Conflict OF Interest RB
Can a Conflict of Interest Invalidate a Building Surveyor’s Appointment?
By Justin Cotton, Partner, Construction and Practitioner Advocacy, Lovegrove Smith & Cotton, Construction and Commercial Lawyers
A recent Building Appeals Board (BAB) determination has shone a light on the importance of building surveyors not falling foul of the conflict of interest provisions in the Building Act 1993. The consequence can be far reaching, even going so far as invalidating the building surveyor’s initial appointment to a project.
In the July 2014 decision concerning a major urban development site, the BAB Panel examined the recent history of the Relevant Building Surveyor (RBS) who made the protection works determination under section 87 of the Act. The Board ruled that because the RBS had previously within a 12 month period acted as a consultant to a demolition contractor working on the project, that there was a conflict of interest.
As a follow on from this, the BAB declared that this conflict of interest was in breach of the provisions against such matters in section 79 of the Act, and that this was sufficient to invalidate the appointment of the RBS in the first place. Due to the invalid appointment, his protection works determination under section 87 was said to be ‘quashed’.
The next question flowing from that was whether the BAB could then move on to substitute its own protection works determination in place of that of the RBS – the Board was of the view it could do this.
The functions of a private building surveyor are specified in section 76 of the Act which says:
“A private building surveyor may be appointed to carry out all or any of the following functions under the Act-
- the issuing of building permits;
- the carrying out of inspections of buildings and building work under Part 4;
- the issuing of occupancy permits and temporary approvals under Part 5.”
There are then some prohibitions in sections 78 to 79 of the Act. The former provision (in part) forbids a person from appointing a private building surveyor to carry out any of the above functions if another private or Council building surveyor has already started to carry out the functions in respect of that building or building work.
Section 79 then specifies the prohibitions on acting in a way that will crystallise a conflict of interest. It is stated that a private building surveyor must not accept an appointment to carry out any functions set out in section 76 in regard to a building or building work if the private building surveyor:
- prepared the design of the building or building work;
- is, or within the prescribed period was, employed or engaged by the person or body which prepared the design of the building or building work – other than for an appointment to carry out a
function set out in section 76 of the Act;
- has a direct or indirect pecuniary interest in the body which prepared the design of the building or building work; or
- has a direct or indirect pecuniary interest in the building or building work or in any body carrying out the building work.
There are also other prohibitions to do with accepting an appointment to act as private building surveyor in a Council area if the building surveyor also works for Council.
A private building surveyor can apply to the VBA for an exemption from all or any of the anti-conflict requirements set out in the section, in respect of a particular building. The exemption needs to be written and, one suspects, would need compelling special reasons in order to be granted.
In late 2014 the Supreme Court received a referral of certain issues, upon a judicial review of the BAB judgment. The Court had to examine section 79 of the Act, and it was said that section 79 is “expressed in mandatory and clear terms.” The purpose of the section was to ensure that a private building surveyor “is independent and is in a position to act impartially in undertaking the important functions assigned to this role by the legislation.”
Justice Vickery at the Supreme Court said that the legislative scheme made it incumbent on a private building surveyor, prior to accepting the appointment as a relevant building surveyor, to satisfy themselves and make a decision on whether or not they fall within the prohibitions in section 79. (It would follow that if the conclusion reached is that the appointment would be caught by this section for some reason, then the relevant building surveyor (RBS) should decline to be appointed).
Furthermore only an RBS can make a section 87 determination, and that person would only be a relevant building surveyor on and from the valid acceptance of an appointment under Part 6 of the Act.
Also, the Board too (on an appeal) has authority to consider and determine the validity of the RBS’ appointment under section 79 of the Act. If it decided the appointment was invalid it could either quash the section 87 determination or set it aside and substitute instead its own determination.
This was because the original RBS decision under s87 was voided as a result of the contaminated appointment. If that engagement or appointment of the RBS was done in contravention of section 79, it follows that “actions purportedly taken by that surveyor are not authorised by the Act and are therefore invalid” (and of no force of effect).
This case gives us more than just an analysis of section 79 of the Building Act. It highlights the critical importance of the relevant building surveyor acting independently and impartially, even if it is the Owner or Developer paying their accounts. This is of key importance to the private building surveyor system and of the building legislation read as a whole, whether it be Victoria or other States in Australia.
For more information and assistance, please contact Lovegrove Smith & Cotton