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Building Permit Levy Changes: Building Appeals Board Decision Overturned by the Supreme Court

Building Permit Levy

Changes to Building Permit Levies

Building Permit Levy Calculation Changes

On April 20, 2023 the Supreme Court of Victoria issued a landmark judgment which has significant implications for the construction industry, introducing substantial changes to the calculation of building permit levies for developers under the Building Act 1993 (Vic). This momentous decision has set a new precedent that demands careful attention and analysis, as it promises to reshape the regulatory landscape of the construction sector.

Building Appeals Board Decision Overturned

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In a significant legal development, the recent Supreme Court of Victoria ruling has overturned a decision made by the Building Appeals Board in the case of May21 Pty Ltd v Building Appeals Board. The judgment, handed down by Judge Stynes J in Melbourne, has raised important questions about the interpretation of the Building Act 1993 (Vic) and its implications for the estimation of building project costs.

The case involved May21 Pty Ltd challenging the Building Appeals Board decision, alleging an error of law.

At the heart of the dispute was the Building Appeals Board’s interpretation of Section 205I(2)(a)(i) of the Building Act, which raised questions about whether a building surveyor should estimate the cost of the entire building work solely based on the contract price or consider other factors.

The main question

The court clarified the following question:

‘Where a party applies for a staged permit under the Act and there is a contract for the whole of the building work, must the relevant building surveyor estimate ’the cost of the whole of the building work (including the cost of labour and materials)’, for the purpose of s 205I(2)(a)(i) of the Act, by reference only to the contract price of the contract?’

“No”

Judge Stynes J ruled the answer to this question was ‘No’. A building surveyor’s estimate, in this case, does not need to be made by reference only to the contract price.

In the previous decision by the Building Appeals Board, they had ruled ‘Yes’ on this point of law. Thus their decision was overturned.

During the hearing, May21 Pty Ltd, argued that the Board had misinterpreted the Act by insisting on the contract price as the sole basis for estimating building work costs. They contended that the building surveyor should consider additional factors to arrive at an accurate estimation. the Building Appeals Board, represented by the Victorian Building Authority, maintained that the contract price should be the primary consideration, and the Board’s interpretation aligned with the legislative intent.

In the judgment, the court ruled that the Board had indeed made an error in interpreting Section 205I(2)(a)(i) of the Act. The court found that the Act did not support the Board’s approach of relying solely on the contract price for cost estimation.

As a result, the court quashed the Board’s determination and orders from October 3, 2022. The matter has been remitted back to the Building Appeals Board for reconsideration in accordance with the correct interpretation of the law.

Building Appeals Board is held Accountable

This landmark ruling has significant implications for the construction industry, particularly in terms of how building project costs are estimated. The court’s decision also highlights the role of the judiciary in clarifying legal matters and ensuring fair and just outcomes in construction disputes. It reinforces the need for precise interpretation of legislation to avoid any ambiguity or misunderstanding in the application of the law.

The case offers a significant reassurance to all stakeholders within the building and construction industry. It reaffirms the principle that the Building Appeals Board, as a regulatory body, is held accountable for its decisions. The court’s ruling showcases the availability of recourse through the Australian court system, providing a mechanism to rectify any errors made by the Board in matters of law. This outcome instills confidence among industry professionals, ensuring a fair and just process for those seeking resolution before the Board.

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