Draft Submissions to Government on regulatory amendments to the Building Act 1993 – AIBS/Lovegrove & Cotton synthesis.
There is no doubt that the Victorian Building Act 1993 has served the construction profession well for over 15 years.
- greater certainty to resolve disputes between parties;
- improvements to allow better access to justice;
- better separation of powers in building regulation and
investigation.
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.
There is no such thing as perfection when building dispute resolution obviously involves conflicting interests.
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 upskilling.
In NSW, the fines for misconduct can be up to $120,000 and suspension or cancellation is a last resort.
However 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 eg, the power to compel a course of training/education or to report on one’s practice to an auditor at regular intervals over a period.
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”.
- 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.
There could be a specification that the Board’s first consideration when sentencing is to increase the skill sets in the industry and to protect the public, rather than punishment of the practitioner.
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.
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.
Arguably, judicial appointees 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.
The relevant list at the ADT is equipped to deal with reviews (including on 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 ADT is a totally separate judicial body from the Building Professionals Board.
Definitions
The definition of “unprofessional conduct” under the Building Act has proved to be a cumbersome definition.
There needs to be a clear demarcation between minor and major misconduct offences. This is consistent with other 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
- 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 accreditation.
The Victorian definition of “unprofessional conduct” would certainly benefit from further clarification within the Building Act as it is currently somewhat vague and hard to pin down.
This does not assist in resolving misconduct inquiries or give guidance to the profession when carrying out their functions.
Building Practitioners Board (BPB)
The relationship with the Building Commission is obviously a close one and consideration should be given to a clear separation between the BPB and the Building Commission.
Although the BPB is an independent body, funding comes from a common source for both organisations.
Ideas could include separate income streams and separate incorporation, and even demerging office locations.
This may overcome the disquieting perception there is no real independence.
- the BPB is in the role of investigator and indeed prosecutor;
and yet - is effectively also the trier of fact and decision
making body.
The Inquiry hearing is held before a panel convened by the BPB.
The BPB as the decision maker will often engage a solicitor or barrister as “Counsel assisting” the Inquiry.
This person is effectively in the role of the prosecuting Counsel.
All this can create a perception of bias (at least in the mind of the practitioners called before the Inquiry).
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.
By contrast, in Victoria there is an avenue for appeal of disciplinary decisions to the Building Appeals Board (BAB), but again, this body comes with the umbrella of the Building Commission.
Query whether it would be appropriate for BPB decisions to 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’.
This 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.
In building prosecutions at the Magistrates Court, a fine of $5,000 would usually be accompanied by an award of costs of a similar sum or less.
Both jurisdictions involve building misconduct, yet there is a potentially huge difference in the costs ramifications.
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.
However there is confusion and uncertainty about whether the RBS is required by law to do anything further.
The Building Commission will sometimes refer inspection reports to the RBS for comment about certain defects (eg cracking and settlement).
But in many cases these problems have arisen months or years after the final inspection by the RBS.
If there are concerns with some of these defects, that there could be a risk to health and safety to persons or damage to property, there is a strong argument that the Council (the Municipal Building Surveyor or “MBS”)) should be the appropriate party to act.
Under the legislation, only the MBS can issue an Emergency Order and it would appear this is the most suitable instrument should these situations exist on site.
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.”
Sometimes 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.
There is a good argument that their roles and responsibilities need to be more clearly delineated.
Who is the best party to appoint the Building Surveyor?
We have been advised by some clients 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 often 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.
The builder may apply subtle pressure on the building surveyor to grant approvals (particularly if the two practitioners are acquainted), whereas the interests of owners are slightly different.
It is in the medium to long term interests of owners to have a sound, compliant construction that complies with the Building Regulations.
Query whether the Act should state that the owner must appoint the building surveyor and apply for the building permit, rather than the builder doing this.
The issue of lapsed building permits
Where building permits are issued but subsequently “lapse”, there is uncertainty about the relevant role of the building surveyor. 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) to the Building Commission, to obtain consent to the building surveyor’s termination.
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 (eg by an engineer) of works performed since the lapse of the original Permit.
A level of confusion exists within the industry 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 relying on the existing section 81)
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 the insurance cover.
This causes a lot of frustration for owners and adjoining owners who try 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.
It would be better if more specification is given on what the policies must contain.
For eg, a requirement that 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 defining the 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.
Price regulation of Building Surveyors
There is a case to impose a minimum scale of fees / 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 overly competitive fee discounting.
It is the relevant building surveyor who has 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 come across situations 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, 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 the ability of adjoining owners to challenge such decisions should be better enhanced 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, by the next door 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.
This directly affected 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 this owner 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.
This 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 directly relates to the adjoining property.
Notably, despite the apparent lack of standing afforded to adjoining owners in the Act, building surveyors still face allegations that they have not responded adequately to adjoining owner concerns.
Coupled with the vague definition of “unprofessional 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.
There 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 under the Act of 10 years post completion.
Recognition of building surveyor and inspector cadetships
There is also potential scope for Part 11 (Registration of building practitioners) to be changed to allow some building inspections to be carried out by appropriately skilled cadet building inspectors/surveyors.
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.
In one matter 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’s to say that this person was not more appropriately skilled than some current registered building surveyors / 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 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.
So we have some important areas for possible reform, to improve the legislation rather than to “throw the baby out with the bath water”.
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. Doyles Guide ranks Kim Lovegrove as one of the leading construction lawyers in Australia. Justin Cotton, likewise, 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 Council, for HIA Victorian Chapter. 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 enquiries@lclawyers.com.au.
