IN THE SUPREME COURT OF VICTORIA Not Restricted

AT MELBOURNE

COMMERCIAL AND EQUITY DIVISION

No. S CI 1098 of 2014

COLONIAL RANGE PTY LTD (ACN 070 855 220) Applicant

VICTORIAN BUILDING AUTHORITY (and others) Respondents

AND

No. S CI 1264 of 2014

COLONIAL RANGE PTY LTD Applicant

BUILDING APPEALS BOARD (and others) Respondents

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JUDGE: VICKERY J

WHERE HELD: Melbourne

DATE OF HEARING: 1 April 2014

DATE OF JUDGMENT: 4 April 2014

CASE MAY BE CITED AS: Colonial Range Pty Ltd v Victorian Building Authority and Ors

MEDIUM NEUTRAL CITATION: [2014] VSC 272

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ADMINISTRATIVE LAW – Judicial review – Natural justice – Victorian Building Authority (“Authority”) – Decision of the Authority under s 81(1) Building Act 1993 (Vic) – Decision of the Authority to consent to termination of a private building surveyor – Whether decision amenable to judicial review under the Administrative Law Act 1978 (Vic) – Whether Authority to afford natural justice to adjoining owner when making the decision – Scheme of the Building Act 1993 (Vic) – Role and functions of private and municipal building surveyors under the Building Act 1993 (Vic) – Nature of the decision made under s 81(1) Building Act 1993 (Vic) – Contrasted with decision of owner to appoint a building surveyor under s 78 Building Act 1993 (Vic) – Obiter dicta observations on the potential application of R v Panel on Take-overs and Mergers, Ex parte Datafin Plc [1986] EWCA Civ 8 to decision of owner to appoint a building surveyor under s 78 Building Act 1993 (Vic) – Ground of review on natural justice not made out – Discretion would have been exercised against relief in any event.

BUILDING - Scheme of the Building Act 1993 (Vic) – Role and functions of private and municipal building surveyors under the Building Act 1993 (Vic) – Nature of the decision made under s 81(1) Building Act 1993 (Vic) – Contrasted with decision of owner to appoint a building surveyor under s 78 Building Act 1993 (Vic).

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APPEARANCES: Counsel Solicitors

For the Applicant Mr N Magee QC with Hoeys Lawyers

Mr J M Forrest

For the First and Second Mr R M Niall SC with Victorian Government Respondents Ms C Harris Solicitor

For the Fourth Respondent Mr Hanks QC with Maddocks Solicitors

Mr A Woods

HIS HONOUR:

Background

1 The Applicant, Colonial Range Pty Ltd (‘Colonial’) is the registered proprietor of a property situated at 140 Queen Street, Melbourne and another adjoining parcel of land situated at 21-27 McKillop Street (‘Colonial’s Land’). A planning permit has been issued to build a hotel and retail premises on these sites.

2 The Fourth Respondent, CES Queen (Vic) Pty Ltd (‘CES Queen’) is the registered proprietor of a property situated at 150 Queen Street, Melbourne (‘CES Queen’s Land’) which adjoins Colonial’s Land. A planning permit has been issued to build a 71 storey residential tower on this site.

3 CES Queen wishes to demolish the present building situated on its land to make way for its proposed development.

4 Building Permits have been issued which permit the demolition.

5 Disputes have erupted between Colonial and CES Queen as to protection works which are necessary to protect the building on Colonial’s Land from damage caused by the proposed demolition. Colonial is principally concerned that, unless adequate protection works are undertaken, vibrations arising from the demolition will cause the façade of its building to collapse.

6 CES Queen appointed Mr Stasi Galanos (‘Mr Galanos’) as the private building surveyor for its building works.

Proceeding No. S CI 1264 of 2014 (the ‘Injunction Proceeding’)

7 Proceeding No. S CI 1264 of 2014 arises in the following circumstances:

(a) Colonial is the Plaintiff. It is also the Appellant in a proceeding presently being conducted before the Building Appeals Board which commenced on or about 19 February 2014 (the ‘Appeal Proceeding’);

(b) In the Appeal Proceeding, Colonial has appealed against a protection work determination made by Mr Shane Leonard (‘Mr Leonard’), who was the relevant building surveyor, dated 5 February 2014;

(d) The hearing of the Appeal Proceeding is scheduled to commence in the week commencing 7 April 2014;

(e) In the Appeal Proceeding, Colonial seeks the following principal order: an injunction to restrain the Building Appeals Board (the ‘Board’), which is the First Defendant, from hearing the Appeal Proceeding until such time as the Court has determined proceeding No. S CI 1098 of 2014.

8 In these reasons, proceeding No. S CI 1264 of 2014 will be called the ‘Injunction Proceeding’.

Proceeding No. S CI 1098 of 2014 (the ‘Review Proceeding’)

9 In proceeding No. S CI 1098 of 2014 the Applicant, which is Colonial, seeks a review of the decision of the delegate of the Victorian Building Authority (the ‘Authority’) dated 23 December 2013 purportedly made pursuant to s 81 of the Building Act 1993 (Vic) (the ‘Act’), pursuant to which the Authority gave its consent to the termination of the appointment of Mr Galanos as the private building surveyor for the demolition works on CES Queen’s Land at 150 Queen Street (the ‘Review Proceeding’).

10 The Review Proceeding was adjourned to Tuesday 1 April 2014 for hearing.

11 In these reasons I will deal first with the Review Proceeding.

12 Review Proceeding was commenced by Colonial by application made to the Court under the Administrative Law Act 1978 (Vic) (the ‘ALA’). Colonial applied for an order that each of the Respondents to that proceeding show cause as to why the decision of the Authority, which is the First Respondent, made pursuant to s 81 of the Act on 23 December 2013 to consent to the termination of Mr Galanos as the private building surveyor in respect of the demolition of 150 Queen Street, should not be reviewed.

13 Although other grounds were initially pleaded, in the course of submissions Colonial, having abandoned the other grounds, relied on only one ground of review, namely that the Authority failed to observe the rules of natural justice.

14 By way of relief, Colonial sought an order in the nature of certiorari and a declaration.

The Legislative Scheme in Relation to Private Building Surveyors

15 The Authority is established under s 193 of the Act and is subject to the direction and control of the Minister. It has a broad suite of functions that include a function to monitor and enforce compliance with the Act and regulations. It acts ‘on behalf of Victoria’ in respect of certain functions, and has powers to do all things necessary or convenient.

16 The functions and obligations of building surveyors are prescribed in the building control legislation. Building surveyors play a critical role in achieving the objects of the legislation, particularly in maintaining public safety and protection in relation to the design and construction of buildings in Victoria.

17 The building control legislative scheme in Victoria comprises the Act, the Building Regulations 2006 (the ‘Regulations’), the Building Code of Australia 2007 (which forms part of the Regulations) and relevant Australian Standards (as referenced in the Building Code of Australia).

18 The public policy underpinning this legislative scheme is to facilitate and promote the cost effective and safe construction of buildings, the construction of environmentally and energy efficient buildings, to enhance the amenity of buildings and to protect the safety and health of people who use buildings and the local environs.

19 The Authority has certain functions in relation to building surveyors and the work undertaken by building surveyors, which for the most part are set out in Pt 6 and Sub Div 5 of Pt 12 of the Act.

20 However, the Authority does not register nor discipline building surveyors, that function being given to the Building Practitioners Board, which is required to assume those responsibilities in respect of ‘building practitioners’ including building surveyors.

21 Under the Act , the functions of building surveyors are performed by municipal building surveyors, who are building surveyors appointed by a municipal council as its municipal building surveyor for the purposes of the Act, and private building surveyors, who are privately appointed.

22 The important functions assigned to building surveyors under the Act may be summarised as follows:

(a) In Part 6, s 76 the prescribed functions of a relevant building surveyor are (a) the issuing of building permits; (b) the carrying out of inspections of buildings and building work under part 4; (c) the issuing of occupancy permits and temporary approvals under Part 5;

(b) In Part 7, s 87 the prescribed function of a relevant building surveyor is to determine protection works required to protect an adjoining property notwithstanding differing opinions expressed by an owner and an adjoining owner;

(c) Sections 106, 111, 112, 113 of Part 8 confer power on a relevant building surveyor to issue notices and orders including stop work orders with respect to building works to ensure the works are being carried out in accordance with the Act and the Regulations, including any protection work requirements.

23 Part 6 of the Act regulates the appointment of private building surveyors.

24 Under s 78 of the Act, it is the person who is entitled to apply for a building permit, occupancy permit or temporary approval under the Act in respect of a building or building work, which is usually the owner or developer of the relevant land or its agent, who appoints a private building surveyor to carry out the s. 76 functions. The Authority does not appoint private building surveyors, nor have any role in their appointment. This assumes some importance in the present application.

25 Pursuant to s 79(1) of the Act, a private building surveyor must not accept an appointment to carry out any of the functions set out in s 76 in relation to a building or building work in a number of instances. Section 78(1) relevantly provides:

(1) Subject to subsection (2), a private building surveyor must not accept an appointment to carry out any functions set out in section 76 in relation to a building or building work if the private building surveyor—

(a) prepared the design of the building or building work; or

(b) is, or within the prescribed period was, employed or engaged by the person or body which prepared the design of the building or building work other than an appointment to carry out a function set out in section 76; …

26 The prohibitions in ss 79(1)(a) and 79(1)(b) prohibitions may be contrasted. The prohibition in s 79(1)(a) is a prohibition which applies where the building surveyor has prepared the design of the building or the building work. Section 79(1)(b), on the other hand, does not require the building surveyor to have been involved in the design of the building; the prohibition applies if he has been employed or engaged by the person who has designed the building within the prescribed period.

27 Section 79 of the Act has the purpose of ensuring that a private building surveyor is independent and is in a position to act impartially in undertaking the important functions assigned to this role by the legislation.

28 This objective is also reflected in the Regulations. Regulation 1502(c) requires building practitioners (which includes a relevant building surveyor) to receive remuneration for his or her services as a building practitioner solely by reference to the professional fee or other benefits specified in the contract of engagement or by reference to the salary and other benefits payable by the building practitioner's employer.

29 Practice Note 2006 – 20 issued by the Building Commission in relation to protection work illustrates the independence and impartiality required of a building surveyor in undertaking his or her functions. Although this document cannot bear directly upon the construction of the legislation or the Regulations because it stands outside the legislative framework, it does provide evidence of the practical context in which the legislation and the Regulations are intended to operate. The Practice Note relevantly provides:

The RBS [Relevant Building Surveyor] can play a positive role in assisting all parties to reach a successful outcome when protection work is required. But the RBS must take care to ensure that they do not become an advocate for one side or the other …

The RBS acts as an independent decision maker in relation to protection work. The owner should provide the RBS with information that will enable the RBS to determine the appropriateness of the proposed protection work if the adjoining owner disagrees with the proposal or requests further information.

The RBS should refrain from acting as an arbiter where there is disagreement. If the determination is challenged via an appeal to the BAB, then the RBS should provide the BAB whatever evidence and/or information is necessary in order for the BAB to resolve the situation.

30 In further recognition of the important functions performed by building surveyors in the Victorian building industry, the Act, in combination with the Regulations, set standards for the registration of building surveyors and the approval of such registration by the Building Practitioners Board. Section 176 makes it an offence for a person who is not appropriately registered, inter alia, to practise as a building surveyor.

31 In support of this regime of registration s 169 (Part 11) provides for the registration of building practitioners (including building surveyors) and requires an applicant to provide prescribed information as to character and, pursuant to s 169A must consent to a police check if required by the Board. Pursuant to r 1509 of the Regulations – the prescribed information as to character includes:

(a) the applicant has within the last 10 years as an adult or the last 5 years as a child, been convicted or found guilty of an indictable offence or an offence that, if committed in Victoria, would be an indictable offence involving fraud, dishonesty, drug trafficking or violence; or

(b) the applicant has ever been insolvent under administration; or

(c) any licence, permit, registration or other authority enabling the applicant to work as a building practitioner in Victoria or in an equivalent occupation in the building and construction industry in another State or Territory has ever been cancelled or suspended; or

(d) the applicant has ever been disqualified from holding, or been refused a licence, permit, registration or other authority enabling the applicant to work as a building practitioner in Victoria or in an equivalent occupation in the building and construction industry in another State or Territory; or

(e) the applicant has been fined, reprimanded or cautioned for any breach of an Act, regulations, rules, professional conduct or code of ethics, in relation to working as a building practitioner in Victoria or in an equivalent occupation in the building and construction industry in another State or Territory; or

(f) any insurer has ever declined, cancelled, or imposed special conditions in relation to the provision of professional indemnity insurance, public liability insurance, or any other indemnity insurance in respect of the applicant working as a building practitioner in Victoria or in an equivalent occupation in the building and construction industry in another State or Territory.

32 The standards expected to be observed by a building surveyor are also buttressed by the Regulations. Regulation 1502(a) requires building practitioners (including a relevant building surveyor) to perform their work in a competent manner and to a professional standard.

33 Section 81 of the Act is central to the present application. It provides:

81 Termination of appointment

(1) Subject to subsection (3), the appointment of a private building surveyor under this Part cannot be terminated without the written consent of the Authority.

(2) If building work in respect of which a private building surveyor is appointed is terminated before commencement or completion, the owner of the land on which the building work was or was to be carried out must notify the Authority and the relevant municipal council of the termination of the building work.

(3) On receipt by the Authority of a notice under subsection (2), the appointment of the private building surveyor is deemed to be terminated.

(4) If the appointment of a private building surveyor is terminated under subsection (3), a private building surveyor or municipal building surveyor must not complete the first private building surveyor's functions in respect of the building work without the written consent of the Authority.

(5) This section applies despite anything to the contrary in the terms of the appointment or in any other Act or rule of law.

34 It will be noted that s 81 does not confer on the Authority any power to appoint any replacement private building surveyor. Its power under s 81 is confined to consenting to the termination of the appointment of a building surveyor.

35 It is also to be noted that the discretion conferred by s 81(1) on the Authority to grant or withhold its consent is ‘unconfined by the terms of the statute’.

36 However, the statutory purpose which underpins the s 81(1) consent of the Authority to the termination of the appointment of a private building surveyor is to ensure that an owner cannot terminate the appointment of a building surveyor without the scrutiny of the Authority. In the course of maintaining building standards, a building surveyor will often be placed in a position of having to make decisions which do not coincide with, and indeed may be directly opposed to, the economic and time constraints facing the builder or the owner.

37 By the mechanism of the s 81(1) consent of the Authority, the Act ensures that a person who is merely dissatisfied with the decisions of the privately appointed building surveyor, cannot simply terminate the appointment. By this means, the necessary independence and impartiality of the building surveyor receives a measure of legislative protection.

38 Pursuant to s 82 of the Act, the Authority is given a further role to play in the termination process. In the event of the termination being consented to by the Authority under s 81(1), it may give appropriate directions to facilitate the transfer of the terminated private building surveyor’s functions to a newly appointed replacement building surveyor (whether private or municipal). This power is to be read alongside s 83 of the Act which in effect provides for the newly appointed replacement building surveyor to ‘step into the shoes’ of the terminated private building surveyor. These sections are set out below:

82 Directions of Authority

(1) If—

(a) the Authority consents to the termination of an appointment under section 81(1) and a new private building surveyor or a municipal building surveyor is to complete the private building surveyor's functions; or

(b) the appointment of a private building surveyor has been terminated under section 81(3) and the Authority consents to a new private building surveyor or a municipal building surveyor completing the private building surveyor's functions— the Authority may give such written directions as it considers appropriate to facilitate the transfer of the private building surveyor's functions to that other private building surveyor or municipal building surveyor.

(2) The private building surveyor whose appointment was terminated under section 81, the private building surveyor or municipal building surveyor to whom the functions are to be transferred and the person who appointed the private building surveyor whose appointment was terminated must comply with a direction under subsection (1).

Penalty: 500 penalty units, in the case of a natural person.

2500 penalty units, in the case of a body corporate.

(3) A direction under subsection (1) has effect despite anything to the contrary in the terms of appointment of the first private building surveyor or the private building surveyor or municipal building surveyor to whom the functions are transferred.

83 Effect of transfer of functions

If the functions of a private building surveyor are transferred to a second building surveyor under this Part, then in respect of any period on or after the date of transfer to the second building surveyor, anything done by the private building surveyor in respect of the building work concerned is, for the purpose only of carrying out the second building surveyor's functions under this Act and the regulations, deemed to have been done by the second building surveyor.

39 However, it is important to emphasise that the power given to the Authority to give directions under s 82 does not carry with it the power to actually make the appointment of the replacement building surveyor. The power to appoint is limited to the persons described in s 78. The function of the Authority under s 82 is confined to the giving of appropriate directions to facilitate the transfer of the private building surveyor's functions to that other private building surveyor or municipal building surveyor.

40 Further powers are conferred on the Authority in relation to building surveyors. Pursuant to s 205M, if it considers it necessary for the purposes of the Act or the regulations, the Authority may direct a municipal building surveyor or private building surveyor to carry out his or her functions under the Act or the regulation in accordance with the Act or the regulations; or within a period specified in the direction.

41 The Authority is therefore conferred with the following powers which are relevant to the present application:

(a) the power and function to consent to the termination of the appointment of a private building surveyor;

(b) the giving of directions where the appointment is terminated in order to facilitate the transfer of functions to a new building surveyor; and

The Legislative Scheme in Relation to Building Protection Works

42 Section 16(1) of the Act prohibits a person carrying out building work ‘unless a building permit in respect of the work has been issued and is in force under this Act and the work is carried out in accordance with this Act, the building regulations and the permit’.

43 Section 3(1) of the Act defines ‘building work’ to include ‘work for or in connection with the … demolition … of a building’.

44 According to s 17, an application for a building permit may be made to a private building surveyor appointed under Part 6.

45 Section 19(1) of the Act requires ‘the relevant building surveyor’ to decide whether to issue the permit.

46 Part 7 of the Act deals with ‘Protecting adjoining property’.

47 Section 84 of the Act requires an owner who is required by the building regulations to carry out protection work in respect of an adjoining property to serve on the owner of the adjoining property and the relevant building surveyor a notice of the proposed building work, including prescribed details of the work.

48 Regulation 602(1) of the Building Regulations 2006 (the ‘Regulations’) requires that ‘Protection work must be provided in respect of an adjoining property, before and during the carrying out of any building work, if required by the relevant building surveyor’.

49 Pursuant to s 85(1) of the Act, the adjoining owner may either agree to the proposed protection work or give the owner and the relevant building surveyor a notice disagreeing with the proposed protection work or requiring more information be given.

50 Section 87(1) of the Act then requires that on receipt of a notice disagreeing with the proposed protection work or requiring more information be given, the relevant building surveyor is required to examine the proposal for protection work and determine the appropriateness or otherwise of the work.

51 By s 87(4) of the Act the relevant building surveyor is required, to ‘give the owner and the adjoining owner notice in writing of a determination made under s 87.

52 Section 88(1) of the Act prohibits an owner who is required by the Regulations to carry out protection work in respect of an adjoining property carrying out any building work giving rise to that requirement until:

(a) the adjoining owner agrees to the protection work;

(b) the matter is determined by the relevant building surveyor; or

53 Section 88(2) of the Act requires the owner to carry out any protection work required by the regulations:

(d) if the adjoining owner agrees to the protection work, in accordance with that agreement;

(e) if the relevant building surveyor has made a determination under Part 7 in respect of the protection work, in accordance with that determination; or

(f) if the Building Appeals Board has made a determination under Part 10 in respect of the protection work, in accordance with that determination.

The Building Appeals Board and its Jurisdiction

54 Part 10 of the Act makes provision for ‘The Building Appeals Board and its jurisdiction’.

55 Section 141(a) of the Act provides that an owner required to carry out protection work or an adjoining owner may appeal to the Building Appeals Board against a determination by a relevant building surveyor under s 87 as to the appropriateness of the work.

56 Pursuant to s 148(1) of the Act, an appeal under Part 10 is in the nature of a re-hearing. Further, s 148(2) of the Act specifically authorises the Building Appeals Board on an appeal to consider matters not raised before the decision under appeal was made.

57 Section 149(1) of the Building Act requires the Building Appeals Board to consider and determine an appeal and by its determination:

(a) affirm the decision under appeal;

(b) quash the decision under appeal;

(d) set aside the decision under appeal and (i) substitute its own decision or (ii) remit the matter to the decision-maker for consideration in accordance with any directions or recommendations it considers appropriate.

58 Section 149(2) of the Act gives the Building Appeals Board, in addition to its other powers, all the powers of the decision-maker in relation to the decision under appeal.

59 Section 140 of the Act gives to the owner who appoints a private building surveyor a right to appeal to the Building Appeals Board against the Authority’s failure, within a reasonable time, or refusal to consent to the termination of the building surveyor’s appointment. However, no person is given a right of appeal against a decision by the Authority to consent to the termination of the building surveyor’s appointment.

Facts of the Present Case

60 In the present case it was the private building surveyor himself, Mr Galanos, who was appointed by the owner of the building site, CES Queen, who requested the consent of the Authority to terminate his appointment as private building surveyor. For this to occur, the ‘written consent of the Authority’ was required under s 81(1).

61 A new private building surveyor was appointed by CES Queen on 14 January 2014.

62 The relevant history of the role of Mr Galanos is as follows:

63 CES Queen appointed Mr Galanos as the private building surveyor for its building works.

64 CES then applied to Mr Galanos for a number of building permits.

65 Mr Galanos required protection work to be carried out under r 602(1) of the Regulations in respect of two permit applications, with one of those applications requiring protection work with respect to Colonial's adjoining properties.

66 After Colonial applied to the Building Appeals Board for a hearing as to the protection works required, both Colonial and the Board suggested that new protection works notices should be served, due to what appeared to be defects in the relevant protection works notices.

67 Accordingly, CES Queen recommenced the protection works process in order to have the protection works issue determined as soon as possible.

68 Colonial, by its solicitor, made serious allegations regarding Mr Galanos’ professionalism.

69 On 5 December 2013, and without consulting CES Queen, Mr Galanos applied to the Authority for its consent under s 81 of the Act to terminate his appointment as the private building surveyor.

70 On 6 December 2013, Colonial made a submission to the Authority as to why the Authority should not consent to the termination of Mr Galanos.

71 On 9 December 2013, CES Queen’s solicitors wrote to the Authority, stating that it was content for Mr Galanos to continue, but in the circumstances did not object to his application to terminate his appointment.

72 On 16 December 2013, CES Queen wrote to the Authority, confirming that, if the Authority was to consent to Mr Galanos’ termination, it would appoint Mr Leonard as the private surveyor for the development of its site.

73 On 18 December 2013, CES Queen’s solicitors wrote to the Authority, advising that the company was keen to proceed with the works and sought advice from the Authority as to when it would make a decision on the matter.

74 On 18 December 2013, the Authority wrote to CES Queen’s solicitors noting the urgency and anticipating the Authority’s decision would be provided by 20 December 2013.

75 On 23 December 2013, the Authority wrote to Mr Galanos, giving its written consent to the termination of his appointment and made directions that Mr Galanos provide material to Mr Leonard and for Mr Leonard to inspect the subject site. The Authority also wrote to CES Queen and to Mr Leonard confirming these matters.

76 On 14 January 2014, CES Queen appointed Mr Leonard as the private building surveyor for the development of its site.

77 On 31 January 2014, Colonial wrote to the Authority, seeking ‘… reasons for the decision to consent’.

78 On 5 February 2014, Mr Leonard made determinations regarding the protection work that was required for CES Queen’s demolition of a plant and lift motor room at the subject site.

79 On 18 February 2014, the Authority wrote to Colonial, providing reasons, where it explained that, prior to giving its consent, the Authority had regard to, amongst other things, Colonial’s solicitor’s submissions of 6 December 2013.

80 On 21 February 2014, Colonial appealed to the Building Appeals Board against Mr Leonard’s protection works determination. On 5 March 2014, the Building Appeals Board listed Colonial’s appeal for 13 March 2014.

81 On 12 March 2014, Colonial applied to Associate Justice Lansdowne to commence the present proceeding. Her Honour made an order for review requiring the Respondents to show cause why the Authority’s granting of consent under s 81(1) of the Act in respect of Mr Galanos should not be reviewed, on six grounds.

82 On 13 March 2014 at the hearing of Colonial’s protection works appeal at the Building Appeals Board, Colonial’s solicitor served the order commencing this proceeding on CES Queen and, on the basis of the current proceeding, sought a stay from the Building Appeals Board of Colonial’s appeal.

83 The Building Appeals Board refused to grant a stay, but adjourned the hearing of the appeal. Colonial then sought to enjoin the Building Appeals Board from continuing to hear Colonial’s appeal, by commencing the injunction proceeding.

84 Colonial’s protection works appeal is now scheduled to be heard in the week commencing 7 April 2014.

Colonial’s Concerns as to Mr Leonard

85 In exercising its discretion to consent to the termination of Mr Galanos’ appointment, the Authority considered that fact that Mr Leonard had indicated his acceptance of a transfer to him of the functions of the relevant building surveyor for the works at 150 Queen Street. This was referred to in the reasons for decision given by the Authority dated 18 February 2014, which included the following reference to Mr Leonard, which it said was one of the factors determined to be ‘of sufficient weight and relevance to reaching a decision.

86 The full reasons for decision provided by the Authority in a letter of 18 February 2014, addressed from the Authority’s delegate Vicky Samargis to John Hoey, solicitor for the plaintiff Colonial were:

Reasons for decision

1. On 23 December 2013, I as the ‘decision maker’ appointed by legislation pursuant to section 199 of the Building Act 1993 gave my written consent to terminate the private building surveyor Mr Anastasios Galanos (BS-U 16541). The consent was provided pursuant to section 81(1) of the Building Act 1993 .

2. On 5 December 2013 Mr Galanos sought the consent of the VBA to terminate his appointment as the private building surveyor. In making the decision to provide consent I carefully reviewed the permit history and all other information available to me which included the comments provided by Mr Galanos (in application for consent [sic]) and your submissions of 6 December 2013. After consideration of the information at hand, I ultimately determined the following factors to be of sufficient weight and relevance to reaching a decision:

2.1 That a staged building permit had been issued by Mr Galanos for the proposed building work;

2.2 That building work had commenced;

2.3 That Mr Galanos had himself made the request to terminate his appointment;

2.4 That neither the Builder nor the Owner objected to the termination of Mr Galanos’ appointment; and

2.5 That another private building surveyor Mr Shane Leonard (BSU 1076) of Phillip Chun and Associates Pty Ltd had indicated his acceptance of a transfer of the functions of a Relevant Building Surveyor (RBS).

3. In all things considered, I determined that the continuation of Mr Galanos as the private building surveyor for this site would, more probably than not, impact on his ability to perform his functions as the RBS with impartiality. And so, consent pursuant to section 81(1) of the Building Act 1993 was given by letter dated 23 December 2013.

87 Colonial says that prior to making its decision to consent to the termination of the appointment of Mr Galanos, the Authority had not been told, as was the fact, that the proposed replacement private building surveyor, Mr Leonard, had been retained to give evidence against Colonial’s interests by one or more of the respondents in an appeal brought by Colonial against the issue of protection works determinations made by Mr Galanos on 3 July 2013 in respect of the works at 150 Queen Street, Melbourne.

88 At the Building Appeals Board hearing on 25 July 2013, Mr Greg Campbell, solicitor, announced his appearance on behalf of Mr Galanos. Mr Campbell’s firm, Maddocks, also acted for the owner of 150 Queen Street, CES Queen, in relation to the extant dispute over the adequacy of the proposed protection works to 140 Queen Street and 21-27 McKillop Street (owned by Colonial) by the demolition of 150 Queen Street.

89 Mr Leonard also attended the hearing. Mr Campbell stated to the Board that Mr Leonard was to be called as an expert witness in opposition to the appeals filed with the Board by the adjoining owner, Colonial.

90 In these circumstances, Colonial submitted in the present proceeding, that Mr Leonard’s retainer by CES Queen as an expert witness in the Building Appeals Board hearing, made him a partial witness in the dispute concerning the adequacy of the protection works before the Board and partial against the interests of Colonial in the dispute.

91 Colonial says further that prior to making its decision, the Authority had not been told, as was the fact, that Mr Galanos had been asked by the building owner of 150 Queen Street, Melbourne, CES Queen, to withdraw his protection works determinations and that Mr Galanos had refused to withdraw them.

92 In this vein, Colonial says that it was not disclosed to the Authority [comprised of the delegate of the Authority which made the relevant decision consenting to the termination of Mr Galanos] that Mr Galanos in his solicitors’ letter to the Authority dated 5 December 2013 said that:

(a) on or about 2 December 2013 the owner CES Queen had requested Mr Galanos revoke his protection works determinations dated 3 July 2013;

(b) the adjoining owner’s (Colonial’s) solicitors had objected to Mr Galanos revoking his protection works determinations dated 3 July 2013; and

(c) Mr Galanos had stated that as the matter was currently before the Building Appeals Board it would be inappropriate to either confirm or revoke the protection works determinations and that he would abide the decision of the Building Appeals Board on the matter. There is no evidence that the owner informed the Authority of the existence of the dispute between it and Mr Galanos notwithstanding the numerous correspondences and communications passing between it and the Authority between 5 December 2013 and 23 December 2013.

93 Colonial says that the existence of a dispute, in this case between adjoining owners as to whether Mr Galanos should revoke his protection works determinations dated 3 July 2013, was a matter which the Authority ought properly to have taken into account in making a decision to give its consent to the termination the appointment of Mr Galanos as the relevant building surveyor, as evidenced by its published material on the subject.

94 It says that, in these circumstances, had the Authority been informed of the above matters, it would not have terminated Mr Galanos’ appointment if Mr Leonard was to be appointed the relevant private Building Surveyor for the works at 150 Queen Street, Melbourne.

95 In particular Colonial says that had these matters been disclosed to the Authority, then application of its own policy would have resulted in the Authority:

(a) refusing to consent to the termination of the appointment of Mr Galanos; or

(b) consenting to the termination of the appointment of Mr Galanos on condition that another relevant building surveyor or the municipal building surveyor be appointed to take over the functions of relevant building surveyor – other than Mr Leonard.

96 Colonial says further that if the order to review was to be dismissed the effect on the adjoining owner Colonial is likely to lead to substantial injustice. The demolition process is likely to proceed with Mr Leonard as the relevant building surveyor acting as the statutory regulator responsible for ensuring the work is carried out according to the law.

97 However, as Colonial submitted, Mr Leonard already had a relationship with the owner CES Queen beyond the statutory role and had been engaged to give evidence against the adjoining owner Colonial. In these circumstances, the adjoining owner and the public could not be satisfied that he will act independently and impartially in their respective interests against the owner if it became necessary to do so in the course of the demolition works, for example, by stopping the demolition if the approved conditions for the works were not adhered to.

Administrative Law Remedies Founded on Denial of Natural Justice Claimed by Applicant

98 Colonial also submitted that the Authority is a ‘tribunal’ for the purposes of the Administrative Law Act 1978 and in this case it was obliged to afford natural justice in making its decision to consent to the termination of the appointment of Mr Galanos as the private building surveyor for the works at 150 Queen Street and in particular, the Authority had to act without bias in making its decision.

99 Section 81 of the Act appears to contemplate two classes of persons making application to the Authority for its consent to the termination of the appointment of the relevant building surveyor – the appointer (for example, a building owner) and the appointee (the building surveyor).

100 Colonial put a number of examples which it submitted pointed strongly to natural justice being applicable to a determination made by the Authority pursuant to s 81(1) of the Act. The examples were:

(a) Assuming that a developer had appointed a private building surveyor but fell into dispute with him concerning the building works being performed and, as a result, the developer made application under s 81 of the Act for the Authority to consent to its termination which was opposed by the private building surveyor. Further, assuming that the delegate of the Authority making the decision was related to the developer or had an interest in the removal of the relevant building surveyor and consented, on behalf of the Authority, to the termination of the private building surveyor.

(b) After making its decision, it cannot have been intended by the legislature that if there had been actual or apprehended bias with respect to the making of the decision, the private building surveyor would have no right to review the decision under the Act. The contrary view is that the Authority did not have to afford the private building surveyor natural justice – a view which is not supported by the Act.

(c) Alternatively, assuming that in the course of an application by a developer for the consent to the termination of the private building surveyor pursuant to s 81 of the Act, the developer files extensive materials with serious allegations of impropriety or improper conduct against the private building surveyor. In those circumstances, it could not be seriously suggested that the private building surveyor would not be entitled to be heard to answer those allegations and request the Authority to hear the application on its merits.

101 It is to be noted that these submissions focussed on affording the private building surveyor natural justice, and not affording any other party, for example in this case an adjoining land owner Colonial, natural justice. In this case it is neither Mr Galanos, nor his original appointer CES Queen, who is making a claim that natural justice should be applied to them but has been denied.

102 Colonial put its claim that its existing rights were affected by the decision of the Authority to consent to the termination of the appointment of Mr Galanos without making any appropriate accompanying condition which in effect barred Mr Leonard from becoming the replacement building surveyor.

103 In submissions Colonial referred to a letter dated 13 November 2013 from its solicitors to the Building Appeals Board. This letter related to a directions hearing which was scheduled to be heard in Colonial’s appeal proceedings before the Board. The letter made reference to a request by the solicitors for CES Queen for Colonial’s appeals to be dismissed on the basis that CES Queen intended to withdraw the protection works notices issued by Mr Galanos and withdraw its building permit application for the demolition works. If this was to be carried out by CES Queen, then the demolition permit and the protection works notices issued upon it by Mr Galanos would lapse, and a new permit and protection works notices would in all likelihood be issued by the replacement building surveyor, who in all likelihood would be Mr Leonard. However, Mr Leonard, for the reasons already canvassed, it was submitted, was not in a position to bring an independent and impartial mind to these tasks, or there was a reasonable apprehension that he could not do so.

104 On this basis, Colonial submitted that it had existing rights which were materially affected by the decision of the Authority and the decision was reviewable under the established procedures because:

(a) the decision of the Authority operated in law to determine a question affecting its rights within the definition of a ‘decision’ referred to in s 2 of the ALA; and

(b) Colonial was a ‘person affected’ within the definition of that term referred to in s 2 of the ALA by reason that the decision of the Authority would or may affect its interest (which was greater than the interest of other members of the public), either directly, or indirectly to a substantial degree; and

(c) the Authority was a ‘Tribunal’ for the purposes of s 2 of the ALA because, in arriving at its decision it was required by law, whether by express direction or not, to act in a judicial manner to the extent of observing one or more of the rules of natural justice.

Application of Natural Justice in the Present Context

105 In my opinion, the scheme of the legislation manifests a clear intention to exclude an obligation to observe any of the rules of natural justice towards adjoining owners in respect of a determination made under s 81(1) of the Act in relation to the granting or withholding of consent to the termination of the appointment of a private building surveyor.

106 In this context it is important to bear in mind that a decision of the Authority made under s 81(1) of the Act is not one to appoint a replacement private building surveyor. The power exercised under the section is merely to consent to the termination of an existing private building surveyor.

107 Similarly, the power of the Authority to give directions under s 82 of the Act is not a power of appointment. It is merely a power to give directions to facilitate transfer of the terminated private building surveyor’s functions to another newly appointed private building surveyor or municipal building surveyor.

108 At all times, the power to appoint a private building surveyor remained with the person or persons referred to in s 78(1) of the Act, being the person who is entitled to apply for a building permit, occupancy permit or temporary approval under the Act in respect of a building or building work, which is usually the owner or developer of the relevant land or its agent.

109 It was submitted by the First and Second Respondents that the Act does not contemplate that the decision of an owner to appoint a private building surveyor is governed by the rules of natural justice or procedural fairness.

110 It has been authoritatively held by the Full Court of this Court that a ‘Tribunal’ for the purposes of the AJA does not include private bodies such as an arbitrator appointed by agreement of the parties, although the position is different in the case of statutory arbitrators, nor does it include the trustees of a superannuation fund. Similarly, the prerogative writs of certiorari and prohibition do not go to private arbitrators.

111 It is clear from the legislative regime established by the Act that the appointer under s 78 of the Act is a private individual. The appointer is not an officer of the government, is not nominated by an officer of the government and is not paid by the government for exercising statutory functions. Nor does the Authority have any power to control the appointment of a private building surveyor, either when exercising statutory functions, or otherwise. At first glance this would tend to suggest that the decision to appoint a private building surveyor under s 78 of the Act is not amenable to judicial review under the AJA or to the issue of the prerogative writs of certiorari and prohibition.

112 However, the judgment of the Court of Appeal of England and Wales in R v Panel on Take-overs and Mergers, Ex parte Datafin Plc (‘ Datafin’ ) may have significantly changed the position. In Datafin the decision making body in question was the Panel on Take-overs and Mergers, which was an industry body lacking legal recognition. Its determinations were of undoubted commercial and public significance in the operation of the London Stock Exchange and the enforcement of the non-statutory City Code on Take-overs and Mergers. The Court of Appeal held that it was amenable to judicial review although it was a private body, because it was exercising ‘regulatory functions of government’. It found that the powers exercised by the Panel (regulating take-overs and enforcing a code of conduct on them) were essentially in the domain of public law and formed part of the Government's scheme to regulate the City. Those affected had no choice but to submit to the Panel's jurisdiction. As a result, the Panel had the duty to act judicially and its decisions were amenable to judicial review. On the merits however, the Court found no ground to quash the disputed decision.

113 Although it is unnecessary in the present proceeding to decide the point because no judicial review or relief has been sought by Colonial as against CES Queen in respect of its decision to appoint Mr Leonard as the new private surveyor, since Datafin the decision to appoint a private surveyor may well be open to judicial review and the application of relief by way of a prerogative writ, and is not necessarily immune from such a process because it is a decision of a ‘private’ body as opposed to that of a ‘public’ body, or by reason that the decision in question was contractually based as opposed to being founded in a statute.

114 In Grocon Constructors Pty Ltd v Planit Cocciardi Joint Venture (No 2) (‘ Grocon ’) I concluded that an adjudicator operating under the Building and Construction Industry Security of Payment Act 2002 (Vic) was subject to judicial review and to relief by way of certiorari and declaration. I found that there was neither jurisdictional error nor other error of law, with the result that certiorari was refused. However, I considered such relief would be available in an appropriate case. After referring to doubts expressed in the Court of Appeal (NSW) in Brodyn Pty Ltd v Davenport I referred to authority for the proposition that any body having statutory authority to determine questions affecting the rights of persons might be characterised as exercising ‘governmental power’, sufficient to attract certiorari. I held in Grocon :

An adjudication determination cannot finally resolve all of the rights of the parties under the applicable construction contract; they are left to be determined by later proceedings in the event of a continuing dispute. Nevertheless, an adjudication determination does have the effect of finally determining the right of a claimant to immediate payment of its progress claim. This has a discernable or apparent legal effect upon rights, sufficient to found certiorari: Hot Holdings Pty Ltd v Creasy [1996] HCA 44; 185 CLR 149 at 159 per Brennan CJ, and Gaudron and Gummow JJ.

115 In Grocon , I also turned to consider whether the adjudicator was to be characterised as in a similar position to a privately appointed arbitrator whose awards have generally been considered immune from interference by prerogative writs. I referred to R v Panel on Take-overs and Mergers, Ex parte Datafin Plc.

116 In Grocon I ventured the view that Datafin had been ‘applied in Australia’, in State of Victoria v The Master Builders’ Association of Victoria and Masu Financial Management Pty Ltd v Financial Industry Complaints Service Ltd (No 2) .

117 However, this observation did not find favour with Basten JA in Chase Oyster Bar v Hamo Industries , his Honour concluding that:

The result of this analysis suggests that there is an absence of authority in Australia addressing the question of whether or not Datafin applies. The authorities relied upon in Grocon do not support the proposition that it is applicable and, to the extent that it extends public law remedies to private bodies which do not exercise functions conferred by government, whether under statute or otherwise, it is not necessary to rule on its application in the present case. Suffice it to say that there is no authority in the High Court which supports its application and statements of general principle in that Court might be thought to adopt a more limited scope for the operation of public law remedies.

118 As observed by the Court of Appeal (Vic) in Mickovski v Financial Ombudsman , in face of increasing privatisation of governmental functions in Australia, there is a need for the availability of judicial review in relation to a wider range of public and administrative functions. The Court of Appeal noted that the Datafin principle “offers a logical, if still to be perfected, approach towards the satisfaction of that requirement” and that “There have also been a number of first instance decisions in which it has been held or suggested that the Datafin principle does apply in Australia, and indeed in the past there has been some limited recognition given to the principle in this court”.

119 The Court of Appeal however proceeded with caution, noting that:

That said, however, the clear implication of the High Court’s decision in Neat Domestic Trading Pty Ltd v AWB Ltd and of the observations of Gummow and Kirby JJ in Gould v Magarey is that we should avoid making a decision about the application of Datafin unless and until it is necessary to do so. In this case, we do not consider that it is necessary to do so. For, assuming without deciding that Datafin has some operation in this country, we agree with the judge that it could not have applied in the circumstances of this case. Taken at its widest, it is doubtful that the principle has any application in relation to contractually based decisions and, even if it does, we agree with the judge that the public interest evident in having a mechanism for private dispute resolution of insurance claims of the kind mandated by s 912A is insufficient to sustain the conclusion that FOS was exercising a public duty or a function involving a public element in circumstances where FOS’s jurisdiction was consensually invoked by the parties to a complaint.

[Footnotes omitted]

120 The position in relation to the application of Datafin in Australia as reflected by the Court of Appeal in Mickovski was also left open by Mansfield J in Bilaczenko v Financial Ombudsman Service Ltd.

121 In any event, I am not required to decide in the present application whether a private appointer of a building surveyor acting under s 78 of the Act, as in the present case, is or is not exercising any ‘regulatory functions of government’ of the kind contemplated in Datafin and whether the principles expressed in that case apply or should be applied in Australia.

122 As to the question of whether the Authority in this case was required to apply natural justice in making its decision to consent to the termination of Mr Galanos as the private building surveyor for the 150 Queen Street project, the Authority would only be required to accord natural justice or procedural fairness to Colonial before it made the decision to consent to the termination of Mr Galanos’s appointment if Colonial’s interests might be adversely affected by the exercise of the power to grant that consent.

123 In Kioa v West Mason J said:

[T]he application and content of the doctrine of natural justice or the duty to act fairly depends to a large extent on the construction of the statute.

124 In the present case, the terms of s 81(1) considered in the context of the Act as a whole, in my opinion not point to there being any duty to accord natural justice to a person in the position of the Applicant, an adjoining owner. For example, there are no express statutory provisions requiring that a hearing be given to an adjoining owner in relation to the decision whether to grant or refuse consent under s 81(1).

125 Indeed, the statutory scheme is inconsistent with an obligation to afford natural justice in the context of the Authority making a determination under s 81(1). No such duty can therefore properly be implied.

126 Section 81, considered in the context of the scheme of the Act indicate that the power of the Authority to grant consent was intended by the Legislature to be exercised in a flexible way, unconstrained by procedural requirements. Section 81(1) is couched in terms of a prohibition on termination of an appointment without the written consent of the Authority. The Act provides no procedural requirements at all for the making of a decision by the Authority. Section 81(1) does not stipulate any form of application. This may be contrasted with other provisions of the Act.

127 Further, s 81 does not expressly require that the Authority provide any notice of the potential decision to any party, nor any opportunity to be heard. This too may be contrasted with other provisions of the Act which do provide such facilities.

128 The Act identifies no specific matters that the Authority is required to take into account. Again, this may be contrasted, for example, with decisions of the Building Practitioners Board as to whether to grant consent to owner – builders as provided for in s 25E.

129 Further, the Act provides extensive procedural and substantive protections to adjoining owners in relation to any protection works which may affect them, including in relation to appeals from decisions of private building surveyors as to adequacy of protection works and other matters. The scheme of the Act is such that it can be inferred that the intention of the legislature was to provide procedural and substantive protections for adjoining owners in relation to any decisions or acts relating to protection works, including decisions of private building surveyors which affect them, and that there was no basis for adjoining owners to participate in decision-making in relation to the termination of a private building surveyor’s appointment.

130 In Annetts v McCann it was noted that “when a statute confers power upon a public official to destroy, defeat or prejudice a person’s rights, interests or legitimate expectations, the rules of natural justice regulate the exercise of that power unless they are excluded by plain words of necessary intendment”.

131 However, the exercise of the Authority’s power in this case, exercised pursuant to s 81(1) of the Act to grant consent to the termination of Mr Galanos’s appointment, as such could not affect Colonial’s interests. The power to consent (or refuse consent) to the termination of the appointment of a private building surveyor does not relevantly, and in a direct and immediate way, engage the interests of adjoining owners. The result is that there is no relevant right or interest (in the sense described in Annetts v McCann ) which would attract the rules of natural justice.

132 Further, as Gleeson CJ observed in Re Minister for Immigration and Multicultural Affairs; Ex parte Lam :

Fairness is not an abstract concept. It is essentially practical. Whether one talks in terms of procedural fairness or natural justice, the concern of the law is to avoid practical injustice.

133 Considering the absence of any negative consequences for Colonial as a result of the Authority giving consent to the termination of the appointment of Mr Galanos, there has been no such practical injustice.

134 The Applicant, as an owner of property adjoining a site on which building works in relation to which a surveyor is appointed are to be carried out, may potentially be affected by determinations made by that building surveyor.

135 However, even if a consequence of the decision of the Authority is taken into account, namely freeing CES Queen to appoint a new private building surveyor, namely Mr Leonard, I am not satisfied that practical injustice is likely to be caused to Colonial as a result of this appointment. The Act provides for a number of protections for adjoining owners including the right to be heard and to appeal to an independent Colonial Range Pty Ltd v Building Appeals Board and Ors statutory body, the Building Appeal Board, from any determinations made by Mr Leonard.

136 These protections focus not on the identity or personal characteristics or position of the appointed Building Surveyor, but rather on the outcome dictated by his or her decisions. This is, after all, where the practical impact of an unsatisfactory decision will manifest itself. The protections are:

(a) Section 83 operates to preserve anything done by the terminated building surveyor in the event that a second building surveyor is appointed in his or her place;

(b) Section 141 provides a facility for an appeal by an adjoining owner to the Building Appeals Board in relation to the appropriateness of the protection work proposed by the relevant building surveyor following a determination made under s 87, as part of the detailed process of protection procedures and facilities provided under Part 7 of the Act;

(c) The Act and the Regulations make provision for the maintenance of professional standards by a building surveyor, which carry with it strong sanctions in the event of a breach of those standards; and

(d) Finally, there is s 155 of the Act which provides a facility for a reference to the Building Appeals Board initiated by an adjoining owner in the event that there is a disagreement with the owner in relation to the protection works under Part 7 of the Act in circumstances where ‘the Building Appeals Board’ does not have jurisdiction to deal with the matter under any other provision. Such a reference is supported by the general and very wide powers conferred on the Board by s 161 of the Act.

137 Further, in my view, had the Authority embarked upon making it a condition of the grant of its consent under s 81(1) that Mr Leonard should not be appointed as the replacement building surveyor, it would be confining the class of possible appointees in a manner which it had no power to do, and would be acting ultra vires .

138 Had it been necessary to do so, the existence of these protections would have been taken into account in the exercise of the Court’s discretion to refuse the relief sought by the Applicant by way of certiorari or declaration, even if the grounds for relief had been made out.

139 For these reasons, in my opinion, there is no requirement for the Authority, in making a decision to consent to the termination of the appointment of a private building surveyor under s 81(1) of the Act, to afford natural justice to any owner of property adjoining the property in respect of which the private building surveyor had been appointed.

140 The relief sought by the Applicant should be refused.

Orders

141 The review proceeding, being present application for judicial review be dismissed.

142 It follows too, that the injunction proceeding also be dismissed.

143 Subject to the submissions of the parties, the applicant in the review proceeding, Colonial Range Pty Ltd should pay the costs of the other parties in both proceedings.

144 I will hear the parties on what other orders should be made.

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