Deliberately misleading CC issued after work started

Tuesday, 1 November, 2016
A certifier knowingly made false and misleading statements when issuing a CC, and issued it after substantial building work had already been carried out. He also accepted a PCA appointment from the builder, who didn't own the property so wasn't entitled to make the appointment.

Lessons identified from this case

  • When issuing a construction certificate (CC), don't rely on a site inspection carried out weeks or months ago – things change on site that certifiers won't necessarily know of. Carry out a fresh inspection to check work hasn't started, then issue the CC (if approved) as soon as practicable (same day if possible).
  • Only accept applications from the person with benefit of development consent. A builder can't apply for a CC or appoint a principal certifying authority (PCA) unless the builder owns the land.
  • Don't issue a CC unless satisfied all preconditions of development consent are met. For example, don't accept assurance that outstanding payments will be made before work starts – obtain evidence of payment, then issue the CC.
  • Certifiers have a regulatory role and must not cut corners despite any general expectation that a certificate will be issued. It's the client's responsibility to ensure work is ready on time.

Setting the scene: relevant legislative provisions

Environmental Planning and Assessment Act 1979

  • Section 109E(1)(a): the person with the benefit of development consent must appoint a PCA.
  • Section 109E(1A): a contractor cannot appoint the PCA unless the contractor also owns the land.
  • Section 109F(1A): a CC has no effect if issued after building work has physically commenced on the site.

Environmental Planning and Assessment Regulation 2000

  • Clause 139(1A): only the person eligible to appoint the PCA may apply for a CC.
  • Clause 146(b-c): relevant preconditions of development consent must be met before a CC is issued.

Code of Conduct under Building Professionals Act 2005 section 4(2)(b)

The code of conduct requires accredited certifiers to act in the public interest, with honesty, impartiality and integrity. For example:

  • Requirement 3 provides that a certifier must not misinform or otherwise mislead
  • Requirement 4 provides that a certifier must act honestly.

Case details

Approval was given to demolish existing structures on a site and build six townhouses. The demolition was approved via a complying development certificate (CDC), and a separate development consent covered the townhouses.

CC must not be issued after work commences

The certifier first visited the site to issue a CDC for the demolition. About five months later, he issued a CC for the townhouses without re-inspecting the site, believing the earlier inspection fulfilled his responsibility to confirm building work hadn't started.

The certifier should have recognised that five months is a long time between inspections, and things can change on site that certifiers may not be aware of. This was certainly the case – the CC was issued after substantial work had been carried out on the basement car park, ground floor slab and brickwork.

The builder had also urgently requested the CC the day before submitting an application for it. This sense of urgency should have prompted the certifier to take a particularly cautious approach. He should have been mindful that a certifier is a public official with a regulatory role, whose decisions must not be influenced by pressure from clients or builders

A certifier mustn't make false or misleading statements

The development consent identified a number of conditions that had to be satisfied before a CC could be issued, but the certifier issued the CC despite some conditions being outstanding.

  • Development contributions and an infrastructure fee (totalling more than $40,000) hadn't been paid to the council.
  • Registration documents for the stormwater drainage easement hadn't been submitted to, and approved by, the council.

The builder had a letter from a lawyer confirming the drainage easement was in the final stages of registration. In relying on this, the certifier didn't insist on the registration documents being sent to the council as required. A lawyer's letter was not an admissible alternative to council approval.

Aware the above conditions hadn't been met, the certifier knowingly made false statements by issuing a CC that referred to copies of receipts and registration documents (which weren't yet in existence). He also instructed the builder to ensure the fees were paid and then lodge a copy of the CC with the council. However, the builder lodged the CC before the fees were paid.

Builders can't appoint a PCA unless the builder owns the land

The builder was also the applicant for the CC and for the PCA, despite not having the benefit of development consent and so not entitled to make either application. Nevertheless, the certifier accepted both applications.

Although the owner had given written permission to the builder to apply for a CC, the letter of authority didn't extend to appointing a PCA. Regardless of any letter, the certifier should have known the applications had to be made by the owner.

The Board's findings

The Board's Disciplinary Committee found the certifier's conduct to be a category D 'Moderate infringement' under the Disciplinary Penalty Guidelines. These attract a $5,000 to $20,000 fine and/or non-financial penalties.

The certifier was:

  • fined $15,000
  • reprimanded
  • ordered to complete the certification short course (University of Technology, Sydney) within 12 months.

Conclusion

The certifier acted in a willfully inappropriate and careless manner by issuing a CC:

  • without inspecting the site to check that building work hadn't commenced
  • knowing certain preconditions of the development consent hadn't been met
  • making deliberately false and misleading statement about documents that didn't exist
  • giving instructions to the builder that, in effect, perpetuated the misleading statements in the CC.

This case also reminds certifiers to maintain their regulatory focus as public officials and not to cut corners if a builder or client says a certificate is needed urgently. The legislation specifies who can apply for certificates and what documents must accompany the application, and the development consent will indicate which conditions need to be met at each stage.

The significant penalties imposed demonstrate that the Building Professionals Board will not tolerate conduct by certifiers that falls short of what the community expects of public officials.

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