This is the second of my articles published today about the principles which should govern best practice building regulation and control across any jurisdiction in the world.
In my previous article , I talked about eight core concepts including the need for a single building act, clear building act objectives, a single set of building regulations, a single building code, a dedicated ministry of construction, a board for practitioner licensing, building officials who oversee building approvals and a final joint inspection.
In the discussion below, I outline four further concepts which define principles nine to twelve.
These are as follows:
(9) There will be a builder registration and licensing regime
The Ministry for Construction will establish the licensing Board. The Board will determine the criteria for licensing and will oversee the probity regime for registration and licensing of practitioners to ensure that the public is protected from practitioner recalcitrance and ethical compromise
The Licensing Board will ensure that principal Construction actors licensed annually.
The criteria for gaining a practitioner license will be:
· An approved qualification
· Approved level of experience
· The maintenance of compliance insurance cover
· Maintaining annual compulsory professional development
· Payment of the annual licensing fee
The practitioners will be:
· Residential builders
· Commercial builders
· Building officials
· Building inspectors
· Proof engineers
· Designers and draftspersons
The Licensing Board will establish the qualifications and experience criteria for the actors. In the case of engineers, architects and building officials the qualification criteria will be not less than a degree in the respective discipline from a recognised university or tertiary institution.
With regards to the establishment of qualification criteria regard should be had to international best practice on point. The greater the skill, the level of professionalism and ethical propensity the less likelihood of optimum construction outcomes.
There will also be grading mechanisms. In Shanghai for instance to practice as a medium level engineer one must have a degree in engineering and 5 years’ experience. To become a quality assurance supervisor, the engineer has to obtain an additional 4 years’ experience and must then sit and must then pass a further examination to qualify as a quality assurance engineer. Under this system little is left to chance in terms of ensuring that a key actor in the building approval design and quality vetting process is up to speed.
In Germany the “proof engineer” is licensed by government to vet engineering designs and computations that have been prepared by the engineers and designers engaged by the developer.
This second set of eyes brings to bear the ‘lenses’ of total arm’s length objectivity and detachment along with a very high qualification and skill set. This approach resonates with a culture that is very much disposed to best practice quality outcomes.
The German approach has much to commend it with respect to complex buildings such as high rises or SHRs (super high rises) or buildings that contain high risk elements or buildings that harbor the likes of combustible cladding; there is a lot to be said for making the deployment of a proof engineer mandatory by law.
The insurability of a building regulatory environment is insightful bell weather as regards whether a construction paradigm functions properly. The insurance industry keeps a very close eye on building regulatory failure and the pricing of construction risk. Market underwriting is rather nomadic, insurers move in and out of markets as they are global players with global appetite and they don’t have an appetite for higher risk as countries that have experienced the flow on effect of the combustible cladding controversy have found out. If insurers refuse to underwrite construction jurisdictions then there is little consumer protection for compromised construction outcomes so it is critical that regulation in light of its holistic and utilitarian make up delivers an insurable paradigm.
An insurable paradigm will show case strong building controls, skilled practitioners and swift and efficient dispute resolution mechanisms and the most compelling evidence of building control success will be no construction related death and minimal claims for economic loss.
Building practitioners will be required by law to carry compulsory professional indemnity cover. This cover will provide indemnification for losses that emanate from negligent design or supervision. This assists the aggrieved in obtaining recompense for losses caused by building practitioners.
The insurance requirements will be approved by the Ministry and will be published in Ministerial ordinances or gazettes and it will be illegal for building practitioners to practice unless they are insured.
In the case of builders they will be required to carry a warranty cover that provides compensation for losses that emanate from defective workmanship.
Licensing Board Probity regime
The Board will oversee the probity regime for the building industry in the State. The licensing body will have broad investigatory powers and will also have the power to:
· Conduct a hearing
· Fine suspend or cancel a license
· Refer heinous matters to the policy for criminal investigation and prosecution
There will be an investigatory and auditing arm of the Licensing Board.
The auditing arm will ensure that all building officials are audited twice a year. The auditing arm will ensure that all other building practitioners are audited at least once a year. The auditors will be empowered to carry out random audits at any time. It will be incumbent upon the ‘auditees’ to afford full cooperation to the auditors with respect to giving the auditors access to building project records and practices.
The auditors will be required to have a technical qualification and a law enforcement qualification.
Auditing and enforcement is critical in so far as it is one of the best means of public protection. One of the best auditing regimes that the writer has observed is the Japanese regime where the private building official is audited annually. Although the Japanese had regard to the private certification model adopted by a number of Australian jurisdictions in the early nineties, whereas in the Australian jurisdictions there was no legislative requirement for building officials to be annually audited, the Japanese made the auditing requirement mandatory at law.
The impartiality of private certifiers in Australia has been called into account as there is a view that some certifiers have not been sufficiently arm’s length from their contractor or developer clients. The Japanese approach which is very must akin to the auditing regime that apples to lawyers that hold client monies in trust, ensures that audits occur at regular intervals. As the practitioner is ever mindful of the fact that he or she will be audited and investigated for errant practices, the process serves to put a break on any temptation to compromise a statutory obligation.
Although in Japan the annual mandatory auditing only applies to private building officials it is considered that an optimum best practice probity regime would ensure that all building practitioners were audited annually. The challenge however for the establishment of a ‘broad church’, auditing regime would be that it would require the government to provide immense funds to the capability.
For this reason the user pays funding regime sighted below is commended to the reader for consideration.
(10) Funding of the Auditing regime
There will be a user pays regime. The auditors will be accredited by the Ministry of Construction but the practitioners will pay the Ministry an amount that is commensurate with the auditor’s fee. The auditors need not be in the full time employ of the Ministry but will be accredited and approved by the Minister and will at all times.
This auditing funding model regime is based on the auditing regime for Australian lawyers, a user pays model that is established and has been pivotal in ensuring that practitioner recalcitrance is minimized. New Zealand also has had in place a like regime for many years.
The rationale for the user pays auditing system is to ensure that regardless of the ebbs and flows of the building economy, the enforcement regime funding model is sustainable and not constrained by contracting governmental budgets. The Latvian supermarket roof floor collapse occurred as a result of post GFC austerity measures where the inspectorate regime was dismantled. As user pays self-funding auditing regime based on the Australian lawyer auditing model would ensure that this would never occur.
Where there is an imminent threat to life and limb or major adjoining property damage the Ministry of Construction will be able to direct the building official to issue enforcement orders and directives immediately by also will maintain an absolute discretion to intervene on its own behalf and invoke whatever measures in its absolute discretion it considers necessary.
Appeal Powers regarding building approval matters
There will be a designated tribunal or division within that Tribunal that will have the power to preside over and hear appeals in respect of the following:
· Notices and orders issued by building officials
· A failure on the part of an official to approve an inspection
· A failure on the part of an official to issue an occupancy permit
· A failure on the part of an official to issue a building permit
· The appealing of a reprimand or censure handed down by the licensing body
There will however be no appeal right in circumstances where the Ministry of Construction has been compelled to invoke emergency intervention powers.
There will also be a fast track appeal procedure, where matters that require urgent determination are ‘moved up the line’. The Building act will define the circumstances that qualify for urgent determination. There will be a significant fee levied for the initiation by the appellant of a fast track appeal and this fee will be prescribed in the regulations.
Regardless of whether the hearing is a fast track appeal or a normal hearing there will be 3 decision makers presiding over the appeal, one of whom will be a lawyer experienced in administrative or construction law.
The decision makers will be ministerial appointees and they will be chosen on account of them being venerated and respected by members of good repute from the construction fraternity. They need not be full time employees of the Tribunal or the public service; rather they can also be employed in other capacities.
The members will be remunerated in accordance with a remuneration scale published in the regulations.
The Powers of the Decision Makers
The decision makers will have the power to:
· Uphold the decision of first instance
· Overturn the decision of first instance
· Award costs against the party that was unsuccessful
(11) Their Will be Dedicated Divisions of Courts or Tribunals for Building Disputes
There will be dedicated specialist divisions of Courts and or Tribunals that will specialize in the resolution of building disputes. These specialist divisions will be established by legislation that will empower the designated theatre to have primary responsibility for the managing and resolution of construction disputes.
The jurisdiction will comprise mediators and specialist decision makers, be they judges or referees that facilitate the resolution of building disputes.
The regime will also ensure that in addition to providing accredited mediators there will be accredited expert witnesses whom are venerated by peers of good repute and these expert witnesses will be deployed to diagnose construction failure causation and the costs associated with rectification of same.
Both mediators and independent expert witnesses will be remunerated by the parties on a 50/50 basis to ensure that the costs are born equally. This will ensure that the State does not have to underwrite such deployment.
Judges and decision makers will be remunerated by the state and will be employees of the state judicial systems.
Rationale for dispute resolution system
Building disputes are complex and highly specialist and require the deployment and intervention of specialists with both experience that is tailored to resolve building conflicts that are specific to this area. Ideally the decision makers will have a background in construction law. In the Australian state of Victoria there are a number of dedicated construction dispute resolution theatres such as divisions within the Victorian Supreme Court and the Victorian Civil and Administrative Tribunal.
These divisions comprise decision makers that practiced construction law prior to their joining the Bench. Their experience belies a natural affinity for the resolution of building disputes.
Mediation will be compulsory on account of the fact that building disputes are very costly affairs. It follows that the sooner a matter is resolved, i.e. preferably at the genesis of the dispute, the less prejudice will be sustained by the disputants on account of “runaway” legal and expert witness fees.
The requirement for Court appointed expert witnesses, is to remove the need for adversarial expert argument that tends to characterize plaintiff/respondent litigation. In terms of technical diagnosis there should be no argument, rather there should be clinical analysis of causes of building failure or compromised construction outcomes by one actor, in circumstances where that clinical analyses is:
· Independent and totally arm’s length of the parties rather than ‘expert for hire’ as it were
· Carried out by someone that is highly qualified and venerated by peers of good repute
· Remunerated in equal shares by the parties to ensure that the impartial deliberator does not need to be funded by the public purse
(12) There Will Be a Robust Liability Regime
10 Year Liability Regimes
The aggrieved i.e. those negatively affected by a construction outcome that emanate from the negligence of a practitioner will have 10 years to initiate legal proceedings from the date upon which the occupancy permit was issued. 10 years after that period of time has concluded the plaintiff will forfeit the right to sue for damages. There will be one exclusion and that is where the negligence culminates in an injury or death the claimant’s rights to sue will still remain intact.
The system is based upon the Spinetta Law, a very established French liability regime that has underpinned French Liability Laws for many years. The concept has also been adopted by many Australian jurisdictions.
The rationale for adoption is that the limitation period is non-contentious as there is a clear and defined period for the initiation of legal proceedings i.e. 10 years, post issue of an occupancy permit. Furthermore it is well established by insurance actuaries that by the tenth year, the incidence of claims emanating from a construction output dating back ten years prior, is nigh on non-existent; hence there is more than ample time within the ten years for the aggrieved to initiate legal proceeding as the defect that was consequential upon negligent construction would have revealed itself.
This doctrine dictates that each practitioner that is responsible for his, her or its contribution to a construction failure will be found liable, for a percentage that is commensurate with or equal to the practitioner’s liability. When a number of practitioners’ are found liable for a negative construction outcome, the judge will apportion the liability between the defendants in the shares that the judge considers equate with their liability.
Proportionate liability complements a compulsory registration and mandatory insurance regime in that all parties responsible, in their being licensed are also insured. This enables them to financially account for their failure. It is a fair doctrine in that accountability is measured and judged having regard to the allocation of contribution for construction failure.
The system was introduced to the Australian States and Territories in the early nineties and has been well received by consumers and practitioners alike on account of its inherent fairness and jurisprudential logic.
It is considered that the best way for building control to move forward is for regulators to go back to the fundamentals, back to the drawing board. As building control is very much an in internationally interconnected paradigm in the 21st century the pressure for regulatory harmonization is much greater not only within the context of local settings, be they Federal or non-federal but also ‘pan country’, ‘pan pacific’, ‘pan northern hemisphere’.
Best practice building control must be holistic, reminiscent of a jigsaw puzzle that can never be complete unless every components of the puzzle is incorporated into the complete picture. To leave out one piece of the puzzle is to generate an imperfect outcome and ion the case of building the design of building regulation that can be fatal, literally. The completed picture must be designed to eliminate construction deaths, minimise economic collateral damage, and reach a balance of building efficiency with robust building control mechanisms.
Consistent with the globalization of markets, products and systems is the need to develop internationally best practice building regulations that are inspired by precisely that international best practice. The comfort factor associated with looking within is becoming less and less viable. One of the reasons the emerging Asian economies are progressing so remarkable quickly is their willingness to be at the cutting edge, their willingness to be the best, to adapt and evolve. They are not held back by the inertia of the past or even the present for that matter. So looking to the future, requires an embracement of the future and a recognition that building regulation, is not concrete in that once the concrete is set its pathology is such that it must not move. Regulation has to be designed so that it can move to ensure that it can adapt and be living rather than static in terms of its ability to evolve.