Northern Territory Second Reading Speeches

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BUILDING AMENDMENT BILL (NO. 2) 2004

Bill presented and read a first time.

Dr BURNS (Transport and Infrastructure): Mr Acting Deputy Speaker, I move that the bill be now read a second time.

The bill amends the Building Act to address three distinct matters that are contained in three separate parts of the bill. The first is to clarify the powers of the Building Practitioners Board; the second is the validating provision to validate, retrospectively, all action taken in relation to declared building areas since 1993; and the third is to legislate to address an impasse on certificates of occupancy for works done prior to 1993. The first matter follows a decision of the Supreme Court; the second matter follows a decision of the Magistrates Court; and the third matter follows legal advice on liability and the legality of current practice.

These matters address existing provisions and are in contrast of the Building Amendment Bill that I introduced into the House on 14 October, which covered the new initiatives of registration of residential builders and home warranty insurance.

I will now address the three separate matters in turn. As Part 1 of the bill deals with preliminary matters, the three matters are described in Part 2, Part 3 and Part 4 of the bill. I will deal firstly with the powers of the Building Practitioners Board. First, I will address the matter contained within Part 2 of the bill that deals with, as I have said, the powers of the Building Practitioners Board and the Director of Building Control.

The Northern Territory Building Act 1993 established a building control system that is supported by private sector certification, with registered building practitioners having the major certification role and responsibility within the building control process. In recognition of the important role that private building practitioners have in the private certification system, the Building Practitioners Board was established under the act to register and monitor the performance of all building practitioners, and take appropriate disciplinary action where individuals do not meet their legislative responsibilities. The board is comprised of members appointed by the minister having experience in the building industry or matters connected with the building industry. The minister may also appoint the Director of Building Control to the board. The purpose of the board is to ensure that the qualifications and performance of building practitioners is commensurate with their responsibility under the Building Act to the Northern Territory community and government.

The introduction of the Building Act 1993 changed the government's role from one of operational administration of building control, to one of supporting private sector professionals in their achievement of appropriate building standards.

The Building Advisory Services Branch of the Department of Infrastructure, Planning, and Environment audits the performance of building practitioners in the building control system to ensure that industry participants fulfil their obligations under the Building Act 1993. As a result of this auditing, the board has held a number of disciplinary hearings in relation to the performance of building practitioners.

In January 2002, the performance of a building practitioner was referred to the board and an inquiry was commenced to ascertain whether breaches had been committed under the Building Act 1993. Based on legal advice, three members of the board were selected to make up an independent inquiry panel. The inquiry panel commenced proceedings on 26 August 2002. On 2 September 2002, the counsel for the building practitioner applied for and was granted an interim injunction in the Supreme Court preventing the panel continuing the inquiry. The grounds for the injunction were apprehended bias, lack of jurisdiction as the board delegated its disciplinary powers to three members of the board, and a breach of the principle of procedural fairness.

On 26 August 2003, the Supreme Court deemed that the disciplinary inquiry into the conduct of the building practitioner was invalid and null and void. The reasons given were twofold; namely, that the board bifurcated and delegated its disciplinary powers – and I am quoting here - '… to only some of their number in the absence of an express power to do so', and that a meeting of the Director of Building Control with the inquiring panel in the absence of the parties created a reasonable apprehension that the panel might not bring an impartial or unprejudiced mind to the resolution of the allegations against the plaintiff.

The decision has brought into question the ability of the board to effectively monitor and discipline building practitioners. Given that any future action taken under the current legislative provisions could be threatened by similar applications in the Supreme Court, legislative amendments are required to ensure that the building practitioners can be held accountable. While audits are consistent with the object of the act, legal advice is that there is no express power in the Building Act for anybody to conduct them. Therefore, failure to comply with any audit requests does not carry any statutory sanction. The functions and powers of the Director of Building Control are to be expanded to cover the auditing and investigation of complaints of building practitioners and building works. The director is to be given power to prosecute matters of conduct and performance of building practitioners to the board.

Traditionally, the director has been appointed as a member of the board, as allowed under the act. However, the director has declared an interest and not participated in the deliberative phase when bringing these matters as a result of audits to the board. Nevertheless, the director's membership on the board can, and has, created a reasonable apprehension that the board may not bring an impartial or unprejudiced mind to any issue brought before the board by the director. Accordingly, the bill states that the director is not to be appointed to the board.

The composition and powers of the board in relation to the conduct of inquires are to be better defined. Presently, the board performs two roles in that it produces the evidence against the practitioner and judges that evidence against the evidence produced by the practitioner. It is the prosecutor and judge. This dual role has the potential for bias. Therefore, it is proposed to restructure the role of the board so that it acts only in the capacity of adjudicator. The board is to be given the power to form an inquiry panel from its membership appropriate to the category of practitioner under inquiry.

It is proposed to expand the membership of the board to include at least one person with legal qualifications. This person could be appointed as a standing chair of the board's inquiry panel to ensure that principles of law and procedural fairness are followed. Under the provisions of the bill, the board, through an inquiry panel, may reprimand a person; require a person to pay the costs of, or incidental to, the inquiry; require a person to give an undertaking not to do a specified thing; impose a fine; suspend registration for not more than three years; or cancel registration. If an inquiry makes a finding favourable to a registered building practitioner, the board may pay that practitioner's reasonable costs of, and incidental to, the inquiry.

I will now address the second matter which relates to the validation of declared building areas which is contained in Part 3 of the bill. The Northern Territory Building Act 1993 established a building control system that is based on its application to the parts of the Territory commonly referred to as declared building areas. Section 6.2 of the Building Act 1993 states:
Parts 4 to 13 of the Building Act 1993 cover building certifiers, building standards, building permits, commencement, inspection and certification of building work, occupancy permits, protection of adjoining property, enforcement of safety and building standards, building appeals, general enforcement provisions, and liability.

On 29 September 1993, the Government Gazette published an instrument signed by the then minister. This was part of the commencement of operation of the Building Act 1993 for the purposes of section 6(2) of the act. This instrument stated that all provisions of Parts 4 to 13 apply to parts of the Territory designated in the Schedule and, I quote:
During 2003, the Director of Building Control initiated a prosecution action in the Magistrates Court in respect of an illegal building at Wagait Beach, Mandorah. On 19 March 2004, the magistrate found that the prosecution had not proven beyond reasonable doubt that the property in question at Mandorah fell within the jurisdiction of the act. This was because the prosecution had to prove that the relevant map was held in the physical office of the Director of Building Control on 1 September 1993. Evidence was, therefore, needed from a witness who actually saw the map in the office of the Director of Building control on that date. Due to the time that had elapsed and the staff changes, the prosecution could not produce evidence required and, accordingly, the prosecution failed and the charges were dismissed. In practice, there was and is a widespread understanding by building practitioners in those parts of the Northern Territory that are declared building areas. The case was lost on a technicality and the magistrate's decision brought into question the validity of the 1993 declaration of building control areas.

Given the ramifications of the decision, legal advice was sought on whether there may be grounds for appeal against the decision of the magistrate. Advice was received to the effect that an appeal was not likely to succeed. A legislative response was, therefore, chosen to put the matter beyond doubt. On legal advice, a new notice pursuant to section 62 was published in Gazette S29 on 16 September 2004. This notice included full technical descriptions and maps, and was signed by the minister. An erratum to correct typographical errors and a corrigendum to correct a reference in the technical descriptions were gazetted on 17 November 2004.

The purpose of the bill is to amend the act so that the recent notices in the Gazette are deemed to have been in effect from 1 September 1993. It has retrospective effect and validates all actions taken under Parts 4 to 13 of the act. I stress that this action makes no change to the declared building areas as they were commonly understood in 1993.

In conclusion, the matter of certificates of occupancy issued for works approved before 1993 is contained in Part 4 of the bill. The Building Act 1993 repealed the Building Act 1983. However, the effect of transitional provisions contained in section 170 of the Building Act 1993 is that the Building Act 1983 continues to have general application in respect of building works completed between its commencement and its repeal.

In particular, section 40 of the Building Act 1983, obliges the Director of Building Control to issue a prescribed certificate, 'a certificate of occupancy', certifying that the building work has been completed in accordance with the building permit, and that the building, as erected or altered, is fit for occupation. Section 41 of that same act makes occupation of any building illegal unless there is a certificate in respect of that building. It should be noted at this stage that there is no legal requirement to have a certificate of occupancy to sell a property.

Since the introduction of private certification in September 1993, the policy and practice has been to issue certificates of occupancy for all building works constructed prior to that date, subject to certain conditions. The building works included those covered by a building permit previously issued by the Northern Territory government, or other works such as those undertaken by a government body, or done before the subject land was included in a declared building area. In all cases, owners have been obliged to provide certification from private building practitioners that all works - whether engineering, glazing, termite treatment and so on - complied with the requirements of the day. The policy extended to building works approved prior to the commencement of the Building Act 1983. Such building works were regulated by the Building Ordinance 1955.

The Department of Infrastructure, Planning and Environment has encountered many practical problems in implementing this policy. Invariably, over the years, unapproved works have occurred on a subject property. The records are generally incomplete. Legal complexities abound. Many contracts of sale are made subject to a certificate of occupancy and, as the settlement date looms, the anxiety rises - the government is accused of jeopardising the sale.

Increasingly, the government is being held liable for a certificate of occupancy, with owners seeking compensation, if and when structural problems have been found with the building subsequent to the issue of the certificate of occupancy. In recognition of the inherent weaknesses of the current policy, a position was taken in 2001 to no longer issue certificates of occupancy for building works which did not require a building permit at the time of construction. This covered works undertaken by the Commonwealth government, and any building works undertaken before the subject land was declared to be in a building area. In these cases, the buildings were legal at the time of construction and, because of existing use rights, the building works remain so.

Given the concerns with the practice of issuing certificates for the many thousands of pre-1993 works that were not finalised with the issue of a certificate of occupancy, further legal advice was sought. The advice was that, in respect of building works completed under the Building Ordinance 1955, there is no power to issue certificates of occupancy. Further, the advice stated that the Director of Building Control must satisfy himself that the building works completed under the Building Act 1983 comply in all respects with the requirements of today's standards and not those at the time of construction.

In light of this advice, a further change of policy was proposed in late 2003. Given the number of perceived practical problems in implementing the policy, and public concerns, I instructed the department to undertake further consultation with industry to further consider the proposed policy and other options. Following a number of meetings with key industry representatives, agreement was reached in September 2004 for legislated change. Hence, this bill is now before the House.

The main provision in the bill is to remove the legal requirement for old building work to have a certificate of occupancy. This recognises the reality with the passage of time of up to 49 years. It is very difficult to determine the actual structural construction due to non-existent or incomplete records, or inaccessible building components.

There are two matters that should be addressed in the purchase of a building. First is its legal status. The bill will allow a building certifier to advise a client that a pre-1993 building is legal if a building permit was required at the time of construction, a permit was issued, and an inspection reveals that the building is substantially in accordance with the permit. The second matter is the current state of the repair of the building. This is a consumer consideration that is best addressed by a building condition report from a building practitioner. This is not a matter for regulation, but a matter of consumer awareness and choice.

An education program is proposed for the real estate industry and the public on the importance of the two matters referred to above; namely, the legal status of a building and its current state of repair.

In conclusion, this bill will resolve many of the operational concerns with the Building Act as it stands at present. The introduction of private certification in 1993 was an enormous reform of the building control regime. The Northern Territory was the first jurisdiction to go down this road, to the extent of placing complete responsibility of issuing permits with the private sector. This left the public sector with the role of regulating the standards required for building works, registering building practitioners, auditing their performance, and keeping the official records of buildings.

This bill clarifies the powers of the Building Practitioners Board in ensuring the performance of the private sector practitioners, validates the buildings areas intended in 1993, and addresses the problems associated with works approved before 1993.

However, there are still more amendments to come. I foreshadow further housekeeping amendments to the Building Act in 2005. There were a number of general operational matters raised in the discussion paper on the review of the Building Act that was the subject of consultation last year. These matters have not been included in the two bills to date, as they have a lower priority. However, it is my intention to address them in a further bill next year. I will take the opportunity, at that time, to change the penalty system in the act from dollars to penalty units, and review the level, as there is evidence that the current penalty provisions are far too low.

Mr Acting Deputy Speaker, I commend the bill to honourable members.

Debate adjourned.

 

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