Home Building Amendment Bill 2004

New South Wales
Explanatory note
This explanatory note relates to this Bill as introduced into Parliament.

Overview of Bill

The object of this Bill is to make miscellaneous amendments to the Home Building
Act 1989 (the Principal Act):

(a) to underpin the requirements relating to the provision of home warranty
insurance contained in Part 6 of the Principal Act in various respects so as to
facilitate the provision of such insurance, and

(b) to enhance the licensing and certification provisions concerning the issue,
renewal and restoration of contractor licences and other authorities under the
Principal Act so that the Commissioner for Fair Trading, Department of
Commerce (who in the Principal Act is called the Director-General) can better
prevent inappropriate persons from holding authorities, and

(c) to expand the grounds for the taking of disciplinary action against holders of
contractor licences and other authorities under the Principal Act, to enable the
Director-General to suspend such authorities pending disciplinary action and
to increase the amount of the penalty that may be imposed by the
Director-General if the Director-General is satisfied a ground for disciplinary
action has been established, and

(d) to increase the maximum penalties for offences under the Principal Act and
regulations and to increase the monetary penalty that may be imposed against
a corporation by way of disciplinary action, and

(e) to enable proceedings for a breach of the Principal Act to be dealt with
summarily either before a Local Court or the Supreme Court, and

(f) to create new offences relating to unlicensed contracting and supplying of kit
homes and the lending of authorities, and

(g) to require persons in control of work at a building site to supply the names and
addresses of persons undertaking work at the site at the request of an
authorised officer, and

(h) to constitute a Home Warranty Insurance Scheme Board, and
        (i) to reconstitute the Home Building Advisory Council, and

(j) to modify provisions enabling a contract of sale for the sale of land on which
residential building work is, or is to be, done to be voided if a certificate of
insurance evidencing a contract of insurance required under Part 6 of the
Principal Act is not attached to the contract of sale at the time it is entered into,
and

(k) to enable the Director-General to remove false, erroneous, misleading or
unfairly prejudicial particulars about the holders of authorities from, or to
otherwise amend the particulars in, the register kept under section 120 of the
Principal Act, and

(l) to provide for the service of documents by post in the same manner as they
may be served under the Fair Trading Act 1987, and

(m) to insert savings and transitional provisions.

The Bill makes various other minor, consequential or ancillary amendments to the
Principal Act. It also makes consequential amendments to the Home Building
Regulation 2004 and the Fair Trading Act 1987.

Outline of provisions

Clause 1 sets out the name (also called the short title) of the proposed Act.

Clause 2 provides for the commencement of the proposed Act on a day or days to be
appointed by proclamation.

Clause 3 is a formal provision that gives effect to the amendments to the Home
Building Act 1989 set out in Schedules 1–7.

Clause 4 is a formal provision that gives effect to the amendments to the Home
Building Regulation 2004 set out in Schedule 8.

Clause 5 is a formal provision that gives effect to the amendments to the Acts and
regulations set out in Schedule 9.

Schedule 1 Amendments relating to insurance
Part 6 of the Principal Act protects consumers of residential building services and
subsequent purchasers by requiring builders, owner-builders, developers and persons
supplying or erecting kit homes to take out home warranty insurance in respect of
certain work.

Schedule 1 contains a number of amendments to underpin the requirements relating
to the provision of home warranty insurance contained in Part 6. These include the
following:

Section 103A of the Principal Act enables the Minister to approve kinds of insurance,
and insurers, for the purposes of Part 6 of the Act subject to any conditions that may
be imposed by the regulations or the Minister. Schedule 1 [5] inserts section 103A
(7) into the Principal Act to enable the Minister to enter into an insurance industry
deed with insurers approved, or seeking approval, as insurers under Part 6. It is
intended that the deed will set out the parameters for the conduct of the home
warranty insurance business of the insurers and for the exercise by the government
of its powers under the Act.

Schedule 1 [1] and [2] contain consequential amendments.

Schedule 5 [2] provides for the constitution of a Home Warranty Insurance Scheme
Board comprising the Director-General and 5 persons appointed by the Minister who
have knowledge of or experience in insurance products or commerce. Schedule 1 [3]
and [4] amend section 103A to provide that the Minister is only to approve a kind of
insurance, or an insurer, for the purposes of Part 6 or to revoke or vary an approval
after consultation with the Board.

Schedule 1 [6] and [7] contain amendments to the Principal Act to facilitate the
exchange of information relevant to the provision of home warranty insurance
between insurers and between insurers and the Director-General. Schedule 1 [6]
amends section 103AC (Information regarding insurers) to enable the
Director-General to require an insurer to give the Director-General information about
particular claimants and insured persons whether or not the claimants or insured
persons consent to the giving of the information. Schedule 1 [7] inserts proposed
section 103AD. The section makes it a condition of the approval of an insurer under
section 103A of the Principal Act that, if an application is made to the insurer for
home warranty insurance or the insurer has provided home warranty insurance to a
person, the insurer must disclose certain information that is relevant to the provision
of the insurance to another insurer to which the person applies for such insurance or
which provides such insurance if requested to do so by the other insurer. The
proposed section extends to information obtained before the commencement of the
amendment (see proposed clause 77 of Schedule 4 to the Principal Act (Schedule 7
[2])).

Schedule 1 [8] inserts proposed section 103EA into the Principal Act to make it an
offence to make a false or misleading statement or to omit any matter or thing without
which a statement is misleading in an application to an insurer for home warranty
insurance.

Schedule 1 [10] inserts proposed section 121A into the Principal Act to provide for
the secrecy of certain information obtained from insurers under, or in connection
with the administration or execution of, Part 6 of the Principal Act. Schedule 1 [9]
contains a consequential amendment to section 121 of the Principal Act.

Schedule 2 Amendments relating to authorities
Part 3 of the Principal Act contains provisions relating to the issue, renewal,
restoration, cancellation and suspension of authorities under the Act (that is,
contractor licences, building consultancy licences, owner-builder permits and
supervisor and tradesperson certificates). Part 4A provides for the review of certain
decisions relating to these matters by the Administrative Decisions Tribunal.

Schedule 2 contains amendments to those Parts and some related provisions
elsewhere in the Act to enhance the licensing and certification provisions concerning
authorities so that the Director-General can prevent inappropriate persons from
holding authorities.

Schedule 2 [4], [10], [12] and [19] amend sections 20, 25, 32B and 40, respectively,
to enable the Director-General to reject an application for a contractor licence,
building consultancy licence, supervisor certificate or tradesperson certificate, or an
application to renew or restore such an authority, if the applicant is not a fit and
proper person to hold the authority. The Director-General is required in considering
whether an applicant is fit and proper to take into account whether the applicant is of
good repute, having regard to character, honesty and integrity. Provision is also made
for such an application to be rejected if the applicant is disqualified by the Principal
Act or the regulations from holding the authority. Schedule 2 [5], [8], [9], [11], [13],
[16], [20] and [22]–[24] make consequential amendments.

Schedule 2 [6], [14] and [19] insert sections 20 (6), 32B (5) and 40 (1) into the
Principal Act to (among other things) enable the Director-General to reject an
application for a contractor licence or building consultancy licence or application to
renew or restore an authority on the ground that the Director-General considers that
a close associate of the applicant who would not be a fit and proper person to hold a
licence or other authority exercises a significant influence over the applicant or the
operation and management of the applicant’s business. Schedule 2 [3] inserts
proposed section 3AA into the Principal Act to define close associate for the
purposes of the provisions and Schedule 2 [1] inserts a signpost to the definition.

Proposed sections 20 (6) and 32B (5) also enable the Director-General to reject an
application for a contractor licence or building consultancy licence on the ground that
an employee or proposed employee of the applicant is disqualified from holding a
licence, has had an application for an authority rejected on a ground relating to his or
her character, honesty or integrity or has had an authority cancelled or suspended on
any disciplinary ground or if there are reasonable grounds to believe that the
application has been made with the intention of avoiding disclosure of any relevant
past misconduct of the applicant or a close associate of the applicant. Schedule 2 [1]
makes a consequential amendment to insert a definition of authority.

Schedule 2 [2] replaces the definition of officer in section 3 of the Principal Act to
expand the definition to include a person who is an officer of a corporation, within
the meaning of the Corporations Act 2001 of the Commonwealth, and not just a
director of a corporation or a person concerned in the management of a corporation
as at present. An example of the effect of this is that, under section 54 of the Principal
Act, a wider group of individuals who are officers of a corporation that is the holder
of a contractor licence or building consultancy licence may be found guilty of
improper conduct for the actions of the corporation.

Schedule 2 [7] and [15] amend sections 22 and 32D, respectively, of the Principal
Act to make it clear that contractor licences and building consultancy licences held
by a corporation may be cancelled if the corporation is wound up voluntarily, not
only if it is wound up by court order.

Schedule 2 [17] inserts proposed section 34 into the Principal Act to make it an
offence for an applicant for an authority, or for the variation, renewal or restoration
of an authority, to fail to notify the Director-General of changes in the particulars or
information accompanying the application.

Schedule 2 [18] inserts proposed section 35 into the Principal Act to enable the
Director-General to require an applicant for a contractor licence or a close associate
of the applicant to authorise a third party to provide certain information or to produce
certain records to specified persons or to consent to the party giving the
Director-General financial and other confidential information concerning the
applicant or close associate.

Schedule 2 [21] amends section 40 of the Principal Act to expand the grounds on
which the Director-General may reject an application for the renewal or restoration
of a contractor licence or building consultancy licence to include the grounds that an
employee or proposed employee of the applicant is disqualified from holding such a
licence, has had an application for such a licence rejected on a ground relating to his
or her character, honesty or integrity or has had such a licence cancelled or suspended
on a disciplinary ground.

Schedule 2 [25] and [26] amend section 83B of the Principal Act to enable decisions
relating to the renewal or restoration of authorities to be reviewed by the
Administrative Decisions Tribunal.

Schedule 2 [27]–[29] contain amendments to section 127 of the Principal Act to
enable any person authorised for that purpose by the Director-General to obtain
information about the financial solvency of an applicant for, or holder of, a contractor
licence, building consultancy licence, supervisor or tradesperson certificate or a close
associate of such an applicant or holder. Proposed section 127 (8) makes it clear that
an authorised person is not, in obtaining information under section 127, required to
comply with specified provisions of the Privacy and Personal Information
Protection Act 1998.

Schedule 3 Amendments relating to disciplinary
action
Part 4 of the Principal Act sets out grounds on which disciplinary action may be taken
against the holder of an authority under the Act and describes the nature of such
disciplinary action.

Schedule 3 contains provisions to expand the grounds for the taking of disciplinary
action, enables the Director-General to suspend an authority pending a decision as to
whether to take disciplinary action and increases the maximum amount of the penalty
that may be imposed by the Director-General if the Director-General is satisfied that
a ground for disciplinary action against a corporation that holds an authority has been
established.

Schedule 3 [2] amends section 51 of the Principal Act to make it improper conduct
for the holder of an authority to commit an offence under section 307A (False or
misleading applications) or 307B (False or misleading information) of the Crimes
Act 1900 and so a ground for taking disciplinary action against a holder of an
authority who, for example, makes a false statement in an application to renew the
authority.

Schedule 3 [3] amends section 51 of the Principal Act to make the holder of a
contractor licence or supervisor or tradesperson certificate becoming disqualified by
the Act or regulations from holding the licence or certificate improper conduct and
so a ground for taking disciplinary action against the holder.

Under sections 56 and 56A of the Principal Act, the Director-General may take
disciplinary action under section 62 of the Act against the holder of a contractor
licence or holder of a building consultancy licence if the holder is guilty of improper
conduct.

Schedule 3 [4] and [5] amend section 51 of the Principal Act to make it improper
conduct for the holder of a contractor licence or building consultancy licence to
employ a person (or, if the holder of a contractor licence, to engage a person under a
contract for services) knowing the person is disqualified from holding a licence, has
had an application for an authority (as to be defined by a definition of authority to be
inserted by Schedule 2 [1]) rejected on a ground relating to the person’s character,
honesty or integrity or has an authority cancelled or suspended on a disciplinary
ground. Schedule 3 [6] inserts section 51 (4) into the Principal Act to make it a
defence to a complaint that the holder of a licence has been guilty of such improper
conduct if, before employing or engaging the person concerned, the holder obtained
the approval of the Director-General to the employment or engagement.

Section 54 of the Principal Act makes an individual who is a member of a partnership
or an officer of a corporation that is the holder of a contractor licence guilty of
improper conduct if the holder does certain things.

Schedule 3 [7] amends section 54 to expand the provisions to cover individuals who
are members of a partnership or officers of a corporation that is the holder of a
building consultancy licence.

Schedule 3 [8] amends section 56 of the Principal Act to expand the grounds for
taking disciplinary action against the holder of a contractor licence to include the
following grounds:

(a) that the holder does not meet the standards of financial solvency determined
by the Director-General to be appropriate to the class of licence held,

(b) that, in the opinion of the Director-General, there is a risk to the public that the
holder will be unable (whether or not for a reason relating to the financial
solvency of the holder) to carry out work that the holder has contracted to do
(whether before or after the commencement of the proposed paragraph),

(c) that the licence was improperly obtained,

(d) that the Director-General has become aware of information about the licensee
that, if known at the time the application for the licence was determined, would
have been grounds for rejecting the application,

(e) that the holder has knowingly done any residential building work or specialist
work before the relevant principal certifying authority has carried out any
critical stage inspection required to be carried out under section 109E (3) (d)
of the Environmental Planning and Assessment Act 1979 in relation to the
work or has failed to give any notification required under that Act in relation
to such an inspection.

Schedule 3 [9] amends section 56A of the Principal Act to expand the grounds for
taking disciplinary action against the holder of a building consultancy licence to
include the following grounds:

(a) that the licence was improperly obtained,

(b) that the Director-General has become aware of information about the licensee
that, if known at the time the application for the licence was determined, would
have been grounds for rejecting the application,

(c) that an employee of the holder is disqualified from holding such a licence, has
had an application for such a licence rejected on a ground relating to his or her
character, honesty or integrity or has had such a licence cancelled or
suspended on a disciplinary ground.

Schedule 3 [10] amends section 57 of the Principal Act to expand the grounds for
taking disciplinary action against the holder of a supervisor or tradesperson
certificate to include the following grounds:

(a) that the certificate was improperly obtained,

(b) that the Director-General has become aware of information about the holder
that, if known at the time the application for the certificate was determined,
would have been grounds for rejecting the application.

Schedule 3 [11] inserts proposed section 61A into the Principal Act to enable the
Director-General to suspend an authority, when a show cause notice is served,
pending a determination as to whether to take disciplinary action against the holder
of the authority. Section 61A will replace section 83 of the Act which enables the
District Court to suspend a contractor licence at the request of the Director-General.

Schedule 3 [1] makes a consequential amendment to update a reference to section 83
in a note to section 22B of the Principal Act. Schedule 3 [13] makes a consequential
amendment to repeal Division 5 of Part 4 of the Principal Act (which contains section
83) and Schedule 3 [14] amends section 83B of the Principal Act to enable the
Administrative Decisions Tribunal to review decisions under proposed section 61A.

Schedule 3 [12] amends section 62 of the Principal Act to increase from $22,000 to
$50,000 the maximum penalty that the Director-General may impose against the
holder of an authority that is a corporation when satisfied that disciplinary action
should be taken against the holder.

Schedule 4 Amendments relating to offences and
penalties
Schedule 4 contains amendments to the Principal Act to increase the maximum
penalties for certain offences by corporations from 200 to 1,000 penalty units
($110,000) and to increase other maximum penalties, to enable the regulations to
create an offence punishable, if committed by a corporation, by a maximum penalty
of 200 penalty units, to enable proceedings for a breach of the Principal Act to be
dealt with summarily either before a Local Court or the Supreme Court and to create
new offences relating to unlicensed contracting or supplying and the lending of
authorities. Provision is also made to require persons in control of work at a building
site to supply the names and addresses of persons undertaking work at the site on
request.

Schedule 4 [1], [3], [4], [6] and [11] amend various sections of the Principal Act to
increase the maximum penalties for offences, and to enable the regulations to create
offences punishable by the maximum penalties, as described above.

Schedule 4 [2] amends section 4 of the Principal Act to make it an offence for the
holder of a contractor licence or a developer to contract with an unlicensed person to
undertake building work for the holder or developer of a kind that would normally
require the person to be licensed.

Schedule 4 [5] amends section 16A of the Principal Act to make it an offence for the
holder of a contractor licence to contract with a person to supply a kit home if the
person does not hold a licence to supply a kit home of that kind.

Schedule 4 [6] amends section 18H of the Principal Act to make it an offence for the
holder of a building consultancy licence to contract with another person to do
building consultancy work for the holder if the person does not hold a licence to do
work of that kind.

Schedule 4 [7] inserts proposed section 32AA into the Principal Act to make it an
offence for the holder of an owner-builder permit to contract with another person to
do residential building work for the holder if the person does not hold a licence to do
work of that kind.

Schedule 4 [8] inserts proposed section 46A into the Principal Act to make it an
offence to lend an authority to another person or permit another person to use an
authority.

Schedule 4 [9] inserts proposed section 127A into the Principal Act to enable a
person authorised by the Director-General to request a person who has control over
the carrying out of residential building work or specialist work at a building site, or
an owner-builder, to state the name and address of each person undertaking work at
the site or for the owner-builder.

Schedule 4 [10] amends section 139 of the Principal Act to enable proceedings for a
breach of the Act to be dealt with summarily either before a Local Court or the
Supreme Court. If proceedings are brought in a Local Court, the maximum penalty
that the Court will be able to impose is 200 penalty units.

Schedule 5 Amendments relating to Home Warranty
Insurance Scheme Board and Home
Building Advisory Council
Schedule 5 contains amendments to the Principal Act to constitute the Home
Warranty Insurance Scheme Board and the Home Building Advisory Council.

Schedule 5 [1] amends section 3 of the Principal Act to insert definitions of Advisory
Council and Scheme Board.

Schedule 5 [2] inserts proposed Division 1 (sections 89E–89G) into Part 6 of the
Principal Act.

Section 89E constitutes the Home Warranty Insurance Scheme Board (the Scheme
Board).

Section 89F provides for the Scheme Board to comprise the Director-General and 5
persons appointed by the Minister who have knowledge of or experience in relation
to insurance products or commerce.

Section 89G sets out the functions of the Scheme Board. These include advising the
Minister with respect to the approval of kinds of insurance, and insurers, under Part
6 of the Principal Act, monitoring the scheme established by the Part with respect to
home warranty insurance and providing advice and recommendations with respect to
the scheme.

Schedule 5 [3] inserts proposed Part 7B (sections 115B–115D) into the Principal
Act.

Section 115B constitutes the Home Building Advisory Council (the Advisory
Council).

Section 115C sets out the functions of the Advisory Council. These are to advise the
Minister on such consumer-related and trader-related issues relating to the home
building industry as it thinks fit or as are referred to it by the Minister or the Scheme
Board and to provide advice to the Minister with respect to any other matter referred
to it by the Minister.

Section 115D provides for the Advisory Council to consist of at least 14 members.

These are to include the Chairperson and Deputy Chairperson of the Scheme Board,
the Director-General or his or her nominee, members appointed by the Minister to
represent the insurance industry, the building industry, building industry employees
and the interests of consumers and holders of contractor licences, a legal practitioner
appointed by the Minister and such other persons with appropriate qualifications or
experience as may be appointed by the Minister.

Schedule 5 [4] inserts proposed Schedule 1 into the Principal Act. It contains
provisions relating to the membership and procedure of the Scheme Board and
Advisory Council.

Schedule 6 Miscellaneous amendments
Schedule 6 contains amendments to modify provisions enabling a contract for the
sale of land on which residential building work is, or is to be done, to be voided if a
certificate of insurance evidencing a contract of insurance required under Part 6 of
the Principal Act is not attached to the contract of sale at the time it is entered into,
to enable the Director-General to remove certain information from the register
recording particulars about authorities, to provide for the service of documents by
post in the same manner as they may be served under the Fair Trading Act 1987 and
to update the definition of Director-General.

Schedule 6 [1] replaces the definition of Director-General in section 3 of the
Principal Act to reflect current administrative arrangements.

Sections 95, 96 and 96A of the Principal Act make it an offence for an owner-builder,
developer or other person carrying out or having residential building work done on
the owner-builder’s, developer’s or person’s behalf to enter into a contract for the
sale of land on which residential building work has been done, or is to be done, unless
a certificate of insurance evidencing that the person who did or does the work was
insured as required under Part 6 is attached to the contract of sale. If an
owner-builder, developer or other person contravenes this requirement, the contract
is voidable at the option of the purchaser before the completion of the contract.

Schedule 6 [3], [5] and [7] amend sections 95, 96 and 96A, respectively, of the
Principal Act so that the contract of sale will not be voidable if the owner-builder,
developer or other person obtained a contract of insurance before entering into the
contract and, before completion of the contract, serves on the purchaser (or a legal
practitioner acting on the purchasers’s behalf) a certificate of insurance evidencing
the contract of insurance required under Part 6 for the residential building work
concerned. Schedule 6 [2], [4] and [6] contain consequential amendments.

Schedule 6 [8] amends section 120 of the Principal Act to enable the
Director-General to remove false, erroneous, misleading or unfairly prejudicial
particulars about the holders of authorities from, or to otherwise amend the
particulars in, the register kept under the section.

Schedule 6 [9] and [10] amend section 123 of the Principal Act to enable documents
to be served by posting them in a letter to the last known address of an individual or
the address last known as the principal place of business of a corporation,
respectively.

Schedule 7 Amendments inserting savings and
transitional provisions
Schedule 7 contains an amendment to Schedule 4 to the Principal Act to enable the
making of savings and transitional regulations (Schedule 7 [1]) and an amendment
to insert savings and transitional provisions relating to amendments contained
elsewhere in the Bill (Schedule 7 [2]).

Schedule 8 Amendment of Home Building
Regulation 2004
Schedule 8 makes amendments to the Home Building Regulation 2004 that are
consequential on amendments contained in Schedule 2 to the proposed Act relating
to the issue, renewal and restoration of authorities. It also increases the penalties for
certain offences against the regulation.

Schedule 9 Amendment of other Acts and
regulations
Schedule 9 contains amendments to the Fair Trading Act 1987 and various other
Acts and regulations.

Schedule 9.4 amends the Fair Trading Act 1987 to omit provisions in that Act that
are superseded by provisions inserted by Schedule 5 [3] to the Bill reconstituting the
Home Building Advisory Council and to make it clear that persons who are members
of the Council as constituted under that Act cease to hold office on the
commencement of the amendments.

Schedule 9.1–9.3 and 9.5–9.9 amend various Acts and regulations to update
references to certificates of registration under the Principal Act (such certificates are
now known as tradesperson certificates).

Note: If this Bill is not modified, these Explanatory Notes would reflect the Bill as passed in the House. If the Bill has been amended by Committee, these Explanatory Notes may not necessarily reflect the Bill as passed.

 

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