Articles

By Justin Cotton, Director, Lovegrove & Cotton – Construction and Planning Lawyers

Architects practising in Victoria may no longer be able to stand apart in “splendid isolation” from the ramifications of tightened public protection changes in that State. New indictable offence provisions for works without the proper building approval could draw Architects into the web of those practitioners who can be whacked with stiff penalties.

As many of you will know building legislation in Victoria including the Building Act 1993 is currently undergoing reform in many areas, including provisions for dispute resolution orders and alternative dispute mechanisms for Builder and Owners.

Given high profile events such as the demolition of the Corkman Hotel without the requisite approvals and consequent dumping of asbestos material in breach of regulations, there has been a political imperative to be seen to be clamping down on “dodgy developers”.

This has manifested itself in the passage through parliament of a Bill that will see an amendment to the current section 16 of the Building Act 1993 that mandates that a party cannot carry out building work without the requisite Building Permit, and that the work must be in accordance with that Permit, the Act and the Regulations.

Of most dramatic import, a new provision 16B of the Act has been mooted which introduces “indictable offences” that attract serious and significant consequences if a party is found guilty of a contravention.

The term “indictable” suggests a potential sanction of imprisonment in the most serious cases, and that is indeed the situation here, if not a substantial monetary fine.

Indictable offences in the new section 16B will apply to a person “in the business of building” who knowingly carries out building work without a Building Permit, or who carries out building work knowing that the work contravenes the Building Act, the Regulations or the Building Permit.

The phrase “person in the business of building” is not necessarily definitive and may be fertile ground for later judicial interpretation, but can include somebody who “manages and/or arranges” the performance of the building work. At the very least it is not a closed and exclusive definition. Thus it could potentially apply to Architects and Developers who are acting as project / construction managers.

It has been stated that the legislative intent is to prevent parties simply incorporating the consequences of acting irresponsibly into the budgeted cost of a building project. This has led to the attachment of harsh penalties to the section 16B indictable offences. The maximum penalties planned are as follows:

• 600 penalty units (about $93,000 in fines) or imprisonment for 5 years (or both) in the case of a natural person individual; and

• 3000 penalty units in the case of a corporation (about $466,000).

This mooted change has caused some consternation and submissions to government by industry associations that represent Builders in Victoria, but there may be some lack of awareness in the construction industry about the potential ramifications for other parties such as Architects and Developers.

While carrying out building work where there is no Building Permit may be a careless or reckless act, the situation can become murkier in staged Permit situations where the Builder or their contractors have inadvertently done further works that were not covered by the current Building Permit. This equates to illegal works that were not covered by a current Permit. It is somewhat easier for a practitioner to act mistakenly here without necessarily being a reckless actor or a dishonest rogue.

Anecdotally there have been instances where Owners or Developers have approached Builders and suggested that “just a little bit more work” should be carried out, that is not covered by an approved Permit, and that their Architect has said that this should be ok. This can of course place a Builder in an invidious position, because they could be placing their own head “in the noose” were they to accede to such a request.

Where an Architect is in a role akin to a project manager, as well as the designer, the imperative is to have the project built and out of the ground as fast as possible. However, what they perhaps do not realise is that if the Architect as project manager is regarded as “managing and arranging” the conduct of the works, they too could be held liable under the new offence provisions for carrying out works either without a Building Permit, or contrary to the Permit, the Act and the Regulations. Should that be the conclusion, the Architect will find themselves accused of an “indictable” section 16 breach.

It is concerning that any such offence that can result in a criminal conviction would have far reaching consequences for an individual’s livelihood and reputation for (potentially) many years into the future.

In addition, fears have been raised that the indictable offence as drafted does not properly distinguish between major projects and breaches versus small scale works like a back garden gazebo or pergola “misdemeanour”. One suggestion was that a re-draft could entail that there must be some motive of significant financial gain for the accused party.

As it stands the added element of significant financial gain has not been incorporated into the wording of the new offence. However, the State Government has emphasised that there is a knowledge element of the offence and it is not “strict liability” where only the fact the offence has occurred is sufficient to prove guilt (regardless of knowledge / intent).

Further to that the Government has stressed that the prosecutor must prove knowledge, for example knowledge by the accused party that a Building Permit was needed but there was no Permit in force, before the charge will be found proven. Also there have been soothing noises to the effect that charges will not be laid except for the most serious sets of circumstances and where the requisite knowledge / intent is likely to be found proven.

That is all well and good but no-one knows how hard the DPP will go on this once the law is enacted, and a prosecuted party may well find themselves having to respond to an information gathering inquiry before the prosecutor decides whether or not to proceed with the charge. This will not assist the accused practitioner in sleeping easily once the problem is raised.

Further to all the above, Architects also need to be aware of a new “strict liability” offence planned which will be a new section 16(4) of the Act.

This new provision will make it an offence for a building practitioner or Architect to fail to ensure that a Building Permit has been issued before works commence. The change has removed the need for actual non-compliance with the Permit, Act and Regulations to also be shown, so it may become easier to find Architects and other building practitioners guilty of this strict liability offence.

As explained above, “strict liability” means that a prosecutor only needs to demonstrate that a certain act or omission has occurred in order to prove the charge; the absence of knowledge or motive is seen as irrelevant. However, the Government has again sought to ease concerns by saying that a defence of honest and reasonable mistake will be open to a practitioner.

The maximum penalty for the new section 16(4) offence will be 500 penalty units ($77,730) for a natural person individual and $2500 penalty units ($388,650) for a company.

By Justin Cotton, Lovegrove & Cotton, Construction and Planning Lawyers