The Building Act 1993 – Recommended Amendments & Suggestions for the “How to Fix the Building Act Seminar”
By Justin Cotton, Director, and Miro Djuric of Lovegrove & Cotton.
There is no doubt that the Victorian Building Act 1993 has served the construction profession with alacrity for around 15 years. However, like any fine tuned motor that has turned over the miles, the experiences along the highway are only now beginning to sound like a clarion that some change is required before too long. This may amount to some important tinkering round the edges rather than a complete overhaul, but it is no less important. This will be for the benefit of the construction industry, even if it only creates greater certainty, and in some cases will serve the interests of justice in a significant way.
So the time is nigh and we are moving on with the business of identifying some key provisions of the Building Act that would benefit from some reform and further clarity.
Penalties for Misconduct
The Building Practitioner’s Board can hand out a maximum fine of around $12,000. The next highest censure is either the suspension of a practitioner’s registration or then cancellation. The Board should be afforded more ability to impose alternative “sentences” other than a fine on the one hand or suspension/cancellation on the other hand.
Alternative options include if the Board were to instead impose sentences geared toward further education and up skilling. This could assist in improving the skill levels in the industry generally. If one can improve the lowest common denominator then there will be macro benefit.
In NSW there is a greater range of possible sanctions or remedies that do not involve a financial penalty but may assist in reforming the practitioner. For instance the power to compel a course of training/education or to report on one’s professional practice to an auditor at regular intervals over a period of time.
There is now more flexibility in the Victorian Building Act, with the advent of subsection (ca) of section 179(2) that allows the imposition of a requirement to “complete a specified course of training”. This flexibility could be augmented by, for example, including a direction that the practitioner must report on one’s practice from time to time, or for a compulsory audit of one’s practice and procedures. Further, there could be a legislative specification to the effect that the Board’s first consideration when mulling over sentencing options is to increase the skill sets in the industry and to protect the public, rather than punishment of the practitioner.
BPB Inquiry Hearings
We would also recommend that every BPB panel presiding over an Inquiry hearing should contain at least one member from the legal fraternity, to minimise the chances of errors of law in decision making (and providing balance to avoid the prospects of appeals being brought).
Appeals from the Building Practitioners Board (BPB)
Building Practitioners currently can appeal adverse BPB findings to the Building Appeals Board (BAB). The BAB primarily deals with building regulatory and technical matters. As a practitioner’s livelihood is at stake, it would be better if occupational licensing appeals went to a judicial body. Professor Kim Lovegrove was engaged by the NSW government in the late 1990s on a consultancy to advise on the establishment of private certification and practitioner registration regimes. He recommended that appeals of this persuasion be referred to a judicial body and as it transpired this became the Administrative Decisions Tribunal (the ADT) presided over by Justice O’Connor.
It is considered that, mindful of the gravity attaching to livelihood censures and the balancing of public policy imperatives, that judicial appointees in an appeal setting are better positioned to be arbiters of decisions that affect a practitioner’s livelihood. In NSW the Building Professionals Board retains the right to hand down misconduct determinations and penalties for building practitioners, but the relevant list at the ADT is equipped to deal with reviews (including as to the facts) from such determinations and has the expertise to decide such reviews. This lends an added perception and reality of independence in the decision making process.
The definition of “unprofessional conduct” under the Building Act has proved to be a cumbersome definition for advocates to work with. It is considered that there needs to be a clear demarcation between minor and major misconduct offences. This would be in keeping with more traditional models of misconduct jurisdictions and lends itself to more balanced decision making.
For example, in NSW there is a two tiered definition of unsatisfactory professional conduct versus professional misconduct in regard to accredited certifiers. The former is given a definition of several subsections referring primarily to conduct that falls short of the standard of competence, diligence and integrity that a member of the public is entitled to expect of a reasonably competent accredited certifier, but also including other branches of conduct including acting partially or with bias, wilful disregard of relevant matters, and failing to comply with relevant codes of conduct or specified legislation. The more serious tier of professional misconduct is then defined as unsatisfactory professional conduct of a sufficiently serious nature to justify suspension or withdrawal of the practitioner’s accreditation.
It is drawing too long a bow to say the Victorian definition of “unprofessional conduct” is the proverbial “riddle wrapped within a mystery inside an enigma”. Nevertheless, the current definition would certainly benefit from further clarification within the Building Act as it is currently somewhat vague and hard to pin down, which does not assist in resolving misconduct inquiries or give guidance to the profession when carrying out their functions.
Building Practitioners Board (BPB)
Some critics say that from a perception point of view the relationship with the Building Commission is not sufficiently remote. Funding for instance for the commission and the BPB comes from the same source, the levy. It is suggested that separate income streams and separate incorporation, and even demerging office locations could be explored.
Inquiry hearings throw up another potential conundrum in that the BPB is in the role of investigator and indeed prosecutor, and yet is effectively the trier of fact and decision making body. The Inquiry hearing is held before a panel convened by the BPB. Given that the BPB as the decision maker will often engage a solicitor or barrister as “Counsel assisting” the Inquiry, who is effectively in the role of the prosecuting Counsel, this can create a perception of bias (at least in the mind of the practitioners called before the Inquiry) even though no actual bias is in existence.
Again, if one cites the Building Professionals Board in NSW, practitioners can appeal or review disciplinary decisions at the ADT, which is an entirely different crown body to the industry regulator. There is never any churlishness about the perception of independence in this type of model. By contrast, in Victoria there is an avenue for appeal of disciplinary decisions to the Building Appeals Board (BAB).
If we look at other industries, there has been reform of the misconduct process for solicitors. On the earlier model the Law Institute, the body that registers lawyers, used to manage disciplinary investigation and censure, but reforms a few years ago culminated in disciplinary hearings being migrated to a special division in the VCAT. So, what can one surmise from all of this? Query whether it would be appropriate to reform the process and forum for Inquiry hearings so that BPB decisions can be reviewed or appealed at a separate tribunal or court, rather than sending appeals to the BAB. Potentially a list at VCAT could be created to serve this purpose.
BPB awarding of costs
Section 181 provides that where the BPB fails to establish an adverse finding against a practitioner, then the practitioner may be entitled to reasonable costs “of and incidental” to the Inquiry. The section provides that the BPB may pay that practitioner’s reasonable costs but it is not imperative in its language and the term “reasonable” is used.
Section 179(2) however provides that one of the decisions the BPB may make on a finding against a practitioner is to require the person to pay ‘the costs of or incidental to the Inquiry’, which is tantamount to full indemnity. The term ‘reasonable’ has not been included, as it was in section 181 (in reference to the practitioner’s costs). Also the phrase “of/or incidental” is utilised, inferring a wider cost awarding power.
For findings of guilt against practitioners, there have been instances where an aggregate fine has been handed down of $6,000 yet the costs of incidental/legal costs have exceeded $40,000. There is a clear inequity that requires a more balanced and fair cost awarding power. When one remembers that for building prosecutions in the Magistrates Court, a fine of $5,000 would usually be accompanied by an award of costs of a similar sum or less, then one realises there is a huge disparity between the two forums yet both are dealing with building misconduct. No doubt this would be a strange look should the media decide to investigate the legal machinations of construction inquiries, in between stories about celebrity stays in re-hab.
The role of the building surveyor post the issuing of an Occupancy Permit
It is correct to say that after the relevant building surveyor (“RBS”) issues an Occupancy Permit, his/her statutory functions appear to end in a practical sense, but there is confusion and uncertainty about whether the RBS is required by law to do anything further. There needs to be clarification on point, because whilst the Building Commission will sometimes refer inspection reports to the RBS for comment about certain defects (e.g. cracking and settlement), in many cases these problems have arisen months or years after the final inspection by the RBS.
In addition, section 212 of the Act states that “Except where otherwise expressly provided in this Act or the building regulations, a council is responsible for the administration and enforcement of Parts 3,4,5,7 and 8 and the building regulations in its municipal district.” There are instances though where the Council declines to act because there is a private building surveyor appointed and yet the private building surveyor considers the matter would be best dealt with by the Council (for example, by way of an Emergency Order). This is particularly so where some time has passed since the issuing of an Occupancy Permit or Certificate of Final Inspection. There are also instances where both Council and the private building surveyor have issued Orders under Part 8 and this could create confusion for owners as to the correct party to respond to.
Again, while it is accepted that both private and Council building surveyors have their separate and distinct roles, where a private building surveyor has been appointed the Council still retains some involvement. There is a good argument that their roles and responsibilities need to be more clearly delineated. At the moment “it’s a bit untidy”.
Who is the best party to appoint the Building Surveyor?
There are some critics who say that problems can arise when it is the builder who appoints the building surveyor (as agent for the owner) without reference to the owner. In fact, the owner is sometimes in the dark about the identity of the building surveyor and knows little about the approval of the building permit and the later actions of the building surveyor.
Consideration could be given to requiring the owner to appoint the building surveyor and apply for the building permit, rather than the builder.
The issue of lapsed building permits
In circumstances where building permits are issued but subsequently lapse there is great confusion and uncertainty about the relevant role of the building surveyor during this hiatus. Clarification is required.
Building Permits will expire or “lapse” if the building work is not commenced and completed within the relevant periods specified in the Permits. If a Building Permit has not been extended and has lapsed, an application must be made by the owner (or their agent) to obtain a new Building Permit in regard to any works not commenced or completed. That application must be made to the original building surveyor that was appointed UNLESS an application is made under section 81(1) of the Act to the Building Commission, to obtain the Commission’s consent to the building surveyor’s termination from that role.
For incomplete works under a lapsed Permit, an entirely new Building Permit application will be needed together with plans and specifications for the future works and certification (e.g. by an engineer) of works performed since the lapse of the original Permit.
Miro and I have noted some level of confusion amongst both owners/developers and indeed the construction profession as to what is to happen when a Building Permit lapses, and even more particularly, whether the original building surveyor can still act and is required to act. While the answers can be deciphered from a careful reading of the Act, we suggest further clarification would be useful. Specific provisions or sections could be drafted to deal precisely with this eventuality and the process for a new application, rather than placing too much reliance on the current section 81 (which is not directly connected to lapsed Permits).
Protection Works Insurance
Section 93 provides that protection works insurance must be provided when the RBS issues a protection works notice and before any protection work is commenced in respect of the adjoining property. The legislation does not spell out precisely the nature and the composite elements of such cover. This causes a lot of frustration for owners and adjoining owners who in good faith endeavour to provide compliant cover only to find that different types of policies are offered up. These alternative policies may allow insurers to deny coverage on the basis that protection works or the adjoining owners are not in fact strictly covered.
This uncertainty could allow parties to exploit a situation and it would be preferable if more specification is given on what the policies must contain, and that (for example) the adjoining owners must be noted on the policy certificates as coming within the definition of ‘the insured’.
The role of the Building Surveyor
More work needs to be done on clarifying and corralling the accountabilities and liabilities of building surveyors. In the early 1990s there were more than double the number of building surveyors, but over the years attrition and law suits have induced paranoia and migration to safer occupations. This has had an impact on the building surveyor fraternity, in respect to the numbers of people in the profession. The critical mass of regulatory “gate keepers” is in jeopardy. This makes it even more inexplicable that building surveyors are undercharging for their very important services and under cutting one another on fees.
Price regulation of Building Surveyors
There is a case to impose a minimum scale of charge out rates for building surveyors to ensure that the profession does not “cannibalise” itself by fierce under cutting of prices. The role of the building surveyor is such a critical statutory role that it is not well suited to an overly competitive fee discounting environment. Remember, it is the relevant building surveyor who has the enforcement powers under Part 8 and only they can approve the final inspection on a development.
Standing of Adjoining Owners under the Building Act
We have encountered some occasions where an adjoining owner has been found to have no standing to argue their case before the Building Appeals Board, even though the issues in dispute directly affect their rights or the amenity of their land. This is because the BAB has adopted, as they are entitled to do, a tight interpretation of the Act that does not specify any particular standing for an adjoining owner unless it relates to protection works under Part 7 of the Act. In one such case an adjoining owner was found to have no standing to challenge the relevant building surveyor’s determination that protection works notices were not required. Therefore Part 7 was not activated and the BAB decided that the adjoining owner had no standing. It is suggested that the ability of adjoining owners to challenge such decisions should be enhanced and included in the Act, so that these parties are given a statutory right of review.
In another matter, an adjoining owner was not afforded standing as a party to an appeal, in an appeal by an owner against the building surveyor’s decision to issue a building order. The reason for the building order was that a garage wall had been constructed too close to a boundary causing overshadowing to the adjoining land in breach of clauses 417 and 418 of the Regulations, thereby directly affecting the adjoining owner’s use and enjoyment of their land. Eventually the adjoining owner was allowed to present an argument as “an interested party” at the hearing of the appeal on the basis of procedural fairness, but was still not afforded the right to be an official party to the appeal or even allowed to be served with relevant appeal documents.
The fact that the Panel in that case was required to seek a legal opinion from Counsel on this question suggests that the position should be clarified. We would argue that the clarification should be in line with procedural fairness and should specify a right to the adjoining owner to be a party to the appeal if a building order refers to or directly relates to the adjoining property.
It is also noted that, despite the apparent lack of standing afforded to adjoining owners in the Act, building surveyors still routinely face allegations that they have not responded adequately to adjoining owner concerns. Coupled with the vague definition of “unsatisfactory conduct” in the Act, there is confusion in the industry as to the extent of the building surveyor’s duties here.
Limitation of Inquiry actions under the Act
Currently there is a limitation on the time for a proceeding for an offence under the Act, in the period of 3 years. However, there is no specified limitation on the time for the BPB to initiate an Inquiry into the conduct of a building practitioner. In some cases building practitioners have come back before the BPB in regard to a series of allegations from different projects dating back 6 years or more, even though they were last at the BPB 3 years ago and the incidents were not raised. Indeed, memories have become clouded and documents difficult to locate, due to the passage of time between the alleged offence and the Inquiry, and it is an inconsistency given the time for an offence proceeding is capped at 3 years.
It is suggested that the matter be clarified so that some finite period is specified for the time within which an Inquiry may be commenced. If 3 years is seen as too short a period, perhaps 6 years would be appropriate. This need not affect the capped period of civil liability of 10 years post completion contained elsewhere in the Act.
Recognition of building surveyor and inspector cadetships
There is also potential scope for Part 11 (Registration of building practitioners) to be amended to allow some building inspections to be carried out by appropriately skilled cadet building inspectors/surveyors. Truth be told, just because an inspector is not registered does not necessarily mean they do not have the skill sets to perform an inspection, or that an inspection has been carried out negligently.
We are aware of an instance where there was a question mark over whether the person carrying out a mandatory building inspection was registered, however the relevant person had been a builder of nearly 20 years standing and was a supervised apprentice building inspector. Who is to say that this person was not more appropriately skilled than some current building surveyors and building inspectors? Perhaps more flexibility is required to enable adequately supervised cadet building inspectors to carry out such inspections, or to give them a form of registration that allows this. Given the migration from the building surveyor industry this idea becomes more attractive.
In summary then, we come back to the theme laid down in the opening paragraphs of this article. The Building Act 1993 is a law that has served the community and the construction fraternity well, but the experience of the ensuing years has shown that even a well oiled machine needs maintenance. To that end, we consider that the above areas are of significance for possible reform, to improve the legislation to better suit the Victorian community.
If the reader wishes to comment or add to the list of matters that would lend themselves to legislative amendment then please email us at firstname.lastname@example.org. We will shortly be collaborating with two peak body associations in a think tank forum and the invitees and attendees will be afforded the opportunity to volunteer their views on ways by which the Act could be enhanced. This paper is therefore somewhat of a work in progress and will evolve.
By Justin Cotton, Director, and Miro Djuric of Lovegrove & Cotton.
Justin Cotton and Miro Djuric are construction lawyers who have worked, published and lectured extensively in construction law over the years. Their practice has also been cross jurisdictional, assisting a range of practitioners and owners in the construction industry. This lends them deep insight and an overview across the Australian jurisdictions.