The Building Legislation Amendment Bill (Bill) was introduced into the legislative assembly of the Victorian parliament on 7 May 2014. It contains the most significant reforms to the building control scheme in Victoria since the introduction of the Building Act 1993 (Building Act). Some of the reforms were foreshadowed in the Victorian Domestic Building Consumer Protection Reform Strategy released in May 2013. The reforms are also said to respond to matters raised by the Victorian Auditor General's Office1 and the Victorian Ombudsman2. We summarise the reforms as follows:

Boards & statutory bodies abolished  

  • As foreshadowed by the state government, the Architects Registration Board of Victoria (ARBV), Building Appeals Board (BAB), Building Practitioners Board (BPB), Building Advisory Council, Plumbing Advisory Council and Building Regulations Advisory Committee (BRAC) will all be abolished.
  • The current functions of the ARBV, BAB and BPB will be conducted on behalf of the Victorian Building Authority (VBA) by panels. The membership of those panels is at the discretion of the VBA. Commissioners will not sit on panels but the CEO may be on panels.
  • The process and procedure for the conduct of hearings by panels is largely consistent with the procedure currently set out in Schedule 3 of the Building Act which currently applies to the BAB and BPB. In relation to the hearing of matters under the Architects Act 1991 (Architects Act), that Act remains in force and sets out the procedure for hearings for those matters.
  • Many of the decisions of the VBA (sitting in panels) are subject to an internal review process before an application for review to VCAT can be made.
  • In terms of transitional arrangements, where the BPB or BAB or an Architects Tribunal have commenced to hear a matter, those boards/bodies may continue to hear those matters after the commencement date and will continue to exist for those purposes only.
  • A new 'Technical Accreditation Committee' will perform the previous BRAC function of accrediting building products.
  • The VBA will also be able to appoint advisory committees where it seeks input from stakeholder groups on particular issues.

Changes to the building permit process  

  • The Bill provides for corporate building surveying entities to be registered and envisages that building permits can be issued by the corporate entity but where this occurs a natural person(s) will be required to be nominated as exercising the functions of the relevant building surveyor (RBS). 
  • Prior to accepting an appointment to act as the RBS in relation to domestic building work, both municipal and private building surveyors will be required to provide the applicant with information about the role of the RBS. 
  • According to the second reading speech, the information sheet (to be approved by the VBA) will explain to the owner that they can choose their building surveyor, tell them what their building surveyor's role will be and that the building surveyor is to act independently in performing their functions. The information sheet must be given directly to the owner rather than to an agent of the owner who is a building practitioner. 
  • Once an appointment is accepted, notification under section 80 of the Building Act is to be given to the VBA. Councils will no longer receive section 80 notifications.
  • The next step is for certain initial information to be provided to the VBA who will collect the building permit levy and issue a building permit number. The RBS must not issue a building permit until a building permit number has been issued by the VBA.
  • This new procedure is intended to improve the collection of building permit levies by providing for payment directly to the VBA, and also by allowing for the value of building work to be reassessed by the VBA. There are a range of other amendments related to the building permit levy including a new power given to enable the VBA to collect a 'penalty levy'3 in relation to building work carried out without a building permit.
  • The VBA will notify the relevant council after it issues a building permit number.
  • Section 30 material (ie building permit documentation) must still be lodged with the relevant council within seven days after a permit is issued, but the RBS must also lodge a document certifying what documents are being lodged by reference to a checklist. The certification/checklist document will be approved by the VBA. For domestic building work, copies of extracts from major domestic building contracts and insurance certificates must also be lodged with councils in the section 30 material and with the VBA.
  • Private building surveyors will be able to delegate their functions to another building surveyor. Where this occurs, the notice of delegation must be lodged with the VBA and relevant council.
  • Section 37 directions, currently issued at mandatory notification stages during building work, will be required to contain certain information. An owner must be given a copy of any section 37 direction and, if the direction is not complied with, a copy must be sent to the relevant council. Unlike the information sheets that must be given at the time of a building permit application, section 37 directions are not expressly required to be given directly to the owner. 

VBA can appoint a manager to run a building surveying business  

  • The VBA will have the power to appoint a person to manage a building surveying business in certain circumstances, including where a private building surveyor has their registration suspended or cancelled; dies; goes to prison or becomes insolvent.
  • The manager will have the power to manage the business pursuant to certain conditions imposed by the VBA and will have statutory indemnities and rights to enable them to perform their role. Managers must be registered building surveyors (unlimited) or can be VBA staff.
  • The expenses incurred by the manager are payable by the VBA but recoverable from the private building surveyor. 

Disciplinary powers and procedures  

  • The VBA's powers in relation to disciplinary matters for registered building practitioners have been reformed considerably. In relation to registered architects, the disciplinary powers are relatively unchanged and remain set out in the Architects Act.
  • For registered building practitioners, the grounds for disciplinary action are similar to those currently in section 179 and 180, however, they will also include failing to comply with a 'rectification order' or direction of the VBA, failing to complete continuing professional development requirements and accumulating more than the prescribed number of 'demerit points' within the prescribed period. In addition, a 'code of conduct' for building surveyors is to be approved by the VBA. A failure to comply with that code will be able to be a ground for disciplinary action.
  • The 'rectification order' process is set out in amendments to the Domestic Building Contracts Act 1995 (DBCA) and provides for the VBA to issue orders to owners and building practitioners as a means of seeking to resolve domestic building disputes.
  • The 'demerit points' process will allow the VBA to issue demerit points to practitioners for various breaches of the Act and Regulations. The details of the scheme will be set out in future regulations. However, accrual of demerit points may trigger an inquiry and/or affect a practitioner's ability to renew their registration. The issuing of demerit points by the VBA will be separate to the new disciplinary inquiry 'show cause' process.
  • Under the Bill, the VBA must commence a disciplinary process by issuing a 'show cause notice' to a registered practitioner which sets out the proposed disciplinary action and the ground(s) (including the relevant facts and circumstances). The show cause notice will invite the practitioner to reply orally or in writing within a certain period (which must be no less than 14 days). 
  • According to the second reading speech, the 'demerit point process' and 'show cause process' will provide a more streamlined way of dealing with practitioners who engaged in inappropriate conduct. These powers will also be supported by the new and improved investigation powers which will provide for the collection of evidence to allow for the VBA to form reasonable opinions about appropriate disciplinary action so that a show cause notice can be issued. The show cause process is said to still allow for practitioners to make written or oral representations but it is intended to replace the current disciplinary process which is said to have been 'laborious, time consuming and expensive'.
  • After the 'show cause' notice is issued and a reply is received, the VBA can determine to take the disciplinary action proposed in the show cause notice or to take no further action. Decisions made under the 'show cause process' will be subject to an application for internal review and if the practitioner is still dissatisfied, the matter can be re heard at VCAT. Persons directly affected by a decision can apply for the internal or VCAT review. This may include complainants.
  • The outcomes of disciplinary action will be required to be published for a period of five years. 

Clarifying local government responsibilities  

  • Section 212 is amended to confirm that the responsibility of councils to administer and enforce certain parts of the Building Act and Regulations applies even where a private building surveyor is appointed.
  • Amendments to the DBCA also create a discretion for the VBA to refer matters to the relevant councils where a report (prepared in relation to a domestic building dispute) identifies a contravention of the Building Act or regulations; or a health or safety matter. It is not clear when this discretion will be exercised or what the relevant council will be expected to do once such matter is referred to it by the VBA. This is likely to depend on the circumstances of the matter.
  • The second reading speech refers to mutual support by the VBA and local councils for a 'Building Control Plan' to be developed which will 'set out the manner in which [each] council intends to exercise its responsibilities for administration and enforcement' under section 212 of the Building Act. It is said that future legislation will address the creation of 'Building Control Plans' by councils. 

Registration of building practitioners  

  • As mentioned above, the Bill provides for the registration of corporations and partnerships. In the case of builders, the intention is to limit this to those corporations carrying out domestic building projects only.
  • The Bill will also enable the VBA to refuse to register persons that are related to corporations which have had their registration cancelled or persons that do not pass financial viability criteria, including where the person has been insolvent.
  • Under the current legislation, once registered, annual renewals are easily obtained and a practitioner remains registered indefinitely. Under the Bill, annual renewals may take into account any demerit points that have been issued and practitioners will need to reapply for registration every five years which will allow for a complete check of competency and other eligibility criteria.

Consumer protection and dispute resolution  

  • Eventually, the current domestic builders warrant insurance will be replaced by a Building Consumer Protection Fund which will be administered by the VBA.
  • As mentioned above, changes to the DBCA represent enhanced processes and procedures for the VBA to assist consumers and domestic builders to resolve disputes. A process for early conciliation is provided for and also a power for the VBA to issue 'rectification orders' to owners and builders after an independent inspection process.  A domestic building conciliation trust fund will be established where money may be paid to in anticipation of building work being rectified or completed.
  • Parties will still be able to take their dispute to VCAT but only after they have participated in a conciliation. Decisions in relation to the making of rectification orders may also be the subject of review by VCAT.
  • New DBCA powers also provide the VBA with the ability to accept undertakings from parties to a dispute and to apply to the courts for injunctions.
  • In addition to these reforms, the enhanced section 37 direction process available to the RBS, is intended to enable the RBS to intervene where inspections at mandatory notification stages reveal that building work does not comply with the Building Act or Regulations or permit.

Investigative powers  

  • The Bill will significantly enhance the investigative powers of VBA and council officers who are authorised under the Building Act.
  • The extensive powers found in the Australian Consumer Law and Fair Trading Act 2012 have been used as a basis for the new powers given under the Bill. In some cases, rights against self-incrimination have been expressly abrogated but where this applies, the VBA and council officers will have limited ability to use incriminating information gathered in subsequent legal proceedings.
  • The Bill also provides for complaints to be made to the Secretary about alleged improper use of the investigative powers.

The Bill is due to be debated in parliament later this week. It is anticipated that once the Bill is passed, some provisions will take effect from 1 July this year whilst others will be introduced over the next two years.