May21 Pty Ltd v Building Appeals Board

IN THE SUPREME COURT OF VICTORIA

Not Restricted

AT MELBOURNE

COMMERCIAL COURT

TECHNOLOGY, ENGINEERING AND CONSTRUCTION LIST

S ECI 2022 03744

MAY21 PTY LTD (ACN 163 938 074)	First Plaintiff
FEC MAY22 PTY LTD (ACN 632 983 950)	Second Plaintiff
v
BUILDING APPEALS BOARD	First Defendant
SHANE LEONARD	Second Defendant
VICTORIAN BUILDING AUTHORITY	Third Defendant

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JUDGE:	Stynes J
WHERE HELD:	Melbourne
DATE OF HEARING:	9 February 2023
DATE OF JUDGMENT:	20 April 2023
CASE MAY BE CITED AS:	May21 Pty Ltd v Building Appeals Board
MEDIUM NEUTRAL CITATION:	[2023] VSC 203

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ADMINISTRATIVE LAW — Judicial review — Error of law on the face of the record — Review of determination of the Building Appeals Board made under the Building Act 1993 (Vic) — Determination of the Building Appeals Board quashed and matters remitted.

BUILDING AND CONSTRUCTION — Statutory construction — Application for staged building permit — Contract for whole of the building work — Matters a relevant building surveyor may have regard to when estimating the cost of the whole of the building work for which a staged building permit is sought — Building Act 1993 (Vic) s 205I(2)(a)(i) applied — Verraty Pty Ltd v Richmond Football Club Ltd (2020) 63 VR 150 applied.

STATUTORY CONSTRUCTION — Building Act 1993 (Vic) s 205I(2)(a)(i) — Whether relevant building surveyor is required to adopt the contract price as the estimate of the cost of the whole of the building work — Australia and New Zealand Banking Group Ltd v Commissioner of Taxation (1994) 48 FCR 268 applied — Manns v Kennedy [2007] NSWCA 217 applied.

WORDS AND PHRASES — ‘estimate’ — ‘having regard to’ — ‘contract price’— ‘staged permit’.

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APPEARANCES:	Counsel	Solicitors
For the Plaintiffs	J Twigg KC and C Dawlings	Moray & Agnew
For the Third Defendant	P Hanks KC and G Ayres	Weir Legal and Consulting

Contents

A.. Introduction

B... Summary of decision

C.. The Building Act 1993 (Vic)

D.. Background

E... The Board’s determination

F... Submissions

G.. Legal principles

G.1 Error of law on the face of the record
G.2 Statutory construction

H.. Consideration

I.... Other matters

J.... Orders

HER HONOUR

A Introduction

This is a judicial review of a determination made by the first defendant, the Building Appeals Board (‘the Board’). The Board is a statutory body established under the Building Act 1993 (Vic) (‘the Act’) with power to determine disputes that may be referred to it under the Act.[1] In this case, a dispute arose between applicants for a building permit and a building surveyor about the building surveyor’s estimate of the cost of the work for which the permit was sought. The plaintiffs are the applicants for the permit, and the second defendant is the building surveyor who is described as the ‘relevant building surveyor’ under the Act.[2]
[1]See Building Act 1993 (Vic) pt 10 (‘Act’).
[2]See ibid s 3(1) (definition of ‘relevant building surveyor’).
Four preliminary questions were raised for the Board’s determination:
(a)Question 1 – 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?
(b)Question 2 – If the answer to Question 1 is ’no’, must the relevant building surveyor estimate the cost of the whole of the building work (including the cost of labour and materials) excluding any aspect of the contract price which is not for:
(i)building work; or
(ii)building work for which a building permit is required?
(c)Question 3 – If the answer to any part of Question 2 is ’yes’, did the relevant building surveyor contravene the Act in the circumstances of this case by including any aspect of the following contracted items in his estimate of the cost of the whole of the building work (including the cost of labour and materials) for which the applicants sought staged permits:
(i)Goods and Services Tax;
(ii)costs relating to the supply or installation of items, which are not fixed to and/or run with the land, such as loose furniture, equipment and goods;
(iii)the builder’s margin on the whole of the work (over and above the direct costs of performing the building work);
(iv)costs of the builder’s preliminaries (excluding site specific overheads);
(v)plumbing work within the meaning of s 221C(1) of the Act;
(vi)electrical work within the meaning of s 3 of the Electrical Safety Act 1998 (Vic);
(vii)landscaping works;
(viii)the builder’s stated amount for consulting fees; or
(ix)allowances made by the builder for consultants’ fees for specialist design services?
(d)Question 4 – If the answer to any of Questions 3(i)-(ix) above is ’yes’, which costs of which particular aspect(s) of the relevant contracted item(s) should the relevant building surveyor have excluded when estimating the cost of the whole of the building work?
On 26 July 2022, the Board determined that:
(a)the answer to Question 1 was ‘yes’; and
(b)consequently, it was not required to answer Questions 2, 3 or 4.
The plaintiffs seek to have this determination quashed on the basis that there has been an error of law on the face of the record; specifically, that the Board misconstrued s 205I(2)(a)(i) of the Act. This is the issue to be determined in this proceeding.
The plaintiffs contend that where a party applies for a staged building permit under the Act and there is a contract for the whole of the building work, the relevant building surveyor undertaking the task of estimating the cost of the whole of the building work may have regard to more than the contract price for the whole of the building work. The plaintiffs rely on three affidavits of Phillip Vassiliadis.
The third defendant, the Victorian Building Authority (‘the Authority‘) contends that where there is a contract for the whole of the building work, the relevant building surveyor undertaking the task of estimating the cost of the whole of the building work is required to adopt the contract price for the whole of the building work. The Authority relies on the affidavit of Krista Weymouth dated 4 November 2022.
By letters dated 3 and 10 October 2022, the Board and the relevant building surveyor each informed the Court that they did not intend to take an active role in this proceeding except in relation to any issues arising as to costs, and would abide by any decision of the Court. I allowed both parties to proceed on this basis, subject to any further order.

B Summary of decision

For the reasons set out below, I find that there is an error of law on the face of the record; namely, the Board misconstrued s 205I(2)(a)(i) of the Act.

C The Building Act 1993 (Vic)

The Act serves numerous purposes. The main purposes of the Act identified in s 1 include:
(a) to regulate building work and building standards;
…
(c) to provide an efficient and effective system for issuing building and occupancy permits and administering and enforcing related building and safety matters and resolving building disputes; …
The objectives of the Act in s 4 include:
(a) to protect the safety and health of people who use buildings and places of public entertainment;
(b)       to enhance the amenity of buildings;
…
(d)       to facilitate the adoption and efficient application of —
(i)        national building standards;
…;
(e) to facilitate the cost effective construction and maintenance of buildings and plumbing systems;
(f) to facilitate the construction of environmentally and energy efficient buildings;
(g) to aid the achievement of an efficient and competitive building and plumbing industry.
The Act prohibits a person from carrying out building work unless a building permit in relation to the building work has been issued and is in force under the Act.[3]
[3]Ibid s 16(1).
‘Building work’ is broadly defined to mean work for or in connection with the construction, demolition or removal of a building.[4]
[4]Ibid s 3(1) (definition of ‘building work’).
An application for a building permit may be made to a municipal or private building surveyor.[5] The application must be in the prescribed form and contain the information and attach the documents prescribed by reg 24 of the Building Regulations 2018 (Vic) (‘the Regulations’),[6] including:
[5]Ibid s 17.
[6]Ibid s 18, sch 2 cl 1(a)–(b).
(a)sufficient information to show that the proposed building work will comply with the Act and the Regulations;[7]
[7]Building Regulations 2018 (Vic) reg 24(4) (‘Regulations’).
(b)in relation to an application for a permit to construct or alter a building:[8]
[8]Ibid reg 25(1).
(i)a copy of any planning permit relating to the proposed building work;
(ii)drawings showing the plan at each floor level, elevations, sections, dimensions and the sizes and locations of structural members to a specified scale;
(iii)specifications describing materials and methods to be used in the construction or alteration;
(iv)allotment plans;
(v)a statement of the use or proposed use of all buildings shown on allotment plans;
(vi)a copy of any computations or reports necessary to demonstrate that the building and building work will, if constructed in accordance with the computations and reports, comply with the Act and Regulations; and
(vii)if the application is to alter an existing building, copies of drawings and allotment plans that differentiate between the existing building and the proposed work for which the building permit is sought.
(c)if there is a contract for the building work, the contract price;[9]
(d)if there is no contract for the building work, the estimated cost of the building work and details of the method of estimation;[10] and
(e)if the application is for a particular stage of building work, the extent of the stage, the cost of work for that stage, and the cost of work for the whole of the building work.[11]
[9]Ibid reg 24, sch 4 form 1.
[10]Ibid.
[11]Ibid.
An application for a building permit can be split up into stages by applying for a staged building permit.[12]
[12]Act ss 3(1) (definition of ‘staged permit’), 20(b).
A relevant building surveyor may require an applicant to provide additional information or documents or to amend its application before the relevant building surveyor deals with or deals further with the application.[13] Where the relevant building surveyor requires an applicant to do this, the prescribed time within which the relevant building surveyor must decide an application for a permit[14] ceases to run, and recommences only when the information, documents or amended application are supplied.[15]
[13]Ibid s 18, sch 2 cl 2(1).
[14]See ibid s 19(2); Regulations reg 35.
[15]Act s 18, sch 2 cl 2(2).
On accepting an application for a building permit in relation to building work, the relevant building surveyor must apply to the Authority for a building permit number for the proposed building permit. The application must be in writing and include the cost of the proposed building work estimated by the relevant building surveyor under s 205I.[16] How the relevant building surveyor is to estimate this cost is central to the issue in dispute and is addressed further below.
[16]Ibid ss 18AA(1)–(2).
The relevant building surveyor must decide an application for a building permit by either:[17]
(a)issuing the permit;
(b)issuing the permit with conditions; or
(c)refusing the permit.
[17]Ibid s 19(1).
The relevant building surveyor must not issue a building permit unless they are satisfied that the building work and the building permit will comply with the Act and the Regulations.[18]
[18]Ibid s 24(1)(a).
The applicant must pay the Authority a building permit levy before the building permit is issued.[19]
[19]Ibid s 205GA.
The amount to be paid is calculated by reference to ’the cost of building work for which a building permit is required’.[20] Relevantly, s 205G imposes:
(a)a levy of 0.064 cents in every dollar of the cost of building work for which a building permit is required;[21]
(b)an additional levy of 0.064 cents in every dollar of the cost of building work for which a building permit is required;[22] and
(c)a further levy in relation to a staged permit where the whole of the building work costs $1,500,000 or more, being a levy of 0.82 cents in every dollar of the cost of the building work for which the permit is required.[23]
[20]See ibid s 205G.
[21]Ibid s 205G(1).
[22]Ibid s 205G(2).
[23]Ibid ss 205G(2A), (2C).
The Authority calculates the levy by reference to a cost estimate provided by the relevant building surveyor.[24]
[24]Ibid s 205I(2)(b). See also ibid s 205I(1)(b) in relation to an application for a building permit other than a staged permit.
The task to be undertaken by the relevant building surveyor is set out in s 205I. For a staged permit, the provision states in its relevant part:
205I Calculation and notification of levy
…
(2) If an application is for a staged permit—
(a) the relevant building surveyor must—
(i) estimate the cost of the whole of the building work (including the cost of labour and materials), having regard to the information given under section 205H(1A)(a) or (b); and
(ii) estimate the cost of the stage of the building work (including the cost of labour and materials) for which the permit is sought, having regard to the information given under section 205H(1)(a) or (b); and
(iii) without delay, give the Authority and the applicant written notice of the matters specified in subsection (3);
…
(3) For the purposes of subsection (2)(a)(iii), the matters are—
(a) the estimates referred to in subsection (2)(a)(i) and (ii); and
(b) whether the application is for the final stage of the building work.
Section 205H relevantly states:
205H Building permit application must contain information about cost of building work
(1) An application for a building permit must—
(a) specify the contract price for the building work (including the cost of labour and materials), if there is a contract for the building work; or
(b) in any other case, include sufficient information to enable the relevant building surveyor to estimate the cost of the building work (including the cost of labour and materials).
…
(1A) If an application is for a staged permit, the application must also—
(a) specify the contract price for the whole of the building work (including the cost of labour and materials), if there is a contract for the whole of the building work; or
(b) in any other case, include sufficient information to enable the relevant building surveyor to estimate the cost of the whole of the building work (including the cost of labour and materials).
(2) The requirements of this section are in addition to any other requirements under this Act or the regulations in relation to applications for building permits.
The relevant building surveyor must refuse a permit in certain circumstances identified in s 205HA, which states:
205HA Relevant building surveyor must refuse permit in certain circumstances
Without limiting the circumstances in which a relevant building surveyor may refuse to issue a building permit under Part 3, the relevant building surveyor must refuse an application for a building permit if the relevant building surveyor is satisfied—
(a) that the contract price for the building work specified in the application is substantially lower than the price normally payable under contracts for building work of that kind; or
(b) that the application—
(i) does not comply with section 205H(1)(b), (1AA)(c) or (1A)(b); or
(ii) contains a statement about the cost of the building work that is false or misleading in a material particular.
If a person required to pay an amount of the building permit levy fails to do so, the Authority may recover that unpaid amount as a debt due.[25]
[25]Ibid s 205K.
Where a staged permit has been issued, the Authority may reassess the amount of the levy required to be paid after a permit for the final stage of the building work has been issued because either:[26]
(a)a variation made to the building work has resulted in an increase in the estimated cost of the building work; or
(b)the estimate under s 205I(2) or (3) by the relevant building surveyor of the cost of the whole of the building work was incorrect; or
(c)the Authority considers that the information provided in the application for the building permit required under s 205H(1A) was incorrect or misleading.
[26]Ibid s 205L(1A).

D Background

The plaintiff companies are the developers of a project known as West Side Place at 250 Spencer Street, Melbourne (‘the Project’). The owner of the land was, at the relevant time, the first plaintiff, May21 Pty Ltd. The current owner of the land is the second plaintiff, FEC May22 Pty Ltd. Both plaintiffs are applicants to the proceeding before the Board. Both companies are managed as part of an organisation known as the Far East Consortium.
On 20 December 2019, the second plaintiff entered into a contract with Multiplex Constructions Pty Ltd (‘the Builder’) to design and construct Towers 3 and 4 of the Project (‘Stage 2 Works’). The contract price for the whole of these works is $660,982,768.[27]
[27]All figures are exclusive of GST unless otherwise specified.
The Builder, on behalf of the plaintiffs, applied for a staged permit in relation to the Stage 2 Works for the Project.
The plaintiffs engaged the second defendant (‘the Building Surveyor’) to assess their application for a staged permit to carry out the Stage 2 Works.
On 16 August 2019, the Building Surveyor estimated the cost of the whole of the building work to be the contract price of $660,982,768.
The Building Surveyor described how he performed this cost estimation task in an email to the Board on 3 September 2021. He stated:[28]
a. I recall I had a discussion with Far East Consortium (I think it may have originally been Aaron Parfit) on or about July 2019 in respect to what was required to be included in the contract sum to be nominated on the building permit.
b. At the time I recall Far East Consortium contesting the need to include GST, builder’s preliminaries, profit, and other matters that they considered non-building works costs, as part of the cost of work.
c. I asked for the contract sum and advised it was my understanding these components are to be included in the contract sum (in accordance with the VBA guidance).
d. I generally check the floor area to cost of work ratio when I receive a building permit application form, and I recall for this project it comes in at around $3,000 - $4,000 per m2, which I believed is within an acceptable range. On this basis, I proceeded to issue building permits based upon the contract sum.
e. I further recall Far East Consortium asking how they could challenge my decision to accept the contract cost of works including all components such as GST, preliminaries, etc. and I advised they could refer the matter to the BAB under s 156 or s 144 of the Building Act (Vic) 1993.
f. I understand for expediency and to facilitate the issue of Building Permits (the first being, site excavation and retention), Far East Consortium chose to pay the Levy based upon my determination, however advised they would be likely to appeal to the BAB and request a refund of any overpaid levy should they be successful.
[28]Court Book 283, Email correspondence.

The plaintiffs disputed the Building Surveyor’s cost estimate of the whole of the building work. More specifically, they challenged the Building Surveyor’s requirement that the whole contract price be included in the permit application form. The plaintiffs contend that the whole contract price was the price for both building work and other work included in the contract that is not building work under the Act.
In October 2022, the dispute was referred to the Board under s 156 of the Act. In short, the plaintiffs contended that:[29]
[29]Court Book 42–5, First plaintiff’s written submissions dated 2 October 2022, [43]–[60].
(a)By adopting the contract price, the Building Surveyor’s estimate of the cost of building work incorrectly included costs that were not ‘building work’ (as defined in the Act) including:
(i)Goods and Services Tax;
(ii)loose furniture, fixtures and equipment;
(iii)the Builder’s margin;
(iv)preliminaries (excluding site specific overheads); and
(v)‘non-building permit works’, being building works that do not require a building permit;
(b)When estimating the cost of building work for the purpose of s 205I of the Act, the relevant building surveyor must take into consideration only those costs that are ‘building work’ as defined in the Act;
(c)The relevant building surveyor should not adopt the whole of the contract price, verbatim, as the cost estimate of the building work;
(d)Rather, the relevant building surveyor has to estimate the cost having regard to the contract price of the whole of the building work. The contract price is relevant to, but not determinative of, the relevant building surveyor’s function.
The Board ordered that the proceeding be listed for hearing and determination of the four preliminary questions. On 26 July 2022, the Board delivered its orders and reasons. It later provided amended orders and reasons on 3 October 2022.

E The Board’s determination

The first preliminary question considered by the Board was:
Question 1 – 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?
The Board determined the answer to be ‘yes’.
The Board’s central conclusions are expressed in the following paragraphs of its reasons:[30]
[30]Court Book 196–7, Building Appeals Board determination and orders dated 3 October 2022, [45]–[60] (emphasis in original).
Estimate the cost
45. In those cases where a contract price is specified, the Act is clear – the RBS must have regard to that contract price.
46. Notably, the words ‘for which a building permit is required’ do not appear in s 205H(1)(a) or in s 205H(1A)(1)(a). The contract price to be specified must be the full price of the contract that has been entered into between the parties to construct the building project.
47. In our view, this is significant. The Applicants submit that the levy is only payable on those aspects of work which actually require a permit, but the Act requires the contract price for the whole contract to be specified.
48. We find that the words ‘for which a building permit is required’ where they do appear do not limit the matters in respect of which building permit levies are payable.
49. We find that once the contract price is specified as required by the Act, it is not appropriate to attempt to disaggregate the work that is included in the contract price and then only require levies to be paid on those aspects which are regulated by the building permit regime created by the Act in the estimate of the cost of the work.
50. The words [in s 205G] ‘building work for which a building permit is required’ are only words of limitation in the sense that they make it clear that no levies are payable in respect of building projects for which no building permit is required.
51. If a building permit is required, and a contract is entered into, it is the contract price that must be specified. And the RBS is then required to adopt that contract price as the estimate of the cost of the building work (including the cost of labour and materials).
52. In saying this:
(a) we accept the submissions of:
(i) the Respondent, that the RBS will have ‘no visibility’ of what is or is not included in the contract; and
(ii) the Interested Party, that the process is intended to be quick and simple, and that building surveyors cannot be expected to carry out a detailed analysis of the cost of the contract; and
(b) we note in particular the provisions of s 205HA of the Act.
RBS must refuse if contract price too low
53. In our view, s 205HA is significant when answering this question for two reasons.
(a) First, because it provides significant context as to how the relevant provisions of the Act should be interpreted; and
(b) Second, because it would be redundant if the other provisions were interpreted in a particular way.
54. Before turning to those two matters, we find that:
(a) the obligation referred to by (then) Senior Member Reigler in Cole-Sinclair was an obligation to ensure that the contract price specified was reasonable (not to undertake a detailed analysis of every possible aspect of the project); and
(b) in any event, s 205HA (which was enacted after Cole-Sinclair was decided) now makes clear the nature of the obligation and the consequences if the specified price is too low.[31]
[31]Referring to Cole-Sinclair v Building Practitioners Board (Review and Regulation) [2014] VCAT 902.
Context
55. We find that s 205HA makes it clear that the primary function of the RBS when estimating the cost of the building work (including the cost of labour and materials) is to ensure that the amount that has been specified is not too low.
56. The Act is concerned to ensure that the RBS acts as a ‘gatekeeper’ to a limited extent only – and that is only to the extent of making sure that levies are not underpaid.
57. An RBS must refuse to grant a permit if he or she is of the view that the amount specified is too low. Thus, it is clear that the only intellectual exercise required of the RBS is to consider whether the contract price specified is ‘substantially lower’ than ‘normally payable’.
58. We accept the Respondent’s submission that this is normally done by dividing the specified price by the number of square metres of gross floor area to be constructed and ensuring the price per square metre falls within an expected range.
Redundant
59. If the RBS was required to engage in an intellectual exercise of estimating the costs of every item, s 205HA would have no work to do. There would simply be no need for a requirement that the RBS refuse to issue a building permit if the contract price specified in the application is substantially lower than the price normally payable.
Conclusion on s 205HA
60. In our view, the terms of s 205HA are indicative of a legislative intention for an RBS to adopt, as their estimate, the specified price, unless that price is substantially lower than the price normally payable.

F Submissions

The plaintiffs submit, in summary:
(a)On a proper construction of the Act, the relevant building surveyor must have regard to the contract price for the whole of the building work specified in the application form, but the relevant building surveyor is not confined to that information alone when performing the task required under the Act;
(b)The word ‘estimate’ as used in s 205I(2) requires the relevant building surveyor to perform an intellectual exercise. How the relevant building surveyor undertakes that task is a matter for them;
(c)‘Estimate’ is used as both a verb and a noun in s 205I. The relevant building surveyor is to estimate the cost, and then the product of that task, the estimate, is to be given to the Authority. That combination makes clear it is the relevant building surveyor’s estimate that is provided, not the contract price;
(d)The task to be undertaken by the relevant building surveyor (ie, to estimate cost) is the same, whether they are required to have regard to (a) the contract price where there is a contract for the whole of the building work, or (b) in any other case, other information provided by the applicant that sufficiently enables the estimation of cost;[32]
(e)‘Having regard to’ takes its meaning from the context in which it is used.[33] In the context of the Act, ’having regard to’ requires the relevant building surveyor to consider the contract price of the building work and give it such weight (if any) as the relevant building surveyor thinks it ought to be given;
(f)It is implicit from the confirmatory statement in s 205H(2) that the relevant building surveyor will consider other information (other than merely the information provided under s 205H) when performing a cost estimate;
(g)Having regard to all the matters the relevant building surveyor may consider in deciding whether to issue a building permit, it would be inexplicable to limit them to consider only the contract price when estimating the cost of the building work. In some situations, the specified contract price cannot provide the sole guidance as to the estimate of the cost of the building work for which a building permit is required. These include, for example, cost-plus contracts, profit-sharing guaranteed maximum price contracts, management contracts with a small amount allowed for building work, and (as is the case in this proceeding) contracts that include work which does not require a permit or is not building work;
(h)The effect of the Board’s construction is to erroneously insert the word ‘only’ after the word ‘regard’ in s 205I(2)(a)(i).
[32]Transcript of Proceedings, May21 Pty Ltd v Building Appeals Board (Supreme Court of Victoria, Stynes J, 9 February 2023) 39–40, 50 (‘Trial Transcript’).
[33]Citing Manns v Kennedy [2007] NSWCA 217, [112] (Campbell JA, with Santow JA and Bryson AJA agreeing); Rathborne v Abel (1964) 38 ALJR 293, 294 (Barwick CJ), 301 (Kitto J).
The Authority submits, in summary:
(a)Properly construed, the contract price is ‘the cost of the whole of the building work (including the cost of labour and materials)’ within the meaning of s 205I(2)(a)(i). Accordingly, there is no need for the relevant building surveyor to have regard to anything other than the contract price. The relevant building surveyor is required to adopt the price nominated by the applicant in their permit application as the estimate;
(b)The plaintiffs’ construction depends on reading words and phrases, such as ‘estimate’, ‘having regard to’ and ‘for which a building permit is required’, in isolation without regard to the legislative scheme as a whole or its evident purpose. If adopted, the plaintiffs’ construction would require relevant building surveyors to undertake lengthy and burdensome exercises of estimation before issuing building permits. One of the purposes of the provisions is to provide for a simple process of cost estimation by the relevant building surveyor. This purpose is supported by the fact that the task of estimation is given to the relevant building surveyor, not a quantity surveyor. Requiring a relevant building surveyor to second-guess the specified contract price by reference to an unstated list of alternative information would press the provisions of the Act beyond its language.[34]
[34]Trial Transcript (n 32) 91–2.
The Authority submitted that there are 10 reasons why the Board’s decision was correct and should be upheld.[35] I have summarised these in the following paragraphs.
[35]P Hanks and G Ayres, ‘Outline of Submissions of the Third Defendant’, Submissions in May21 Pty Ltd v Building Appeals Board, S ECI 2022 03744, 9 February 2023, [16]–[27].
First, it was submitted that the Board’s construction of s 205I does not conflict with s 205G. In summary, ’the cost of building work for which a building permit is required’, as those words appear in s 205G, should be understood as the cost that is ascertained by the process prescribed in s 205I. That process requires estimation of what the relevant cost is expected to be. The Authority says it is unsurprising that Parliament has selected the contract price (where one exists) as the reflex of that cost.
Second, the plaintiffs’ construction fails to give effect to the broad definition of ‘building work’, and proceeds on the incorrect premise that each individual cost item included in a contract, when considered individually, must be for ‘building work’ in order to be captured by the levy. That construction is contrary to the text, context and purpose of the Act, and is also contrary to legal authority.
Third, the Board’s interpretation does no violence to the words ‘estimate’ or ‘having regard to’ as those terms appear in s 205I:
(a)The Authority accepted that the process of ’estimation’ involves an intellectual exercise and ’does not involve arbitrarily seizing upon any figure’, but submitted that the nature of the exercise must be understood by reference to the statutory context. Here, the intellectual exercise differs depending on whether or not there is a contract price:
(i)If there is no contract for the building work, the relevant building surveyor must estimate the cost of the building work having regard to the information provided under s 205H(1)(b) and (if the application is for a staged permit) s 205H(1A)(b), which will require the relevant building surveyor to form a judgment, based on that information, about the cost of the building work.
(ii)If there is a contract, the relevant building surveyor must first assess whether the specified contract price is ’substantially lower than the price normally payable under contracts for building work of that kind’ pursuant to s 205HA(a). If a negative answer is given to that question, then the relevant building surveyor must estimate the cost of the building work having regard to the contract price pursuant to s 205I(1)(a)(i) or (if the application is for a staged permit) ss 205I(2)(a)(i)–(ii).
(iii)Thus, it submitted the two processes of ‘estimation’ required by s 205I are different. The Act stipulates different processes and requirements in relation to the information the relevant building surveyor must have regard to when undertaking each type of ‘estimate’. Parliament has used a single word, ‘estimate’, to describe both processes. But this does not mean that the same process, or a process of similar complexity, is involved in each case.
(b)The phrase ‘having regard to’ may bear different shades of meaning. Section 205I(2)(a)(i) provides that the relevant building surveyor ’must … estimate the cost of the whole of the building work … having regard to the information given under section 205H(1A)(a) or (b)’. Thus the language of the statute is mandatory, and the only matter to which the relevant building surveyor is required to have regard is the information provided under ss 205H(1A)(a) or (b). The proper construction is that the relevant building surveyor must estimate the cost having regard to that specified information and not to other information.[36]
(c)Section 205H(1A) provides an important piece of context. It uses the word ‘specify’, which indicates that the contract price will play a central part in the calculation and collection of the levy.[37]
[36]Trial Transcript (n 32) 87–8, citing Manns v Kennedy [2007] NSWCA 217, [112] (Campbell JA, with Santow JA and Bryson AJA agreeing).
[37]Trial Transcript (n 32) 76–7.
Fourth, it is beside the point that a relevant building surveyor has general powers to ‘require an applicant to provide additional information or documents or to amend the application’.[38] Had Parliament intended the relevant building surveyor to have regard to anything other than the contract price, it can be expected that Parliament would always require an applicant to provide relevant material in addition to the contract price. But Parliament only requires an applicant to supply ‘sufficient information to enable the relevant building surveyor to estimate the cost of the building work’ when there is no contract for the building work.[39]
[38]Act s 18, sch 2 cl 2.
[39]See ibid ss 205H(1)(b), (1A)(b).
Fifth, s 205H(2) does not assist the plaintiffs’ argument. That subsection does no more than recognise that there are ‘other requirements under this Act or the regulations in relation to applications for building permits’; that is, in addition to the requirements in s 205H relating to ‘information about [the] cost of building work’. Of course, the relevant building surveyor will consider information about the subject building work when determining under s 205HA whether the contract price specified in the application is substantially lower than the price normally payable under contracts for building work of that kind. But if they are satisfied that the contract price is not substantially lower than it should be, then the relevant building surveyor is required to proceed to estimate the cost of the building work under s 205I having regard to the contract price alone.
Sixth, the Board’s construction is equally workable in relation to the cost estimation for ‘the whole of the building work’ and ‘the stage of the building work’ as required by ss 205I(2)(a)(i) and (ii) respectively. The clear intention of the statute is that once all staged permits have been issued, the sum of the contract prices for each stage should equal the overall contract price, which is ‘the cost of the whole of the building work’.
Seventh, it is beside the point that building contracts may come in a variety of different forms. The effect of the Act is that parties may choose the form of contract for building work they desire, but the contract price must not be ‘substantially lower than the price normally payable under contracts for building work of that kind’ pursuant to s 205HA.
Eighth, the Board did not erroneously focus on the information that an applicant is required to include in their application form for a building permit. In the relevant passage of its reasons, the Board focused on the requirements of the Act, rather than the requirements of the application form.[40]
[40]Court Book 195, Building Appeals Board determination and orders dated 3 October 2022, [40]–[43].
Ninth, the decision in Cole-Sinclairv Building Practitioners Board (Review and Regulation)[41] does not assist the plaintiffs. In that case, there was no contract for the building work in question. So properly understood, the Tribunal’s comments about cases where a contract does exist merely confirms the obligation of the relevant building surveyor to assess whether the contract price is ‘substantially lower than the price normally payable … for building work of that kind’, an obligation that is now imposed by s 205HA.
[41][2014] VCAT 902.
Tenth, the significance that the Board gave to s 205HA is entirely appropriate. By its written submissions, the Authority submitted that the Board correctly identified how s 205HA(a) informs the nature of the cost estimate that is required under s 205I where a contract exists, and the Board correctly identified that s 205HA would be redundant if the plaintiffs’ construction of s 205I were accepted. During the hearing, counsel for the Authority clarified this submission, stating that s 205HA is a provision which directs and permits the relevant building surveyor to look beyond the specified contract price. Its focus is on whether the contract price should be higher. By contrast, s 205I does not permit the relevant building surveyor to go beyond the specified contract price, as it requires them to take the contract price at face value.[42]

G Legal principles

[42]Trial Transcript (n 32) 95.

G.1 Error of law on the face of the record

When reviewing an error of law on the face of the record, the Court is limited to a review of ‘the record’. At common law, the record is limited to the originating process, pleadings and orders of the Court.[43] However, pursuant to s 10 of the Administrative Law Act 1978 (Vic), the reasons given for a decision are taken to form part of the decision and therefore form part of ‘the record’. Accordingly, the Board’s determination and its written reasons form part of the record for the purpose of this judicial review proceeding.
[43]See Craig v South Australia (1995) 184 CLR 163, 164 (Brennan, Deane, Toohey, Gaudron and McHugh JJ).
The alleged ‘error of law on the face of the record’ is the Board’s interpretation of the Act, a matter that was material to its decision.

G.2 Statutory construction

The legal principles relevant to statutory construction were set out by the Victorian Court of Appeal in Verraty Pty Ltd v Richmond Football Club Ltd.[44] In summary:
[44](2020) 63 VR 150, [53]–[64] (Kyrou , Kaye and Sifris JJA).
(a)the process of statutory construction starts with the actual text of the statute. The text, however, is to be considered in light of the context and purpose of the statute or particular provision including the mischief it is seeking to remedy;
(b)determination of the purpose of a statute or of particular provisions in a statute may be based upon an express statement of purpose in the statute itself, inference from its text and structure and, where appropriate, reference to extrinsic materials;
(c)extrinsic materials cannot be relied on to displace the clear meaning of the text;
(d)the court may depart from the literal meaning where, for example:
(i)the literal meaning would conflict with other provisions of the statute;
(ii)the literal meaning is inconsistent with the purposes of the statute;
(iii)the literal meaning is incapable of practical application; or
(iv)adoption of the literal meaning would lead to a result that is absurd, unreasonable or anomalous;
(e)however, departure from the literal meaning will only be justified if the alternative construction is ‘reasonably open’ and ‘consistent with the language in fact used by the legislature’.

H Consideration

The Board determined that where a party applies for a staged permit under the Act and there is a contract for the whole of the building work, the relevant building surveyor must 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. To put it another way, as the Board did in its reasons and the Authority did by its submissions, if there is a contract for the whole of the building work, the relevant building surveyor is required to adopt the contract price as the estimate of the cost of the building work.
I must determine if the Board in reaching its decision has erred in its interpretation of s 205I(2)(a)(i).
For the following reasons, I consider that the text of s 205I(2)(a)(i) does not support the Board’s interpretation that the provision requires the relevant building surveyor to adopt the contract price.
First, the term used in the provision to describe the task of the relevant building surveyor is ‘estimate’. That term is not defined in the Act. The Macquarie Dictionary defines ‘estimate’ to mean the following:[45]
[45]Macquarie Dictionary (8^th ed, 2020) ‘estimate’.
–verb (t)         1. to form an approximate judgement or opinion regarding the value, amount, size, weight, etc., of; calculate approximately.
2.  to form an opinion of; judge.
–verb (i)          3. to submit approximate figures, as of the cost of work to be done.
–noun             4.  an approximate judgement or calculation, as of the value, amount, etc., of something.
5.  a judgement or opinion, as of the qualities of a person or thing; estimation or judgement.
6.  an approximate statement of what would be charged for certain work to be done, submitted by one ready to undertake the work.
In Australia and New Zealand Banking Group Ltd v Commissioner of Taxation,[46] it was said that: ‘The concept of “estimate” does not involve arbitrarily seizing upon any figure. What is involved is the formation of a judgment or opinion based upon reason. That judgment or opinion must necessarily be made bona fide but it need not be exact as the process of estimation involves a process of approximation’.[47] Having regard to this explanation and the dictionary definition set out above, ‘estimate’ is a poor choice of word if Parliament had intended to oblige the relevant building surveyor to adopt the specified contract price where a contract for the building work exists.
[46](1994) 48 FCR 268.
[47]Ibid 280 (Hill J, with Northrop and Lockhart JJ agreeing).
Second, if I were to accept the Board’s interpretation of s 205I(2)(a)(i), then the word ‘estimate’ would be used to describe two different tasks:
(a)The first would be prescriptive, by requiring the adoption of the contract price where there is a contract for the whole of the building work;[48] and
(b)The second would call for an exercise of judgment where there is no contract, based on information relevant to the cost of building work provided by the applicant for the building permit.[49]
[48]See Act ss 205H(1)(a), (1A)(a).
[49]See ibid ss 205H(1)(b), (1A)(b).
However, on a plain reading of s 205I(2)(a)(i), the task to be undertaken by the relevant building surveyor (ie, to estimate cost) applies equally to situations where there is and where there is not a contract. There are numerous other ways the section could have been written if the task is intended to be different depending on whether or not there is a contract. For example, the provision could have expressly required the adoption of the contract price where there is a contract, but it does not.
Third, the use of the phrase ‘having regard to’ in s 205I(2)(a)(i) does not operate to confine the relevant building surveyor to consider only the contract price. I accept that the meaning of the phrase ‘having regard to’ depends on its context.[50] In this case, the task of the relevant building surveyor is to perform an estimate of cost. To construe ‘having regard to’ as meaning that the relevant building surveyor must only consider and adopt the contract price would, in my view, denude the word ‘estimate’ of any meaning, because it would remove the need for the relevant building surveyor to form a judgment or opinion based upon reason.
[50]Manns v Kennedy [2007] NSWCA 217, [112] (Campbell JA, with Santow JA and Bryson AJA agreeing).
Further, the context of s 205I(2)(a)(i) does not support the Board’s interpretation. That is, in light of the matters described in paragraphs [64] and [65] below, and noting that s 205I does not expressly prohibit consideration of information in the possession of the relevant building surveyor, it does not make sense to confine the relevant building surveyor to consider only the contract price for the purpose of performing an estimate of the cost of the whole of the building work under s 205I(2)(a)(i).
The role of a relevant building surveyor under the Act is much broader than the production of an estimate under s 205I. Their role also includes:
(a)Assessing the application and deciding whether a building permit should be issued with or without conditions, or otherwise refused.[51] Every application is required to be accompanied by prescribed information sufficient to show that the proposed building work will comply with the Act and the Regulations.[52] The relevant building surveyor may also require an applicant to provide additional information or documents, or to amend the application, if the relevant building surveyor considers this necessary to deal further with the application;[53]
(b)Applying to the Authority for a building permit number for the proposed building permit. In doing so, they are required to include the cost estimate they have prepared under s 205I;[54]
(c)An obligation to refuse an application unless they are satisfied that the building work and the building permit will comply with the Act and the Regulations;[55]
(d)An obligation to refuse an application if they are satisfied that:[56]
(i)the contract price for the building work specified in the application is substantially lower than the price normally payable under contracts for building work of that kind; or
(ii)the application:
(1)does not comply with ss 205H(1)(b), (1AA)(c) or (1A)(b); or
(2)contains a statement about the cost of the building work that is false or misleading in a material particular.
[51]Act s 19(1).
[52]Ibid s 18, sch 2 cl 1(a)–(b); Regulations reg 24(4).
[53]Act s 18, sch 2 cl 2.
[54]Ibid s 18AA.
[55]Ibid s 24(1)(a).
[56]Ibid s 205HA.
The task imposed by s 205I is to produce an estimate of cost. It is not a task entrusted to the applicant. Rather, it is a task entrusted to the relevant building surveyor, an independent person with the necessary skills to estimate a baseline for the calculation of the levy. The relevant building surveyor entrusted with the task will, as part of their broader role, possess relevant information about the building work that is the subject of the permit application, and be familiar with that work.
Finally, my construction of s 205I(2)(a)(i) is consistent with the purpose of that provision and is capable of practical application. The purpose of s 205I is to provide for the calculation and notification of the building permit levy. The purpose of s 205I(2)(a) is to require (in the case of an application for a staged permit) a cost estimate to be prepared by the relevant building surveyor and given to the Authority. The Authority must then calculate the amount of the levy payable pursuant to s 205G. Under s 205G, the levy is calculated by reference to the cost of building work for which a building permit is required. In that context, the cost estimate must bear an intelligible relationship to the building work (as defined by the Act) that is to be permitted. An estimate prepared by a relevant building surveyor who may have regard to the contract price as well as other information in their possession describing the building work, facilitates the verification of the relationship between the contract price and the building work. By contrast, an estimate that is no more than a restatement of the contract price does not.
While it should be apparent from the foregoing reasons that I do not accept the Authority’s submissions generally, there are a number of submissions I wish to specifically address.
First, the Authority submits that the plaintiffs’ construction would require relevant building surveyors to undertake lengthy and burdensome exercises of estimation before issuing building permits. I disagree. Section 205I does not prescribe the method to be employed by a relevant building surveyor to produce their estimate; that matter is left to the relevant building surveyor to decide. The method they choose to use may be as complex or as simple as the demands of the relevant application dictate. It must be within the skillset of the relevant building surveyor to determine how to perform the estimate because, even on the Authority’s construction, they are required to produce an estimate in the absence of a contract for the whole of the building work.
Second, the Authority says that s 205H(1A) provides an important piece of context. They submitted that this section uses the word ‘specify’ which is an important indicator that the contract price will play a central part in the calculation and collection of the levy. I accept that the contract price does play an important part in the relevant building surveyor’s analysis, as they are required to prepare their estimate having regard to it. However, the word ‘specify’ in s 205H(1A):
(a)is directed to the applicant, as they are the party who must specify the contract price in their permit application; and
(b)it does not operate to define the task to be undertaken by the relevant building surveyor under s 205I.
Third, the Authority submitted that the significance the Board gave to s 205HA was entirely appropriate. It submitted that s 205HA is a provision which directs and permits the building surveyor to look beyond the specified contract price, while s 205I does not. I disagree. Section 205HA sets out certain circumstances in which the relevant building surveyor must refuse to issue a building permit. It is merely one component of the relevant building surveyor’s role. It is not directed to how the relevant building surveyor is to undertake the task of estimation imposed by s 205I.
In my view, on the proper construction of s 205I(2)(a)(i), if there is a contract for the whole of the building work, the relevant building surveyor must have regard to the contract price specified, but they are not confined to that information when estimating the cost of the whole of the building work.
Accordingly, I find that there is an error of law on the face of the record; namely, the Board misconstrued s 205I(2)(a)(i) of the Act.

Other matters

During the course of the hearing of this matter, it became apparent that the question central to the parties’ dispute is Question 2 (concerning whether the relevant building surveyor should exclude certain aspects of the contract price from their cost estimate). I queried whether that question was properly before me for judicial review, given the Board only determined Question 1. The parties provided, and I was assisted by, short written submissions addressing that issue.
In summary, the plaintiffs submitted:
(a)The plaintiffs have sought to quash all of the orders made by the Board answering Questions 1 to 4;
(b)Questions 1 and 2 are questions of law;
(c)Although answering Question 1 is all that is needed to justify an order of the court quashing the whole of the Board’s determination, the Court, in analysing the answer to Question 1, may need or desire to form and express an opinion about Question 2;
(d)Nothing precludes the Court from answering issues of law which arise in its consideration of the correctness of the answer to Question 1. Strictly speaking, the reasons for that opinion might technically be obiter dicta, but it is a matter for the Court to decide whether to formulate reasons giving guidance to the Board concerning Question 2;
(e)If the Court determines that there is an error of law in the Board’s answer to Question 1, then Question 2 is to be answered by the Board when remitted back to the Board for its determination in accordance with law.
The Authority submitted the following in summary:
(a)Due to the answer the Board gave to Question 1, Question 2 was not required to be answered;
(b)It is open to the Court to consider all of the reasons the Board gave for its answer to Question 1, even if some of those reasons might also be relevant to Question 2;
(c)If the Court determines that the Board made an error of law in making its determination under review, then the appropriate orders to be made by the Court should not include a direction to the Board to answer Question 1 or Question 2 in any particular way. Instead, the appropriate orders would be to quash the Board’s determination and an order in the nature of mandamus requiring the Board to reconsider and determine the matter in accordance with law.
Upon deliberation, my role in this case is to review the decision of the Board and consider whether it should be quashed on the ground that there is an error of law on the face of the record. It is not an appellate procedure enabling either a general review or substitution of the order or decision which I think should have been made. The Board did not answer Question 2. Accordingly, I do not propose to determine how that question should be answered.

J Orders

Subject to any further submission by the parties as to the appropriate form of order and costs, I propose to order that:
(a)the determination and orders of the Board dated 3 October 2022 be quashed; and
(b)the matter be remitted to the Board to consider and determine in accordance with law.

[2023] VSC 203

20 April 2023