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Building Permit Levy

New Developments in Building Permit Levy Calculations

by | Jun 16, 2023

Building Permit Levy Calculations have been bought into the limelight in a significant legal development in the construction industry where the Supreme Court overturned a decision made by the Building Appeals Board. The case, titled May21 Pty Ltd v Building Appeals Board, focuses on a judicial review and highlights an error of law on the face of the record. This ruling could have far-reaching implications for the building and construction sector.

The Building Appeals Board, a statutory body established under the Building Act 1993 (Vic), made a determination regarding the estimation of building work costs based on a contract price. However, this determination has been called into question and is now being reviewed by the court. The court has quashed the Board’s decision and remitted the matters for further consideration.

Potential Reductions in Building Permit Levy

The calculation of building permit levies is influenced by the estimated costs of building works. A higher estimation of costs leads to a higher building permit levy, while lower costs result in a smaller levy. The recent decision by the Supreme Court has implications for stakeholders in the Building and Construction Industry. The court has determined that the estimated costs of building works can be based on factors beyond just the contract price in specific situations. As a result, the estimated costs of building works may be significantly lower than the contract price. This ruling provides an opportunity for stakeholders to potentially reduce their building permit levies under certain circumstances.

May21 Pty Ltd v Building Appeals Board Case

The case primarily revolves around the interpretation and application of the Building Act 1993 (Vic). Specifically, it explores the requirements for a staged building permit and the factors that a relevant building surveyor should consider when estimating the cost of the entire building work. To support their arguments, both sides of the case refer to legal precedents and examine the interpretation of terms such as “estimate,” “having regard to,” “contract price,” and “staged permit.”

 A Landmark Decision

In May21 Pty Ltd v Building Appeals Board, the Supreme Court aimed to determine whether the Board’s interpretation of Section 205I(2)(a)(i) of the Building Act 1993 was correct and whether the relevant building surveyor should consider factors beyond the contract price when estimating building work costs. The court reviewed the official documents and reasons given for the Board’s decision, focusing on the error in interpreting the law and the principles of statutory construction.

The plaintiffs, represented by Counsel J Twigg KC, argue that the relevant building surveyor should consider additional factors beyond the contract price when estimating the cost of building work. They contend that the Board misinterpreted Section 205I(2)(a)(i) of the Act and that the term “estimate” encompasses a broader assessment. In contrast, the third defendant, the Victorian Building Authority, represented by Counsel P Hanks KC, asserts that the contract price should be the sole basis for the estimation and adoption by the relevant building surveyor.

The court’s decision clarifies its role in the case. While it can review the Board’s decision for legal errors, it cannot make a new decision or replace the Board’s authority. As the Board did not address one of the crucial questions in dispute, the court nullifies the Board’s determination and orders from October 3, 2022. The case will now be remitted back to the Building Appeals Board for reconsideration in accordance with the law.

Building Appeals Board – Not Above the Law

The outcome of May21 Pty Ltd v Building Appeals Board bears significant implications for the building and construction industry, particularly regarding the estimation of building work costs and the role of relevant building surveyors. The court’s ruling emphasizes the importance of legal accuracy and fair resolution in construction disputes, setting a precedent for future contractual disagreements.

L A Warren Lawyers encourages professionals in the building and construction industry to closely follow the developments in this case, as it may influence the approach to estimating building work costs and inform decision-making processes for building permits.

About L A Warren Lawyers
L A Warren Lawyers are experts in litigation and commercial disputes resolution, particularly in the Building, Construction, Property and Professional Services Industries.
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