Co-authored by Jace Coaldrake-Redhouse and Chloe Ferreira
All participants in the construction industry need to be aware of imminent changes to the laws regulating building products. The changes have been inserted into the Building Products (Safety) Act 2017 (NSW) but extend far beyond product safety to the suitability of use and quality of installation of those products.
The Building Legislation Amendment Bill 2023 introduced Part 2A into the Safety Act. The amendments aim to create accountability in the supply chain for building products and give regulators the necessary tools to identify and intervene in the use of non-conforming building products. They are intended to begin operating in early 2025.
The amendments establish a chain of responsibility for all building products. The chain of responsibility includes anyone who designs or deals with a building product knowing that it will be used in a building. It also includes anyone who:
- prepares a building design that incorporates or recommends the use of the product in the building, for example, building designers, engineers and architects, and
- uses the product in a building, for example, installing, coordinating or supervising the installation of the product.
The wide-ranging scope of the new rules brings all of the following parties within the chain of responsibility:
- Manufacturers;
- Wholesalers;
- Suppliers;
- Importers;
- Distributors;
- Builders;
- Subcontractors;
- Engineers; and,
- Architects.
The duties owed by those in the chain of responsibility are to:
- Ensure the use of the product complies with the National Construction Code (s 8E);
- Ensure the use of the product is suitable with its purpose (s 8E);
- Provide information on the product (such as manufacturers guidelines) to the next person in the chain of responsibility (s 8F and s 8G);
- Notify the Secretary of any risk of non-compliance or any safety risk (s 8H); and,
- Recall certain products (s 8I).
The duty will expand or shrink to the extent that a person in the chain of responsibility has knowledge of, or control over, the action resulting in breach. A manufacturer who produces a quality product may not be aware of a breach that occurs during installation. However, a manufacturer that does know about a likely breach caused by another party installing its product incorrectly , may be in breach of its duty of care even though its product is of appropriate quality.
The amendments apply to everyone who deals with building products, not just the companies and businesses with control over the products. Employees are subject to these duties and could find themselves in a position where they have a duty to inform the Secretary about breaches of a duty by their employers.
The amendments also establish a regime for the seizure and forfeiture of building products. Seizure may occur where a person authorised by the Secretary, believes on reasonable grounds that:
- A non-compliance risk exists in relation to the product;
- A safety risk exists in relation to the intended use of the product;
- Seizure is necessary to determine whether a risk exists; and,
- An offence under the Building Products (Safety) Act has been committed in relation to the product.
Significant penalties apply for breaches of the Act, including:
- Maximum penalties of $165,000 for corporations and $55,000 for individuals for breaches of the duties owed in relation to conforming products, compliant uses and the provision of information have.
- Failing to notify the Secretary of a non-compliance or safety risk has maximum penalties of $55,000 for corporations, with an additional penalty of $22,000 for each day the offence continues. Individuals may be subject to maximum penalties of $22,000, with an additional penalty of $11,000 for each day the offence continues.
- Failing to comply with Safety notices, which can apply to directors of a company receiving the notice, has maximum penalties of:
- $1.1 million for a corporation, with an additional penalty of $111,000 for each day the offence continues.
- $220,000 and/or two years imprisonment for an individual, with an additional penalty of $44,000 for each day the offence continues.
- $22,000 for a director who fails to take all reasonable steps to stop a corporation from committing the offence.
If you deal with building products and require further advice in relation to what these changes mean for you, please contact our Building & Construction lawyers.
