Key Elements of Effectively Functioning Building Legislation
By Kim Lovegrove RML, FAIB, Senior Lawyer, Lovegrove & Cotton – Construction and Planning Lawyers
In recent decades there have been some spectacular failures in building regulatory systems. The leaky building syndrome in NZ being one such instance where problematic building regulation in the nineties led to billions of dollars being devoted to rectification of a nationwide construction malaise. Building regulations were yet again brought into question in Nepal when many lives were lost because of a major earthquake in 2015 and less than optimum building codes. The collapse of a supermarket roof in Latvia in 2013 was in part caused by fiscal cutbacks and by the disbanding of the national building inspectorate, a consequence of post GFC austerity measures.
In parallel has been the proliferation of privatised building approval processes which some say precipitated a more blasé approach to building control. Yet other jurisdictions such as Japan have showcased innovation and advances in building control and the tightening up of probity regimes.
Best practice enlightening building control saves lives and in the long term saves governments and the tax payers a fortune in expenditure. Thomas Moullier head of building regulations at the World Bank sent me a quote on Monday the 11th of May:-
“The World Bank Global Facility for Disaster Reduction and Recovery (GFDRR) points out that 12 low-income countries, which each received less than $10 million in DRR funding over a 20-year period, simultaneously received over $5 billion for disaster response. In other words, less than 0.7 per cent of total relief aid went to disaster risk reduction with donors spending $160,000 on emergency response for every $1 spent on DRR”
Source: GFDRR Managing Disaster Risks for a Resilient Future: A Strategy for the Global Facility for Disaster Reduction and Recovery 2013-2015.
2. Key maxims for building regulation
Any enlightened and benchmarked Building Act will embrace the following key philosophical foundations:
- Regulation that maximises the construction of safe buildings (i.e. buildings that minimise the possibility of injury or death to occupants or visitors);
- Regulation that enables the construction process to proceed efficiently and swiftly without the compromising of the construction integrity of the “as built” product;
- Regulation that demands the involvement of skilled practitioners and craftsmen and by the same token generates clear accountabilities and consumer safety nets – where there is construction failure or practitioner negligence / recalcitrance;
- Swift, efficient and well considered dispute resolution processes;
- The licensing and disciplinary oversight of the principal actors in the construction process;
- Professional accountability for neglect, act, errors and omissions that cause harm to life, limb or property;
- The issue of building permits that are forthcoming once the building official is satisfied that the design documentation complies with the governing Acts of parliament and the relevant codes and standards;
- Mandatory inspection regimes where inspections are undertaken by appropriately qualified statutory building officials;
- Upon conclusion of construction, the issue of completion certificates by building officials once satisfied that the built product is fit for occupation; and
- Building officials who are appropriately qualified, experienced and licensed, mindful of the paramount significance of this statutory office.
The building official need not be a local government building official but equally can be a private sector official. But regardless of whether the official is of the local government or of the private sector allegiance the remuneration model for payment for the services/functions needs to be carefully considered.
Experience has suggested that building officials in light of their unique statutory enforcement and consumer protection role should not be remunerated on a competitive free-market model. There should be regulation that prescribes a “remuneration floor” below which the building official cannot “undercut”. The fee structures should be set by the regulator and “CPI’d” annually to ensure that the building approval responsibilities are discharged in a manner that is commensurate with the real cost of performing the statutory function.
Absent such a regime then building officials, be they private or local government building surveyors or other professionals of like persuasion can find themselves in a fee cannibalisation dynamic. The net effect is that not enough is being charged for this critical statutory function, which in turn can compromise the integrity of the inspection and probity process and the as-built product. Fee cannibalisation has become common practice in Australia amongst the building surveying profession, which has led to the taking of shortcuts and insufficient devoting of time to vital functions, such as inspection.
3. Mandatory licensing regime
A mandatory licensing regime should be implemented that operates to ensure that principal actors in the construction dynamic are qualified, experienced and capable of delivering quality construction outcomes.
Just like many professions such as the medical profession or the legal profession, all building professionals should be licensed and adorned with specific qualifications and experience with the coupling of mandatory insurance and the subordination of the individual to a statutory government controlled licensing and overarching probity regime.
The licensing regime must of course have appropriate penalty and punitive powers such as fines, powers of suspension and where there is corruption reference to criminal investigatory bodies. NSW contains the most severe penalties for practitioner recalcitrance in Australia; if an accredited certifier is found to have engaged in corrupt conduct, the “Independent Commission against Corruption” can investigate and jail the offender. Japan too has criminal redress under its Building Act. The magnitude of the penalties must be such that they act as potent deterrents aimed at “dis-incentivising” recalcitrants from engaging in conduct that peers of good repute would find unconscionable.
In any building regulatory regime the principal actors involved in the construction dynamic have to be identified and licensed, and the very least should include building officials such as:-
- Building Surveyors;
- Building Inspectors;
- Draftspersons; and
It is also considered that there should be mandatory Continuing Professional Development (CPD) annual courses, as a prerequisite to the annual renewal of one’s license to practice. It goes without saying that the more skilful the practitioner, the less the possibility of compromise to the as-built product – compulsory CPD augers well for up-skilling. In the legal fraternity in Australia and New Zealand, lawyers have to attend annual compulsory Continuing Professional Development seminars as a prerequisite for ongoing registration.
A licensing regime must also display powers that enable recalcitrants to be dismissed from the practitioner fraternity to ensure that the consumer is protected, the regard for the profession is not sullied and the paramount objectives of the legislation are able to gain full expression.
Such a regime, to reiterate, must have a licensing oversight body comprising appropriately qualified and experienced disciplinary arbiters who can adjudicate over issues of professional misconduct. Such bodies should as part of the “decision making mix” include lawyers possessing the skills to ensure that natural justice is applied, legal precedents are followed and the public is protected.
There must however be strong consumer representation on the registration bodies and they must come from a genuine consumer constituency; ideally they will be consumer advocates capable of being forthright and resolute in terms of protection the interest of the public. The regulator must have a sound auditing and investigatory regime to ensure that problematic practices can be investigated and prosecuted if need be. There should also be sufficient human resourcing to ensure that regular random auditing can apply with a view to identifying errant practices that may not ordinarily come to the fore.
4. Fair and just liability and accountability regime
A fair and just liability and accountability regime that ensures that fault and responsibility for construction failure attaches to the party(s) that occasioned the failure.
Enlightened regulation will comprise liability laws that give voice to sound and fair allocation of liability. This ensures that whoever is responsible for a construction failure can be identified and held accountable. It also ensures that plaintiffs can avail themselves of redress and remedy and moreover that the innocents are not attributed liabilities that should not be visited upon them.
Proportionate liability is the appropriate liability doctrine but it should not be implemented without the vital compliment of mandatory insurance and the compulsory registration of all principal construction actors.
In Australia for instance the only jurisdictions that comprise this are Victoria and the Northern Territory where builders, engineers, architects, building surveyors, building inspectors, draftspersons and plumbers all have to be insured and registered. These jurisdictions possess the complements of registration, insurance and proportionate liability. NZ on the other hand still applies the doctrine of joint and several liability which ensures that those with deep pockets such as municipal authorities assume the liabilities of impecunious co-defendants.
There also needs to be a clear commencement date for the initiation of legal proceedings and a clear statutory period whereupon a plaintiff or third party can look for legal redress. Certainty on both counts is required both as to the initiation date and the liability duration date. The limitation period should start upon the issue of an occupancy permit by the building official whereupon litigants are afforded the opportunity to seek legal redress for a period of and not greater than 10 years hence. This is known as a “10 year liability cap”, as for example in the Victorian Building Act. French based liability regimes embrace these clarity tenets as do many Australian jurisdictions.
The NZ Building Act does not. The limitation period is triggered by the identification of acts or errors. This requires contentious evidence that can rarely ever be conclusive as to the trigger date for the beginning of the limitation period.
5. Mandatory insurance regime
A mandatory insurance regime that ensures that all principal actors involved in the construction “line up” are insured so that members of the public and institutional users are protected.
Mandatory PI regimes that insure against practitioner negligence are critical to world’s best practice building regulation. The insurance products however have to be utilitarian. In recent years consumer advocates in Victoria have expressed their considerable dismay regarding the access to indemnity, the time it takes to get insurance pay outs and the costs both financial and emotional that are exhausted in pursuing what should be an uncontroversial and straight forward entitlement. Although insurance is not a “cure all” it cannot be token, for if it does not deliver the required consumer dividend, its raison detre will be in question.
The public and the consumers need to know that they can be financially compensated for construction failures that are occasioned by the negligence of building practitioners. This is not a novel proposition, car drivers, lawyers, doctors and the like have to be insured to ensure that misfortune that is occasioned by their neglect, that is misfortune that generates economic loss, can be made good.
It is from a policy point of view undesirable to introduce proportionate liability regimes without the critical compliment of compulsory insurance. It is not the sort of paradigm that lends itself to optional insurance regimes because insurance premiums are expensive and absent compulsory insurance regimes recalcitrants can wind up their businesses and alight with relative immunity.
6. An Efficient building permit regime
There must be a building approval system that is conducive to efficient, prompt and professionally generated building permits by building officials who are preoccupied with probity.
A system that enables private and local government building officials to compete with one another for building approval work is conducive to sound turnaround times regarding permit issue and inspections. It is absolutely critical, however, that speed of process does not compromise that paramount objective of building approval regulations i.e. “the public comes first” imperative – the public must be protected. This means no building failure, no deaths, no injuries no economic carnage visited upon consumers.
7. Performance based building codes
Enlightened building control evidences a harmonious marriage and connectivity between the umbrella Act of Parliament and the technical codes and standards that the regulations call up. The Building Act, the Building Code and the regulatory standards must seamlessly coexist to ensure that there is a comfortable holistic matrix.
Performance regulation is also vital to innovative construction design and construction techniques. Hence performance building codes of the likes of those found in Australia and New Zealand are worthy of consideration. These technical codes provide designers with the opportunity of producing innovative construction design and solutions through means other than the prescriptive route, provided the designer can satisfy the statutory decision maker that the designs comply with the provisions of the technical code (based on their performance characteristics). As performance regulation, however, bestows more flexibility and is less prescriptive, there is a “deregulationary” theme in performance building control. It follows that there must be safeguards that complement the performance or objective base codes.
These safeguards involve independent peer review, peer review that is regulated. There must also be vigorous due diligence and testing of novel performance design scenarios. Absent the requisite “belts and braces” and regulatory safeguards, one is creating a paradigm that can lend itself to parsimony driven expedience and this will compromise the fundamental above-mentioned tenets of building control.
One contentious issue that exists in some Australian jurisdictions is that building officials/building surveyors can sanction alternative solutions or performance based design scenarios that do not comply with the prescriptive pathways of the Building Code of Australia. Whilst it is acknowledged that in certain instances prescriptive pathways may not culminate in sufficiently nuanced solutions, it is the writer’s contention that design scenarios that do not comply with the prescriptive provisions of building codes should be subjected to independent peer review comprising peers that are totally removed from the building project, rather than concentrating that power in the natural person building surveyor. Taking away building officials and building surveyors’ professional discretion, however, is not the answer to eliminating expedience from the building industry.
8. Swift and effective intervention
There must be statutory powers that enable swift and effective intervention to prevent dangers to life and limb. Enlightened building regulation will evidence notice and order regimes that enable building officials to intervene immediately when danger to life and limb is identified. These powers need to be complimented by mechanisms that compel access, co-operation and the deployment of additional resources that can be brought to bear along with powers that enable regulators to recoup costs involved in compliance.
9. Comprehensive Inspection regimes
Best practice building regulation should contain comprehensive and mandatory inspection regimes. Inspections should occur at critical or key construction junctions, such as concrete pour or foundation stage, frame stage in the case of housing and final inspections upon completion. The inspections should be carried out by independent persons, preferably building surveyors or building officials. It is critical that they are independent and well qualified for the task. A number of Australian jurisdictions such as NSW, Victoria and the NT have mandatory inspection regimes that are undertaken by building surveyors.
10. Swift and Sound Appellate systems
Decisions that are handed down by decision makers be they building officials, disciplinary bodies or other decision makers at first instance need to be capable of appellate jurisdiction oversight. It is the author’s strongest contention that all jurisdictions should have a majority of legally qualified arbiters presiding over them to ensure that due process and legal rigours that adhere to precedents handed down by courts of higher jurisdiction are followed. The fashion of lay-member quasi-judicial decision making, although appealing to economic rationalists as it is cheaper, is less than ideal as there is a greater risk of injustice being perpetrated along with flawed decision making; furthermore appellate jurisdictions provide persuasive precedents.
Best practice building regulation is akin to a holistic jigsaw puzzle. All components of the puzzle have to be incorporated to generate a cohesive best practice regulatory landscape. If any component of the puzzle is lacking, it can generate dysfunctional regulation and dysfunctional outcome. Holistic regulation also needs to be assembled by very experienced micro economic law reformers. Ideally such a team will include appropriately experienced lawyers, technically skilled personnel and economists experienced in law reform.
Lovegrove & Cotton Lawyers to the building industry
For thirty years, Lovegrove & Cotton have represented builders, building surveyors and building practitioners in Melbourne, Canberra, Sydney and Queensland. Justin Cotton is a leading Australian construction lawyer and widely respected in the building fraternity as evidenced by his recent elevation to Chairperson of the HIA Industrial Relations and Legal Services Committee, and member of the Regional Executive Committee, for HIA Victorian Chapter. Likewise, Doyles Guide ranks Kim Lovegrove as one of the leading construction lawyers in Australia. Lovegrove & Cotton can help practitioners resolve any type of building dispute and are preeminent in the area of building practitioner advocacy. If you wish to engage the firm, feel free to contact us via our website or by emailing firstname.lastname@example.org.