Building Corruption Does Not Occur In A Vacuum It Is Enabled
When the regulatory standards and integrity of institutions established to guide and govern us are compromised, it can have disastrous consequences for ordinary citizens. This is essentially what happened in the State of Victoria when the building regulator mandated by Parliament to monitor and enforce compliance failed its statutory obligations.
Privatization and the rise of the crooked surveyor
The privatization of building inspections and a building regulator not properly monitoring the industry allowed unethical practitioners to run rampant. The extent of harm being caused in the community drew the attention of investigative journalists.
Marika Dobbin (SMH 02/07/2009) reported the high-profile case of building surveyor Albert Mitchell. The Building Practitioners Board heard that thousands of permits across Melbourne were issued in the practitioner’s name without his ever conducting building inspections.
That responsibility was relinquished to an unregistered person.
“Between 2007-08 alone 1,100 building permits were issued but never reported to the Building Commission”.
It was also found the surveyor failed to detect significant building faults and work that was different from approved plans.
That same case was followed by Ellen Whinnett (Herald Sun 27/09/2009). It was noted that more than $400,000 in fees were paid by customers but never passed on to authorities. The Building Practitioners Board found the practitioner guilty under s179 (1)(d) of the Building Act 1993, by a pattern of conduct showing he was not a fit and proper person to practice as a building surveyor.
No mention is made of the unpaid fees.
A second surveyor was also deregistered after complaints relating to 580 sites across Geelong and the Surf Coast.
Within the Whinnett article, the Victorian Building Commissioner is quoted as saying
“the vast majority of our practitioners do the right thing, but for the small percentage that don’t, we make sure they are brought to account”.
Marika Dobbin’s later story, ‘Doubts on building permits spark thousands of audits ’(SMH 09/02/2010), informed the public that police were investigating the head of Melbourne surveying company MC Building Consultants who had been issuing dodgy building permits over six years. The company collapsed
“after its head surveyor Albert Mitchell was deregistered”.
At face value, these cases suggested the Building Commission was fulfilling its regulatory responsibilities but all was not as it seemed.
Clay Lucas and Adam Carey’s article ‘Building permits system damned’ (The Age 07/12/2011), cited the Victorian Auditor-General’s 2011 findings that
“The Building Commission could not demonstrate the building permit system was working effectively or that building surveyors were effectively discharging their role to uphold and enforce minimal building and safety standards.”
Richard Baker and Nick McKenzie also shone a penetrating light on the workings of the Victorian Building Commission (The Age 11/04/2012). Of particular concern was “the widespread use of unregistered inspectors that had very serious implications for insurance policyholders, and the legality of house contracts of sale”.
Importantly it was noted that
“Up to 30 officials and consultants who worked for the industry watchdog were being investigated for alleged corruption, serious misconduct and harassment”.
The once strong regulatory system appeared to be functioning more like a protection racket for unethical surveyors than a statutory body mandated by the Parliament to monitor and enforce compliance.
Changing of the guard
Continuing consumer complaints and media reporting about regulatory failings eventually led to forensic investigations into the competence and integrity of the Building Commission. The 2011 Victorian Auditor-General’s Office (VAGO) Report severely criticised the Commission as a regulator and highlighted a need for reform. The 2012 Ombudsman Report also identified cronyism within the Commission along with failures of administration and proper governance.
Such broad condemnation led to the founding of the Victorian Building Authority (VBA), established in 2013 as the ‘one-stop-shop’ for all building regulation matters. The Building Practitioners Board was abolished in 2016 and the VBA now monopolizes practitioner registration, disciplinary actions and penalties under a ‘show cause’ process.
As it turned out the ‘new guard’ was merely a brand name change with little effect. In reality, shoddy and unsafe developments, cladding risks, and unethical surveyors continued to cause immense harm in the community.
In 2019, Benjamin Preiss reported that a building surveyor fined for shoddy work four years previously continued to practice even when struck off by his industry’s own professional body (The Age 21/08/2019).
The practitioner held hundreds of ‘open permits’ across Melbourne but the VBA refused to disclose how many buildings surveyed by the practitioner were already under construction. The regulator eventually suspended the surveyor on ‘public interest’ grounds.
Predictably, the said practitioner then lodged an appeal which is par for the course in building dispute matters. The longer the appeals process drags out the more likely it is that serious allegations will be minimised or omitted altogether. Effectively this tactic allows surveyors to walk away with a small fine that may, or may not ever be paid.
Continuing public outcry about unscrupulous building surveyors signing off on buildings that failed safety standards and cost owners millions of dollars to repair, again forced authorities to be seen to be taking some sort of action.
In ‘Crackdown on cowboy surveyors’ (The Age 02/03/2020), Benjamin Preiss reported that a new code of conduct would be introduced in Victoria that would “prevent the approval of property developments that fail quality and safety standards”.
The draft code says surveyors may face sanctions from the Victorian Building Authority if they fail to properly carry out their duties. The code also warns against engaging in fraudulent, misleading, dishonest, corrupt, criminal or improper conduct. Again this is all ‘smoke and mirrors'.
Instead of employing vague, pretentious language, the new code of conduct should unambiguously state that disciplinary actions will be taken against those engaging in unlawful acts of the kind cited above, and negligent surveyors will be deregistered by the Victorian Building Authority.
Unlawful and unconscionable conduct must immediately be trounced upon by the regulator, not framed in deceptive double-speak to appease industry and protect wrongdoers.
In the same Preiss article (02/03/2020), the Australian Institute of Building Surveyors (AIBS) Victorian director insisted most surveyors acted with a high degree of integrity but admitted “there were some unscrupulous surveyors who had got away with poor work for far too long”. He then cautioned that the ‘new code’ of conduct will only be “as good as the enforcement”. Of course that regulatory responsibility remains with the Victorian Building Authority and there is really no room for excuse.
Under the Building Act 1993, the regulator has always had powerful tools at its disposal to enforce compliance and prosecute breaches in the residential building industry. This is particularly so where unlawful inspections are being conducted by unregistered persons.
Section 176 Offences
The carrying out of functions under Part 4 of the Building Act 1993, can only be performed by a registered building surveyor or registered building inspector. The carrying out of such functions by unregistered persons has always been a breach of section 176(1A) of the Act.
A person who is not registered in the appropriate category or class under this Part must not:
(a) Practise as a building inspector; or
(b) Hold himself or herself out as being registered under this Part or in a particular category or class of registration; or
(c) Hold himself or herself out as being qualified to practice as a building practitioner either generally or in a particular class of work.
Irrespective of the supervision and training given to an unregistered inspector performing inspections, the act of conducting inspections at mandatory notification stages of building work and issuing directions are the functions of a building inspector or surveyor.
Therefore people who carry out such functions must be registered by the Building Practitioners Board (the Board) under Part 11 of the Act.
Not only has it always been an offense for an unregistered person to conduct building inspections under Sec 176 of the Act; the building regulator could also choose to prosecute building surveyors for counseling unregistered inspectors to commit breaches of Section 176(1A)(c)of the Act.
Furthermore, employing an unregistered person to do the work of a building surveyor was unprofessional conduct for the purposes of s179 (1) (a) of the old Building Act and unprofessional conduct under s179 (1)(b) of the amending Act.
Clearly, there has always been plenty of scope for the Building Commission and the Victorian Building Authority to reign in negligent surveyors. In both instances, the fault line appears to have been a weakened regulator captured by the demands of industry and insurance. Crooked surveyors were buoyed knowing that the regulatory system was actually functioning in their favour. If caught out, the usual strategy was to simply blame others for the problem.
‘The AIBS made me do it’
In the Victorian building industry, office staff have long been unfairly maligned as being the source of building permit problems and payment blunders. If a crooked surveyor’s mitigation plea of the ‘incompetent employee’ did not hold up to scrutiny, there was always the 2008 Australian Institute of Building Surveyors (Victoria) Practice Note to fall back upon.
The Practice Note asserted that s34 and s35 of the Act in some way justified building surveyors engaging unqualified persons to conduct inspections. Of course this was merely opinion. A holistic reading and proper interpretation of the Building Act and Regulations confirmed that only registered practitioners can undertake building inspections.
The case of Stanbury v Victorian Building Authority (Review and Regulation)  VCAT 1645 (23 October 2019) is instructive. The VCAT Member rejected legal argument that the inclusion of s35B meant that prior to its inclusion, an inspection carried out pursuant to s 34 or 35 could have been carried out by anyone the relevant building surveyor ‘caused’ to carry it out.
“All the inclusion of 35B did was highlight that the legislation was not expressed as precisely and clearly as it could have been.”
It is and always was, unlawful for unregistered persons to conduct building inspections and equally unlawful for surveyors to counsel unregistered persons to partake in the said inspections.
New pathways to regulatory redemption
Should the Victorian Government ever be serious about eliminating systemic corruption in the residential building industry, there would need to be a dramatic, almost revolutionary shift in regulatory processes and procedure. Imagine for a moment if the following suggestions were enacted.
∙ First resort insurance reinstated with the onus of responsibility put back on negligent practitioners not their victims.
∙ Serial offenders who cause harm as a matter of course be deregistered.
∙ The function of the Victorian Building Authority be reduced to registering practitioners, recording disciplinary findings and issuing press releases. Huge financial resources could then be redirected to services that would better protect consumers.
∙ Demolish the ‘show cause process’ that offers no real consumer protection and allows unethical practitioners to routinely appeal their cases at the VCAT, which can take many long years to resolve, thus further harming owners and their families.
∙ Transfer civil actions against building practitioners from Tribunals to a dedicated Court of Law, where proper rules of evidence are observed and judicial scrutiny applied.
∙ Expert witnesses be required to hold tertiary qualifications, extensive experience and professional indemnity insurance.
∙ Building dispute hearings remain open to the public.
∙ Transparency and accountability of the building regulator to be increased not decreased as is happening now.
The benefits of radical change in the regulatory system would be advantageous for all stakeholders. The expulsion of dishonest practitioners would strengthen the integrity of the building industry as a whole.
Consumers would benefit by having their cases heard in a timely manner in a proper court of law which in and of itself, would act as a deterrent to wrongdoers. Insurance companies would also gain by the forced exodus of unethical practitioners because over time it would ensure fewer negligence claims being lodged.
Restore integrity and stop the harm
Like everyone else in the building industry, surveyors have a duty of care to act responsibly and at the very least, maintain a basic grasp of the Building Act and Regulations before putting up a business shingle and taking payment for works.
Building a new home is usually the biggest investment and most valuable asset ordinary people hold. Practitioner negligence can inflict great social harm and cause financial ruin. In any other societal setting, grand theft of a family’s greatest monetary asset would immediately incur criminal sanctions and be dealt with accordingly.
Why should dishonest building surveyors remain above reproach because the item stolen is the value and integrity of a building?
Likewise, the building regulator has a statutory obligation to monitor and enforce compliance and take proper disciplinary actions against practitioners when the Building Act and Regulations are breached. Where it is evident a practitioner’s actions do not accord with the law and the regulator intentionally fails to act intrinsically suggests culpability.
Real consumer protection and the demise of corruption in the residential building industry will never eventuate without proper structural reform.
No amount of rhetoric or sloganeering about new ‘codes of conduct’ will erase the fact that the Victorian Government continues to oversee and pander to a broken regulatory system. A new order that properly ensures consumer protection could be forged but it would entail collective courage, intellect and strong political will.
This is not a time for hiding in the corridor. In the public interest, right-thinking Parliamentarians of all persuasions need to acknowledge what is actually transpiring here and dutifully bring the matter under discussion. To not act against crookedness is to enable.
Baker, R. and McKenzie, N. 2012, ‘Dodgy building checks exposed’, The Age, April 11. Dobbin, M. 2009, ‘Buildings may be unsafe’, The Sydney Morning Herald, July 2.
Dobbin. M. 2010, ‘Doubts on building permits spark thousands of audits’, The Sydney Morning Herald, February 9.
Lucas, C. and Carey, A. 2011, ‘Building Permits system damned’ The Age, December 7. Preiss, B. 2019, ‘Surveyor’s history of dodgy work’, The Age, August 21. Preiss, B. 2020, ‘Crackdown on cowboy surveyors’, The Age, March 2. Whinnett, H. 2009, ‘Dodgy builders hit with penalties’, Herald Sun, September 27.
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