is then backdated to the date that the application was lodged.
However, the protection afforded by the ‘deemed’ registration only applies from the date of the practitioner’s application, so it is important for practitioners to ensure they apply before performing any regulated work or make compliance declarations. The only exception to this rule is if an unregistered practitioner performs regulated work or gives a compliance declaration between 1 July 2021 and 7 July 2021, they will not be prosecuted for those works during that ‘grace period’ if they apply by 7 July 2021.
Under the deeming provisions of the DBP Regulations, the Department of Customer Service retains the power to cancel a practitioner’s registration should certain criteria not be met, e.g. the applicant is an undischarged bankrupt or not at least 18 years old.
If a person does not apply by 31 December 2021, they cannot rely on a deemed registration and must wait until the Department of Customer Service (i.e. the Secretary) approves their application before doing any work for which registration is required under the DBP Act.
For further information on how the new DBP Act and DBP Regulations may affect you, please contact our specialist team at McCullough Robertson Lawyers.
Thank you to Cameron Baker, Lawyer, for his assistance in preparing this article.
This publication covers legal and technical issues in a general way. It is not designed to express opinions on specific cases. It 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.