Director General, Department of Infrastructure, Planning and Natural Resources v Stapleton (No.3)
[2004] NSWADT 247
•10/29/2004
CITATION: Director General, Department of Infrastructure, Planning and Natural Resources v Stapleton (No.3) [2004] NSWADT 247 DIVISION: General Division PARTIES: APPLICANT
Director General, Department of Infrastructure, Planning and Natural Resources
RESPONDENT
Robert Mark StapletonFILE NUMBER: 033126 HEARING DATES: 15/10/2004 SUBMISSIONS CLOSED: 10/15/2004 DATE OF DECISION:
10/29/2004BEFORE: O'Connor K - DCJ (President); Friedmann P - Non Judicial Member APPLICATION: Accredited Certifier - professional misconduct - Accredited Certifier - unsatisfactory professional conduct MATTER FOR DECISION: Principal matter LEGISLATION CITED: Environmental Planning and Assessment Act 1979
Independent Commission Against Corruption Act 1988
Ombudsman Act 1974CASES CITED: Dimes v The Proprietors of the Grand Junction Canal (1853) 3 HLC 759
Director-General, Department of Infrastructure, Planning & Natural Resources v Stapleton (No 2) [2004] NSWADT 70
Ebner v Official Trustee in Bankruptcy (2000) 205 CLR 337REPRESENTATION: APPLICANT
M Leeming of counsel instructed by Crown Solicitor’s Office
RESPONDENT
K Lovegrove, Lovegrove SolicitorsORDERS: Pursuant to section 109ZA(2) of the Environmental Planning and Assessment Act 1979 (the Act) the Tribunal’s decision is that:; 1. The Respondent is cautioned for unsatisfactory professional conduct in that he:; (a) contravened s 109ZG(1)(c) of the Act by signing the application for a construction certificate for a development and then issued the construction certificate applied for; (b) contravened s 109D(2) of the Act by not issuing the occupation certificate for the development when he was the principal certifying authority ; 2. A condition be imposed on the Respondent’s registration as an accredited certifier requiring him to adhere to the specific protocol set out at para [13] of the Tribunal’s reasons for decision
1 This decision deals with the issue of what disciplinary order should be made by the Tribunal under s 109ZA(2) the Environmental Planning and Assessment Act 1979 in light of adverse findings made against the respondent, Mr Stapleton, in respect of his conduct as an accredited certifier. As to the Tribunal’s primary findings see Director-General, Department of Infrastructure, Planning & Natural Resources v Stapleton (No 2) [2004] NSWADT 70 (13 April 2004).
2 The Tribunal’s order-making power is found in s 109ZA(2), which provides:
3 Mr Stapleton was found guilty of unsatisfactory professional conduct in respect of two of the five charges laid against him:
‘(2) If the Tribunal finds that the accredited certifier is guilty of unsatisfactory professional conduct or professional misconduct, the Tribunal may make any one or more of the following decisions:
(a) caution or reprimand the accredited certifier,
(b) direct that such conditions as it considers appropriate be imposed on the accredited certifier’s accreditation to practise as an accredited certifier,
(c) order that the accredited certifier complete such educational courses as are specified by the Tribunal,
(d) order that the accredited certifier report on his or her practice as an accredited certifier at the times, in the manner and to the persons specified by the Tribunal,
(e) order the accredited certifier to pay a fine of an amount, not exceeding 1,000 penalty units, specified in the order,
(f) order the accredited certifier to pay to the complainant such amount (not exceeding $20,000) as the Tribunal considers appropriate by way of compensation for any damage suffered by the complainant as a result of the unsatisfactory professional conduct or professional misconduct,
(g) suspend the accredited certifier’s accreditation for such period as the Tribunal thinks fit,
(h) withdraw the accredited certifier’s accreditation.’
4 In its earlier decision the Tribunal made the following observations about the degree of culpability of Mr Stapleton’s conduct:
(i) that he contravened s 109ZG(1)(c) of the Environmental Planning and Assessment Act 1979 by signing the application for a construction certificate for a development and then issuing the construction certificate applied for.
(ii) that he contravened s 109D(2) of the Act by not issuing the occupation certificate for the development when he was the principal certifying authority.
5 In the course of its decision in Stapleton (No 2) the Tribunal referred to the difficulties that surround the conflict of interest issue for accredited certifiers:
‘149 We do not think the point has been reached where Mr Stapleton’s continued accreditation should be placed at risk, looking solely at the particular circumstances that have been the subject of charge. Mr Stapleton’s misconduct related to a small development. No actual harm was caused to any of the immediate parties to the development. His conduct did harm the community’s interest in having a certification system that is free from the taint of possible bias. His conduct has undermined the community’s expectation that statutory approvals connected with the development process will be given free of improper influence by developers. He did not have sound internal management systems, thereby leading to the undermining of another community expectation – that the certifier appointed as the principal certifying authority in respect of an occupation certificate will always perform that task.
150 More troubling is the evidence from Mr Stapleton that he has routinely adopted practices of the kind identified by this case. But they were not the subject of charge and are not taken into account for the purpose of assessing how the proven allegations should be categorised in relation to their degree of gravity.’
6 The Tribunal has been concerned that during the proceedings Mr Stapleton exhibited little understanding of what circumstances might give rise to a conflict of interest, and why conflicts of interest threaten the integrity of the accredited certifier system and public confidence in the objectivity of the system. When the Tribunal reconvened on 21 May 2004 to consider the question of a disciplinary order it referred to these concerns.
‘97 … We accept that as a practical matter a builder or developer will often have to turn to a professional experienced in the field (a building surveyor, a building consultant, an architect, for example) to undertake the paperwork requirements connected with lodging development applications, and then attending to queries from the council, objections and the making of submissions. It will often be very convenient if when the major hurdles are passed (such as the development consent) the applicant can have the further statutory certifications done (where permitted by law) by the same professional or at least by another professional in the same firm.
98 The Tribunal’s non-judicial member, Mr Friedmann, referred at hearing to his experience since the scheme was instituted in 1998. His experience has been that it has not been unusual for some accredited certifiers, or at least the firms to which they belong, to have an involvement with developer or builder clients broadly of the kind that has given rise to the present proceedings. For example, the firm would assist in putting together and checking the documentation required by the relevant authorities, deal with technical issues that arose, undertake necessary inspections and in due course another member of the firm with accredited certifier status would deal with the issuance of certificates.
99 Whether arrangements of this kind which involve the erection of ‘Chinese walls’ are sufficient to overcome a conflict of interest objection is not the subject of the present application, or of this decision. (Nor is it necessary on this occasion to assess possibly extreme situations that might arise. There could possibly be circumstances where there was no practical option for a builder/developer than to go to a consultant who is also the most appropriate certifier, because for example of unavailability of alternative certifiers due to factors such as remoteness of location or the specialist nature of the accreditation required.)’
7 It also expressed concern over the lack of any clear guidance from the Department, in its role as the regulatory authority, as to what protocols should be observed by accredited certifiers. The problem was, the Tribunal felt, an acute one, as those upon whom the public office of accredited certifier had been conferred commonly provided building consultancy services.
8 The Tribunal felt that there would be value in a clear, practical general protocol being developed, and that Mr Stapleton enter into a specific protocol (consistent with the general protocol) so as to avoid any recurrence of the problems identified in this case.
9 In the period after 21 May 2004 the Department engaged in the process of developing a general protocol in consultation with industry bodies. The Department has also been consulting Mr Stapleton’s solicitor, Mr Lovegrove, over the contents of a specific protocol applicable to Mr Stapleton.
10 Prior to the commencement of the hearing of the five charges the Department applied, in the event that some or all of its charges were found proven, for orders of the following kind to be made against Mr Stapleton: reprimands accompanied by low level fines; imposition of a condition on his registration that he be interviewed prior to renewing his accreditation; and an order that he undertake an Advanced Certifier Course in the next 12 months.
11 The hearing resumed on 15 October 2004. The Department has advised (by letter dated 19 October 2004, following a request from the Tribunal) that it now seeks the following disciplinary orders in relation to Mr Stapleton’s conduct: a reprimand; the imposition of the specific protocol (discussed later in these reasons) as a condition of Mr Stapleton’s registration; and an order requiring Mr Stapleton to pay a low to mid range fine. (In regard to the fine option the Department noted the comments made by the President at the hearing on 21 May 2004 questioning the utility of a fine in a case of this kind.)
THE PROTOCOL OPTION
12 The Tribunal will first examine the protocol option. The present draft of the general protocol is found in Ex A in these proceedings, and is as follows:
13 The final form of the specific protocol is found in a document filed on 19 October 2004, and is agreed between the Department and Mr Stapleton:
‘ PROTOCOL:
CONFLICT OF INTEREST
There will be situations, not described in this protocol, where a perceived or actual conflict of interest will arise for an accredited certifier. Accredited certifiers should at all times be aware that their primary duty is to the public, and that in performing their duties as accredited certifiers they should maintain an arms length relationship with applicants and developers. Failure to do so may be characterised as unsatisfactory professional conduct.
BROAD PRINCIPLES
Certifiers accredited under the Environmental Planning and Assessment Act 1979 (‘the Act’), must at all times adhere to the requirements and principles outlined in:
STANDARDS OF CONDUCT FOR ACCREDITED CERTIFIERS
(a) Section 109ZG of the Environmental Planning and Assessment Act 1979.
(b) The Independent Commission Against Corruption Act 1988, particularly in relation to the definition and roles of public officials.
(c) The Ombudsman Act 1974 particularly in relation to the definition and roles of public authorities.
(d) Practice Note “When is There a Conflict of Interest for an Accredited Certifier?” (DIPNR, August 2001).
(e) “Strategies for Preventing Corruption in Government Regulatory Functions” (ICAC, March 1999 – see :
(f) “Public Sector Agencies Fact Sheet No. 3 – Conflicts of Interest” (NSW Ombudsman, July 2003 – see:
These standards are a guide to assist accredited certifiers to implement the broad principles set out in the documents listed in paragraphs (a) to (f).
1. An accredited certifier or principal certifying authority (PCA) for a particular development must, in relation to that development, only:
Accredited certifiers must not perform any other function in relation to a development for which they are involved as the accredited certifier or PCA, unless such a function is carried out in fulfilment of a statutory obligation imposed on the accredited certifier. Specifically, an accredited certifier cannot provide additional advice including administrative assistance (i.e. preparing development applications for lodgement) or a design solution for a particular non-compliance issue.
(a) Determine applications for Part 4A Certificates;
(b) Determine applications for complying development certificates;
(c) Accept appointment as the PCA;
(d) Carry out inspections, including mandatory critical stage inspections;
(e) Issue notices requiring work to be carried out; and
(f) Liaise with the consent authority, the local council and the public on matters pertaining to the development.
2. In addition to section 109ZG of the Act an accredited certifier or PCA to whom an application for a Part 4A certificate or complying development certificate (CDC) is made, must not be related, either as defined in the Act or as a co-employee, to any person who has a pecuniary interest in the development (other than a pecuniary interest arising from receiving a fee for issuing a Part 4A Certificate or CDC).
It may be appropriate for accredited certifiers to establish ‘chinese wall’ arrangements within their company or partnership to avoid the actuality or perception of a conflict of interest. The term ‘chinese wall’ describes the arrangements put in place within a firm or corporation to prevent information available to one partner or employee becoming available to other partners or employees and to ensure decision making processes are free from the influence of any other partners or employees.
3. Except to the extent that an appropriate chinese wall arrangement described in paragraph 2 is in place, an accredited certifier cannot issue a Part 4A certificate or CDC if he or she or anyone to whom he or she is related (as defined in s.109ZG(2) or as a co-employee) has a pecuniary interest in the development. An accredited certifier who issues a Part 4A certificate or CDC for a development should not collect or pay fees and levies, particularly development application fees or long service levy payments in relation to that development as this may create an actual or perceived conflict of interest. This paragraph is subject to the exception that an accredited certifier may charge and collect a fee for considering an application for a Part 4A certificate or CDC.’
The Proposed Specific Protocol
14 The proposal is that Mr Stapleton’s accreditation be made subject to a condition that he observe the specific protocol.
‘Mr Stapleton must:
1. At all times adhere to the requirements and principles outlined in:
2. Only be appointed to act as the principal certifying authority (PCA) by the landowner/s or the person/s with the benefit of the development consent.
(a) Section 109ZG of the Environmental Planning and Assessment Act 1979.
(b) The Independent Commission Against Corruption Act 1988, particularly in relation to the definition and roles of public officials.
(c) The Ombudsman Act 1974, particularly in relation to the definition and roles of public authorities.
(d) Practice Note “When is There a Conflict of Interest for an Accredited Certifier?” (DIPNR, August 2001).
(e) “Strategies for Preventing Corruption in Government Regulatory Functions” (ICAC, March 1999 – see:
(f) “Public Sector Agencies Fact Sheet No. 3 – Conflicts of Interest” (NSW Ombudsman, July 2003 – see
3. When acting as a PCA or accredited certifier for a particular development, in relation to that development, only:
For the purposes of this document, (a) to (g) above are referred to as “certification work”.
(a) Determine applications for Part 4A Certificates;
(b) Determine applications for complying development certificates;
(c) Accept appointment as the PCA;
(d) Carry out inspections, including mandatory critical stage inspections;
(e) Issue notices requiring work to be carried out;
(f) Liaise with the consent authority, the local council and the public on matters pertaining to the development; and
(g) Carry out any other functions as required, to fulfil his statutory obligations as an accredited certifier or PCA for the particular development.
4. Not provide additional advice or services (“consultancy work”) in relation to a particular development for which he is the PCA or is acting in the capacity of an accredited certifier. This includes:
5. Only provide design solutions and/or compliance assessments when he or any person to whom he is related, as defined in s 109ZG(2) of the Act or as a co-employee, is not acting as a PCA or accredited certifier for that particular development. Mr Stapleton must comply with this unless and until he implements ‘Chinese wall’ or other appropriate corporate governance arrangements within his business to ensure information available to one partner or employee is not available to other partners or employees and to ensure that the decision making process of the PCA or accredited certifier is free from influence.
(a) Administrative assistance such as:
i) Designing and/or preparing plans or specifications;
ii) Signing or preparing the application for Development, Construction or Occupation certificates; and
iii) Collecting and/or paying development application fees and long service levy payments.
(b) Design of solutions for particular non-compliance issues with respect to the Building Code of Australia, the development consent, construction certificate and/or applicable regulations.
6. Not be related, either as defined in s 109ZG(2) of the Act or as a co-employee, to any person who has a pecuniary interest in the development (aside from a pecuniary interest arising from receiving a fee for issuing a Part 4A Certificate or complying development certificate) for which he is the PCA or is acting in the capacity of an accredited certifier. Mr Stapleton must comply with this unless and until he implements Chinese wall or other appropriate corporate governance arrangements as described in paragraph 5.
7. Mr Stapleton may implement a Chinese wall by implementing the following measures:-
Mr Stapleton must implement measures to ensure he complies with these conditions, within 60 days or within such other reasonable time period as agreed by the Director of the Building Professionals Branch, Department of Infrastructure, Planning and Natural Resources.’
(a) creation of two (2) separate departments (i) Certification department (ii) Consultancy department ;
(b) the Certification department will perform certification work;
(c) the Consultancy department will perform consultancy work;
(d) each department to be managed exclusively by a separate person;
(e) separate contracts of engagement will be used for work performed by each department;
(f) each department shall maintain separate
- filing and computer systems
- accounts
- billing systems
- advertising and department identity;
(g) persons within one department must not, at any time, provide input into, advice or opinion on, or influence, the decisions of the other department in any way, regarding the consultancy work or certification work which each is, or may be, undertaking in relation to the same development.
15 The public interest question for the Tribunal is whether such a protocol adequately addresses the question of conflict of interest.
Assessment of Proposed Protocol
16 It could be argued, and this position was put strongly by one of the expert witnesses in the original proceedings (Mr Wynn-Jones), that what is required to avoid conflict of interest is that the person or firm that undertakes accredited certification be entirely different from the firm that provides general consultancy services in respect of the development application. On this view, if the same firm acts for the one client in respect of the prosecution of the development application and also provides, through one of its members or employees, the public certificates required at certain stages, the situation is, in effect, one of Caesar (in the form of the firm as building consultant) appealing to Caesar (in the form of the person in the firm who is the accredited certifier). Moreover there is a problem of pecuniary interest in that the firm giving the statutory certificates is benefited by the consultancy service (one that might be very substantial in the case of a major development or in connection with a regular client).
17 The key feature of the protocol is the establishment of a ‘Chinese wall’ within Mr Stapleton’s firm.
18 In Hollander and Salzedo, Conflicts of Interest and Chinese Walls (2000) - the authors give the following definition of a ‘Chinese Wall’ at 96:
19 In a review of that book, (2002) 26 MULR 241, Mitchell and Voon noted:
‘ “Chinese Wall” is the expression used to refer to an information barrier within the firm which is intended to ensure that information available to or known by certain members of the firm is not available to other members of the firm.’
20 As these comments and Hollander and Salzedo’s definition reflect, much of the relevant analysis and case-law discussion is focused on the situation where different partners or departments of the one firm act for clients who have different or opposing interests in the same matter, and where the maintenance of strict confidentiality as between the two sides of the firm is seen as the appropriate way to deal with the problem.
‘Around the world, professional service providers … are increasingly exposed to allegations that they are acting in the face of a conflict of interest. This is due to the increase in the size of professional service firms, the corresponding rise in market concentration, and the growing mobility of both professionals and clients between firms. Australia has witnessed a fairly dramatic increase in the number of conflicts cases before its courts, with increases also occurring in other common law jurisdictions such as Canada and the United Kingdom. Unfortunately, unlike the highest courts in those countries, the High Court of Australia has not yet considered the appropriate rule for conflicts of interest cases and this important area remains more uncertain and confused than it should be.’
21 Confidentiality of information is not the key issue here. In the present instance one part of the firm must provide the relevant information to the person elsewhere in the firm who holds accredited certifier status.
22 Here the concern is the importance of maintaining the public’s confidence and trust that the certifier will not be subject to influence in the performance of their public duty. There may be a public perception, in particular, that the accredited certifier might not fearlessly perform their duty to the public because of the pecuniary benefit they or their firm derives from having the applicant as a general client of the firm. (Judges were once automatically disqualified from sitting if they had any pecuniary interest, typically shares, in a company or other entity a party to litigation before them: Dimes v The Proprietors of the Grand Junction Canal (1853) 3 HLC 759; a position now modified, Ebner v Official Trustee in Bankruptcy (2000) 205 CLR 337.)
23 Clearly, the ideal position is that the service of accreditation be undertaken by someone in a separate firm who is otherwise not associated with the development. This would replicate the position as it applied before the conferment of the certification function on privately practising professionals.
24 Nonetheless, taking account of the practical environment in which accredited certifiers operate in New South Wales and their relative fewness (we were informed that there were about 130 across the State), some departure from the standard of strict separation of roles should, we consider, be allowed, at least for the time being. The general protocol being developed by the Department seeks to address the balance to be struck. The specific protocol, to which Mr Stapleton has submitted, is in line with the general protocol.
25 In the Tribunal’s opinion, these protocols provide much clearer guidance on this difficult matter than the earlier compliance documents that have issued. If significant problems emerge in practice, or there is a relevant ruling from the higher courts in Australia, then the question whether they adequately address the problem of conflict of interest may need to be revisited.
26 As to the specific protocol to apply to Mr Stapleton, many of the features of ‘Chinese wall’ arrangements are present: separate departments for accreditation services and consultancy services; separate recording and accounting systems; and restrictions on communication between the person or persons responsible for accreditation and those responsible for consultancy services.
27 One issue that is not addressed is that of hierarchical imbalance. Mr Stapleton’s is a small firm controlled by him (a ‘one-man’ firm). The accredited certifier attached to his firm is not an active equity partner or co-director but an employee. The public may perceive an employee as less well placed in not succumbing to pressure as compared to a partner or co-director of equal standing. The hierarchical imbalance could well be seen as not providing adequate protection against the problem of influence to which we have pointed.
28 Despite this reservation, on this occasion we will not stand in the way of implementation of the protocol as a way of resolving this case.
29 We should reiterate that the issue here is not one of whether the actual professionalism of the accredited certifier would be compromised but whether the reasonably-informed observer might reasonably perceive that the circumstances are ones where there is an undue risk to the public’s interest in the objective and fearless performance of a public duty.
30 While we remain of the view that Mr Stapleton still has some difficulty accepting the significance of the problem identified by these proceedings, we acknowledge that he has felt shamed by these proceedings and that he has, since our findings of guilt were made, actively assisted in the process of developing a protocol to govern the future conduct of his firm.
31 We also note Mr Lovegrove’s closing submissions that it is Mr Stapleton’s intention to relinquish his certification in due course (once the requirements of any current appointments he holds as accredited certifier or principal certifying authority are met). His intention is to practise solely as a building consultant. If that occurs then the specific protocol will lapse. It will remain necessary for anyone accredited in his firm to comply with similar standards, either by way of a specific condition imposed on that accreditation or through any general protocol ultimately laid down by the Department.
32 In the circumstances it is sufficient in our view simply to administer a caution to Mr Stapleton in respect of the two findings of guilt of unsatisfactory professional conduct, together with an order that his registration as an accredited certifier be subject to the condition that he adhere to the specific protocol set out in para [13] of these reasons.
Reprimand or Caution
Fine
33 While we acknowledge that a fine may be appropriate in some cases, and that it has a deterrent value, we are inclined to the view that in this case it is not required. The caution and the imposition of a condition on registration are, on this occasion, sufficient to meet the community’s interest in reproving conduct of this kind, and in minimising the possibility of repetition of the conduct.
Costs
34 As to the question of costs, the parties advised that each has agreed to bear their own costs.
ORDER
Pursuant to section 109ZA(2) of the Environmental Planning and Assessment Act 1979 (the Act) the Tribunal’s decision is that:
1. The Respondent is cautioned for unsatisfactory professional conduct in that he:
2. A condition be imposed on the Respondent’s registration as an accredited certifier requiring him to adhere to the specific protocol set out at para [13] of the Tribunal’s reasons for decision.
(a) contravened s 109ZG(1)(c) of the Act by signing the application for a construction certificate for a development and then issued the construction certificate applied for.
(b) contravened s 109D(2) of the Act by not issuing the occupation certificate for the development when he was the principal certifying authority.
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