The authority that private certifiers have under the Environmental Planning and Assessment Act to issue Complying Development Certificates can be a genuine "two-edged sword", providing both a business benefit and a source of substantial professional risk. While issuing CDCs can be an excellent and profitable business opportunity for certifiers, mistakes or errors of judgement in the process of granting CDCs can "backfire" badly and can open the certifier up not only to the risk that a council might seek to invalidate the CDC (and seek the legal costs of an action in the Land and Environment Court for doing so, as discussed in a previous post on this blog); but also to the danger of disciplinary action by the Building Professionals Board. Consequently, whenever a certifier approves a CDC, it is essential that the certifier make sure that all the i"s are dotted and all the t's are crossed, and that every aspect of the proposal meets the requirements of the State Environmental Planning Policy (Exempt and Complying Development Codes) 2008.
The hazards of incorrectly issuing CDCs was graphically illustrated in a case decided by the Administrative Decisions Tribunal in August 2013, Qiu v Building Professionals Board (2013) NSW ADT 289. The text of the Tribunals decision can be found at the following link:
http://www.austlii.edu.au/au/cases/nsw/NSWADT/2013/289.html
The essence of the Qiu case was that, with respect to three separate development proposals, the certifier had granted CDCs where he could not lawfully do so. Although Part 3 of the Exempt and Complying Development SEPP allows CDCs to be issued for new single and two storey dwelling houses, the Building Professionals Board found that the certifier had erroneously issued CDCs for three storey buildings.
In one case, the BPB's investigator found that the certifier had approved a dwelling in which a part of the bathroom at the basement level, a part of the dining room at ground floor level, and a part of a retreat at first floor level, aligned so that when stacked together they formed a three storey building. It was determined by the BPB that the certifier had incorrectly interpreted the position of an en suite bathroom on the ground floor as aligning with an internal void.
In the second case, the certifier again mistakenly approved a dwelling that was also found to have 3 storeys. The situation with this building was that part of a single garage at the basement level, and parts of galleries at the ground and first floor levels, aligned so that when stacked they produced a 3 storey building. In arriving at a judgment that the building only had 2 storeys, the certifier incorrectly relied upon the definition of the term "storey" in the Building Code of Australia which provided that a basement should not be counted as a "storey" if the floor level of the storey above was less than 1 metre above the ground floor. The BPB rejected this interpretation, and found that instead of relying on the definition of "storey" in the BCA, determined that the certifier should have based his determination on the definition provided in the Standard Instrument - Principal Local Environmental Plan (which provides that a "storey" is a space in a building that is situated between one floor level and the floor level next above).
In the third case, the BPB made findings that the plans for the dwelling in question called for a plant room at basement level, a walk in robe and bedroom en suite at ground level and part of a family room on the first level which again, when stacked together, formed a three-storey building.
Beyond these issues, the ADT confirmed that the certifier had approved several other types of building work that did not comply with the requirements of the SEPP. These included: a) approving plans that did not provide for a setback of at least 3 metres from the boundary of a public reserve as required by clause 3.19(a) of the SEPP; b) failing to require the installation on a balcony in contravention of clause 3.23; approving excavation to a depth of more than 1 metre below existing ground level to allow for the construction of a basement in contravention of clause 3.29; and failing to require that the private open space of a new dwelling be directly accessible from the habitable rooms, in contravention of clause 3.25.
In Qiu, the certifier's failure to ensure that the CDC plans he approved were in compliance with the SEPP led both the BPB and the ADT to make findings that the certifier had been guilty of unsatisfactory professional conduct. Although the BPB made orders imposing a fine of $20,000 and removing the certifier's authority to issue CDCs for a period of 2 years, these orders were varied on appeal to the ADT. The fine was reduced to $7,000 and instead of removing the certifier's power to issue CDCs, a condition was imposed on the certifier's accreditation which required him to provide copies of the CDCs that he issued to the BPB within 2 days of issuance. Additionally, the ADT affirmed a reprimand that the BPB had given to the certifier.
The result in the Qiu case illustrates the kind of serious sanctions that may be imposed on a certifier who issues CDCs that do not comply fully and strictly with the provisions of the SEPP Exempt and Complying Development Code. It provides a warning signal that certifiers who wish to avoid these types of sanctions must adhere faithfully to the specifications in the Code. Where a question of compliance is in doubt, the careful certifier will err on the side of caution, and require the applicant to secure a full development approval from the relevant consent authority.
A recent decision of the NSW Administrative Decisions Tribunal has re-enforced the concept that it is essential that private certifiers properly classify buildings under the Building Code of Australia to ensure that they have the required level of fire safety protection and accessibility. A failure to exercise a sufficient level of care and professional judgment in making this determination can result in negative findings and sanctions from the Building Professionals Board.
The case, McGufficke v Building Professionals Board (2013) NSWADT 307, arose out of a certifier's work on a project involving an "equine agistment facility" in Moss Vale. The development involved building works valued at $5.4 million, and included a main two storey building housing offices, a reception room and other facilities that was connected to two wings accommodating stable boxes, vet rooms and equipment areas, among other things. The certifier issued both a construction certificate and a final occupation certification that were based on his determination that the building should be characterised as a "class 10a" building under the BCA.
In its judgement, the Administrative Decisions Tribunal affirmed the finding of the Building Professionals Board that the certifier had been guilty of unsatisfactory professional conduct in so acting. It was the conclusion of both the BPB and the ADT that the certifier's conduct did not reflect the required standard of competence, diligence and integrity that could reasonably be expected of an accredited certifier.
The certifiers error in the case was to make an overall assessment that the building at issue could be classified as a "non-habitable shed" (class 10a) on the basis that the dominant element of the building was the two wings that contained the stable boxes for the horses. However, the ADT concluded that the building was far more complex in nature, and that the certifier's assessment was not only wrong but was reflective of incompetence. Although the Tribunal recognised that it may often be difficult for certifiers to determine precisely what classification should apply to a building, it found that the characterization of the building as a non-habitable shed was plainly incorrect. In the Tribunal's view, it would have been more appropriate for the certifier to identify a classification that more closely corresponded to the nature of the use and occupancy of the building, and thus to ensure that the building incorporated appropriate fire safety measures.
On the basis of its findings that the certifier had erroneously issued both a construction certificate and a final occupation certificate based on a completely incorrect building classification, the ADT affirmed the orders of the BPB which found the certifier to be guilty of unsatisfactory professional conduct, reprimanded the certifiers and fined him $10,000.
The moral that can be drawn from this case is that certifiers would be well-advised to exercise a high degree of care when making decisions about the appropriate classification of a new building. When the matter appears to be in doubt between one or more possible classifications, the better course is to choose a building classification which requires a higher degree of protection of public safety in terms of fire safety measures and structural integrity.
The ADT's decision can be found on the Internet at the following link:
http://www.austlii.edu.au/au/cases/nsw/NSWADT/2013/307.html
A situation that every private certifier would be extremely eager to avoid is being criminally prosecuted in the Land and Environment Court for wrongfully issuing a construction certificate. The penalty regime under the Environmental Planning and Assessment Act 1979 provides for very high potential penalties if a person is convicted of an offence: Under section 126 of the Act, the maximum fine that can be imposed is $1.1 million. Furthermore, it is the routine practice for the Court to make an award of professional costs against a defendant who is prosecuted, and it is not at all unusual for the amount of costs in such a prosecution to be upwards of $20,000. These penalties and costs are, of course, in addition to any costs that a certifier may have to pay for being legally represented in relation to the prosecution. Thus, beyond the stain on one's personal and professional reputation of having a criminal record for breaching the Act, the financial consequences of being prosecuted in the Court can be very painful if not indeed completely disastrous.
Exactly this perilous situation was faced by the defendant in the case of Warringah v Moy (2005) NSWLEC 416. In that case, the certifier who was prosecuted was a person who had extensive experience, having worked as a building surveyor for 4 councils in the Sydney metropolitan area over a period of 24 years before becoming a private building consultant.
The development project that got the defendant into trouble involved a residential flat building in Brookvale. Evidence was offered in the Court proceedings by the Council that there were major differences between the approved development consent plans and the construction certificate plans. The differences included discrepancies in the height of the building above finished ground level; changes to the internal layout of the apartment units; increases in the height of the floor levels; and changes to the configuration of nearly all of the doors and windows. The Council offered the evidence of two highly experienced and respected building consultants to the effect that the differences between the d.a. and the CC plans were so great that no reasonable certifier could have been satisfied that the CC plans were "not inconsistent" with the d.a. plans.
Thus, it was the Council's case in this prosecution that the certifier should not have issued the construction certificate in question. The Council prosecuted the certifier for breaching his duty under section 145(1)(a) of the Environmental Planning and Assessment Regulation 2000 not to issue any construction certificate unless he was satisfied that the design and construction of the building as shown in the CC plans would not be inconsistent with the development approval, and for falsely including a statement in the CC that he was so satisfied.
The outcome of this case ultimately turned on whether the standard to be applied in assessing compliance with section 145(1)(a) of the Regulation is "objective" or "subjective" - in other words, is the standard whether a reasonable person standing in the shoes of the certifier would have been satisfied that the two sets of plans were consistent, or whether the certifier who actually reviewed the two sets of plans was in fact satisfied that the plans were not inconsistent.
In the event, the Court (Justice Bignold) decided that the appropriate standard is subjective - in other words, whether the certifier in the case was actually satisfied that the two sets of plans were "not inconsistent". There was evidence in the case that the certifier who was prosecuting had closely examined both sets of plans, and that he was satisfied that they were consistent. On this basis the certifier was acquitted of the charges brought by the Council.
It is worthy of note that the judge presiding over the case found that the expert witnesses who gave evidence on behalf of the Council had relied on a set of plans that were not actually those that were in force under the development consent in forming their opinions that the d.a. plans and the CC plans were "inconsistent". It turned out that the plans that actually formed part of the development consent had been extensively modified from the plans that were relied upon by the prosecuting Council's experts.
There are consequently two essential lessons to be drawn from this case. The first is that a conscientious certifier will take great care to ensure that the plans that he or she is given with an application for a construction certificate are indeed the final plans that are referenced in the development consent. The second is that the certifier should be at great pains to examine the CC plans very closely, to satisfy her or himself that those plans are indeed not inconsistent with the d.a., and to prepare a written record providing a detailed explanation of the reasons why the certifier has arrived at this conclusion.
The certifier who wishes to avoid the risk of a possible prosecution or equally painful disciplinary proceedings before the Building Professionals Board will be scrupulous in carrying out the duty to ensure essential consistency between d.a. and CC plans.
The Court's decision in this case can be found at the following link:
http://www.lawlink.nsw.gov.au/lecjudgments/2005nswlec.nsf/2005nswlec.nsf/WebView2/EDF11975A92E5EC1CA25704D001D78E2?OpenDocument
One of the worst situations in which a private certifier can find himself or herself is being sued in the Land and Environment Court by a local council. These proceedings are typically brought by councils to have certificates that have been issued by certifiers declared invalid. In situations where the council is successful in establishing that a certificate has been wrongfully issued, the certifier may be required to pay the council's legal costs. These costs can often amount to thousands, or even tens of thousands of dollars. Consequently, a mistake in issuing a certificate may result in a financial loss that may take many months of hard work to recover, and can even threaten a certifier's livelihood and ability to remain in business.
An example of a case where this "nightmare scenario" materialised, resulting in a costs order against a certifier, is Kogarah City Council v Armstrong Alliance Pty Ltd (No 2) 2013 NSWLEC 2013. Here's a link to the decision:
http://www.caselaw.nsw.gov.au/action/pjudg?jgmtid=163618
In the Armstrong Alliance case, the Council went to court to restrain the carrying out of building works which were greatly different from the works that had been authorised by the development approval the council had granted. Inspections that were carried out by the council's building coordinator revealed that although the consent approved only a 5 unit apartment building, in fact a sixth unit had been built. Other differences between the development approval and the works that were actually built included the construction of an additional storey and outdoor terrace that were not shown on the council-approved plans; an unapproved elevator shaft to access the unapproved additional storey; an increase in the size and an alteration of the layout of the basement car park; and changes to the internal layout of several of the apartments.
In the judgement which Justice Pepper handed down in the case, she described the conduct of the certifier in scathing terms. Justice Pepper stated that the certifier had "flagrantly transgressed" his legal obligation under clause 145(1)(a) of the Environmental Planning and Assessment Regulation 2000 not to issue any construction certificate unless the design and construction of the building as shown on the proposed construction certificate drawings were consistent with the approved development consent. In these circumstances, Justice Pepper found it appropriate to make a declaration that the construction certificate was invalid.
Even worse for the certifier than being on the receiving end of severe criticism from a judge of the Land and Environment Court was that Justice Pepper saw fit to make a costs order against him. In doing so she endorsed principles that had previously been stated by both Chief Justice Preston and Justice Biscoe, namely that when a consent authority makes an error in issuing an approval which necessitates legal proceedings to have that approval declared invalid, that consent authority (very often a private certifier) will be required to pay the legal costs. The rationale for this approach by the Court is that in these circumstances, it is the consent authority's (the certifiers) mistake that has brought about the litigation.
To make matters worse, the cost principles endorsed by the Court provide that a certifier cannot avoid a costs order simply by entering a "submitting appearance:" in the proceedings (in other words, formally entering an "appearance" but indicating that it does not wish to actively participate in the proceedings or contest any orders that may be made by the court). Furthermore, in circumstances where the beneficiary of the wrongfully issued approval chooses not to defend the proceedings, the certifier will be required to pay all of the council's costs. Additionally, there is the potential that when a certifier incorrectly grants an approval, the beneficiary of that approval may itself take legal action against the certifier which may result in a financial award against the certifier for damages and costs.
Therefore, the result in the Armstrong Alliance case provides a clear and unmistakable message to all those who work as private certifiers, specifically that it is essential always to take great care to ensure that plans that are approved in connection with a construction certificate are consistent with the underlying development approval. The consequences of failing to take this message on board can prove to be exceedingly painful, not only financially but to the certifier's professional reputation as well.
