The legal framework

Commercial Building Disclosure program

The Building Energy Efficiency Disclosure Act 2010 (Cth) commenced on 1 July 2010 and is being implemented through the Commercial Building Disclosure (CBD) program. It currently only applies to office buildings, but the government is currently reviewing the early results of the CBD and, it is anticipated, will expand the CBD to cover other building types such as hotels, shopping centres and hospitals from 2014.

Vendors and lessors of office space of 2,000 square metres or more must obtain, register and disclose a Building Energy Efficiency Certificate (BEEC) if they wish to sell, lease or sublease that office space or otherwise face significant fines. The BEEC includes a NABERS rating plus other specified energy efficiency information. The BEEC will be available publicly online via the Building Energy Efficiency Register, and the NABERS rating must be included in any advertisement for the sale, lease or sublease of the office space, using the prescribed format.

The mandatory disclosure requirements of the CBD program do not apply to:

• building less than two years old;
• buildings which have been the subject of major refurbishment (requiring an occupancy permit) in the last two years;
• strata-titled buildings;
• mixed use buildings with less than 75 per cent office space; and
• new buildings where a certificate of occupancy (or equivalent) has either not yet been issued or was issued less than two years earlier.

Contractual obligations

In addition to the requirements under the CBD program, the achievement or disclosure of a rating may be a contractual requirement. When the rating tools were first established, contracts did not oblige the construction contractor to achieve a particular rating outcome. However, contractors are now more frequently being asked to assume the risk of achieving rating outcomes. If the achievement or disclosure of a rating is to be contractually documented, it is important in the contractual framework to:

• determine who has control over the factors that can influence the ability to obtain, calculate and maintain the rating; and
• allocate responsibility accordingly.

A key consideration for contractual risk allocation of obtaining a certain rating is whether the project is being procured as a design and construct or a construct only contract, given this will affect the contractor’s ability to achieve such ratings. For instance, in a construct only scenario it may be more appropriate for the designer or architect to bear the responsibility for obtaining the rating during the design stage and then the contractor may bear the risk for obtaining the rating at practical completion.

A contractor should consider whether to take responsibility for failure to achieve the rating, as the failure may arise due to the manner in which the building is being occupied by the various tenants, or managed by the facilities manager post construction.

Similarly:

• a facilities manager should consider whether to take responsibility for maintaining and calculating a rating and meeting the requirements under the CBD program on a landlord’s behalf; and
• a landlord should be careful about agreeing to abatements under a lease for failure to achieve or maintain a rating, as the failure may arise from the tenant’s behaviour in using and occupying the building, or due to a failure by the appointed facilities manager.

In this regard, it is useful in the project documentation to clearly articulate the occupational parameters around which the rating is proposed to be obtained. For example:

• occupation densities
• hours of operation
• air-conditioning use

The identification of operational usage and tailored design responses will assist the overall environmental effectiveness of the building and its ability to sustain its rating into the future.