As this year’s most talked about Act in NSW comes into effect, it is fairly safe to say that it has been met with some scepticism, criticism, reluctance and many many questions by the construction industry with the changes it brings. But it is here, and it is here to stay.
Since the Design and Building Practitioners Act 2020 (NSW) (“Act”) and the Design & Building Practitioners Regulations 2021 (NSW) (“Regulations”) came into effect progressively from July 2020 and July 2021, design, engineering and building practitioners working on Class 2 buildings have had a raft of new legislative obligations placed upon them from a legislative duty of care, to who can be classified as a “registered design practitioner”, to minimum standards for “regulated designs” within each category of design, to a new “design compliance declaration” regime. This is before we even start to take a look at the relevant consultancy agreement for the project and the contractual obligations contained within it. But perhaps, like all change, it is more daunting at the beginning, in the unknown, than it actually is once we start and grow accustomed to it.
The anecdotal reality is that most design and engineering practitioners are probably already performing their roles and services to many of these legislative standards and requirements already. For example, one would assume that design practitioners were performing their services to a reasonable standard of care to avoid loss caused by building defects, and that it would also be common for, say, an architect to be asked to certify that the designs they produced comply with the Building Code of Australia.
Having said this, design and engineering practitioners do need to make themselves fully aware of all the obligations under the Act and Regulations in order to properly and wholly comply with them. For some, this may be unnerving, but there are a number of useful and informative resources available to help navigate through the changes and requirements brought about by the Act and Regulations. The only question then being – Where do I even start?
A practical and general place to begin building your library of resources is the “Guide for Design Practitioners and Engineers – Contract Terms, PI insurance and the D&BP Act”. Consult Australia, Institute of Architects and Engineers Australia have jointly released a guide on compliance with the design compliance declaration regime in the Act. It does not provide a summary of the Act and Regulation, but instead notes general contract risk management measures that flow on from the obligations imposed, such as:
- the importance of a clear scope of services defining your role;
- the significance of making sure the consultancy agreement gives you adequate time, and extensions of time, to complete the registered design before construction commences; and
- the need to account for the client/builder’s reciprocal obligations, such as consulting with you before commencing a variation that will require a new or amended design compliance declaration.
The next resource to have up your sleeve is the Department of Fair Trading Website, which contains links to the Act and Regulations itself, as well as the requirements for each registered design and standard templates for use for the design compliance declarations and the classes for registration for a registered design practitioner or engineer within each class in order to perform your services and to provide the design compliance declaration for that class. Some helpful documents include:
- design compliance declaration templates and title block to be used;
- regulated design guidance material; and
- design practitioner’s handbook.
On the Department of Fair Trading website, you will also find a link to the two online learning modules on the “Construct NSW Digital Learning Platform” which you must complete and pass before you are able to register as a ‘registered design practitioner’.
informed by Planned Cover also provides a number of relevant webinars to assist and educate including:
- Design and Building Practitioners Act NSW Webinar Recording (July 2020); and
- More on the Design and Building Practitioners Act 2020 (NSW) and Regulation Webinar Recording (April 2021)
If there are any other concerns not addressed by these resources, make sure to seek legal advice as the workings and implications of this Act, the Regulations and compliance with both is yet to be fully worked through and determined in practice.
It is also important to remember that the design or engineering practitioner’s Professional Indemnity (“PI”) insurance is another resource you have at your disposal. Although our colleagues at Planned Cover have started to see policies which contain exclusions stating that all or some obligations under the Act are not covered, this is rare. Most PI insurance policies do not specifically refer to or exclude the Act. PI insurance policies cover you for the provision of professional services noted in the policy schedule (e.g. Architecture). If your experience and professional expertise extended to the provision of services under the Act, your PI insurance policy would be expected cover you for your obligations under it, subject to the other terms and conditions of your PI insurance policy.
With respect specifically to design compliance declarations under the Act, there are two key risks of uninsured liability to consider, and the design or engineering practitioner will need to assess these risks themselves based on their own knowledge of the project:
- The subject matter of the certificate is not within your profession. Professional indemnity insurance covers work in specific professions only, and claims arising from work done outside those professions would not be insured. Any matters outside the design or engineering practitioner’s professional expertise should be (if required) certified by someone who does have that expertise.
- The certificate makes statements that the design or engineering practitioner does not reasonably believe to be true. Professional indemnity insurance covers negligence (mistakes), but generally will cover not knowingly dishonest conduct. If the certificate contains statements that you do not reasonably know or believe to be true, then either refuse to provide it, or amend it to make it accurate.
As you may be aware, PI insurance is ‘claims made and notified’ insurance. This means that the policy in place at the time you first become aware of, and notify a claim or circumstance to your insurer, regardless of whether the claim relates to activities performed in a previous policy period, will be the policy that responds to the claim. As such, when renewing your own PI insurance policy, make sure to look out for exclusions under it or any different policy terms relating to the Act you may be agreeing to.
Change is a constant in our industry, but having a little help from various resources can make it a whole lot easier to handle until we get to the other side.
This article is only general advice in respect of risk management. It is not tailored to your individual needs or those of your business, nor is it intended to be relied upon as legal or insurance advice. For such assistance you should approach your legal and/or insurance advisors.