The NSW Government has introduced legislation to identify, ban and rectify the use of unsafe building products in commercial, residential and industrial buildings across NSW.
The Building Products (Safety) Bill 2017 (Bill) will authorise bans on unsafe building products, rectification orders for existing and future buildings and public disclosure mechanisms to protect prospective purchasers.
The Bill has three main objectives:
Identifying unsafe building products.
Preventing the future use of unsafe building products.
Identifying and rectifying buildings affected by the past use of unsafe building products.
Importantly, existing buildings are exposed to rectification orders if found to contain building products which are later banned under the legislation.
Below, we explore these three objectives of the Bill in greater detail.
IDENTIFYING UNSAFE BUILDING PRODUCTS
To allow the Fair Trading Secretary (Secretary) to determine which building products are unsafe, the Bill introduces extensive investigate powers.
The Secretary will be able to authorise a ‘building product investigation’ to ascertain if a building product is unsafe and determine the location of any buildings where a product may be been used in an unsafe way.
Manufacturers or suppliers may be required to conduct product assessments, but authorised officers from Fair Trading will also be permitted to carry out assessments if a manufacturer or supplier fails to do so. Authorised officers will also be permitted to require manufacturers and suppliers provide information relating to a particular product, while being able to inspect premises, examine or inspect material, and remove samples for testing.
The NSW Civil and Administrative Tribunal will deal with reviews of decisions of the Secretary or an authorised officer.
PREVENTING UNSAFE BUILDING PRODUCTS
The Secretary will have power to ban a building product if there are reasonable grounds to suspect that the use of such a product is unsafe. Under this ‘building product use ban’, the Secretary:
is empowered to impose a total or specified ban on the use of a product;
must give reasons for imposing a ban;
may amend or revoke a ban at any time;
may call for public submissions before or after imposing a ban;
is required to give notice to the manufacturer of the building product before a ban is published, if practicable.
The Bill introduces a maximum $1,100,000 penalty for contravening a building product use ban for a corporation, and a further $110,000 maximum penalty for each day the offence continues. (Maximum penalty of $220,000 for individuals, two-year imprisonment, or both).
Penalties are also imposed for merely representing that a banned building product is suitable for use.
Directors and managers of corporations may be prosecuted if they knowingly authorised or permitted a breach of the legislation by their corporation.
RECTIFYING THE USE OF UNSAFE BUILDING PRODUCTS
The Bill introduces investigative powers to identify buildings affected by the use of unsafe building products. The Secretary can order rectification. Rectification orders can be issued in respect of buildings and structures existing before the date of commencement of the legislation. In this respect, it will operate retrospectively.
Affected building notices
If the Secretary is satisfied that a building is affected or may be affected by the use of a building product that is subject to a building product ban, an ‘affected building notice’ will be issued to the owner, relevant enforcement authority (usually local Councils), and the Commissioner of Fire and Rescue (if a fire risk has been identified).
General building safety notices
A ‘general building safety notice’ can also be issued if the Secretary is satisfied a particular class of buildings is affected by an unsafe building product.
Both an affected building notice and a general building safety notice will identify the safety risk posed by the use of the unsafe building product.
Building product rectification orders
Relevant enforcement authorities are given power to issue ‘building product rectification orders’. The rectification orders will require the owner of an affected building to:
eliminate or minimise the safety risks posed by the use of a banned building product; and/or
remediate or restore the affected building following limitation or minimisation of the safety risk.
Development control orders
Building product rectification orders will be regarded as development control orders under the Environmental Planning and Assessment Act 1979 (NSW) (EP&A Act), ensuring that anyone issued with a rectification order will be afforded the procedural fairness protections outlined in the EP&A Act. The NSW Land and Environment Court will have power to hear appeals relating to rectification orders, and to amend or revoke any orders.
While enforcement authorities will usually issue an affected building notice before a building product rectification order, this is not mandatory. Enforcement authorities will play a proactive role in identifying buildings which are affected by unsafe building materials.
Disclosure to purchasers
Building product rectification orders are to be disclosed to purchasers. This includes disclosure of rectification orders on strata information certificates, planning certificates and vendor warranties in contracts for sale of land.
The Home Building Act 1989 will be amended to provide that use of a banned building product is a major defect in residential building work.
Some likely consequences of enactment of the Bill will be:
additional vendor, purchaser and mortgagee due diligence issues;
impact on property values for affected properties;
potential impacts on insurance availability and premiums;
enforcement risk for owners (including strata owners corporations); and
work, health and safety risk for building owners, landlords and employers more generally.