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Security Equipment Exemption

Wednesday, 13th June 2012

There seems to be some confusion currently being experienced in the Strata and Community industry over the installation, repair and maintenance of security systems and the impact of the Home Building Act 1989 (and regulations).

Under the Home Building Act 1989 (HBA) any “residential building work” as defined in the HBA must be completed under a contract (if the value is above $1,000) and must have home owners warranty insurance if the value of the work is above $12,000.   However, the Home Building regulations do have some exemptions that may apply to the provision of work for the installation of security devices (or works) and this is where the confusion seems to emanate from.

Clauses 9(1)(e) and 9(2) of the Home Building Regulations relevantly provides:

9 Definition of “residential building work”- certain work excluded

(1)          For the purposes of the definition of "residential building work" in section 3 (1) of the Act, the following is declared to be excluded from that definition:

(e)        subject to subclause (2), any work that would otherwise be residential building work but that by or under an Act (other than the Home Building Act 1989 ) a person is prohibited from doing unless the person is the holder of a contractor licence or another authority under that other Act,

(2)        Work referred to in subclause (1) (e) is not excluded from the definition of "residential building work" if it is part only of the work to be done under a contract to do residential building work.

As can be seen, Home Owners Warranty Insurance is only required for “residential building work”.  Where the type of work to be undertaken is covered by some other legislative requirement then the provisions of the HBA do not apply (as to do otherwise would create two regimes to follow and conflicts may result).

One of those areas where the exemption applies is the installation, maintenance and repair of “security equipment”.  Security equipment is defined under the Security Industry Act, 1997 and cannot be carried out unless the person is the holder of a license under that Act (section 7 of the Security Industry Act, 1997).

Under this Act “security equipment” is defined as:

(a) any type of safe or vault,

(b) any mechanical, electronic, acoustic or other equipment designed or adapted to provide or enhance security or for the protection or watching of any property,

(c) any type of device or equipment prescribed by the regulations for the purposes of this definition,

but does not include any type of device or equipment declared not to be security equipment by the regulations.

Further under Section 4 of the regulations there are other classifications of work that are covered by the definitions including the duplication of restricted keys and the manipulation of security systems other than by ordinary means (for example unlocking locks/doors under a class 2C licence).

Finally, some types of work are not considered security equipment under the regulations (clause 3) and they mainly relate to vehicle immobilisers or similar devices and road vehicle alarms.

Effect of Security Industries Act

The effect of the Security Industries Act is that where anyone conducts work involving security equipment (and they are licensed) then they are not required to also comply with the HBA as they are covered by the exemption under clause 9(1)(e) of the HBA.

This is significant for strata and community schemes as the contractor is also not required to have home owners warranty insurance under the HBA (a question often asked).  However, the licensee in charge of the work is required to strictly adhere to the requirements of the licence conditions and if they do not the licence may be revoked.

As a result, whilst a contractor is not required to provide home owners warranty insurance the contractor is still liable for any defective work and poor trading activities may lead to cancellation of the contractors licence.

Is it a total exemption?

No - Mainly contractors will only install, maintain or repair security equipment (as defined), however, it must be the only work being carried out, because if some other work is carried out which is “residential building work” at the same time, then it may not be covered by the exemption.

Where work being carried out is indispensably necessary to perform the installation, maintenance and repair then that work would also be covered by the exemption.

What should a strata or community scheme do?

A scheme should ensure the following:

1.            Ensure the work is Security Equipment (as defined).

2.            Ensure the contractor is licensed under the Securities Industries Act.

3.            Ensure the scope of works is detailed.

4.            Ensure that the contract is fair and reasonable in the circumstances.

If you require advice about your particular circumstances or claim, please contact David Andrews or Colin Grace on (02) 9284 2700 or by email: [email protected] or [email protected]

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