10 December 2024
8 min read
#Construction, Infrastructure & Projects
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As Australia’s construction industry navigates a complex landscape in 2024, marked by economic challenges and shifting priorities, the sector anticipates significant changes in 2025, including mandatory climate reporting for large companies, ongoing efforts to address cladding issues and state-specific legislative reforms aimed at improving payment security and practitioner accountability.
This article provides an overview of the progress made this year and what the industry can expect in 2025. We begin by discussing changes at the national level, followed by developments that are specific to the following jurisdictions:
New financial disclosures relating to climate impacts will soon need to be made by large Australian companies from 1 January 2025. Large and medium-sized construction companies will be affected in a rolling scheme which will be in full force by 2028. Find out if your company is affected and what steps you should take before the new year.
While progress has been made this year, particularly in Victoria, cladding continues to remain a significant issue for the Australian construction industry in 2025. Cladding Safety Victoria’s report in July 2024 found that key professionals, such as architects, draftspersons, fire safety engineers, and building surveyors were responsible for the widespread misapplication of combustible cladding.
The Building and Construction Industry Security of Payment Act 1999 (NSW) (SOPA NSW) continues to play a crucial role in ensuring prompt payment within the state’s construction industry. The reforms in late 2019, including the removal of reference dates and shortened payment timeframes, have now been fully integrated into industry practices.
While no major amendments were made to the legislation in 2024, stakeholders should stay alert to the possibility of a legislative review in 2025. Potential areas for consideration include further streamlining of the adjudication process, expanding the Act’s scope to residential works, and enhancing enforcement mechanisms for adjudication determinations.
This year’s most significant case was A-Civil Aust Pty Ltd v Ceerose Pty Ltd [2024] NSWCA 7, in which the NSW Court of Appeal made the rare decision to quash an adjudicator’s determination due to a significant breach of procedural fairness. The adjudicator had decided the claim for retention monies on a basis that neither party had argued, without giving them an opportunity to address this new reasoning. This ruling underscores the critical importance of ensuring all parties have a fair opportunity to present their case during adjudication proceedings. It also highlights that adjudicators must base their decisions on arguments and evidence presented by the parties or, if introducing new considerations, must allow parties to respond before making a determination.
As the industry continues to digitise, we may see discussions regarding the integration of technologies, such as blockchain, to improve transparency and efficiency in the payment claim process.
In 2024, several significant cases clarified the scope and application of the Design and Building Practitioners Act 2020 (DBP Act), which remains relatively new in NSW courts.
The Owners – Strata Plan 80867 v Da Silva [2024] NSWDC 263 decision confirmed that the duty of care provisions under Part 4 of the DBP Act extends to individuals who carry out, supervise, coordinate or have substantial control over ‘construction work’ as defined in the DBP Act. The Kazzi v KR Properties Global Pty Ltd [2024] NSWCA 143 ruling reaffirmed that individuals with ‘substantial control’ over building work, including directors and project supervisors, can be held personally liable for defective works under section 37 of the DBP Act.
The DBP Act’s scope was also expanded in 2024, with new building classes included, and the grace period for alterations, additions, repairs, renovations and protective treatment of Class 3 and 9c buildings extended to 1 July 2025. The deadline for registered building practitioners to meet the ‘adequately insured’ threshold requirement was also pushed to 30 June 2025.
Looking to 2025, further refinements and interpretations of the DBP Act are expected as more cases are brought before NSW courts. The ongoing parliamentary review could also lead to significant amendments, including an expansion of the Act to cover additional building classes.
From 1 March 2025, the Project Trust Account (PTA) regime will apply to contracts valued at $3 million or more, involving state government authorities, local government, and private entities and individuals. By 1 October 2025, the regime will extend to all contracting parties and apply to contracts valued at $1 million or more.
The implementation of the PTA regime under the Building Industry Fairness (Security of Payment) Act 2017 (Qld) (BIF Act) was originally planned to occur in phases, but the expansion of the regime to include a wider range of contracts has been delayed.
The extension of Phase 3 and Phase 4 provides additional relief to smaller operators in the building industry, offering support in light of the current challenging industry conditions. On 19 March 2023, the then Minister for Energy, Renewables and Hydrogen and Minister for Public Works and Procurement, the Honourable Mick De Brenni, announced that the Queensland Government had postponed the remaining phases to balance continued protections for tradespeople with the need for a suitable software solution for smaller builders grappling with an overstretched industry. He further stated that a steering committee will engage a specialist to ensure a cost-effective and suitable solution, particularly for smaller companies.
Further amendments to the regime came into force on 1 July 2024 under the Building Industry Fairness (Security of Payment) and Other Legislation Amendment Act 2024 (Qld) (Amendment Act). Some of the key changes include:
The Victorian Government has responded to the Environment and Planning Standing Committee’s recommendations, following its inquiry into non-payment of subcontractors. Of the 28 recommendations, 16 were supported in full, 12 in part or in principle. The changes seek to increase the types of claims that can be made and to simplify the adjudication process, which will bring Victoria in line with other Australian jurisdictions.
While the amended regime will likely not come into effect until sometime in 2025, stakeholders should review their processes for making and receiving progress claims. Read more about the recommendations and how it could impact the sector.
If you have any questions or would like to learn more about what to expect in the industry next year, please get in touch with our Construction, Infrastructure & Projects team below.
Disclaimer
The information in this article is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavour to provide accurate and timely information, we do not guarantee that the information in this article is accurate at the date it is received or that it will continue to be accurate in the future.
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