We are increasingly becoming involved in protection works disputes for building owners and adjoining owners.

This is often a complex and emotional area, and all building practitioners need to fully understand their obligations and the process. Below we discuss Building Appeals Board (BAB) and Supreme Court decisions relating to two specific matters.

When should a Building Order to Stop Work be issued?

In this case, in late 2014, extensive renovations to a dwelling commenced on a property in Prahran following the issuing of protection works notices and a determination by the Relevant Building Surveyor (RBS) under s 87 of the Building Act 1993 (Act). A few months into the project, the boundary wall of the adjoining property was undermined by over excavation which resulted in cracking to the wall. The building work stopped and an engineering design was proposed to underpin the wall. Protection works notices were issued for the underpinning works and the adjoining owner agreed to the proposed works. The underpinning works were undertaken and the building work continued. The remaining protection works required for the project were scaffolding works for overhead protection during construction of boundary walls on the building site.

In resolving the rectification of the adjoining owner's wall, it became apparent that the owners of the building site had not provided a copy of the protection work insurance to the adjoining owner before commencing protection work nor obtained their agreement on the amount of insurance provided (as required under s 93 of the Act).

The owner of the building site provided the adjoining owner with a copy of an insurance policy provided by their builder. The adjoining owner disputed the adequacy of the builder's policy as, among other things, it did not name the adjoining owner or the adjoining property. The adjoining owner wrote to the RBS and demanded the RBS issue a building order to stop any further work at the building site on the basis that the protection work insurance was not valid. The building site owner provided a new version of the builder's insurance policy to the adjoining owners. The new version of the policy specifically referenced the adjoining owners property as being covered. The building site owners requested the adjoining owner agree to the revised insurance policy as required by s 93. The adjoining owner refused.

The RBS sought advice from the Victorian Building Authority's (VBA) technical support area and decided to issue a building order to stop all works within one metre of the boundary on the basis that the building work contravened the Act because s 93 had not been complied with. The RBS stated that until the adjoining owner agreed to the protection works insurance offered by the building site owner or until there was a decision of the BAB about this issue, no works could be carried out within one metre of the boundary.

BAB proceedings x 2

The building site owners issued proceedings in the BAB to challenge the building order to stop work. They also applied to the BAB for a determination on the adequacy of the insurance. The proceedings against the RBS's decision were heard first. The owners argued that:

• although they may not have complied with s 93 of the Act initially and could not reach agreement with the adjoining owners about insurance for the remaining protection works, this did not mean that the building work contravened the Act
• it was not for the RBS to stop the work pending resolution of the dispute
• s 86 entitled them to proceed to carry out the earlier protection work (which lead to the damage to the adjoining owners wall) despite the requirements of s 93.

The RBS strongly defended the proceeding asserting that a failure to comply with s 93 amounted to the building work being in contravention of the Act. He further stated that until insurance could be agreed between the owner and adjoining owner, or a decision of the BAB in this issue was obtained, he was obliged to stop the works. In defending his decision, the RBS made strong submissions about the interactions between the owner and adjoining owner and the questions concerning the adequacy of the protection works insurance.

The BAB agreed with the building site owners and quashed the building order to stop work. The BAB said that the simple question for determination was whether the RBS can issue a stop work order because he takes the view that the owner has not complied with s 93. The BAB decided that s 112 was 'limited in its operation to the cessation of building work in the circumstances set out in s 112(2) and does not extend to any breach of the Act, including s 93.'^[1]

In making its determination the BAB stated:

Where there is a disagreement between the owner and the adjoining owner as to the adequacy of protection works insurance s 93(2)(b) [sic] provides a remedy for either party - apply to the Building Appeals Board for a determination. Therefore, having determined that protection work is necessary, as s 92(2)(b) clearly states, and which is conceded by the Respondent, it is not the role of the RBS to make a determination as to the adequacy of the insurance, let alone issue a stop work order because he considered that the insurance is not in place, or is inadequate in some respect.

Therefore the Respondent has clearly misunderstood his statutory role in the protection works process in respect of this project. In fact in doing so, the Board considers that the Respondent has subverted his statutory role of being independent in the process to being an advocate for the adjoining owner.^[2]

Implications of the decision

Decisions of one BAB panel are not binding on other. However, the BAB in this case reinforced the requirement of the RBS to maintain independence when owners and adjoining owners are in dispute about protection works insurance. The provisions of the Act provide a mechanism for owners to apply to the BAB to resolve their dispute and the RBS should be careful not to enter into that dispute by issuing a building order to stop the works. This is not to say there won’t be circumstances where a building order to stop work is warranted because of a danger to life, safety or health or some other valid ground. However, in this case, the BAB found there to be no valid ground to issue the order.

The appointment of new RBS

The disputes arising from protection works proposed regarding the demolition of a building at 150 Queen Street in Melbourne (150 Queen) are very complex and have been afoot for some years. There have been multiple proceedings before the BAB with at least four proceedings commenced in the Supreme Court, resulting in a number of decisions during 2014 and 2015.^[3] The disputes are yet to be resolved. Many of the issues for consideration in the Supreme Court are technical legal questions relating to points of administrative law. Here we will focus on some of the issues that relate more directly to the BAB and the Court's interpretation of the building permit process.

First Protection Works Determinations

Around December 2011, the first building surveyor was appointed by the owners of 150 Queen. The first stage of the development was to be the demolition of the existing 18 storey office block.

In April 2013, the demolisher applied on the owner's behalf for a building permit for the demolition work. The building surveyor required protection works notices to be issued on the owner of adjacent buildings at 140 Queen Street (140 Queen) and in MacKillop Street. The owners of the adjacent buildings lodged Form 4 notices disputing the proposed protection work. A separate building surveyor was engaged to review the Form 4 responses on the owner's behalf.

The protection works determinations that were subsequently issued by the building surveyor were appealed by the adjoining owner to the BAB.

Termination of the First Building Surveyor

In December 2013, the first building surveyor was given permission by the VBA to terminate his appointment as building surveyor. This decision of the VBA was opposed by the adjoining owner. Subsequently, the owner appointed a new building surveyor. The second building surveyor was the same person who had reviewed the Form 4 responses to the first protection works notices.

Second Protection Works Determinations

The owners withdrew the building permit application that had been the subject of the protection works determinations and lodged a new building permit application. The second building surveyor then made new protection works determinations.

The adjoining owner disputed those new determinations on a number of basis, including that:

• the initial building permit application and the protection works determinations relating to it were still on foot because they were the subject of a BAB appeal that was still on foot
• the second building surveyor was not validly appointed on the basis that, contrary to s 79 of the Act, they were a person who had been employed or engaged by the person or body which prepared the design of the building or building work i.e. the demolisher.

In July 2014, the BAB held that the demolisher was the 'designer' of the demolition work and accordingly, the person who had been engaged by the demolisher on the owner's behalf to review the Form 4 responses could not then be appointed as relevant building surveyor within one year, without breaching s 79 of the Act. Accordingly, it found that the appointment was invalid and that the second protection works determinations should be quashed. In so finding, the BAB referred to earlier court findings that s 79 of the Act has the purpose of ensuring that a private building surveyor is independent and is in a position to act impartially in undertaking the important functions assigned to this role by the legislation’.^[4]

The BAB then made findings about what the protection work should be. Those findings are still the subject of continuing court proceedings. The BAB did not make any specific findings about whether or not a building owner can withdraw a building permit application and pursue a fresh building permit application when BAB proceedings have not been finalised for the first building permit and this is yet to be determined by a Court.

Practical Implications

Building surveyors accepting an appointment under s 76 of the Act must consider carefully whether they have any prior involvement in building work that might preclude them from accepting that appointment pursuant to s 79. As the facts in the disputes surrounding the development at 150 Queen demonstrate, the consequences of a building surveyor accepting an appointment that is prohibited by s 79 can be significant for both building surveyors and owners.

The Act is silent on the ability of an owner to withdraw a building permit application and commence a fresh permit application based on different proposed building work in circumstances where a BAB appeal has been lodged for protection works determinations relating to the first permit application. While starting afresh appears to be a practical step that could avoiding lengthy legal disputes, these cases have shown that this approach will not necessarily allow an owner to avoid resolving the issues in dispute under the original building permit.

[1] Taken from page 8 of the Determination in the matter of Kidd v Hansen BAB ref 447962

[2] ibid

[3] See, for example, Colonial Range Pty Ltd v Victorian Building Authority [2014] VSC 272; CES Queen (Vic Pty Ltd v Bryan Thomas and Stephen Kip (sitting as the Building Appeals Board) [2014] VSC 602; CES-Queen (Vic) Pty Ltd v Bryan Thomas and Stephen Kip (sitting as the Building Appeals Board) [2015] VSC 120; CES Queen (Vic) Pty Ltd v Bryan Thomas and Stephen Kip (sitting as the Building Appeals Board) [2015] VSC 564

[4] Colonial Range Pty Ltd v Victorian Building Authority [2014] VSC 272 at [27]