The Victorian 10-Year Liability Cap – The 10 Years from When the Occupancy Permit Is Issued Test
The French Napoleonic Code inspired ‘decennial liability’ Section 134 of the Victorian Building Act 1993 was introduced to bring certainty to the legal process and the limitation period for legal proceedings.
Before Section 134, there was confusion about when the clock for initiating legal proceedings started to tick over.
There were two conflicting tests:
– The Infinity Plus 6 test: Once a defect was discovered, you had 6 years to issue legal proceedings.
– From WhenTheDamage Occurred test: You had 6 years from when the damage occurred to issue legal proceedings.
This uncertainty meant plaintiffs and defendants often didn’t know whether they were still within the time limit or not and had to run the gauntlet of litigation to find and answer to this question.
The result was risky litigation, where you had to rely on sometimes shaky, after-the-event evidence to figure out when the limitation period was triggered.
Attempts to navigate the confusion is seen in recent New Zealand cases, where litigation revolves around trying to divine the cryptic trigger point for when the limitation period begins.
The Wording of Section 134
Limitation on time when building action may be brought
Despite any thing to the contrary in the Limitation of Actions Act 1958 or in any other Act or law, a building action cannot be brought more than 10 years after the date of issue of the occupancy permit in respect of the building work (whether or not the occupancy permit is subsequently cancelled or varied) or, if an occupancy permit is not issued, the date of issue under Part 4 of the certificate of final inspection of the building work.
Why 10 Years?
The 10-year liability cap follows the French system, inspired by the Napoleonic Code.
The decennial liability rule in French law allows for a 10-year period to bring building claims.
The statutory precedent provided clear guidance, offering certainty to both plaintiffs and defendants.
A policy decision in Victoria by the then law reformers was made that the likelihood of a defect taking more than 10 years to evolve from latent to apparent was infinitesimally small.
This policy reduced the risk of plaintiffs being shut out from bringing claims.
How Does It Operate?
In Victoria, building surveyors are required by law to issue an Occupancy Permit (OP) when a building is fit for occupation.
For renovations, a Certificate of Final Inspection is issued instead of an OP.
Once either instrument is issued, the parties involved have 10 years to initiate legal proceedingsfrom the date of the OP or final inspection.
To use French terminology, the right to issue legal proceedings is then “guillottinéd” (cut off after the 10-year period).
Section 393 of the Building Act 2004 – The 10 Years from the Act or Omission Test
Section 393 of the Building Act 2004 (New Zealand) also imposes a 10-year limitation period for bringing legal actions related to compromised building work. This test is based on the date of the act or omission that caused the problem.
Unlike in Victoria, where the clock starts ticking from the issuance of an Occupancy Permit or Certificate of Final Inspection, in New Zealand, the limitation period starts from the actual date when the problematic work was done or when the omission occurred.
Section 393 of the Building Act 2004:
393 Limitation defences
(1) The Limitation Act 2010 applies to civil proceedings against any person if those proceedings arise from—
(a) building work associated with the design, construction, alteration, demolition, or removal of any building or the manufacture of a modular component manufactured by a registered MCM who is certified to manufacture it; or
(b) the performance of a function under this Act or a previous enactment relating to the construction, alteration, demolition, or removal of the building or the modular component.
(2) However, no relief may be granted in respect of civil proceedings relating to building work if those proceedings are brought against a person after 10 years or more from the date of the act or omission on which the proceedings are based.
(3) For the purposes of subsection (2), the date of the act or omission is,—
(a) in the case of civil proceedings that are brought against a territorial authority, a building consent authority, a regional authority, or the chief executive in relation to the issue of a building consent or a code compliance certificate under Part 2 or a determination under Part 3 the date of issue of the consent, certificate, or determination, as the case may be; and
(b) in the case of civil proceedings that are brought against a person in relation to the issue of an energy work certificate, the date of the issue of the certificate.
Compare Section 134 with Section 393
Section 134 – 10 Years from the Issuance of the Occupancy Permit
Section 134 of the Building Act 1993 (Victoria) establishes that legal proceedings must be initiated within 10 years after the date of issue of the occupancy permit or, if an occupancy permit is not issued, 10 years after the date of issue of the certificate of final inspection.
This means that the limitation period is based on the officials’ approval of the building’s completion or renovation.
The relevant building surveyor is required by law to issue an occupancy permit when the building is fit for occupation, and a copy of that OP must be filed with the local council. This makes the evidence crystal clear in terms of verifying the start date, as there is a specific and documented issuance date. This creates a ‘slam-dunk’ evidential clarity mechanism.
A legal instrument that provides clear evidence of the 10 year limitation period start date-section 134 Victorian Building Act 1993
Section 393 – 10 Years from the Act or Omission
Section 393 of the Building Act 2004 (New Zealand) sets the limitation period as 10 years or more after the date of the act or omission on which the proceedings are based.
This means the time starts running from the actual act or omission that caused the problem, rather than from an official approval like an occupancy permit.
However, the date of the act or omission in New Zealand raises several evidentiary challenges:
The challenge is to find the evidence of an act or admission-section 393 New Zealand Building Act 2004
What was the act? Determining the exact nature of the problematic act can often be unclear.
What was the omission? Identifying whether a failure to act (omission) contributed to the issue can be subject to dispute.
By whom? Multiple parties may have been involved in the building work, making it hard to pinpoint responsibility.
Years after the event, is the evidence still available? After 10 years, evidence may be lost, damaged, or unavailable.
Is it contestable? Even if evidence is available, its quality may be challenged in court due to the time elapsed.
Are the key witnesses still alive or in the country? Witnesses may have passed away or moved abroad, affecting their availability for testimony.
Can they recall? After 10 years, the reliability of witness memory can be a significant issue, leading to discrepancies in their testimonies.
6. How to Fix NZ’s 10-Year Confusion: A Clearer Path Forward
One possible solution to this issue in New Zealand could be amending the Building Act 2004 to clarify the start date for the 10-year limitation period.
The 10-year litigation period could commence upon the date that a Code Compliance Certificate (CCC) is issued by the relevant territorial authority.
If a CCC is not issued, the start date could be triggered by another form of completion certificate, such as an Occupancy Permit, to bring clarity and alignment with the Victorian system.
Additionally, there would need to be a regulation that mandates the filing of a copy of the completion instrument with the local territorial authority, ensuring that a clear, documented start date is available as evidentiary proof.
Footnote: Cladding Exclusion (Section 134A)
Section 134A provides an exception to the general 10-year liability cap for cladding-related defects. This section allows for legal proceedings to be brought even after the normal 10-year period has expired, specifically for claims relating to non-compliant cladding. The key provisions are:
A cladding building action may be brought in respect of any building work relating to non-compliant or non-conforming external wall cladding product within the period ending on the later of—
(a) 10 years after the date of issue of the occupancy permit in respect of the building work or, if an occupancy permit is not issued, 10 years after the date of issue of the certificate of final inspection of the building work; or
(b) 10 years after 16 July 2019.
This section applies to any cladding building action, whether the right to bring the action accrued before, on, or after 16 July 2019.
About the Author
Adjunct professor Kim Lovegrove MSE RMLis the founder of Lovegrove & Cotton Lawyers is the Founding Chairman of the International Building Quality Centre (IBQC). Kim has been a senior law reform consultant to the World Bank in which capacity he was part of a team that provided advice to the Chinese Government on best practice approaches to building regulatory reform. He was also retained by the World Bank to review the first-ever Malawian Building Act and was the project director of the Australian National Model Building Act team, which served as the law reform template for several Australian jurisdictions in the mid-nineties.
Some other related articles on law reform ideas and liability reform
Disclaimer: The information provided in this article is for general informational purposes only. It does not constitute legal advice. For specific legal advice related to building regulations and compliance, please consult a qualified construction lawyer.
In October 2024, the Victorian Building Appeals Board (BAB) delivered a decision resolving a combustible cladding compliance case concerning a large apartment complex in the heart of Melbourne.
The matter involved the Owner’s Corporation of “The William” Building, a multi-apartment tower building in the central city. The Owner’s Corporation was represented by Lovegrove & Cotton Construction and Planning Lawyers, with Director Justin Cotton being the solicitor with conduct of the Applicants’ proceedings.
The case addressed the question of whether aluminium composite panels (ACP) with a fire-retardant core could remain on the building’s façade under the Building Code of Australia. The BAB concluded that the panels complied with the performance requirements and could remain.
The nature of the proceeding and the relief sought is as follows:
An application commenced with the Building Appeals Board for a determination that the retention of all of the existing Alpolic/FR combustible (external wall) cladding installed on a Class 2, 3, 5, 6 and 7a building complies with Performance Requirements CP2 and CP4 of the Building Code of Australia 2011 – Volume One(“BCA”)1.
This decision not only saved the Owners Corporation from significant remediation costs but also averted protracted and very expensive multi-party litigation. It was a great relief to the strata community.
Background of the Cladding Compliance Case
The dispute arose following the redevelopment of the building between 2012 and 2014. The project created two multi-storey towers, linked by a sky bridge, and included residential apartments, a hotel, and commercial spaces. The first Occupancy Permit was issued in September 2014.
This case involved the following parties:
Owners Corporation PS648185V (Applicant) – Represented the landowners seeking determination on whether retaining combustible cladding would be compliant with safety codes.
Municipal Building Surveyor for the City of Melbourne (First Interested Party) – Monitors compliance and fire safety, initially raised concerns about cladding risks.
Fire Rescue Commissioner (Second Interested Party) – Focuses on fire safety, particularly access for firefighting and potential risks posed by the cladding.
Victorian Building Authority (Third Interested Party) – Provides regulatory oversight, supporting compliance assessments and legal interpretations.
Relevant Building Surveyor (Fourth Interested Party) – Involved in issuing occupancy permits but did not participate in hearings.
Built Vic Pty Ltd (Fifth Interested Party) – Building contractor, had made no substantive submissions.
In November 2019, the Melbourne City Council issued a Building Order requiring action regarding the building’s external cladding. This was based on concerns that the ACP panels, while classified as fire-retardant with less than 30% polyethylene, were still combustible materials that could potentially compromise occupant safety in a fire. The Building Order required the Owners Corporation to:
(a) Remove/replace all the combustible ACP cladding on the building with a material compliant with the BCA.
OR
(b) Remove and replace all the combustible ACP cladding on the building as far as is reasonably practical whereby it can be demonstrated (to be verified through a Section 160A application via the Building Appeals Board, for design determination) that the cladding extent and configuration satisfies the BCA performance requirements2.
The Owners Corporation disputed the Building Order, asserting that the cladding complied with the Building Code of Australia. On 2 January 2020, the Applicant subsequently made an application to the BAB for such a determination3.
The application made by the Applicant was pursuant to section 160A(1) of the Building Act 1993 (Act) seeking a determination that retention of all existing combustible cladding installed on a Class 2, 3, 5, 6 and 7a building complies with Performance Requirements CP2 and CP4 of the BCA4.
A Timeline of Events
Key Milestones in the Compliance Process:
2012–2014: Redevelopment of the property created a multi-storey complex in central Melbourne, featuring residential apartments, a hotel, and commercial spaces.
September 2014: An Occupancy Permit was issued, by the relevant building surveyor signifying project completion.
November 2017: The Occupancy Permit was amended following a supplementary fire engineering report.
November 2019: A Building Order was issued, mandating the removal or replacement of the ACP cladding.
2020–2024: Proceedings before the BAB involved extensive testing, expert conclaves, and multiple reviews by relevant agencies.
October 2024: The BAB ruled that the cladding met the performance requirements of the 2011 Building Code and could remain in place, with no remedial work needed.
Role of Expert Reports and Testing
Central to the case was the use of Alpolic/FR ACP cladding, which has a fire-retardant core with less than 30% polyethylene. Testing conducted by CSIRO and other experts included small- and intermediate-scale mock-ups of the cladding and insulation systems5. These tests eventually demonstrated that:
The cladding did not propagate significant fire spread.
Fire barriers at each floor provided additional containment.
The building’s active and passive fire safety measures, including sprinklers and compliant egress paths, mitigated overall risks.
A key finding was the presence of polyester batts in the cavity, which, while combustible, were separated from the ACP cladding by sarking and steel channels, significantly reducing fire risk. Expert conclaves provided further evidence that the cladding’s configuration satisfied the Building Code’s performance requirements CP2 and CP46.
These findings were presented in the expert report prepared by SKIP Consulting Pty Ltd. A key conclusion from the report was as follows:
‘The ACP cladding … and combustible polyester insulation does not ‘pose a risk to the life of any occupants using the building’ as described in the building notice and building order and is compliant to the relevant performance requirements of the BCA’7.
Some of the Challenges
Throughout the process, there had to be a navigation of some of the conflicting opinions. While CSV classified the building as “not high risk” and declined to provide rectification funding, other regulatory bodies, including the VBA and Fire Rescue Victoria, maintained that the cladding posed a fire safety risk.
Without CSV funding, the Owners Corporation had to independently engage experts and fund the BAB proceedings. However, these efforts ultimately saved the Owners Corporation from facing extensive remediation costs and having to pursue potential litigation. The decision averted the need for expensive multi-party legal disputes.
The Victorian Building Appeals Board’s Decision
The BAB concluded that:
The applicable version of the Building Code was the 2011 edition, as it governed the original construction.
The ACP cladding complied with CP2 and CP4, given the fire-retardant core and mitigating fire safety measures in place.
The cladding could remain, as it did not materially increase fire risks to occupants or the building’s façade.
The findings further considered the expert opinions and concluded that the retention of the Alpolic / FR did not materially increase the risk of fire spread to the façade of the Building, or otherwise materially compromise the fire safety of the persons within the building8.
Adjunct Professor Kim Lovegrove has praised the BAB’s model, noting that its multi-disciplinary panel and swift hearing process—typically lasting no more than 1-2 days—aligns with international best practices for dispute resolution. The BAB has proven to be a sustainable and highly effective institution for resolving complex building compliance disputes.
Implications of the Decision
The decision has significant implications for both the Owners Corporation and the wider construction industry. It highlights the importance of robust evidence, technical analysis in compliance disputes and deployment of lawyers that have a high level of expertise in this niche jurisdiction.
Furthermore, the ruling emphasizes the practicality of addressing cladding issues through case-specific solutions rather than blanket removal mandates.
Recent guidelines encouraging collaboration between regulators and Owners Corporations, including partial rectification options, reflect a shift toward more pragmatic approaches. This decision provides a precedent for other strata communities facing similar challenges, balancing safety, financial considerations, and practical outcomes.
This case highlights the BAB’s role as an effective dispute resolution forum, supported by a panel of multi-skilled decision-makers. Adjunct Professor Kim Lovegrove, an international expert on building regulatory reform, often describes the BAB as exemplifying international best practice. Its swift hearings and sustainable operations over many years provide a valuable template for other jurisdictions.
Key Takeouts
1. Sustainable Dispute Resolution
The BAB’s multi-disciplinary panel approach demonstrates its ability to resolve technical disputes effectively.
2. Collaborative Evidence is Essential
Extensive testing and expert conclaves provided the robust evidence needed to demonstrate compliance.
3. Case-Specific Flexibility is Key
This case reinforces the value of tailored compliance assessments over one-size-fits-all solutions, particularly for complex matters like cladding.
4. Avoiding Litigation Benefits Owners
The outcome saved the Owners Corporation from costly multi-party litigation and expensive remediation works, providing a practical and equitable resolution.
5. International Comparisons
The BAB’s model holds up well against international benchmarks, serving as a valuable example of best practices in building dispute resolution.
Conclusion
The Victorian Building Appeals Board’s decision in October 2024 is an important example of how well-structured dispute resolution processes can deliver practical, equitable outcomes. The ruling balanced public safety concerns with financial realities, allowing cladding to remain on a performance-based approach and averting unnecessary litigation. The holistic active and passive fire safety provisions at this building were also taken into consideration.
The BAB’s structure, involving multi-skilled decision-makers, underscores its value as a model for international best practice. Its efficient processes, demonstrate the sustainability and effectiveness of its approach. This outcome not only saved the Owners Corporation from considerable costs but also provided a clear precedent for future cladding disputes.
By focusing on evidence-based assessments and collaborative solutions, this decision offers a pathway for addressing combustible cladding issues in a way that safeguards both public safety and the financial well-being of apartment owners.
Disclaimer
The information provided in this article is for general informational purposes only. It does not constitute legal advice. For specific legal advice related to building regulations and compliance, please consult a construction lawyer.
Lovegrove & Cotton Construction and Planning Lawyers
For more than thirty years, Lovegrove & Cotton have provided advice and represented Owners Corporations, Building Practitioners and regulators in building and planning regularisation matters. If you wish to engage the firm, feel free to contact us via our website, by emailing enquiries@lclawyers.com.au, or by calling on (03) 9600 4077.
Footnotes
In the matter of 189-203 Willaim Street, Melbourne [2024] BAB 452215 ↩︎
In the matter of 189-203 Willaim Street, Melbourne [2024] BAB 452215 [12] ↩︎
In the matter of 189-203 Willaim Street, Melbourne [2024] BAB 452215 [13] ↩︎
In the matter of 189-203 Willaim Street, Melbourne [2024] BAB 452215 [1] ↩︎
In the matter of 189-203 Willaim Street, Melbourne [2024] BAB 452215 [23] ↩︎
Important New Building Appeals Board Decision Regarding Cladding and a Multi-Unit Development ↩︎
In the matter of 189-203 Willaim Street, Melbourne [2024] BAB 452215 [21] ↩︎
In the matter of 189-203 Willaim Street, Melbourne [2024] BAB 452215 [57] ↩︎
AI Generated Good Practice Provisions of a Building Act
Kim Lovegrove asked Chat GPT 4 to identify 30 key elements of a good practice building act, below is the response.1
30 Provisions for a Good Practice Building Act
1. Comprehensive Practitioner Licensing
Mandate registration and licensing of all builders, designers, and certifiers, with competency-based assessments and periodic reviews.
2. Consumer-Focused Warranties
Establish clear, enforceable warranties and defect liability periods to safeguard property owners from construction defects.
3. Compulsory Insurance Requirements
Ensure practitioners maintain accessible, cost-effective insurance to protect against defects, insolvency, and professional negligence.
4. Efficient Permit Approvals
Implement digital permitting systems to streamline approvals, reduce administrative burdens, and cut project delays.
5. Independent Third-Party Inspections
Require inspections at critical construction stages, conducted by certified independent professionals.
6. Risk-Based Compliance Framework
Tailor regulatory requirements based on project-specific risk assessments, ensuring proportional oversight.
7. Advanced Enforcement Mechanisms
Equip regulators with cutting-edge tools, data analytics, and adequate resources for proactive enforcement.
8. Support for Retrofitting Existing Buildings
Introduce simplified processes for retrofitting aging infrastructure, focusing on energy efficiency and structural resilience.
9. Provisions for Low-Risk Projects
Develop streamlined regulatory pathways for minor or low-risk projects, reducing compliance costs for property owners.
10. Continuous Professional Development
Require practitioners to stay updated with industry advancements through mandatory training programs.
11. Public Transparency of Building Data
Mandate public access to key building information, including permits, inspections, and compliance histories.
12. Integrated Sustainability Measures
Include requirements for energy efficiency, carbon reduction, and sustainable materials in all new construction projects.
13. Comprehensive Dispute Resolution Systems
Establish centralized, accessible, and cost-efficient dispute resolution mechanisms for all stakeholders.
14. Graduated Penalties for Non-Compliance
Introduce a scalable penalty system based on the severity of breaches to encourage compliance without excessive costs.
15. Advanced Digital Record Management
Require digital submission, storage, and management of all permits, plans, and compliance certificates.
16. Consumer Awareness and Education
Launch ongoing campaigns to educate property owners about their rights, the construction process, and available protections.
17. Collaborative Governance Models
Involve representatives from government, industry, and consumer advocacy groups in regulatory oversight and decision-making.
18. Crisis-Ready Building Provisions
Integrate provisions for rapid construction and rebuilding in response to emergencies or natural disasters.
19. Global Standards Alignment
Ensure regulations align with international building standards, enhancing trade and construction quality benchmarks.
20. Incentives for Innovation
Offer financial or procedural incentives for projects adopting innovative technologies or sustainable practices.
21. Lifecycle Cost Analysis Requirements
Mandate lifecycle cost analysis for large projects to ensure long-term economic and environmental viability.
22. Zero-Tolerance Policy for Major Safety Violations
Introduce strict penalties, including license suspension or revocation, for significant safety breaches.
23. Accessible Housing Provisions
Incorporate universal design principles to ensure all buildings are accessible to individuals with disabilities.
24. Noise and Environmental Impact Controls
Mandate stringent controls on noise, pollution, and environmental disruption during construction.
25. Dedicated Ombudsman for Building Complaints
Create an independent office to address unresolved complaints and monitor systemic industry issues.
26. Proactive Risk Mitigation Programs
Develop programs encouraging pre-construction risk assessments and preventive measures for complex projects.
27. Building Information Modeling (BIM) Adoption
Encourage or require the use of BIM for transparency, efficiency, and improved project management.
28. Annual Regulatory Reviews
Conduct annual reviews of the Building Act to ensure relevance, efficiency, and responsiveness to industry changes.
29. Strengthened Data Privacy Protections
Ensure that digital systems for permits and inspections comply with robust data privacy and cybersecurity standards.
30. Energy and Carbon Performance Benchmarks
Establish mandatory benchmarks for energy efficiency and carbon reduction, with regular compliance audits.
Footnote
The AI platform was ChatGPT-4. The person that posed the question was Adjunct Professor Kim Lovegrove, MSE, RML; there were only a couple of very, very minor edits, such as instead of best practice, good practice. The interviewer does not necessarily agree with every one of the maxims and is of the view that there are other elements that warrant consideration. Having said that it was interesting to see what the AI take on the question was↩︎
The infographics were also generated by Chat GPT 4
Disclaimer
This is not legal advice and is general in nature only, for legal advice consult a lawyer that has expertise in the area of building practitioner, licensing and practitioner registration and professional advocacy
Building control systems in some countries are at a crossroads, grappling with the complexities of modernization, sustainability, and resilience. In many nations, fragmented regulations, inconsistent enforcement, and piecemeal reforms have exposed systemic vulnerabilities. These shortcomings often culminate in devastating consequences, jeopardizing public safety, economic stability, and trust in governance.
Conversely, high-performing jurisdictions such as Japan exemplify the merits of embracing international best practices and innovative frameworks. By prioritizing a cohesive, proactive approach, these regions have managed to avert many of the pitfalls that plague others.
Japan’s success underscores the importance of foresight, collaboration with international thought leaders, and adaptability in regulatory design, providing a template for jurisdictions aspiring to elevate their building control ecosystems.
This article examines the principles underpinning effective building control systems. It advocates for transformative reform models that prioritize public safety, operational efficiency, and long-term sustainability.
By studying internationally tested solutions, jurisdictions can adopt holistic ideas from jurisdictions that have road tested key reform concepts. The guiding philosophy is clear: to reform effectively, nations should look outward, drawing like a successful chess player from both successes and failures.
Problem Statement: Perennial Challenges with the design of Building Regulations.
Despite years of regulatory reform, some countries continue to wrestle with suboptimal building control systems. Some of the systemic issues are highlighted below.
1. Fragmentation in Legislation
The proliferation of regulations across multiple statutes creates confusion, hinders enforcement, and weakens compliance mechanisms. Fragmented systems often result in overlapping jurisdictions or, conversely, regulatory blind spots where accountability is ambiguous.
2. Lack of Political Continuity and the ‘Yo-Yo Effect’
Frequent changes in government disrupt continuity in policy implementation. Shifting priorities between deregulation and overregulation impose significant adaptation costs on industries, forcing businesses to repeatedly overhaul practices in response to fluctuating policies.
5. Cyclical Trends in Regulation
The re-emergence of outdated trends highlights the cyclical nature of regulatory approaches. Innovations that once seemed transformative may later fall out of favor, only to resurface decades later. This cycle reflects the inability to solidify enduring frameworks.
4. Economic Pressures and Austerity
Budgetary constraints often drive austerity measures that prioritize cost-cutting over resilience. The dismantling of inspection systems, reduced funding for oversight, and staff shortages undermine the effectiveness of building control mechanisms.
5. Reactive Reforms
Reforms enacted in response to crises tend to focus narrowly on immediate threats, neglecting broader systemic issues. These reactive measures are akin to treating symptoms rather than curing the underlying malaise, leaving the system vulnerable to future failures.
Sometimes one has to do more than trim the hedges particularly if deep structural reform is necessary to repair something fundamentally broken.
The cumulative impact of these issues is stark: preventable disasters continue to claim lives and livelihoods, exposing the dire need for comprehensive reform rooted in international best practices.
Lessons from Failure: Tragedies That Illuminate Weaknesses
1. Human and Economic Costs
The following high-profile regulatory failures highlight the devastating consequences of inadequate building control systems:
Grenfell Tower Fire (UK): A glaring example of weak oversight, the 2017 fire was fueled by unsafe building practices. The unchecked deregulation of the building sector and failure to prioritize public safety resulted in 72 deaths and immeasurable trauma for survivors.
Latvian Supermarket Roof Collapse: In 2013, the collapse of a supermarket roof in Riga was traced to design flaws and inadequate inspections. Post-crisis austerity measures had dismantled key oversight systems, leading to 54 fatalities.
New Zealand’s Leaky Building Syndrome: Deregulatory reforms in the 1990s, which prioritized cost reduction over quality assurance, led to systemic construction defects. The resulting crisis has cost billions in repairs, severely damaging public trust in the regulatory system.
2. Ripple Effects of Inadequate Regulation
The repercussions of regulatory failure extend beyond immediate human loss. Economies bear the burden of costly reconstruction, disrupted industries, and diminished investor confidence. Moreover, communities suffer long-term psychological and social impacts, while the erosion of trust in governance undermines future reform efforts.
Key Elements of Effective Building Control
To craft resilient and efficient building control systems, reformers must focus on core principles that address systemic weaknesses. The following elements make up key elements of good practice building regulation:
1. Consolidated Legislative Framework
A consolidated Building Act that encompasses all regulatory aspects provides clarity, reduces fragmentation, and fosters accountability. This framework ensures consistency across jurisdictions and simplifies compliance for stakeholders.
2. Clear Legislative Objectives
Regulations must explicitly articulate goals such as public safety, sustainability, and operational efficiency. Clear objectives provide a benchmark for assessing the effectiveness of reforms.
3. Centralized Oversight
A dedicated Ministry of Construction or equivalent body ensures cohesive administration, enabling streamlined decision-making and statewide accountability. Centralized oversight mitigates the risks of fragmented or contradictory policies.
4. Risk-Based Building Classification
Tailoring regulatory focus to the risk profile of buildings enhances efficiency and resource allocation. For example, high-risk structures like hospitals or high-rises warrant more rigorous inspections compared to low-risk residential properties.
5. Independent Building Officials
Empowering impartial building officials to oversee permits, conduct mandatory inspections, and enforce compliance safeguards the integrity of the regulatory process. Independence minimizes conflicts of interest and ensures decisions are guided solely by public safety imperatives.
6. Robust Inspection Protocols
Mandatory inspections at critical construction milestones act as an early warning system. By identifying and addressing non-compliance early, these protocols prevent minor issues from escalating into systemic failures.
7. Practitioner Licensing and Accountability
Centralized government controlled licensing boards enforce stringent standards for builders, designers, and other practitioners. By holding professionals accountable, these boards foster trust and elevate industry standards.
8. Continuing Professional Development (CPD)
Mandatory CPD programs ensure practitioners remain abreast of technological advancements, evolving regulations, and best practices. Lifelong learning is integral to maintaining industry competence.
9. Proportional Liability Frameworks
Proportional liability systems ensure accountability is equitably distributed among responsible parties. This approach incentivizes professionalism and discourages negligence, fostering a culture of accountability.
10. Compulsory Practitioner Insurance
Mandatory insurance provides a financial safety net for consumers, ensuring they are compensated for defects or negligence. This measure also instils confidence in the building industry.
11. Specialist Dispute Resolution Tribunals
Dedicated tribunals expedite the resolution of construction-related disputes, reducing litigation costs and ensuring outcomes are informed by industry expertise.
Accessible appeals processes protect stakeholders’ rights, promote fairness, and reinforce public trust in the regulatory system.
13. Product Accreditation Mechanisms
Accrediting construction materials ensures only safe, high-quality products are used, mitigating risks associated with substandard materials.
14. Joint Inspections
Final joint inspections involving the key construction actors improve the likelihood that all regulatory and safety standards are met, promoting accountability and transparency.
15. Emergency Powers
Regulators must possess the authority to intervene swiftly in situations posing imminent danger. Emergency powers are a critical safeguard for public safety.
Reforming for a Resilient Future
1. Evidence-Based Reforms
Effective reform strategies must be guided by empirical data and rigorous analysis. Reactive measures, while necessary in crises, should be supplemented by long-term solutions grounded in evidence.
2. Global Collaboration
Engaging with international organizations such as the International Building Quality Centre (IBQC) enables reformers to leverage global expertise. Collaborative initiatives facilitate the exchange of ideas, fostering innovation and consistency across jurisdictions.
3. Law Reforms as Strategic Moves on a Chessboard
Law reforms must adopt a forward-thinking, strategic approach akin to playing a game of chess. Each move on the regulatory chessboard sets in motion a chain of events, with outcomes that can either culminate in societal “wins” or “checkmates.” The goal of law reform must be to deliver a win for society—safe, sustainable, and resilient construction practices. Conversely, poorly considered reforms result in compromised construction outcomes, leaving communities vulnerable.
Well thought through law reform moves culminate in sustainable buildings
Reformers must think of their decisions as deliberate movements, both at the micro and macro levels. Every action, every adjustment must be thoroughly thought through, considering its ripple effects and long-term consequences. Reform requires expertise—lawmakers with a proven track record in designing sustainable and resilient systems. Well-designed reforms stand the test of time; poorly conceived ones have dire consequences.
Poor law reform will often lead to unfavourable construction outcomes
A case of sustainable reform is the National Model Building Act of the early 1990s. Key provisions such as mandatory registration for key actors, compulsory insurance, a clear 10-year limitation period through liability capping, and a low-cost appeals process for building permit delivery provided a robust foundation. Thirty years on, these reforms have endured and continue to safeguard the building sector.
Using the chessboard analogy, the foresight embedded in these reforms ensured they were immune to the oscillations of political cycles—the “yo-yo” swings between deregulation and overregulation. By designing reforms that anticipate future challenges and withstand short-term pressures, reformers can ensure that frameworks remain effective and relevant.
4. Balancing Short-Term Needs and Long-Term Resilience
Reforms should strike a balance between addressing immediate challenges and building adaptive frameworks capable of evolving with future demands. Flexibility is key to sustaining regulatory relevance in an ever-changing environment.
Conclusion: A Vision for Building Regulation
Building control systems are more than regulatory frameworks—they are the cornerstone of public safety, economic stability, and social well-being. High-performing systems inspire confidence, foster innovation, and enhance quality of life.
By learning from the successes of best practice jurisdictions and addressing systemic weaknesses illuminated by tragedies, reformers can craft building control ecosystems that are both sustainable and holistic. These frameworks must prioritize safety, efficiency, and resilience while remaining adaptable to future challenges.
The opportunity is clear: through collaborative efforts, informed by international best practices, nations can create regulatory systems that protect lives, uphold trust, and inspire confidence in the built environment.
Disclaimer
The information provided in this article is for general informational purposes only. It does not constitute legal advice. For specific legal advice related to building regulations and compliance, please consult a construction lawyer.
This paper was prepared by Adjunct Professor Kim Lovegrove MSE RML and had regard to a number of previous papers and addresses that he has presented at various international conferences. Formatting, extrapolations and the infographics were developed with that assistance of Chat GPT 4.
The Building Appeals Board (BAB) in Victoria functions as an independent review body established in 1993 under Part 10 of the Building Act 1993 (VIC)(‘the Act’), replacing the Victorian Building Control Act 1981. This history gives it a long-standing legacy in building regulation, and, factoring in its predecessors, the BAB has been part of the regulatory framework for decades.
It serves a vital role in reviewing decisions made by statutory authorities on building control matters, facilitating dispute resolution, and issuing determinations as set out in the Act. Through the BAB, parties can seek reviews of statutory bodies’ decisions, access dispute resolution pathways, and request determinations outlined in the Act. This piece outlines the BAB’s functions, including its jurisdiction over appeals, compliance reviews, and modification determinations.
Factor’s Contributing to the BAB’s Sustainability
Numerous factors contribute to the BAB’s sustainability and longevity, ensuring it remains a trusted and effective body for dispute resolution over time.
The BAB’s sustainability is supported by a model that includes a diverse range of referees, typically comprising a presiding construction lawyer and two technical experts, allowing for a comprehensive review of each case.
Further, members of the BAB are appointed by the Minister and selected based on their expertise and reputation in the field, recognized by their peers as reputable and venerated professionals. Although appointments are typically for three-year terms, members may be reappointed.
The BAB can also appoint referees with specific skills to suit the nature of a case. For example, in disputes involving a building surveyor’s discretion—such as issuing or refusing a building permit—a qualified building surveyor may be included on the panel. This ensures specialised expertise for each matter.
Jurisdiction of the BAB: Issues the BAB Can Hear
The BAB has broad jurisdiction under Part 10 of the Act to handle multiple building-related matters, including:
Appeals: (ss 138–149),
Disputes: (ss 150–158),
Compensation applications: (s 159).
An alternative: Section 160 Application to the BAB in Building Design or Compliance
When engaging in the appeals process, some complex compliance issues such as cladding may arise. In these situations, a MBS may request that owners apply under Section 160A for a determination regarding building design or compliance. This is an alternative that seeks a determination that a building complies with the performance and compliance requirements under the Building Code. It is a voluntary application by the building owner, and is associated with more costs.
A section 160 application is for a determination that states a provision of the Building Regulations does not apply; or applies with modifications or variations as specified in the application.
Reviewing Decisions of Statutory Authorities at the BAB
Under Part 10, Division 1, the Act outlines several grounds upon which applications for review can be made to the BAB regarding a statutory authority’s decision. Section 138(2) grants the BAB authority to examine disputes against a requirement of a reporting authority or Relevant Building Surveyor (RBS) to provide further details or to amend a permit application Furthermore, under Division 3 of Part 10, the BAB may address disputes related to the discretionary powers exercised by an RBS under the Act.
Appealing Building and Occupancy Permit Decisions
Section 138 of the Act specifies situations in which appeals can be lodged with the BAB in relation to building and occupancy permits. Under Section 138(1), appeals may be filed if:
A building permit is refused,
Conditions are imposed, or
Amendments or cancellations are contested.
Appeals can also be filed when a permit amendment or cancellation request is denied or unreasonably delayed. Consequently, the BAB has jurisdiction over decisions made by municipal or private building surveyors concerning building permits.
Challenging Directions to Fix Building Work Through the BAB
The BAB offers routes to review and challenge Directions to Fix building work issued by an RBS or the Victorian Building Authority (VBA) under Division 2 of Part 4 of the Act. An RBS may issue a Direction to Fix if, following an inspection, it is deemed on reasonable grounds that the work fails to comply with the Act or permit. Non-compliance with a Direction to Fix may lead to financial penalties if the Municipal Building Surveyor (MBS) decides to prosecute the matter of non-compliance in the Magistrates’ Court. However, under Section 138A, a builder may appeal to the BAB if they believe the work in question complies with the Act, Regulations, or Code and does not require a written direction.
Directions to Fix may be issued verbally or in writing, each having different time limitations and penalties for non-compliance. If a verbal direction is issued, the builder must comply within seven (7) days before a written direction follows. A written direction then specifies at least seven more days for compliance. Failure to comply may result in penalties of up to 500 penalty units ($98,795) for individuals and 2,500 penalty units ($493,975) for corporate entities.
Note: The above figures are at the 1 July 2024 to 30 June 2025 penalty unit value of $197.59. It is subject to change. CLICK HERE for further information.
Termination of Building Surveyor Services: Rights to Appeal at the BAB
Under Section 140 of the Act, an owner who appoints a Private Building Surveyor (PBS), or the PBS themselves, may appeal to the BAB if an authority fails to consent to or refuses termination of the surveyor’s appointment within a reasonable time. Such decisions may also be subject to review by the Victorian Civil and Administrative Tribunal (VCAT) under Section 83R of the Act, which offers a merits review jurisdiction. VCAT may affirm, vary, or set aside the decision or remit it back to the VBA for reconsideration.
Protection Works Disputes: Appeals for Adjoining Owners and Builders
Protection works disputes are common appeals at the BAB. Section 141 of the Act allows appeals by either an owner required to conduct protection work or an adjoining owner. Appeals can challenge determinations regarding:
The BAB reviews these appeals and has the power to affirm, vary, or set aside the decisions made by the building surveyor.
Compliance Notices and Orders: Options for Appeal
Compliance measures, such as building notices and orders, address non-compliant work or risks in buildings. Section 142 of the Act provides rights to appeal these notices or orders to the BAB, including emergency orders issued by a MBS.
Municipal Authority Decisions: BAB’s Jurisdiction for Review
Section 144 of the Act enables owners to appeal determinations, approvals, or discretionary decisions by a person or body under the Building Regulations 2018. Examples include determinations about:
Projections beyond street alignments,
Septic tank installations,
Construction in flood-prone areas,
Construction over easements.
Each of these determinations is reviewable by the BAB under Section 144 of the Act.
Expedited Appeals: The BAB’s Fast-Track Process
The BAB provides a fast-track review process for urgent matters to which are appeals under Section 147 of Part 10, Division 2 of the Act.
Dispute Resolution Services Offered by the BAB
The BAB has jurisdiction over specific disputes under Part 10, Division 3 of the Act, such as:
Disputes between owners and surveyors over RBS inspection powers,
Disputes regarding emergency protection works,
Protection works insurance disputes between owners,
Costs of supervising protection works.
BAB’s Powers to Award Costs
The BAB has specific powers regarding costs as outlined in Clause 17 of Schedule 3 of the Act, where each party typically bears its own costs. However, Clause 16(2) of Schedule 3 gives the BAB discretion to make cost orders if it considers it ‘just.’ Though not bound by the Victorian Civil and Administrative Tribunal Act 1998 (VCAT Act), the BAB may refer to Section 109(3) of the VCAT Act, which allows costs orders based on factors such as whether a party acted to disadvantage another or prolonged proceedings unnecessarily. Although the VCAT Act does not bind the BAB, it frequently applies Section 109(3), as it is ‘appropriate to have regard to the factors set out under s 109(3) of the VCAT Act when considering the making of any costs order’.1
It is important to note that the BAB does not automatically impose costs on unsuccessful parties, which makes it less intimidating for parties concerned about potential financial repercussions. However, it does retain the power to award costs if appropriate.
Scope of BAB Orders: Powers and Limitations
The decision-making powers of the BAB are not solely limited to that of appeals and considerations in dispute resolution proceedings. That is, the powers of the BAB under section 161 of the Act are extended to any matters that are referred to them under the Act, and they are able to make any order that ‘it considers appropriate in the circumstances’.2
Length of Hearings and Timeline Expectations
Typically, appeals take six to twelve months to reach a hearing. In certain cases, such as large-scale cladding matters, the waiting period may extend to or over two years.
Hearings generally conclude within a day, with panels that typically comprise of three part-time members with relevant expertise in engineering, surveying, architecture, or law. While parties aren’t required to have legal representation, it is advisable to seek legal advice.
Why Expert Construction Lawyers Are Essential for BAB Cases
Due to the BAB’s unique jurisdiction, it is beneficial to have experienced construction lawyers familiar with BAB processes. Skilled lawyers understand when and how to appeal and the likelihood of success.
Lovegrove & Cotton has nearly three decades of experience in BAB jurisdiction, offering expert advice and representation. In particular, Adjunct Professor Kim Lovegrove, Chair of the International Building Quality Centre (IBQC) and a former World Bank law reform consultant, has advocated for the BAB as a model of best practice in building regulatory processes. Contact Tsigereda Lovegrove or Justin Cotton at enquiries@lclawyers.com.au.
Disclaimer
The information provided in this article is for general informational purposes only. It does not constitute legal advice. For specific legal advice related to building regulations and compliance, please consult a construction lawyer.
Major Domestic Building Contracts are usually paid in progress payments. Many industry standard building contracts involve progress payments to be made pursuant to the amount stipulated in the contract (i.e. at the completion of the main defined stages).
Example 1
Imagine you are an owner and have entered into a Major Domestic Building Contract for $800,000.00. There will likely be a table in your contract which states when you must pay the builder certain amounts of the contract price. See table below:-
Contract to build through to all stages
5%
$40,000.00
Deposit
10%
$80,000.00
Base Stage
15%
$120,000.00
Frame Stage
35%
$280,000.00
Lock up Stage
25%
$200,000.00
Fixing Stage
10%
$80,000.00
Final Payment upon Completion
= 100%
$800,000.00
Total
Cardona V Brown
In Cardona V Brown [2012] VSCA 1741, The Court of Appeal found that builders claiming progress payments can only make consecutive claims incrementally at the completion of each stage (in accordance with the legal definition of completion of each stage).
This means that the builder can only make the progress claim for each stage payment once the previous stages (and the current stage) have been completed. Further, the claims must be in sequence.
Given that in the past it has been widespread in the industry for some builders to claim these payments when prior stages had not been fully completed (e.g. claiming for Fixing Stage, even though Lock Up had not been claimed due to some missing brickwork), this decision has now effectively forbidden this practice.
For this reason, it is essential that the stage has been finalised before an owner makes a payment to a builder.
Interpretations of the Payment Stages
In Victoria, stages are usually verified as completed by a surveyor coming to check and approve that the stage has in fact been completed. However, there can be variations in what each stage entails.
Additionally, it is important to review your contract carefully as it will list what work is attributed to each stage. However, broadly, there are common stages which can be defined. These stages are:-
(a) in the case of a home with a timber floor, the stage when the concrete footings for the floor are poured and the base brickwork is built to floor level;
(b) in the case of a home with a timber floor with no base brickwork, the stage when the stumps, piers or columns are completed;
(c) in the case of a home with a suspended concrete slab floor, the stage when the concrete footings are poured;
(d) in the case of a home with a concrete floor, the stage when the floor is completed;
(e) in the case of a home for which the exterior walls and roof are constructed before the floor is constructed, the stage when the concrete footings are poured;
The base stage will only be viewed as complete once substantial foundational work and compliance with regulatory standards has been met.
Case Law
In the case of Sightway Construction Pty Ltd v Jayasinghe(Building and Property) [2018] VCAT 6762, a dispute arose as to whether the base stage had been completed for the construction of three two-storey units.
The court examined the circumstances of the case, given its difficult structure of the land. However, specific principles can be drawn as to the interpretation of base slab:
Foundational structure
a. The base stage involves parts of the structure that are to support the building. Concrete pads must also be completed, to ensure the completion of the stage.
b. It is common industry knowledge that the base stage is fulfilled when either a concrete slab-on-ground has been constructed or, in the case of suspended floors, when the footings and the supporting case brickwork are installed and an explanation is provided.
Engineering plans
a. Reinforcement slabs when corroded need to be fixed by a structural engineer, in accordance with the plans and drawings.
Establishing support for Water
a. When there are difficulties in terms of access to a site, the drainage retention systems should be constructed prior to the base stage.
Thinking back to Example 1 above, at this point, where you are satisfied that Base Stage has been accomplished, payment would be made to the Builder, in the amount of $80,000.00.
Frame Stage
Definition under ss 40(1) of the Domestic Building Contracts Act 1995 (VIC)
“frame stage” means the stage when a home‘s frame is completed and approved by a building surveyor;
Case Law
The case of AMO Rifat Holdings Pty Ltd v Dib (Building and Property) [2024] VCAT 4193 assists in the interpretation of frame stage. This is a case where a dispute occurred over three storey house. The parties disagreed on whether the frame stage was completed satisfactorily, which impacted subsequent stages of the project.
Four principles which can be derived from the case in relation to frame stage are:-
Structural integrity
a. The frame stage is defined as the point in construction where the essential structural elements of a building are completed. This includes the erection of walls, floors and roof structures which provide necessary support for the building. The stage cannot be completed until the work that is so core to the structure of the building is satisfactorily sound.
Compliance with plans
a. The work completed during the frame stage must adhere to the approved architectural and engineering plans. Any deviations from these plans without the proper permits could indicate that the frame stage is not completed.
Building Code Compliance
a. As with all the stages, the frame stage must meet all relevant codes.
Formal inspections
a. A formal inspection by a Building Surveyor is required to verify that the work meets the necessary standards.
Example
Thinking back to Example 1 above, at this point, where you are satisfied that Frame Stage has been accomplished, payment would be made to the Builder, in the amount of $120,000.00.
Lockup Stage
Definition under ss 40(1) of the DBCA:
“lock-up stage” means the stage when a home‘s external wall cladding and roof covering is fixed, the flooring is laid and external doors and external windows are fixed (even if those doors or windows are only temporary);
Case Law
In the past garages have not always been considered to be part of ‘the home’ as it is a class 10a non habitable area – further, builders often delay the installation of the garage door as it can be damaged during construction.
In Cardona the Victorian Court of Appeal found that the garage is indeed part of the home and falls within the scope of the Lock Up stage, if the garage is part of the agreed scope of works in the contract. The Court supported this approach given that if the garage was not installed then the home could not be secured.
Example
Thinking back to Example 1 above, at this point, where you are satisfied that Lockup Stage has been accomplished, payment would be made to the Builder, in the amount of $280,000.00.
Fixing Stage
Definition under ss 40(1) of the DBCA
“fixing stage” means the stage when all internal cladding, architraves, skirting, doors, built-in shelves, baths, basins, troughs, sinks, cabinets and cupboards of a home are fitted and fixed in position.
The case of Alpha Developers and Promoters Pty Ltd v Advance Building & Engineering Pty Ltd (Building and Property) [2015] VCAT 3174assists in interpreting what fixing stage actually means and highlights the potential consequences to a builder for not meeting those standards. The principles which can be derived form this case are:-
Completion of Internal Works
a. The fixing stage is characterised as the point in the construction process where all internal fixtures, fittings and finishes are installed. This includes elements such as internal cladding, shelves, sinks, cabinets, and cupboards.
Standards of work
a. The tribunal emphasises that there are high standards of workmanship which must be completed, including compliance with relevant codes, standards and specifications of the contract.
Weather-Proofing and security
a. The fixing stage focuses on internal works. However, the fixing stage implies that the building should be secure and weather ready, for example through ensuring all troughs and sinks are properly fitted to prevent ingress.
Readiness for inspection
a. The fixing stage is typically followed by a final inspection which assesses whether the building is ready for occupancy. Thus, it must be completed to a standards which allows for this.
Example
Thinking back to Example 1 above, at this point, where you are satisfied that Fixing Stage has been accomplished, payment would be made to the Builder, in the amount of $200,000.00.
Completion
The final payment for a build is paid when the build have in fact been completed in accordance with contractual the plans and specifications.
Case Law
In the case of Carlisle Homes Pty Ltd v Dawn (Building and Property) [2023] VCAT 660 5(“Dawn”), there was a dispute behind the construction of a new dwelling on Mr Dawn’s property.
When a Builder considers their building works have reached completion, the Builder is to give to the owner:
A Notice of Completion; and
The Final Claim.
The Builder must not demand Final Payment until after the builder has given the owner either:
A copy of the occupancy permit under the Building Act 1993, if the building permit for the building works requires the issue of an occupancy permit; or
In any other case, a copy of the certificate of final inspection.
In this case, a final inspection was carried out that lead to a list of defects being identified. Completion as reiterated, is achieved when the works “have in fact been completed in accordance with the plans and specifications”.
As the principle in Cardona, it is necessary for there to be “effective and satisfactory completion of the required stage…[as] a condition of any instalment payment.”
In Dawn the builder demanded a full payment for Completion stage. However, the builder was not entitled to demand this stage of the work before it was completed.
Example
Thinking back to Example 1, at this point, where you are satisfied that the build is completed, final payment would be made to the Builder, in the amount of $80,000.00.
Summary
Owners paying Builders at the correct time is essential to ensure that the build operates smoothy. However, on occasion, a Builder will request payment when a stage is not yet complete. This reiterates the importance of a clear understanding of the common stages of a Major Domestic Building Contract.
Disclaimer
The information provided in this article is for general informational purposes only. It does not constitute legal advice. For specific legal advice related to building regulations and compliance, please consult a construction lawyer.
Kim Lovegrove’s career spans nearly 40 years. Kim Lovegrove was admitted to the Auckland High Court on 19 December 1985. Kim then moved to Australia in 1986, so this makes 2025 a special year as he recently reinstated his New Zealand practising certificate. Marked by transformative contributions to building law reform both in Australia and internationally. Domestically, he played a pivotal role in shaping landmark legislation such as the National Model Building Act and the Building Act 1993 (Vic)(” the Act”), laying the foundation for modern regulatory frameworks.
Internationally, Kim’s expertise as a past senior law reform consultant to the World Bank and his leadership as Chair of the International Building Quality Centre (IBQC) have solidified his reputation as a thought leader in global building regulation.
His career reflects a commitment to fostering collaboration, advancing best practices, and ensuring sustainable building law reforms across diverse jurisdictions. This piece highlights the key milestones of his journey.
1. The National Model Building Act (1991-1993)
Kim`s involvement in the National Model Building Act (NMBA) is one of his most significant contributions to building law reform in Australia. As the Project Director of the NMBA, he was one of the prime drivers in its development, providing a framework for consistent building regulations across Australian jurisdictions.
It became the template for the development of some of the early nineties freshly minted Building Acts in a number of Australian jurisdictions.
Role and Achievements
It established a model framework for building regulation, focusing on:
Proportionate liability reforms, introduced for the first time in Australia.
A privatised alternative for issuing building approvals.
Mandatory insurance and practitioner registration.
Licensing for key actors.
Tenure liability capping.
2. Founding Lovegrove Solicitors (1993)
In 1993, in the middle of the ‘great recession’ Kim founded Lovegrove Solicitors, the original incarnation of what is now Lovegrove & Cotton Construction and Planning Lawyers. This marked the beginning of a dedicated legal practice focusing on construction law and building regulation. Thirty years later, it is headed up by the writer and Justin Cotton.
Kim Lovegrove gifting a Penfold 707 to Justin Cotton in recognition of Justin’s more than two decades at Lovegrove & Cotton.
3. Transformative Leadership in Victorian Building Law (1993)
Following the NMBA’s chapter, Kim became the Assistant Director of Building Control in Victoria, where he was pivotal in shaping the Act in his capacity as instructing officer to parliamentary counsel.
Key Contributions
Introduced a privatised alternative to issuing building permits, giving consumers and applicants the option to choose between a local government building surveyor or a private building surveyor to:
Issue the building permit.
Carry out mandatory inspections.
Issue the occupancy permit.
The reform agenda:
Established a system of proportionate liability,
Established a ten-year liability limitation period,
and implemented mandatory registration and insurance for building practitioners.
These reforms streamlined regulatory processes, reduced project delays, and enhanced professional accountability of key actors.
Articles from archives on the impact of the reforms are below
4. Deployment by the New South Wales Government (Late 1990s)
In the late 1990s, Kim was deployed by the New South Wales government as a key adviser on reforms to the Environmental Planning and Assessment Act, Part Four.
Key Innovations Introduced
Establishment of the Building Professionals Board, which regulated building practitioners.
Private certification to fast-track approvals and reduce project delays.
Ten-year liability capping.
Proportionate liability, ensuring equitable allocation of responsibility.
5. International Advisory Work: Japan (1997 and 2009)
In 1997 (as a representative of the Federal Government of Australia) and 2009 (in his own capacity), Kim was invited by the Japanese government to participate in law reform think tanks to advise on best practice reforms to Japan’s Building Standard Law.
Focus Areas
Enhancing safety and compliance measures.
Aligning Japan’s building regulations with best practice international standards.
6. Deputy Executive Director of the Australian Building Codes Board (Mid-1990s)
Domestically, Kim served as Deputy Executive Director and manager of policy with the Australian Building Codes Board (ABCB). He had some input into the development of certain aspects of the Building Code of Australia.
In 1997, Kim played a key role in establishing the Inter-Jurisdictional Regulatory Collaboration Committee (IRCC). This initiative promoted international cooperation in building regulation, connecting policymakers and experts to share insights and best practices. It now has 14 countries as international members.
A late 90s misty photo of the Lovegrove vineyard featuring a Kangaroo in the middle. The vineyard setting where some of the founders of IRCC progressed the establishment of the IRCC.
8. President of the Victorian Chapter of the Australian Institute of Building (Early 2000s)
In the early 2000s, Kim was elected President of the Victorian Chapter of the Australian Institute of Building (AIB).
9. Chair of the Victorian Building Practitioners Board (2007-2009)
From 2007 to 2009, Kim served as Chair of the Victorian Building Practitioners Board, overseeing the registration of building practitioners.
10. President of the Northern Chapter of the New Zealand Institute of Building (Approximately 2013)
About 10 years ago, Kim served as President of the Northern Chapter of the New Zealand Institute of Building.
11. Honorary Consul for Ethiopia to Victoria (2017-2018)
From 2017 to 2018, Kim served as Honorary Consul for Ethiopia to Victoria, furthering diplomatic and cultural ties between Ethiopia and Australia.
Photos of the launch of the Consulate are below
Kim and his Family, Wezoor Lovegrove, Joy Lovegrove and wife Tsigereda Lovegrove at the launch of the Consulate in Melbourne.
Photo of Kim being awarded Humanitarian Honour for humanitarian services to Ethiopia by Prince Ermias Sahle Selassie, the late Emperor Haile Selassie`s grandson.
12. World Bank Consultancy (2018-2021)
Kim Lovegrove (seated middle) at the 2019 conference in Beijing hosted by the World Bank and the Chinese Government. Kim gave an address on key elements of best building regulations.
Between 2018 and 2021, Kim was part of a World Bank team that provided advice on international best-practice approaches to designing building regulations.
His work extended to cities in China, including Shanghai, Changzhou, Beijing, and Chongqing, as well as reviewing the first-ever Malawian Building Act.
Focus Areas
Advising on best practice delivery mechanisms for building permit delivery and modern building regulatory compliance frameworks.
Implementing scalable solutions for diverse regulatory environments.
Kim Lovegrove has authored or co-authored approximately 15 books on construction law, providing invaluable insights for practitioners, policymakers, and academics.
Legacy and Ongoing Contributions
Kim Lovegrove’s career spans decades of impactful contributions to building law and regulation. His legacy includes ground-breaking legislation, international law reform consultancy, and academic leadership that continue to shape global best practices.
Some Comments by those that are familiar to Kim with respects to his contributions
“I wish to acknowledge the instrumental role of Professor Kim Lovegrove, Chair of the IBQC, in chairing the collaboration that resulted in the Good Practice Guidelines for Emerging Economies in construction dispute resolution.
This IBQC initiative is a truly global partnership, drawing upon the expertise of outstanding international jurists from both the Northern and Southern Hemispheres. Professor Lovegrove’s leadership ensured that the collective knowledge and experience of this diverse group were harnessed to craft guidelines that address the distinct needs and challenges of emerging economies.
The collaboration between the IBQC and African jurists exemplifies the value of international partnerships in developing context-sensitive solutions that advance access to justice and improve dispute resolution frameworks. These guidelines will have a transformative impact, particularly within the African context, where accessible and effective dispute resolution is paramount”.
MalawianHigh Court Judge the Hon Justice Gloria Namonde
“I wish to acknowledge Professor Kim Lovegrove’s significant contributions to the building and construction sector, notably as a co-founder of the IBQC. His excellent leadership in the formulation of best practice guidelines in dispute resolution, tailored towards emerging economies and developed through a coalition of legal and industry experts, including my self and senior African jurists, is a testament to his commitment and dedication of fostering international collaboration and cooperation to positively influence the broader legal and professional community, particularly in emerging economies like Ethiopia.”
Ethiopian Federal Court Judge the HonJustice Maedot Tesfaye
“Kim Lovegrove’s career is a testament to the profound influence of visionary leadership in building law reform. From shaping regulatory frameworks in Australia to guiding international policy and fostering global collaboration, his work has left an indelible mark on the construction industry. His enduring legacy will continue to inspire advancements in building regulation worldwide.”
Professor Robert Whittaker AM, Deputy Chair of the IBQC and a past National President of the Australian Institute of Building and has known Kim for 20 years.
“In 2019, Kim was instrumental in in the founding of the International Building Quality Centre (IBQC) which acts as, and delivers on, a global thought leadership hub for collaboration and best practices in building regulation at the international scale with a strong focus on assisting developing nations and/or those who want to improve their current levels of performance. The IBQC’s board, which Kim Chairs with the highest of standard and respect, is truly multinational and consists of preeminent international experts and supporters that include international NGOs and leading universities. Within Australia, the IBQCs impact and importance has been recognised by his excellency, the Governor General of Australia (https://www.linkedin.com/pulse/australian-governor-general-hosts-international-building-i-b-q-c-w7a6c/).
Professor Charles Lemckert Deputy Chair of the IBQC.
Authors Notes
This piece settled by legal practice manager of Lovegrove & Cotton Tsigereda Lovegrove is record of some of Kim’s key achievements in law reform locally and internationally, spanning more than 40 years in addition to those that he has made on the diplomatic front when he was an Honorary Consul.
In April 2024, the Owner of a property in Port Melbourne was refused consent for an “as designed” floor level by the Port Phillip City Council (“the Council”), based on a floor level requirement of 2.7m Australian Height Datum (AHD). This requirement was issued pursuant to Melbourne Water’s specified flood level of 2.4m AHD, which relied on an anticipated floor level for the year 2100, plus a freeboard. The proposed design had a floor level of 2.3m AHD and was said by Council to raise concerns of flooding and other safety risks.
Subsequently, the Owner appealed the decision to the Victorian Building Appeals Board (“the Board”) under section 144(1)(a) of the Building Act 1993(“the Act”). This appeal was successful, with the Board overturning the decision of the Council in favour of the Owner on the basis that the proposed floor level in the design adequately mitigated flood risk and offered improved safety compared to the existing dwelling.
Owner’s Position
The Owner’s position was that they relied on information given to them by Melbourne Water regarding the AHD for the property from May 2023 to June 2024. During this time, Melbourne Water issued multiple flood level certificates for the property (at the Owner’s request), all of which were citing a 2.0m AHD flood level. The Owner had based the design for the proposed dwelling on the first of such certificates under the assumption that the height of the ground floor (2.3m AHD) would be 300mm above the stipulated flood level.
Additionally, the Owner argued that the proposed AHD by Melbourne Water was calculated while considering flood risk in the year 2100, a date that would have exceeded the expected life of the proposed dwelling. It was also argued that Melbourne Water had not engaged in the correct legislative process under the Water Act 1989(“Water Act”) of declaring this flood level. There was no public gazettal of the higher flood level.
The Owner emphasized that raising the floor further would impose unnecessary costs and that the design height improved flood resilience compared to the existing dwelling.
Port Phillip City Council & Melbourne Water’s Position
The Council initially refused consent for the Building Permit based on information from Melbourne Water, who advised that the flood level for the site was 2.4m AHD. This then required a minimum floor level of 2.7m AHD as per Regulation 153(6)(b) of the Building Regulations 2018(“The Regulations”), when allowing for the freeboard distance. As a result of this, the Owner’s proposal for the property was not compliant with this recommendation, because the proposed floor level was set at 2.3m AHD.
Melbourne Water’s submissions defended its determination of an estimated 2.4m AHD flood level for the year 2100, based on supporting data indicating that the subject land was at risk of flooding resulting from storm surge / tidal inundation caused by rising sea levels.
Although Melbourne Water acknowledged it had not officially declared this level under the correct legislative process, it argued that such declarations are not mandatory, and that councils can still rely on its advice underthe Water Act.
Moreover, Melbourne Water asserted that its flood level certificates provided earlier to the Owner were purely advisory and not valid authority for a proposed development.
The Council adopted the position that it was incumbent on it to refer the report and consent application to a referral authority (ie Melbourne Water) and that its hands were effectively “tied” given the opposition from the referral authority. Council would not allow a report and consent approval on that basis.
Expert Evidence & Key Findings
During the Owner’s submissions, they relied upon the expert evidence from a risk and flood management expert. This consultant provided an analysis of the flood risk of the Subject Land in an Expert Report.
The Report considered the revised flood level of 2.4m AHD for the year 2100, stating that this figure was speculative and did not account for potential flood mitigation measures, including future sea wall enhancements.
The Report reinforced the proposed dwelling’s floor level of 2.3m AHD, stating that it would demonstrate adequate resilience against current and future flood risks, including the year 2100 1% AEP storm tide risk raised by Melbourne Water.
Additionally, the Report outlined the reduced risk to life, health and safety that the proposed development introduced, due to the finished floor levels being raised to 2.3m AHD, which was higher than the current floor level of the existing home at the property.
Moreover, the flood risk expert emphasised the low risk associated with the development in the year 2100, with a key consideration being that there was no evidence to suggest that sea levels had risen in Hobson’s Bay in recent decades. In conjunction with this, the report opined that the site held a low flood hazard classification due to minimal amounts of floodwater that would likely present at the site.
Life, Health and Safety Risks
One of they key considerations from all parties involved was whether there would be life, health and safety risks to owners or occupants if the lowest floor level was built at 2.3m AHD. A critical issue under this consideration is regulation 153(4) of the Regulations, which states that:
‘The relevant council must not give its consent under subregulation (2) if it is of the opinion that there is likely to be a danger to the life, health or safety of the occupants of the building due to flooding of the site’.
As argued by the Owner and detailed in the expert evidence, the proposed floor level at 2.3m AHD would mitigate flood risks better than the existing dwelling and posed no significant safety risks. Additionally, flooding at the site would likely be short-lived, with no wave action, and would be classified as low hazard for adults and children. These claims were further supported by the Expert Report, which reinforced the view that there was minimal risk of flooding or hazard to life.
The proposed garage floor was also a factor considered when judging life health and safety risks. Under regulation 153, class 10 buildings (non-habitable structures such as garages) are exempt from the requirement for council report and consent in flood-prone areas.
However, Melbourne Water raised the possibility that the garage, due to its inclusion within the broader dwelling design and having habitable spaces above, might fall within the scope of Regulation 153.
Despite the garage not being subject to the regulations, the Owner argued that its floor level does not affect the broader compliance of the dwelling and that habitable rooms above the garage at 5.17m AHD are well above flood levels.
Findings
The BAB found that the proposed dwelling at 2.3m AHD posed no significant life, health, or safety risks under Regulation 153(4). It accepted evidence from the Expert Report, demonstrating that any flooding at the site would likely be short-lived and low hazard, with the dwelling’s design offering enhanced safety compared to the existing structure. The inclusion of a first-floor refuge further supported the conclusion that occupants would be protected in extreme scenarios.
While the garage was exempt as a Class 10 building, the BAB noted that its design posed no additional risks, with habitable rooms above at 5.17m AHD being well above flood levels. These findings collectively reinforced that the overall proposal sufficiently mitigated potential flood-related hazards.
Furthermore, the BAB was not persuaded by Melbourne Water’s flood level projection for the year 2100, citing a lack of sound evidence and relevance to the specific issue. Additionally, the design life of the proposed new dwelling was a consideration in the decision on the flood level projection.
Evidence presented in the Expert Report from the Australian Bureau of Statistics stated that the average design life of a dwelling is 62 years. When considered in the general context of the situation, the Board found it was possible that in 72 years (ie by the year 2100) the proposed dwelling would likely not be in service.
The BAB substituted their findings for that of the Council and granted report and consent to allow the design to remain at the currently designed AHD level.
Disclaimer
The information provided in this article is for general informational purposes only. It does not constitute legal advice. For specific legal advice related to building regulations and compliance, please consult a construction lawyer.
The images in this article were generated using ChatGPT-4 based on prompts provided by Lovegrove and Cotton Lawyers.
The Victorian 10-Year Liability Cap – The 10 Years from When the Occupancy Permit Is Issued Test
The French Napoleonic Code inspired ‘decennial liability’ Section 134 of the Victorian Building Act 1993 was introduced to bring certainty to the legal process and the limitation period for legal proceedings.
Before Section 134, there was confusion about when the clock for initiating legal proceedings started to tick over.
There were two conflicting tests:
– The Infinity Plus 6 test: Once a defect was discovered, you had 6 years to issue legal proceedings.
– From WhenTheDamage Occurred test: You had 6 years from when the damage occurred to issue legal proceedings.
This uncertainty meant plaintiffs and defendants often didn’t know whether they were still within the time limit or not and had to run the gauntlet of litigation to find and answer to this question.
The result was risky litigation, where you had to rely on sometimes shaky, after-the-event evidence to figure out when the limitation period was triggered.
Attempts to navigate the confusion is seen in recent New Zealand cases, where litigation revolves around trying to divine the cryptic trigger point for when the limitation period begins.
The Wording of Section 134
Limitation on time when building action may be brought
Despite any thing to the contrary in the Limitation of Actions Act 1958 or in any other Act or law, a building action cannot be brought more than 10 years after the date of issue of the occupancy permit in respect of the building work (whether or not the occupancy permit is subsequently cancelled or varied) or, if an occupancy permit is not issued, the date of issue under Part 4 of the certificate of final inspection of the building work.
Why 10 Years?
The 10-year liability cap follows the French system, inspired by the Napoleonic Code.
The decennial liability rule in French law allows for a 10-year period to bring building claims.
The statutory precedent provided clear guidance, offering certainty to both plaintiffs and defendants.
A policy decision in Victoria by the then law reformers was made that the likelihood of a defect taking more than 10 years to evolve from latent to apparent was infinitesimally small.
This policy reduced the risk of plaintiffs being shut out from bringing claims.
How Does It Operate?
In Victoria, building surveyors are required by law to issue an Occupancy Permit (OP) when a building is fit for occupation.
For renovations, a Certificate of Final Inspection is issued instead of an OP.
Once either instrument is issued, the parties involved have 10 years to initiate legal proceedingsfrom the date of the OP or final inspection.
To use French terminology, the right to issue legal proceedings is then “guillottinéd” (cut off after the 10-year period).
Section 393 of the Building Act 2004 – The 10 Years from the Act or Omission Test
Section 393 of the Building Act 2004 (New Zealand) also imposes a 10-year limitation period for bringing legal actions related to compromised building work. This test is based on the date of the act or omission that caused the problem.
Unlike in Victoria, where the clock starts ticking from the issuance of an Occupancy Permit or Certificate of Final Inspection, in New Zealand, the limitation period starts from the actual date when the problematic work was done or when the omission occurred.
Section 393 of the Building Act 2004:
393 Limitation defences
(1) The Limitation Act 2010 applies to civil proceedings against any person if those proceedings arise from—
(a) building work associated with the design, construction, alteration, demolition, or removal of any building or the manufacture of a modular component manufactured by a registered MCM who is certified to manufacture it; or
(b) the performance of a function under this Act or a previous enactment relating to the construction, alteration, demolition, or removal of the building or the modular component.
(2) However, no relief may be granted in respect of civil proceedings relating to building work if those proceedings are brought against a person after 10 years or more from the date of the act or omission on which the proceedings are based.
(3) For the purposes of subsection (2), the date of the act or omission is,—
(a) in the case of civil proceedings that are brought against a territorial authority, a building consent authority, a regional authority, or the chief executive in relation to the issue of a building consent or a code compliance certificate under Part 2 or a determination under Part 3 the date of issue of the consent, certificate, or determination, as the case may be; and
(b) in the case of civil proceedings that are brought against a person in relation to the issue of an energy work certificate, the date of the issue of the certificate.
Compare Section 134 with Section 393
Section 134 – 10 Years from the Issuance of the Occupancy Permit
Section 134 of the Building Act 1993 (Victoria) establishes that legal proceedings must be initiated within 10 years after the date of issue of the occupancy permit or, if an occupancy permit is not issued, 10 years after the date of issue of the certificate of final inspection.
This means that the limitation period is based on the officials’ approval of the building’s completion or renovation.
The relevant building surveyor is required by law to issue an occupancy permit when the building is fit for occupation, and a copy of that OP must be filed with the local council. This makes the evidence crystal clear in terms of verifying the start date, as there is a specific and documented issuance date. This creates a ‘slam-dunk’ evidential clarity mechanism.
A legal instrument that provides clear evidence of the 10 year limitation period start date-section 134 Victorian Building Act 1993
Section 393 – 10 Years from the Act or Omission
Section 393 of the Building Act 2004 (New Zealand) sets the limitation period as 10 years or more after the date of the act or omission on which the proceedings are based.
This means the time starts running from the actual act or omission that caused the problem, rather than from an official approval like an occupancy permit.
However, the date of the act or omission in New Zealand raises several evidentiary challenges:
The challenge is to find the evidence of an act or admission-section 393 New Zealand Building Act 2004
What was the act? Determining the exact nature of the problematic act can often be unclear.
What was the omission? Identifying whether a failure to act (omission) contributed to the issue can be subject to dispute.
By whom? Multiple parties may have been involved in the building work, making it hard to pinpoint responsibility.
Years after the event, is the evidence still available? After 10 years, evidence may be lost, damaged, or unavailable.
Is it contestable? Even if evidence is available, its quality may be challenged in court due to the time elapsed.
Are the key witnesses still alive or in the country? Witnesses may have passed away or moved abroad, affecting their availability for testimony.
Can they recall? After 10 years, the reliability of witness memory can be a significant issue, leading to discrepancies in their testimonies.
6. How to Fix NZ’s 10-Year Confusion: A Clearer Path Forward
One possible solution to this issue in New Zealand could be amending the Building Act 2004 to clarify the start date for the 10-year limitation period.
The 10-year litigation period could commence upon the date that a Code Compliance Certificate (CCC) is issued by the relevant territorial authority.
If a CCC is not issued, the start date could be triggered by another form of completion certificate, such as an Occupancy Permit, to bring clarity and alignment with the Victorian system.
Additionally, there would need to be a regulation that mandates the filing of a copy of the completion instrument with the local territorial authority, ensuring that a clear, documented start date is available as evidentiary proof.
Footnote: Cladding Exclusion (Section 134A)
Section 134A provides an exception to the general 10-year liability cap for cladding-related defects. This section allows for legal proceedings to be brought even after the normal 10-year period has expired, specifically for claims relating to non-compliant cladding. The key provisions are:
A cladding building action may be brought in respect of any building work relating to non-compliant or non-conforming external wall cladding product within the period ending on the later of—
(a) 10 years after the date of issue of the occupancy permit in respect of the building work or, if an occupancy permit is not issued, 10 years after the date of issue of the certificate of final inspection of the building work; or
(b) 10 years after 16 July 2019.
This section applies to any cladding building action, whether the right to bring the action accrued before, on, or after 16 July 2019.
About the Author
Adjunct professor Kim Lovegrove MSE RMLis the founder of Lovegrove & Cotton Lawyers is the Founding Chairman of the International Building Quality Centre (IBQC). Kim has been a senior law reform consultant to the World Bank in which capacity he was part of a team that provided advice to the Chinese Government on best practice approaches to building regulatory reform. He was also retained by the World Bank to review the first-ever Malawian Building Act and was the project director of the Australian National Model Building Act team, which served as the law reform template for several Australian jurisdictions in the mid-nineties.
Some other related articles on law reform ideas and liability reform
The information provided in this article is for general informational purposes only. It does not constitute legal advice. For specific legal advice related to building regulations and compliance, please consult a qualified construction lawyer.
The 9 key pillars of good practice building regulatory ecology.
When viewed through global lenses the New Zealand Building Act 2004 (The NZ Act) is an interesting piece of legislation and when compared with some jurisdictions has ‘some’, and it is emphasised ‘some’ commendable elements. There are however areas that warrant revision if there is a desire to embrace international good practice.
This piece will offer some ideas for consideration.
1. Practitioner Registration:
The Building Act has a licencing regime that registers licenced building practitioners (LBP). The categories of licences are:-
Many jurisdictions would not register this cohort as they are by and large tradespeople that are contracted to head contractors such as builders. Acts of parliament such as the NSW Home Building Act NSW and Victorian Domestic Building Contracts Act have an entirely different registration emphasis in that the head contractor, the builder is required to be registered rather than the tradespeople or sub-contractors.
Recommendation for Consideration
The current cohort of registrants could be maintained but consideration could be given to the registration of the head contractor i.e. the residential and commercial builder. After all, it is the builder that assumes overall responsibility for building the structure in its entirety and to have a regime where the principal or head contractor is not considered to be ‘central casting’ could be said to be very unusual at least if one looks through the lenses of comparisons abroad.
Building Surveyors:
Neither building surveyors nor building inspectors are categories of registrants under the LBP cohort.
This approach is at odds with counterpart jurisdictions in the states and territories of Australia where building surveyors are regarded as being key actors under the apposite building acts. If one has regard for instance to NSW, Queensland and Victoria there is a tremendous amount of ‘regulatory infrastructure’ that governs the interactions of building officials such is the vital role they perform under the building regulatory construct.
Recommendation for Consideration
Expand the LBP cohort to include building surveyors as registrants under the Building Act 2004.
Engineers, Architects and Designers
Engineers and architects are required to be registered under their own cohort licensing acts as there is an existing and established registration apparatus for the registration of these key actors. Little point in reinventing the wheel and migrating the jurisdiction of the existing registration bodies to the Building Practitioners Board.
Rather one can include them as part of the LBP fold by promulgating a regulation that dictates that if an architect or an engineer is registered under the apposite legislation then that actor is deemed to be an LBP under the Building Act 2004. The Victorian Building Act 1993 has for many years had in place a regulatory mechanism that does this.
Broad Church Registration
Consideration could be given to expanding the registration cohort to include the building practitioner cohort of professionals and the tradespersons.
The rationale being to have a harmonised approach that ensures that all key actors come within the curtilage of a centralised licencing ambit to amongst other things achieve a harmonised approach to disciplinary censure and synergistic qualification and experience criteria. There is a lot to be said for consolidation as it makes it easy for the consumer to understand how to access the reservoir of licenced persons.
When the writers carried out an analysis of the registration regime in New Zealand it took considerable time to identify all of the licencing bodies as the system is disaggregated.
2. Proportionate liability
New Zealand unlike its antipodean neighbours has retained the liability apportionment doctrine of joint and several liability (JSL).
The JSL doctrine provides that solvent parties assume the liabilities for insolvent actors in multi-defendant legal proceedings where responsibility for compromised construction outcomes are found to attach to a number of responsible actors.
In a typical legal proceeding, there will be a number of defendants and or third parties. If for argument’s sake there are five defendants, one being a territorial authority, a couple of the defendants being uninsured licenced building practitioners or commercial builders and judicial determination is forthcoming, where all five defendants are found to be contributorily liable, the insured defendants will assume the financial liabilities of any defendant that becomes an insolvent.
This means that the insured defendants pay for the “sins” of the impecunious.
The diagrams below provide an example of proportionate liability and the need to join all parties to a proceeding.
The illustration below is for the hypothetical demonstration of an aggregate costs award to rectify a $1,000,000 damages award.
In pie chart number one, all relevant actors are joined, the judge finds that all of the joined parties are culpable and damages are visited upon all. The plaintiff will receive damages in full provided they are all solvent.
Flow chart 2, 5 parties are responsible yet only 4 are joined. The judge hands down a determination where each of the joined parties is found liable in aggregate, but only for 80% of the total damages. The plaintiff in these circumstances would be deprived of 20% of an award by virtue of the non-joinder of a key actor. Because only 4 parties were joined and found liable for $800,000 there has been a short fall of $200,000 due to the non-joinder of a key actor.2
The rationale that underpins JS
The rationale is that absent the application of JSL, the consumer will have no redress to compensation for damages if the solvent parties do not assume the liabilities of the impecunious contributors.
The rationale that underpins proportionate liability
Proportionate liability provides that no defendant will be liable for any more then its judicially allocated contribution to the compromised construction outcome. So, if a given defendant is found to be liable for 15% of the aggregate liability that defendant’s liability will be limited to the 15%. It is a doctrine that is rooted in fairness, one is liable for ones’ own mistakes not those of others.
Nevertheless under this liability creed absent a compulsory insurance regime for key actors the consumer can indeed be deprived of significant compensation in circumstances where there are impecunious defendants and this is very problematic.
The escalating problem with JSL
The New Zealand economy can be a fragile economy and the consequence of the application of JSL is that local government has become “the insurer of last resort” and is picking up the financial liabilities of impecunious actors such as insolvent builders and or tradespersons that are the primary authors of compromised construction outcomes.
Yes, on the one part the plaintiff consumer has a level of comfort in knowing that the territorial authority is the ultimate backstop but the broader class of consumer, the rate payer underwrites that liability.
So, on the one part there is a conflict between the plaintiff consumer and the broader class of likewise innocents the local government rate-payers. With the country`s accelerating migration rates of younger skilled tax payers and an aging demographic, if one looks to the future, fewer and fewer will be called upon to do more and more heavy lifting in terms of rates.
Insured councils are having to contend with escalating insurance premiums in part because of the application of JSL and this also translates into higher rates that are levied upon the community.
Additionally, the writer has heard albeit by way of anecdote that such is the fear of territory authority building officialdom to issue code compliant certificates that delays in terms of building permit delivery are increasing.
Such delays and the cost associated with those delays are then visited upon a different class of consumer i.e. home owners wishing to have their houses built in a timely fashion. Of course, the longer it takes to get a building consent and a CCC, the longer the tenure of the home loan and the interest payable on that home loan.
Furthermore, if vital and finite local government resources are tied up in defending legal proceedings, then that lost down time cannot be allocated to the core functions of building permit delivery.
Recommendation for Consideration
Consideration could be given to jettisoning JSL and introducing the binary of proportionate liability and compulsory insurance.
Under this system all LBPs would be required to be insured by law to ensure that all defendants in multi-party proceedings are insured. The upshot would be that the consumer i.e. the plaintiff consumer would have the guarantee of insured defendants.
An alternative approach.
Since the early nineties, the Victorian Building Act has required key actors to be insured by law. As a result in certain circumstances where there are multi-defendant liabilities, the application of proportionate liability ensures that all defendants are accountable for their judicially apportioned liability that is financially backed by compulsory insurance.
Having said that it is submitted that the current cast of licenced building practitioners in NZ may not be able to avail themselves of professional indemnity cover as typically this is limited to the professions rather than tradespersons. In light of the above, the Victorian model where engineers, architects, residential builders, building surveyors and building inspectors are required to be insured, is worthy of consideration as there is a thirty-year heritage of mandated insurance cover for this cohort.
Recently the writer was in New Zealand and was informed that some of the insurers had stated that there would be no insurance appetite for underwrite a compulsory PI market. The writer stated that if the regulatory architecture of the Building Act was redesigned to align with some of the regulatory architecture of the likes of the Victorian Building Act 1993 it would be difficult to fathom why the underwriters that have provided pi in the Victorian market since 1993 would shy away from providing like coverage in a similar regulatory ecosystem. After all NZ is closer to Victoria and NSW than the latter are to WA and the NT.
Both the New Zealand and Victorian legislation provide a 10-year limitation period where civil proceedings in respect of building work may be brought. One could be forgiven for believing the two liability limitation periods act in similar ways, however in practice the New Zealand legislation is more problematic.
This is because the New Zealand legislation is marred by uncertainty in terms of the time when the liability limitation period begins to run.
The Victorian legislation is not so marred as the liability period commencement trigger is crystal clear – that being when the occupancy permit is issued. Absent a similar provision, the New Zealand legislation has had to rely on interpretation from the Courts to determine when the commencement trigger may be. (see footnote 3 above)
The decision of Wigglesworth v Auckland Council [2012] lacking the Victorian specificity in this area, proffered the terms ‘off-task’ or ‘off-duty’ as a test for considering when the commencement of the liability would run for a contractor.4
These phrases were used to define ‘when the ostensible 10-year period starts to run’ and would relate to situations where a ‘contractor stops work on the site, leaves the site and does not return’.5
The situation as regards when the liability period commences would not be so clear where ‘the sub-trader’s works are partially completed and then not finally completed until the end of the building project’ which is common.6
The vagueness of the New Zealand approach has been resolved 3 decades ago in Victoria by the specificity of ’10 years from issuance of occupancy permit’. There is nothing that is either cryptic or uncertain about such a trigger.
The OP is issued by the relevant building surveyor, a copy is kept with the council and 10 years post issue of the OP the ability to sue for economic loss is expunged or to use French vernacular guillotined (save for the cladding exemption).
Building Act 2004 (New Zealand) s 393(2)
Building Act 1993 (VIC) s 134(2)
…no relief may be granted in respect of civil proceedings relating to building work if those proceedings are brought against a person after 10 years or more from the date of the act or omission on which the proceedings are based’7
‘…a building action cannot be brought more than 10 years after the date of issue of the occupancy permit in respect of the building work (whether or not the occupancy permit is subsequently cancelled or varied) or, if an occupancy permit is not issued, the date of issue under Part 4 of the certificate of final inspection of the building work.’8
Recommendation for Consideration
Insert similar wording into the New Zealand Building Act 2004 to crystallise a definitive commencement trigger on when the liability period begins. The issuing of the Code Compliance Certificate may be an appropriate trigger mechanism.
4. Adopting a Risk-Based Building Inspection and Mandatory Inspection System
A number of countries are moving towards codified risk-based building classifications that are calibrated with a mandatory inspection regime.
In studying best practice building regulatory regimes this writer recognised that there are a great deal of very good building codes on the planet but very few have embraced a risk-based design classification methodology, let alone one that is calibrated with a mandatory inspection regime.
The World Bank has extolled the virtues of risk-based building inspections in a paper ‘What role should risk-based inspections play in construction’, which stated:
“Since 2005, 18 economies have incorporated elements of risk-based building inspections… Risk-based inspections, as opposed to random untargeted inspections, allow governments to allocate resources where they are most needed without compromising worker and public safety… Risk-based inspections have become more popular in the past decade, resolving some of the issues from random and phased inspections. Though many risk-based inspections systems include a minimum number of phased inspections for all buildings, they typically give priority to buildings with high risks – such as environmental ones and optimize the process…. Risk-based inspections are conducted to ensure a buildings structural safety, fire safety, worker safety, and public safety but in a more efficient manner. Having fewer inspections for less risky buildings lowers costs without compromising safety, in increasing flexibility and enabling inspections move away from random and phased inspections.” 9
Under a codified risk-based classification system, the type of building finds itself located in a cohort of buildings that are measured for want of a better word on the basis of their risk profile in terms of potential to generate harm.
A low-risk classification would include buildings that on the ‘risk barometer’ pose low to very low risk to life and limb.
For instance, a free-standing four-walled single roof, single slab farm barn, with an uncontroversial usage would be domiciled in the low-risk band of the codified classification.
On the other end of the barometer where the risk ‘mercury level’ is much higher in that the cohort of buildings potentially pose a much greater risk to life and limb in given scenarios such buildings will be domiciled in the high-risk/potential consequence band.
Buildings of the likes of high-rise residential, hospitals, high-rise commercial and munitions factories will typically find themselves domiciled in the high-risk band.
The most challenging risk band to populate is the medium band that is populated by the types of buildings as the demarcation will to some degree be arbitrary. The band will have regard to the number of occupants and the usages of same that are of a higher-risk classification than low-risk and a lower risk classification then the high-risk.
In recognition of the fact that building official and inspectorial resources are finite and in recognition of the reality that some jurisdictions are very challenged in adequately resourcing building officialdom, the IBQC guidelines are responsive and sensitive to this reality.
Best practice jurisdictions have adopted a mandatory inspection regime. Having said that, a calibrated mandatory inspection regime will allocate inspectorial resources in a way that is calibrated to the classified risk band.
Accordingly, there will be minimal mandated inspectorial interventions for the low-risk band. There will be a higher number of mandated inspections in the medium-risk band. Predictably, there will be a higher number of mandated inspectorial interventions in the high-risk band.
Higher risk bands will have mandatory peer reiview
Furthermore, with respect to the high-risk band there will be legislatively mandated interventions of qualified peer reviewers that have been key actors in the critical path of the evolution of the building such as:-
fire engineers,
electrical engineers,
mechanical and air-conditioning engineers,
Building envelope specialists that instance sign off water-proofing and cladding integrity.
The said IBQC Guidelines illustrate the marriage between a mandated inspection regime and a codified risk-classification system.
Recommendation for consideration:
New Zealand could have regard to a risk-based building classification system that is calibrated with a mandatory inspection regime. This way, the finite and as some would say anecdotally the resourced challenged building inspectorates in the territorial authorities could allocate inspectorial interventions where on a risk-weighting basis the public is best served.
5. Mechanisms for faster permit delivery appeals
Whether it be delays in issuing building consents or code compliance certificates, concerns have been raised that the process takes too long in NZ.
This was a common complaint in Australia in the early 90s and led to the introduction of a privatised alternative to building permit delivery. In jurisdictions like NSW and Victoria an applicant who wishes to get a building permit/construction certificate can either engage a building surveyor from the private sector or in the case of Victoria a relevant building surveyor from the council or in the case of NSW a local government principal certifying authority.
In the early 90s, sometimes it took months to get a building permit from local government and once private certification was introduced, the issue of building permits was often turned around within a few weeks rather then a few months.
Private certification was experimented with in New Zealand in the late 90s but by 2008 the chapter of private certification was closed. In Australia, all jurisdictions maintain a private certification regime although the approach to private certification differs depending on the jurisdiction.
This writer is not advocating a return to private certification….
Save for consideration being given to utilising private certifiers in a low-risk building classification setting. Reason being this system did not prove to be sustainable and viable in the New Zealand setting for a whole host of reasons, not limited to insurability and registered competency levels.
What has been advocated for consideration however is to adopt a fast-track appeal mechanism in line with the Building Appeals Board concept in Victoria.
Refusals to issue building permits or occupancy permits in Victoria can culminate in an election on the part of the applicant to appeal the decision to the Building Appeals Board. Although the Building Appeals Board can take some months to hear and deliberate on the matter depending upon the level of ‘new starts’ in the construction industry when compared to the delays in the courts, it is a faster avenue.
The additional benefit particularly for bean counters in Treasury is that the Building Appeals Board members are Ministerial appointees, work parttime and are practicing members of the construction industry and the legal fraternity whom are appointed on account of them being venerated by peers of good repute.
Typically, a hearing will be presided over by a construction lawyer, a building surveyor and an engineer or an architect so there is a multi-skilled professional alchemy. The hearings in this writer’s experience very rarely are take longer than a day. The key point is it is a win-win for a government in the sense that the cost of maintaining the apparatus is not great, the level of professional dexterity is high and the time to take to resolve a bottleneck is better than the Court time frames.
The advantage also to local government or the local building surveyor is that when challenged by making the decision as regard whether or not to issue a building consent or construction certificate, if the matter goes to the BAB’s determination, the decision ameliorates the risk to the local government decision maker as an independent umpire as it were comes down with a ruling.
The system has been in operating now for decades and this writer considers that it stands up very well under international best practice analytics.
Recommendation for consideration:
Have regard to the Victorian Building Appeals Board model.
6. Product Safey and Product Safety Compliance:
The government has announced that it is opening up the market to allow for imported construction product to lower the cost of construction. This is commendable but there is of course a caveat, there need to be legislative mechanisms to ensure that inferior product that is not fit for purpose does not wash on to New Zealand shores.
The reason for this is obvious, poor construction product will compromise the quality of the as-built environment and furthermore is likely to lower the lifespan of the building. Neither New Zealand nor the consumer can afford to countenance such an outcome particular against the backdrop of the leaky building catastrophe.
It follows that there need to be robust building control mechanisms to ensure that product that goes to market is fit for purpose and complies with the apposite elements of the New Zealand Building Code and relevant standards.
These guidelines were developed by an international coalition of IBQC board members including inaugural board member Dame Judith Hackitt (who presided over the Grenfell Inquiry), Neil Savery (a past chief executive of Australian building codes board), Stephanie Barwise KC (who represented a class-action at the Grenfell Inquiry), along with other preeminent law reformers, the names of which are identified in the document along with this writer.
The guidelines were peer-reviewed by venerated international institutions and took 3 years to think-tank, develop and resolve. There is little to be said that is not manifest in the guidelines so the reader is encouraged to access the guidelines through the hyperlink.
7. Dispute Resolution:
Although the Building Act does not venture into the broader construction dispute resolution realm it would be remiss of one not to offer some thoughts on how dispute resolution theatres can be redesigned to speed up the dispute resolution process, lower costs of dispute resolution delivery and provide better access to the citizen and industry actors for the delivery of justice.
Although the Building Act does not venture into the broader construction dispute resolution ambit it would be remiss of one not to offer some thoughts on how dispute resolution theatres can be redesigned to speed up the dispute resolution process, lower costs of dispute resolution delivery and provide better access to the citizen and industry actors for the delivery of justice.
The guidelines are brief and to the point and were developed by leading international experts ranging from KC’s, to senior judges, to senior construction lawyers from the United Kingdom, Australia, New Zealand and Africa.
Some of the key take-outs are as follows
Specialist lists
Best-practice regimes have dedicated building cases lists that are either in the courts or tribunals.
The lists are presided over by jurists that specialise exclusively in construction law decision making.
They have significant experience in construction law before they venture onto the Bench.
Front End Mandated Mediation:
Best practice construction dispute resolution theatres make it compulsory for the parties to attend a mediation at an early stage of the dispute resolution journey.
To defray the costs of providing that service to government, the parties renumerate the mediator on a 50 50 basis.
The single expert witness protocol:
Such is the cost and time of the traditional approach to adversarial expert witness advocacy; the polarised adversarial approach is coming under considerable scrutiny.
There is a move away from the adversarial plaintiff defendant expert witness dynamic and a move towards Court appointed independent expert witnesses.
This idea along with the other ideas are picked up in the said guidelines but are best expressed by Her Honour Sharon Burchell (County Court Judge in Victoria) in a ten minute video presentation. Her Honour gave to the IBQC global dispute resolution conference. Her Honours` talk can be accessed by clicking here.
Recommendations for Consideration:
The giving of consideration to the establishment of a dedicated building cases list in the District Court and or the High Court where front-end mediation is made mandatory and the giving of consideration to single expert witness protocol.
It is submitted that the combination of this ‘trifecta’ will in a very significant sense cut the cost of construction dispute resolution and expedite dispute resolution delivery.
Some other on message videos from the global conference are those of NZ barrister and arbitrator Mark Colthard and the writer also as you may be aware a Kiwi and admitted to practice in both countries. If you click their names in this sentence you can access their 10 minute presentations.
Conclusion:
It is evident that the government is intent on reforming the New Zealand building Act 2004. It is instructive to have regard to law reform history over the last 30 years in New Zealand. Reason being there have been well-intentioned reforms that have not delivered the utilitarian dividends that were intended dispute best of intentions. The leaky building fiasco was one of the worst systemic failures in the West in the last 30 years and it was a product of a de-regulationary zeal.
It is also instructive to have regard to international good practice to cherry pick the best of the best but by the same token to inoculate the act against that which has the potential to compromise building regulatory ecology to avoid a situation where the New Zealand citizen is adversely affected.
The writer was on two occasions retained by the Japanese Government to participate in law reform think-tanks with respect to reforms to the Japanese Building Standard Law. The reforming civil servants made a point of engaging with off-shore experts in Tokyo to be briefed on not just that which succeeded and could be held up as being exemplary building legislation but also briefings on that which have failed and equally importantly why it had failed.
It is indeed a very good thing that the government is intent on reforming the Building Act 2004 because to be frank it needs to be reformed. Local government is bearing a disproportionate share of liability on account of the operation of joint several liability. It is submitted that this is not sensitive to the resource constraints of local governments and the significant financial impost and litigation related time demands that are visited upon local government officialdom.
Responsibility should lie with the authors of fault but responsibility can only have real application if there exists the capacity to financially account for liability. Absent a compulsory insurance system and a mandated home warranty insurance regime, a status quo will remain where the primary authors of compromised construction outcomes do not assume the liabilities that they should.
Fortunately, there are regulatory ecologies close by that are instructive with regards to providing ideas on the redesign of regulatory architecture.
Fortunately also, there are some quick fixes such as the introduction of a clear non-contentious liability trigger date that will eliminate the confusion and vexed litigation that is afflicting owners and builders alike as courts grapple with the current uncertainty. A simple ten-year liability cap triggered by the equivalency of an occupancy permit would be a swift remedy.
Consideration could also be given to an evaluation of the registration criteria to determine whether the emphasis is not what it should be and moreover a licence building practitioner regime would be better served by the building act registering more key actors.
This piece is written by Adjunct professor Kim Lovegrove, the chair of the IBQC. The opinions in this piece are his own and are not representative of any organisation that he chairs or represents. The writer has 3 decades in law reform, is a past senior law reform consultant to the World Bank and is a senior lawyer at Lovegrove and Cotton Construction and Planning Lawyers. He is also a past Ethiopian Honorary Consul to Ethiopia and is the recipient of honours for humanitarian services to Ethiopia.
Disclaimer
This article is not legal advice rather a discussion of the topic in only general terms.
Licenced Building Practitioners, ‘Licensing Classes’<Licensing classes | Licensed Building Practitioners (lbp.govt.nz)><Accessed 13 May 2024> ↩︎
Wigglesworth v Auckland Council [2012] NZHC 1194 ↩︎
Presentation by Adjunct Professor Kim Lovegrove for the Society of Construction Law New Zealand, February 2023 <Kim-Lovegrove-NZ-SCL-Presentation-2023.pdf (lclawyers.com.au)><Accessed 16 April 2024> ↩︎
World Bank, ‘What role should risk-based inspections play in construction.’ ↩︎
Lovegrove and Cotton 2024, The IBQC Risk Based Building Classification and Manadatory Inspection Guidelines’ <https://lclawyers.com.au/the-ibqc-risk-based-building-classification-and-mandatory-inspection-guidelines/><Accessed 13 May 2024> ↩︎
