New South Wales introduces safe building products legislation

The New South Wales (NSW) Government introduced the Building Products (Safety) Bill 2017 (the proposed Act) into Parliament on 16 November 2017.

The proposed Act has been expedited in response to the Grenfell Tower fire in London where it is thought that external cladding attached to the building may have accelerated the spread of fire in the building. It is intended that the proposed Act will prevent unsafe use of building products in NSW buildings by enabling the Commissioner for Fair Trading (the Secretary) to ban the use of specified building products in a building if the Secretary is satisfied that there is a risk to safety posed by the use of the building product.

New powers for investigation, compliance and enforcement will be introduced and vested in the Secretary and the relevant enforcement authority for the building, being either the council for the area in which the building is located or a body that may give orders in relation to the building under the Environmental Planning and Assessment Act 1979 (NSW).

There following key concepts are used under the proposed Act:

The Secretary may prohibit the use of building products, if the Secretary is satisfied on reasonable grounds that the use is unsafe, by written notice published on the internet which must include the reasons for the ban. The ban will come into force on the day specified by the Secretary, being no earlier than the date of the notice.

Notice must also be given, if practicable, to the manufacturer and or supplier of the building product.

Rectification orders

Though a notice for building product use bans cannot come into force earlier than the date of the notice, a relevant enforcement authority may make a building product rectification order in respect of a building affected by a building product that is subject to a building product use ban. Such an order requires the owner of the building to do such things as necessary to eliminate or minimise the safety risk posed by the use in the building of a banned building product, and/or remediate or restore the building following the elimination or minimisation.

A number of consequential amendments will ensure full disclosure is given to any purchaser of land.

Investigations

The Secretary may authorise an investigation to ascertain whether use of a building product is unsafe, or the location of any building in which a building product has been used in a way that is or may be unsafe. In doing so, the Secretary must give the manufacturer, or the importer or supplier in the case of a foreign building product, an opportunity to make submissions in relation to the product.

The Secretary may also, by order, require a manufacturer or supplier to conduct a product assessment in relation to a building product and provide a report to the Secretary about that assessment.

Regulatory powers

Authorised officers, appointed by the Secretary, will have powers, including, to:

• require persons to provide information and documents;
• require persons to answer questions;
• enter a premises and exercise a broad range of powers including to inspect, take samples and photographs, make examinations and inquiries, and inspect documents; and
• require the owner of a premise to provide assistance at the premises.

Under the proposed Act, it is an offence to cause a building product to be used in a building in contravention of a building product use ban. A person causes a building product to be used if the person does the building work, or in any other circumstances prescribed by regulations.

It is also an offence, in trade or commerce, to represent that a building product is suitable for use in a building if that use would contravene a building product use ban.

The maximum penalty for these offences in the case of corporation is currently $1.1 million, and a further $110,000 for each day the offence continues.

In any other case, the maximum penalty is currently $220,000 or 2 years imprisonment or both, and a further $44,000 for each day the offence continues.

Executive liability

These offences are executive liability offences, which means that if the corporation commits an offence:

• a director of the corporation, or
• a person involved in the management of the corporation and who is in a position to influence the conduct of the corporation in relation to the offence,

also commits an offence if the person knows or ought reasonably to know that the offence would be or is being committed and the person fails to take all reasonable steps to prevent or stop the commission of that offence.

The maximum penalty for committing an executive liability offence is currently $22,000.

The proposed Act also creates general liability for directors or persons concerned with the management of the corporation where a corporation commits an offence and the person knowingly authorised or permitted the contravention, and a specific offence where such a person aids, abets, counsels, procures, induces, or conspires to effect the commission of an offence committed by a corporation.