The Building Legislation Amendment (Consumer Protection) Act 2016 (the Amendment Act) was enacted into law in April and amends the Domestic Building Contracts Act 1995, the Building Act 1993 and the Victorian Civil and Administrative Tribunal Act 1998.
There are a number of amendments which will come into fruition on a staggered basis between July 4, 2016 and July 1, 2017 and many will affect the regulation of building surveyors in Victoria.
Some of the changes that have affected the regulation of building surveyors from 4 July 2016 are as follows:
Checklist must be lodged with the relevant council
From July 4, 2016, pursuant to section 47 of the Amendment Act, there were new sections 30A and 30B inserted into the Building Act 1993 (Building Act). These sections require the relevant building surveyor (RBS) to lodge an approved checklist certifying the lodgment of documents with the relevant council. An approved checklist in accordance with section 30A of the Building Act has been developed and uploaded to the Victorian Building Authority (VBA) website.
Accordingly, it is now a breach of section 30B, for the RBS not to lodge the approved checklist when lodging the required documents or make the required certifications. The said breach can attract a penalty of up to 10 penalty units under the Building Act. With one penalty unit currently being $155.46, this could be a maximum penalty for a breach of section 30B in the sum of $1,554.60.
Private building surveyors may not act in circumstances where there is a conflict of interest
From July 4, 2016, pursuant to section 39 of the Amended Act, section 79 has been inserted into the Building Act and states that a private building surveyor (PBS) is not permitted to act in certain circumstances where the PBS has a conflict of interest in any and/or all of their functions in relation to the building work. Additionally, if a related person would be unable to act if they were the PBS, then the PBS may not act.
A “related person” is defined under section 79(4) of the Building Act to include a member of a partnership with the PBS, an employer or employee of the PBS or a director of a body corporate or a related body corporate where the PBS is a director.
It is still an offence to carry out any function of a PBS where the PBS prepared the design, is an employee of the person who prepared the design or is a financial beneficiary of the person carrying out the building work.
For the avoidance of doubt, a conflict of interest is anything that would preclude a PBS from acting independently, including any decision that could result in financial gain for the PBS or a family member of the PBS. This provision only applies to a conflict of interest that arises on or after July 4, 2016.
Accordingly, a breach of section 79(1) or 79(2A) of the Building Act, each carry a penalty of up to 500 penalty units. This could be a maximum penalty of $77,730.00 for each breach of section 79(1) and 79(2A).
Building surveyors have greater powers to issue directions to fix building work
From July 4, 2016 pursuant to section 37E of the Building Act, building surveyors have have greater power to issue directions to fix building work that fails to comply with the Building Act, the Regulations or the relevant permit. A written direction to fix building work in accordance with section 37F(1) of the Building Act, has been developed and uploaded to the VBA website.
Proposed future changes to affect building surveyors that will be implemented from September 1, 2016 include:
When a private building surveyor (PBS) may be appointed
From September 1, 2016, pursuant to section 78(1A) of the Building Act, a builder who has entered into a major building contract or who proposes to act as a domestic builder in relation to domestic building work must not appoint a PBS on behalf of the owner of the land on which the domestic building work is to be carried out.
Pursuant to section 78(1B) of the Building Act, a building surveyor must not accept an appointment referred to in section 78(1A).
The penalty for a breach of section 78, will be 240 penalty units in the case of a natural person and 2,500 penalty units in the case of a body corporate. This would mean a maximum penalty of $37,310.40 for an individual and $233,190 for a body corporate.
This change applies to domestic building work only, and does not prevent other practitioners of agents acting on behalf of an owner to appoint a PBS.
The VBA website advises that transitional arrangements will be made so that contracts entered into prior to September 1, 2016, that authorize a builder to appoint a PBS will not be affected.
It is worth noting that section 78 (1C) states that:
“Nothing in subsection 78(1A) or (1B) affects the validity of any action taken by a BS who is appointed in contravention of those sections.”
Under the law as it currently stands, owners can use a PBS or a municipal building surveyor (MBS) for domestic building work. A PBS is of the private sector and an MBS is of the public sector.
The new amendments in section 78 of the Building Act will force owners to appoint their own RBS and for the purposes of appointment, the owner’s builder cannot be the appointed agent. Builders can still recommend the RBS, but this could arguably be a circumvention of the intent of the Amendment Act which was consumer protection.
The VBA website states that it will be grounds for disciplinary action for a building surveyor to accept an appointment to undertake a function under section 76 of the Building Act for domestic building work from a builder. Further, it also states that it will also be grounds for disciplinary action for a builder to appoint a PBS for or on behalf of the owner.
Building surveyors serve an important function in society in protecting consumers and ensuring that builders are complying with the relevant Acts of Parliament, regulations and building codes. As building surveyors have such an important role, they need to be on top of the amending legislation and the changes that have already taken affect and those that will take affect in the near future. Should you require further legal advice on how the changes will affect you as a building surveyor, builder or as an owner, you should contact a building and construction law specialist well versed in the area.