The NSW Government is pushing ahead with changes to the rules governing construction certificates, occupation certificates and the supervision of building work. It’s time for development proponents to focus on what they will mean for any construction program.

The changes are triggered by Part 6 of the Environmental Planning and Assessment Act 1979 (the EP&A Act).  This legislation has been on the law books since 1 March last year, but has not yet come into operation.  The old rules have continued to apply under transitional arrangements.

The new rules were originally due to kick-in on 1 September last year, but they were then postponed for 12 months (ie to this month).  However, the Government now seems to have settled on a final commencement date of 1 December 2019.  The transitional regulations have been amended to reflect this.

The Government has also now published (on 30 August 2019) a regulation that sets out the detail of the new arrangements.

The new arrangements will apply to any development consent granted from 1 December 2019.  For development consents granted before this date, any construction certificates, occupation certificates, etc will continue to be covered by the old rules.

The key changes that affect the developers/builders of new housing, workplaces and other urban premises are set out below.

In general terms, we think these changes will result in increased legal complexity, a greater need for modification applications (in time-critical circumstances) and some project delays.

The ‘not inconsistent’ test will be abolished

At present, a construction certificate can only be issued if it is ‘not inconsistent’ with the relevant development consent.  This means the development consent taken as whole, not just the approved drawings.  (This is because the conditions of a development consent will often modify the approved drawings.)

Similarly, at present, an occupation certificate can only be issued when the design and construction of the completed building is ‘not inconsistent’ with the development consent.  The approval of plans and specifications by a construction certificate in itself modifies a development consent — so in practice the ‘not inconsistent’ test for an occupation certificate is applied by comparing the completed development against the approved construction certificate drawings.

For development consents granted from 1 December 2019, the issue of any construction certificate will need to satisfy a new, stricter, test requiring that the plans and specifications are consistent with the development consent.

Similarly, any consequent occupation certificate can only be issued if the design and construction of the new building (or any part that has been completed) is consistent with the development consent.  (This would normally mean consistent with the plans and specifications approved by the construction certificate.)

While it may seem that there is not much difference between ‘not inconsistent’ and ‘consistent’, the change is likely to have a significant practical difference for developers and builders.

The current ‘not inconsistent’ test anticipates that adjustments to approved plans and specifications are inevitable.  Variations to those plans and specifications may be permitted, subject to consideration of their nature and extent.  Provided the development consent and construction certificate plans (and specifications) are largely similar they will meet the ‘not inconsistent’ test.

However, the deliberate and explicit change in the law on 1 December 2019 to replace the ‘not inconsistent’ requirement with a ‘consistent’ requirement will change the legal picture. The courts will now apply a stricter approach.  It is likely that being ‘consistent’ will require the construction certificate plans or specifications (or in the case of an occupation certificate, the design and construction of a new building) to be ‘agreeing or concordant’, ‘compatible’, ‘not self-imposed or self-contradictory’ with respect to the development consent.  (Noting that, again, that for an occupation certificate this test is normally met by making a comparison with between the design and construction of the new building and the approved construction certificate plans and specifications.)

Under the new regime, construction certificates may be struck down by the Land and Environment Court if:

  • proceedings are brought within three months after the issue of the certificate; and
  • the plans and specifications or standards approved by the certificate are not consistent with the development consent.

Developers who are seeking development consents now (where the development consent is likely to be issued from 1 December 2019) should consider managing this situation by ensuring that (if possible) the plans and specifications submitted to obtain a development consent will not need to be modified by any plans and specifications submitted for a construction certificate.

However, often this will not be possible.  If this is the case, the submitted material should clearly disclose this fact.  For example, development application drawings might contain a note that declares that ‘minor changes to building form and configuration may be required when drawings are subsequently prepared for construction purposes after the grant of development consent’.

However, it may not be enough to merely make notations on drawings (and other specifications).  A development proponent will need to carefully review the conditions of any development consent actually granted to see what strict obligations it imposes. Generally development consents are framed so that the conditions override the approved drawings.

For example, if a development consent condition overrides any note on a drawing (and there are inconsistencies between the drawings and the ‘for construction’ drawings) it may be necessary to make a modification application to either:

  • remove the problematic condition; or
  • secure express approval in the development consent for the ‘for construction’ drawings prior to the issue of a construction certificate.

New subdivision works certificate

For some development consents granted from 1 December 2019 a ‘subdivision works certificate’ will need to be obtained instead of — or in addition to — a construction certificate.

A subdivision works certificate is a new type of certificate (and should not be confused with a ‘subdivision certificate’).

Currently a construction certificate is good for both building work and subdivision work.  Under the new regime, a construction certificate will only be good for building work.

If a development consent authorises subdivision work, a subdivision works certificates will be required.

If the development consent authorises both building and subdivision work, then both certificates will be required.  For some development consents, the same work may be regarded as both ‘building work’ and ‘subdivision work’ (for example, a development consent that authorises the erection of a residential flat building and also authorises the strata subdivision of the building).  In those instances two certificates may be required for the same work.

Unlike a construction certificate, the new subdivision works certificate will not form part of the development consent.  This means that there is new risk of legal problems arising from any differences between plans and specifications approved by a subdivision works certificate and a development consent.

The new subdivision works certificate is subject to the same test for consistency with the development consent as will now apply for construction certificates.

No more ‘interim’ occupation certificates

The term ‘interim’ occupation certificate will be abolished under the new regime.  However, it will still be possible to obtain an occupation certificate for just part of a new building.

There is a new legal expression: a ‘partial occupation certificate’.  This is an occupation certificate that is issued for the first completed stage of a partially completed building.  Such a certificate will carry a condition that an occupation certificate must be obtained for the whole of the building within five years after the partial occupation certificate is issued.  This condition becomes a condition of the development consent on the issue of the partial occupation certificate.

Mandatory directions regime for principal certifying authorities

Principal certifying authorities are to be renamed ‘principal certifiers’.

Principal certifying authorities/principal certifiers have a supervisory role in relation to the construction work authorised by a development consent.

Principal certifying authorities (at present) typically take the same approach to achieving compliance as most public authorities. That is, through monitoring, education (including the provision of advice) and, only if necessary, through formal enforcement action.

The new regime compels principal certifiers to abandon this approach to achieving compliance in certain (limited) circumstances.

Under the new regime, private sector principal certifiers will be legally obliged to issue a written direction to a builder for non-compliances that are identified outside of a critical stage inspection.  This is most likely to be a non-compliance identified as a consequence of a neighbour’s complaint.

The principal certifier will be required to issue this written direction even when he/she thinks that compliance could have been achieved through simpler, less formal processes.

Earlier appointment of principal certifiers

A principal certifier will now need to be appointed prior to any physical activity involved in the erection of a building.  At present (in relation to building work) the legislation only requires that a principal certifying authority be appointed prior to the actual erection of the building itself.  (Although development consent conditions may sometimes require an earlier appointment of the principal certifying authority.)

This means for example, that (under the new regime) a principal certifier would need to be appointed prior to the carrying out of demolition work.