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Construction Law Update 2020

Posted by Marcus McCarthy | 31 October 2019 | Civil Contractors and Construction

Construction law is an ever-changing landscape, which is why we work closely with our valued clients to stay ahead of the game. Below are some of the recent changes affecting the industry.

‘I told you so’ – the growing importance of the 18F defence

Section 18F of the Home Building Act 1989 (NSW) (the Act) provides a complete defence to builders from defects arising from instructions received from an owner or designer contrary to their written advice.

In many cases we deal with, this defence would have been available but the builder either failed to put something in writing or did so but was not very definitive about it, making them potentially liable for issues that were not their fault. This is especially dangerous in complex projects where the line between design and construction concepts get mixed.

Because section 18F is a relatively new provision, the Courts have not given much guidance on the meaning of the words ‘written advice’. Thankfully, a recent case of Owners Corporation v Jackson Teece, in which Nexus successfully defended a builder in the NSW Supreme Court, provides some much-needed clarification on what constitutes as ‘written advice’ to establish this defence.

In that case, it was established that the Defendant need not be very formal with its correspondence or write with ‘an extreme degree of specificity’. It seems the Court is willing to look holistically at the context of related correspondences at the critical time to see if they fall into this category and if they do, it may be enough to establish this very critical defence.

This is great news for builders in an area that has been plagued with uncertainty for some time, but it is still critical for builders to provide written notice if they believe a given instruction is incorrect.

Say Goodbye to Interim Occupation Certificates

Amendments to the Environmental Planning and Assessment Act mean that no more Interim Occupation Certificates will be issued from 1 December 2019.

This stems from the 2015 Lambert Review identifying problems in certification practices in NSW. It concluded current processes allowed staged occupation of parts of a building before critical inspections had occurred. Although there was some logic to this, the issue of a Final Occupation Certificate (OC) sometimes required retrospective certifications and these were not always easily obtained, leaving some developments struggling to obtain a Final OC.

With the growing awareness around poor or delayed certification practices in the media recently, the change is designed to ensure this problem does not occur and promote more fulsome inspection and certification procedures throughout stages.

Although IOC’s will disappear, there is a corresponding change to the definition of an OC, which will authorise the occupation of part of a building on certain conditions.
So, staged builds can continue but each stage will need undergo a certification process as if a Final OC was being sought for each stage, which will require a separate application for each stage until completion.

Unfortunately, this increases certification costs and may provide disincentive for staging developments but this new mechanism provides a stronger regulatory framework for staged developments.

New Security of Payment Laws

It wouldn’t be a proper construction update without a mention of the Building and Construction Industry Security of Payment Act. Significant amendments to this Act are commencing on 21 October 2019, introducing a new regulatory framework for enforcing proper contracting and certification procedures in the industry generally.

This is a material shift from the Act’s original narrow focus on enforcing progress claims. Nexus will be issuing a comprehensive summary of the changes and how to manage them in future articles.

If you would like more detail in relation to the above or any other contract or construction matters call 02 4961 0002 for a free initial consultation.

This article was first published in the Hunter Business Review magazine (page 38).

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