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Building Construction - Issue Of Building Permits (Victoria)

Building surveyors and building inspectors play a vital role in domestic and commercial construction.

Both perform statutory functions of inspection and certification. Building inspectors have considerable statutory powers to order a halt to construction until problems are rectified.

In the 1980s, architects became the defendants of universal choice in litigation brought by clients, builders, contractors and subcontractors. The architect was always incorporated as a party. This was largely due to the architect's dual role in design/design development on the one hand and contract administration/supervision on the other hand.

Over the last 25 years, litigation against architects has been declining. This has largely resulted from the loss by the architect's profession of building administration and supervision and the exponential growth of the entirely new profession of building contract managers.

Over the last 5 years, building surveyors and building inspectors are starting to become the mandatory defendants of choice in place of architects.

This is largely due to the growing appreciation by claimants that in performing their statutory functions of issuing building permits, building surveyors are having to act as designers, architects, town planners and engineers. Accordingly, when a domestic or commercial building project runs into difficulties, the building surveyor is sued for not only wrongful issue of the building permit but also for allegations amounting to design/engineering/town planning problems.

This article identifies current hot topics for building surveyors and building inspectors in Victoria.

Issue of Building Permits - Current Hot Topics - Part 1

Building permits must be issued before building work can be carried - Section 16 & 17 of the Building Act.

"Building work" is defined in Section 3 as work for or in connection with the construction, demolition or removal of a building.

Section 5 of the Domestic Building Contracts Act covers the following types of work:

- the erection or construction of a home including associated work including, but not limited to, landscaping, paving, retaining structures, driveways, fencing, garages, carports, workshops, swimming pools or spas;

- the demolition or removal of a home.

Section 6 excludes from the coverage of the Act and from the definition of "building work":

- any work in relation to a farm or proposed farm building;

- any work in relation to a business building;

- any work in relation to a building intended to accommodate animals;

- design work carried out by an architect, engineer or draftsperson; and

- any work involved in obtaining foundations data in relation to a building site.

Issue of Building Permits - Current Hot Topics - Part 2

Do these definitions mean that site cuts or site excavations are building work covered by this legislation in respect of which a building permit is required?

On the one hand, site cuts and excavations could be regarded as work associated with the erection or construction of a home including landscaping. Accordingly, a building permit would be required whether the builder, developer or an independent contractor was to undertake the site cut or excavation. Such cuts and excavations can be quite extensive and, depending upon geotechnical reports and recommendations and soil classification, may have batters of 45o or more. Such site cuts and excavations may well also have Occupational Health & Safety ramifications for builders, developers, site owners and neighbours both during construction and after construction has been finished.

This question was considered by the Supreme Court of Victoria Court of Appeal in a 2004 decision in Winslow Contract Constructors Pty Ltd v. Mt. Holden Estates Pty Ltd.

The Court of Appeal had to decide whether earthworks, roadworks, drainage, sewer and water reticulation construction amounted to domestic building work in respect of which a building permit was required for a new allotment developed by Mt. Holden Estates. The Court of Appeal noted that there were no homes on the vacant land, no homes were being constructed or completed on the land, no domestic building contracts for the construction of any homes had been entered into, no titles had been issued by the Registrar of Titles in relation to the land, and no sales of any titles to prospective homeowners had occurred.

VCAT and the Supreme Court Trial Division had concluded that the earthworks did amount to domestic building work under the Building Act and the Domestic Building Contracts Act. The Court of Appeal disagreed and allowed the appeal. The Court of Appeal decided that large scale building work covering more than one home was not intended to be covered by the legislation. The legislation was intended to regulate the rights of individual homeowners and builders as distinct from developers and builders of large-scale earthworks.

Would the same conclusion be reached, that no building permit was required, for a site excavation to be performed either by the owner or a builder in respect of a specific building contract on a specific allotment for a specific proposed home construction? Perhaps not. However, the difficulty would be in determining when large-scale residential earthworks end and individual site cuts begin. Accordingly, the question of whether building permits are needed for site cuts and site excavations remains a grey area.

What is the significance of this question for building surveyors?

If no building permit is required, the working drawings presented to the surveyor for the issue of the building permit should make no reference to the location, method of construction, dimensions, bearings or batters of site cuts. There should be no question that the building permit does or does not apply to the proposed site cut or excavation.

If, on the other hand, a building permit is required for a site cut or excavation, then work cannot commence until the building permit is issued. The surveyor will need to assess whether the site cut complies with the Building Code of Australia, Building Regulations and applicable Australian Standards.

At the very least, the building surveyor will need to look at any excavation shown on the site plan in the working drawings to determine whether it is correctly located and dimensioned, whether protection works notices may be required, whether the batters are in accordance with the building notes and/or geotechnical reports provided by the builder. If a building permit is required, surveyors should require the architect / designer / engineer / builder to provide a more detailed site plan for the excavation if these details are not present.

Site cuts excavated incorrectly can cause significant delays and expense to building projects. If a building permit is issued to cover such an incorrect excavation, a developer's first target may well be the correctness or adequacy of the building permit.

The argument will be that the surveyor owed a duty of care to ensure that the site cut/excavation was correctly sited, was in accordance with any town planning permit and was such that would not cause harm to any worker during construction or owner / occupier or neighbour after construction. The surveyor may take the view that the real or effective reason for the developer's loss is inadequate geotechnical reporting, incorrect building design / working drawings, or error by the excavator or builder.

Under Victorian Law (Wrongs Act Section 24AI), the onus is on the first party sued to join additional parties. Otherwise, VCAT or Victorian Courts will order judgment solely against the building surveyor for all loss even if that loss has been caused by other parties which have not been sued. The onus would be on the building surveyor to join and claim contribution against additional parties so that any damages awarded to the developer plaintiff would be limited to an amount reflecting that proportion of the loss or damage claimed against the surveyor that was just having regard to the extent of the surveyor's responsibility in comparison to the responsibility of the additional joined parties.

The situation is reversed when claiming contribution under Commonwealth legislation. The onus is on the initiating plaintiff or applicant to ensure that all potentially guilty or responsible parties are sued at the outset. Otherwise, the risk of only succeeding to recover part of the damages remains with the plaintiff/applicant. An example might be where the surveyor is sued for misleading and deceptive conduct under Section 52 of the Trade Practices Act.

Michael Pickering is a solicitor employed at LAC Lawyers Melbourne http://www.laclawyers.com.au. He has nearly 20 years experience as a lawyer.

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