Conflicts of Interest for NSW Certifiers
By Jarrod Gutsa, Construction Lawyer Lovegrove Smith & Cotton
The Building Professionals Act 2005 (“the Act”) and the Building Professionals Regulation 2007 (“the Regulations”) are the key legislative instruments in the regulation of accredited certifiers in New South Wales. The Act sets out broad categories of when a conflict of interest will arise for an accredited certifier. The categories are as follows:
Section 66 of the Act provides:
“(1) An accredited certifier must not issue a Part 4A certificate or complying development certificate in relation to any aspect of development:
(a) if the accredited certifierhas been involved in the design of that aspect of the development, or
(b) if the accredited certifierhas been involved in the carrying out of work on that aspect of the development, or
(c) if the accredited certifieris the applicant for the certificate or is related to the applicant for the certificate, or
(d) if the accredited certifieris associated with the council of the area in which the development is to be carried out, or
(e) if the accredited certifieris related to a person who was involved in the design or construction of that aspect of the development, or
(f) if the accredited certifier has a pecuniary interest in that or any other aspect of the development.”
The above raises potential concern for accredited certifiers and certification companies that are operating any ancillary business to certification. As this may constitute being involved in the design of an aspect of the development.
The meaning of being involved in the design of an aspect of a development is stated in section 67 of the Act.
Section 67 of the Act provides:
“(1) For the purposes of this Division, an accredited certifier is involved in the design of an aspect of development:
(a) if the accredited certifieris involved in the preparation of the plans or specifications for that aspect of the development, or
(b) in such other circumstances as may be prescribed by the regulations.”
Further to this definition, the Regulations provide further deeming provisions, when an accredited certifier will be deemed to be involved in the design of an aspect of a development.
In summary these provisions will deem an accredited certifier to be involved in the design of an aspect of a development if they provide advice on how to amend plans and/or specifications to make the development comply with the BCA, the legislation or the regulations.
This creates difficulty for businesses that offer ancillary services to accredited certification in New South Wales as it potentially captures any planning or building consultancy services.
In days gone by it was permissible to operate a certification business with an ancillary business by using the Stapelton Protocols. The Stapelton Protocols allowed for the operation of a certification department and a building consultancy department with the institution of “Chinese Walls” or information barriers (in the new vernacular). In effect a private certification business was afforded the same leniency as a local council that has both certification departments and planning departments.
The Stapleton Protocols, however, are now superseded by the Act. Section 68 of the Act significantly broadens the meaning of “related to” and it includes the following circumstances:
For the purposes of this Division, an accredited certifier is related to another person if:
- “the accredited certifier is an employer, partner or employee of the other person, or
- the accredited certifier is employed by the same employer as the other person, or
- the accredited certifier is employed by a subsidiary (within the meaning of the Corporations Act 2001 of the Commonwealth) of the other person or the other person controls (within the meaning of section 50AA of that Act) the employer of the accredited certifier, or
- the other person is employed by a subsidiary (within the meaning of the Corporations Act 2001 of the Commonwealth) of the employer of the accredited certifier or the accredited certifier controls (within the meaning of section 50AA of that Act) the employer of the other person, or
- the accredited certifier is a spouse, de facto partner (whether of the same or the opposite sex), sibling, parent or child of the other person, or
(f) the accredited certifier has a contractual arrangement with the other person that might reasonably be seen to give rise to a conflict between the accredited certifier’s duties as an accredited certifier and the accredited certifier’s interests under the arrangement.”
It is of paramount importance that accredited certifiers consider Division 3 of Part 6 of the Act and also the Regulations when operating an ancillary business to a certification business. As it may amount to a conflict of interest if that other business offers services that are deemed to “be involved in the design of an aspect of the development” or a co-employee is providing services that are deemed to be involved in the design of an aspect of a development.
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© Lovegrove Smith & Cotton 2014
Accredited certifiers should seek legal advice if they are operating a business in these circumstances or if they have plans to operate such a business.