Home Building & Construction Building Commission NSW: Increasing Activity and the Impact on Builders

Building Commission NSW: Increasing Activity and the Impact on Builders

The Building Commission NSW is increasing its enforcement activity, imposing penalties on licensed builders for alleged statutory warranty breaches—even in cases where defects are disputed in NCAT. Understanding how rectification orders, improper conduct findings, and penalties can impact your business is essential for NSW builders navigating compliance risks.

Understanding the Powers of the Building Commission NSW

The Home Building Act 1989 (NSW) gives the Building Commission the power to impose a penalty on a licenced builder in certain circumstances. One key area of enforcement is breaches of the statutory warranty leading to a finding of improper conduct under section 51 of the Act.

Rectification Orders and Disputes in NCAT

In practice if the Building Commission is satisfied that a builder has breached a statutory warranty, it will often issue a rectification order under section 48E of the Act.

However, if the builder disputes that the work is defective, they or the homeowner can commence proceedings in NCAT (NSW Civil and Administrative Tribunal).

Commencing in NCAT means that the rectification order ceases to have effect pursuant to section 48F(2) of the Act.

Building Commission’s Approach to Improper Conduct Findings

However, the Building Commission has taken the view that it can still find a builder guilty of improper conduct for a breach of a statutory warranty:

Based on an inspection of work by one it its inspectors.
Without any finding by NCAT that there has been a breach of a statutory warranty (even if proceedings are on foot to dispute an allegation of defective work).
Regardless of whether a rectification order has ceased to have effect by reason of proceedings being commenced.

The Risk for Residential Builders

Residential builders need to be aware that the involvement of the Building Commission in any project can carry the risk of a finding that there is defective work sufficient to lead to a finding of a breach of statutory warranty and therefore improper conduct. 

This is particularly relevant in cases where there may be a stoppage of work due to non-payment or the defects are disputed and are being disputed in NCAT. 

This could have significant impacts for builders and may involve a builder having to prove that work is not defective to the Building Commission and then again in NCAT.

Penalties the Building Commission NSW Can Impose on Builders

The penalties that the Building Commission can impose include:

A caution or reprimand.
A determination requiring the holder to pay to the Secretary, as a penalty, an amount not exceeding $11,000 (in the case of an individual) or $50,000 (in the case of a corporation).
Varying the licence held by the holder, by imposing a condition on the licence, including a condition requiring the holder to undertake a course of training relating to a particular type of work or business practice within a specified time.
Suspending the licence for a period.
Cancelling the licence.
Disqualifying the holder of the licence.

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The information in this article is not legal advice and is intended to provide commentary and general information only. It should not be relied upon or used as a definitive or complete statement of the relevant law. You should obtain formal legal advice specific to your particular circumstance. Liability limited by a scheme approved under Professional Standards Legislation.