18 October 2017

AMCA presentation

Some recent legal updates

David Glinatsis

Director

I N D U S T RY S E C T O R S

Our lawyers have expertise and experience in the following industry sectors

• •

• •

• •

• •

• •

• •

• •

•

• Security of Payments Australia wide.

• Contract negotiation.

• Contract terms and conditions.

• Legal issues relating to BIM.

• BIM and construction Contracts.

• Contract administration and risk mitigation.

• Managing Building and Engineering Contracts.

• Strata legislation and issues.

• Record keeping.

• Dispute resolution.

• Legal issues in the management and resolution of Delay

and Disruption.

• Liability for defective work.

Kreisson regularly provides updates, though leadership and education on legal developments

and topics in the construction and engineering industries including:

Security of Payment

What the Courts are saying? Current reviews and

issues 10 Nov 2017 Regal Consulting Services Pty Ltd

v All Seasons Air Pty Ltd,

“[All Seasons] shall claim payment progressively in accordance with Item 37…[a]n early progress claim shall be deemed to have been made on the date for making that claim” [Clause 37]

Deeming provision is a contractual fiction

Valentine’s Day

14 Feb 2018

Probuild Constructions (Aust) Pty

Ltd v Shade Systems Pty

Ltd [2018] HCA 4.

Court only has jurisdiction to quash an

adjudicator’s determination for jurisdictional

errors.

Valentines Day

14 Feb 2018

Maxcon Constructions Pty Ltd v

Vadasz [2018] HCA 5

“pay when paid” - a provision in a contract that:

“makes the liability to pay money or due date

for payment contingent on or dependent on the

operation of another contract”

Security of Payment

In December 2015 a Discussion

Paper was released by the NSW

Government

Called for responses to various

questions about the security of

payment law and its operation

Submissions as to the Discussion

Paper (closed on 26 February

2016)

Further targeted consultation and

research as necessary

Report to the NSW Government

Awaiting outcome

Where are the reviews up to? Current reviews and issues

Security of Payment

Murray Review

21 December 2016 Commonwealth Government

announced that it had appointed John Murray AM

to conduct a review of the SOPL throughout

Australia

22 August 2017, “Issues Paper”

30 September 2017, a progress report as to the

Review was provided to the Minister for

Employment

Final report - 31 December 2017

Where are the reviews up to? Current reviews and issues

Security of Payment

Publication of adjudicators’ determination;

Court’s power to sever and remit;

Statutory trusts to further protect subcontractors;

Adjudication for domestic construction;

Special mechanism for small business; and

Acts of intimidation and retribution.

Security of Payment

Non-conforming Products

Who could be liable?

• Approved use of Alucobest

• Issued Building Permit

• Failed to stipulate no storage on balcony

surveyor

• Was responsible for choosing claddingarchitect

• Failed to “exercise reasonable care not to create a fire hazard in the use and occupation of the

unit.”

tenantBuilder

Owners Corporation

Orders to rectify

Builder is reported to have alleged that:

Lacrosse Fire – A case study

http://www.afr.com/real-estate/lacrosse-builder-lu-simon-says-architect-elenberg-fraser-failed-on-cladding-20170929-gyrldk

http://www.abc.net.au/news/2017-09-16/docklands-cladding-fire-apartment-owners-in-legal-minefield/8948374

The Grenfell fire

Who could be liable?

https://www.standard.co.uk/news/london/individuals-may-face-criminal-grenfell-charges-says-prosecutor-a3605581.html

Corporate Manslaughter

Gross Negligent Manslaughter

Civil claims – wide range of categories

May include breach of contract, insurance claims, tort, breaches of statutory duties (under health and safety laws) against individuals or corporate bodies brought by victims or their estates or former tenants.

As at end February 2018

NSW Qld SA WA NT Vic ACT TAS

Taskforce established

Dept of PlanningTransp. and Infrast.

Building Comm.

No

AUDIT

No. of buildingspotentially affected so far/warrant further consideration /priority

Over 1,000

Note 1

Focus on 1994-2004

Note 2

77

Note 3

229

as at02/18

Note 4

1400

Note 5

43

[42 of 43 – low risk]

As at Jan 2018

Note 6

NewLegislation

No No No No No

Notes

1 http://www.fairtrading.nsw.gov.au/biz_res/ftweb/pdfs/About_us/Whats_new/NSW_Gov_Fire_Safety_and_External_Wall_Cladding_Fact_Sheet.pdf

4 https://www.commerce.wa.gov.au/publications/state-wide-cladding-audit-status-update

2 http://statements.qld.gov.au/Statement/2017/6/30/queensland-stands-up-audit-taskforce-to-conduct-targeted-investigations-of-buildings

5 http://www.vba.vic.gov.au/cladding

3 4,500 buildings of two storeys or more, with 77 buildings listed for further checksSee para 2.36 Senate Economics References Committee Non conforming building products Interim report: Aluminium composite cladding page 14

6 http://www.justice.tas.gov.au/__data/assets/pdf_file/0018/403029/Tasmanian-Aluminium-Composite-Panel-Audit-Summary-2018.pdf

Cladding and Non conforming products

Overview

Commenced 1 November 2017

• Amends Queensland Building and Construction Commission Act 1991 (QBCC Act) and other Acts and Regulations

• Non conforming Building Products Code provides guidance

• Expands compliance and enforcement powers of QBCC

• Chain of responsibility

• Non transferable duties

• Notification requirements

• New offences of up to $126,150

Key concepts

• Building product – s74AB(1)

• Non conforming building product for intended use – s74AB(2)

• Safe – s74AA

• Safety risk – s74AA

• Reasonably practicable – s74AA

Likelihood, harm, knowledge, availability and suitability, costs

• Persons in the chain of responsibility

Designers Manufacturers Importers Suppliers Installers

What are the key duties under the Act?

• (Primary duty) that product is not non conforming for intended use as far as reasonably practicable.

• (Additional duty) - provision of “required information”

• Comply with recall requirements

• Due diligence on Executive Officers

• Not make false and misleading representations

• Notification to QBCC of:

Non conforming product

Safety related incidents or concerns

Building and Construction Legislation (Non conforming Building Products – Chain of Responsibility and Other Matters Amendment Act (2017) (Qld)

QLD Reform :Non Conforming Products

QLD Reform - Supply Chain

Primary duty

That product is not non conforming for intended use as far as reasonably practicable

designer Manufacturer importer supplier installer

Additional duties - to provide “required information” for the product – see Code

Other duties:• comply with recall;• due diligence on Executive Officers;• not to make false and misleading representation; and• notify QBCC – notifiable incidents.

What is Intended use ?

Ref. Code

Step 1 - all aspects of the intended use

Step 2 - seek evidence that building product meets “deemed to satisfy”

Mu

ltip

le d

uti

es

Pe

nal

tie

s fo

r b

reac

h o

f d

uty

, fal

se r

ep

rese

nta

tio

ns,

fai

lure

to

giv

e n

oti

ce t

o Q

BC

C

Incr

eas

ed

po

we

rs o

f Q

BC

C t

o e

nte

r, g

ath

er

evi

de

nce

, in

vest

igat

e,

pro

secu

te

Building Products (Safety Act) 2017 - NSW

Key objectives

• prevent unsafe use of building products

• identify buildings using prohibited products

• require rectification of affected buildings

• Act prevails over NCC

Key terms

• “unsafe” safety risk

• “Safety risk” - if any occupants of the building are or will likely be a risk of death or serious injury from the use of the building product in the building

• “Building product”- any product or thing that could be used in a building

• Affected building – banned building product has been used in a building

• A Building is made safe if safety risk in affected building notice is eliminated as far as practicable

Key provisions

Increased powers to NSW Fair Trading

NSW Fair Trading may issue:• Product use ban• Affected building notices• General building safety notice

Rectification orders can be issued on owners of affected buildings

Amendments to other Acts and Regulations

• Home Building Act 1989 • Conveyancing (Sale of Land)

Regulation 2017• Strata Schemes Management Act • EP & A Act

Penalties

Corporation Individuals

Max $1.1m

$22,000 for directors

$220,000 or 2 years

imprisonment or both

$110,000 per day

offence continues

$44,000 per day for

individual

Background

• Act forms part of 10 point plan

• Commenced on 18 December 2017

• Part of wider reforms in NSW

Secretary NSW

Fair Trading

Product

ban

Investigation and

assessment of

Building products

Enforcement

Agency/Council

Owners corporation

Owner

Commissioner

of Fire

New obligations

• Contract for sale

• Strata Statement

• S149

Affected

building

Notice

Affected

building

Ban

ned

p

rod

uct

Inv

esti

ga

tio

n

Rectification

OrderGeneral

Order

Corporation Individuals

Max $1.1m

$22,000 for

directors

$220,000 or 2 years

imprisonment or both

$110,000 per day

offence continues

$44,000 per day for

individual

NSW Reform – product bans

Importer

Managing the Legal Risks

Designer Manufacturer Supplier Certifier

Qld - Multiple duties for designer, manufacturer, importer, supplier and installer

Installer

Specifier,Designerspecification Certifier

SaleProduct to site

suitabilityBuilding Work

Defect Liability Period

Relevant state and territory legislation governing the building approval process including licensing and WHS requirements

Home

warranty

schemes

National Construction Code and relevant jurisdictional requirements

Elements of the Australian Consumer Law (generally deceptive or misleading product provisions) – these can be privately litigated and also litigated by ACL

regulators or the ACCC

Builders, design professionals – duty to act with reasonable care and skill, breach of contract, breach of statute, breach of professional regulations

Modified from EESS “Non Conforming Building Products Report” App.3 – “Building Product Supply Chain Strategies to Address Risks related to Non Conforming Building Products"

Border

Legislation

Watermark

Thank you