Victorian Building Authority v May21 Pty Ltd

SUPREME COURT OF VICTORIA

COURT OF APPEAL

S EAPCI 2023 0060

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

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JUDGES:	EMERTON ACJ, NIALL and OSBORN JJA
WHERE HELD:	Melbourne
DATE OF HEARING:	13 June 2024
DATE OF JUDGMENT:	28 June 2024
MEDIUM NEUTRAL CITATION:	[2024] VSCA 150
JUDGMENT APPEALED FROM:	[2023] VSC 203 (Stynes J)

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BUILDING AND CONSTRUCTION – Statutory construction – Application for leave to appeal from decision of trial division judge on an application for judicial review of a determination of the Building Appeals Board – Dispute with respect to the basis of an estimate utilised to calculate a levy imposed on a building permit – Whether judge erred in holding that where a contract price is specified in an application for a staged building permit pursuant to s 205H(1A)(a) of the Building Act 1993, the relevant building surveyor is not required to estimate the cost of the whole of the building work (including labour and materials) under s 205I(2)(a)(i) of the Act by reference only to the specified contract price – Matters to which a relevant building surveyor may have regard – Meaning of ‘having regard to’ – Relevant building surveyor not required to treat contract price for the building work as the exclusive basis for the estimation – No error – Leave to appeal refused.

Building Act 1993, ss 205G, 205H(1), 205H(1A), 205HA, 205I(2)(a)(i), 205L.

Obian v The King [2024] HCA 18, R v Hunt; Ex parte Sean Investments Pty Ltd (1979) 180 CLR 322, considered; Manns v Kennedy [2007] NSWCA 217, referred to.

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Counsel
Applicant:		Mr P Hanks KC with Mr G Ayres
First and Second Respondents:		Mr JAF Twigg KC with Mr CFE Dawlings
Third Respondent:		No appearance
Fourth Respondent:		No appearance
Solicitors
Applicant:	Weir Legal and Consulting
First and Second Respondents:	Moray and Agnew
Third Respondent:	Victorian Government Solicitor
Fourth Respondent:	Lander & Rogers

EMERTON ACJ
NIALL JA
OSBORN JA:

Introduction

This is an application for leave to appeal with respect to a decision of Stynes J on an application for judicial review of a determination of the Building Appeals Board (the ‘Board’).
The Board had before it a dispute with respect to the basis of an estimate utilised to calculate a levy imposed upon a building permit pursuant to pt 12 sub‑div 4 of the Building Act 1993 (the ‘Act’).
Upon receipt of an application for a staged building permit, the Act requires the relevant building surveyor in part to estimate ‘the cost of the whole of the building work (including the cost of labour and materials)’.[1]
[1]Building Act 1993, s 205I(2)(a) (‘Act’).
The estimate must be made having regard to the information contained in the building permit application[2] which must— (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).[3]
[2]Ibid.
[3]Ibid s 205H(1A).
The relevant building surveyor’s estimate is in turn utilised by the applicant authority (the ‘VBA’) to calculate the levy payable by way of the sum of cumulative components calculated in accordance with s 205G of the Act.
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?[4]
[4]May21 Pty Ltd v Building Appeals Board (2023) VSC 203, [2] (Stynes J) (‘Reasons’).
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 respondents to this application (the ‘developers’) were the relevant permit applicants and sought to have the Board’s determination quashed on the basis that the Board’s decision demonstrated an error of law on the face of the record, namely that the Board had misconstrued s 205I(2)(a)(i) of the Act which governs the basis of the relevant building surveyor’s estimate.
The developers contended that where application is made for a staged building permit under the Act and there is a contract for the whole of a building project, the relevant building surveyor undertaking the task of estimating the cost of the whole of the building work in the relevant sense, may have regard to information additional to the contract price if it is relevant to do so.[5]
[5]Ibid [5].
The VBA contended that, where there is a contract for the whole of the building project work, the relevant building surveyor undertaking the task of estimating the cost of the whole of the building work in the relevant sense, is required to adopt the contract price for the whole of the building project work as the estimate.[6]
[6]Ibid [6].
The trial judge accepted that the statutory scheme did not require the relevant building surveyor to treat the contract price for building work as the exclusive basis for the estimation of the cost of such work. It followed that the Board had misconstrued s 205I(2)(a)(i) of the Act.[7]
[7]Ibid [8].
The VBA now seeks leave to challenge that decision on one ground of appeal:
The primary judge erred in holding that, where a contract price is specified in an application for a staged permit pursuant to s 205H(1A)(a) of the Building Act, the relevant building surveyor is not required to estimate the cost of the whole of the building work (including labour and materials) under s 205I(2)(a)(i) of the Building Act by reference only to the specified contract price.
For the reasons which follow, we would refuse leave to appeal. Where the building permit application specifies the contract price for a project, the relevant building surveyor must have regard to the contract price as a fundamental consideration in estimating the costs of the building work but is not precluded from having regard to other relevant matters in order to estimate the cost of the building work for which a building permit is required.

The statutory scheme

The Act contains provisions which can be viewed in the broad as directed to two principal objectives, namely the regulation of building activity by way of the prescription and enforcement of appropriate building standards, and the avoidance of rectification hazards arising from building.[8]
[8]City of Port Phillip v Shout Rock Cafés Pty Ltd [2023] VSCA 327, [19] (Emerton P, Kennedy and Osborn JJA).
The main purposes of the Act include:
(a) to regulate building work and building standards; and
…
(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; …[9]
[9]Act, s 1.
The trial judge summarised the provisions of the Act relevant to building permits and it is convenient to adopt that summary (which was not the subject of challenge).
11The 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.[10]
[10]Ibid s 16(1).
12‘Building work’ is broadly defined to mean work for or in connection with the construction, demolition or removal of a building.[11]
[11]Ibid s 3(1) (definition of ‘building work’).
13An application for a building permit may be made to a municipal or private building surveyor.[12] 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’),[13] including:
[12]Ibid s 17.
[13]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;[14]
[14]Building Regulations 2018 (Vic) reg 24(4) (‘Regulations’).
(b)in relation to an application for a permit to construct or alter a building:[15]
[15]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;[16]
[16]Ibid reg 24, sch 4 form 1.
(d)if there is no contract for the building work, the estimated cost of the building work and details of the method of estimation;[17] and
[17]Ibid.
(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.[18]
[18]Ibid.
14An application for a building permit can be split up into stages by applying for a staged building permit.[19]
[19]Act ss 3(1) (definition of ‘staged permit’), 20(b).
15A 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.[20] 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[21] ceases to run, and recommences only when the information, documents or amended application are supplied.[22]
[20]Ibid s 18, sch 2 cl 2(1).
[21]See ibid s 19(2); Regulations reg 35.
[22]Act s 18, sch 2 cl 2(2).
16On 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.[23] …
[23]Ibid ss 18AA(1)–(2).
17The relevant building surveyor must decide an application for a building permit by either:[24]
[24]Ibid s 19(1).
(a)issuing the permit;
(b)issuing the permit with conditions; or
(c)refusing the permit.
18The 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.[25]
[25]Ibid s 24(1)(a).
19The applicant must pay the Authority a building permit levy before the building permit is issued.[26]
[26]Ibid s 205GA.
20The amount to be paid is calculated by reference to ‘the cost of building work for which a building permit is required’.[27] Relevantly, s 205G imposes:
[27]See ibid s 205G.
(a)a levy of 0.064 cents in every dollar of the cost of building work for which a building permit is required;[28]
[28]Ibid s 205G(1).
(b)an additional levy of 0.064 cents in every dollar of the cost of building work for which a building permit is required;[29] and
[29]Ibid s 205G(2).
(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.[30]
[30]Ibid ss 205G(2A), (2C).
21The Authority calculates the levy by reference to a cost estimate provided by the relevant building surveyor.[31]
[31]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.
22The 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.
23Section 205H relevantly states:
205HBuilding 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.
24The relevant building surveyor must refuse a permit in certain circumstances identified in s 205HA, which states:
205HARelevant 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.
25If 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.[32]
26Where 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:[33]
(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.[34]
[32]Ibid s 205K.
[33]Ibid s 205L(1A).
[34]Reasons, [11]–[26] (citations in original).
For present purposes, there are three critical elements in the statutory scheme:
(a)The basis of the levy is the cost of the building work proposed to be carried out in accordance with a permit, ie ‘the cost of building work for which a building permit is required’.[35]
(b)In order to estimate that cost in respect of works comprised in a stage of building work which is the subject of a staged permit application, the relevant building surveyor must estimate both the cost of the work in the stage and the cost of the building work as a whole. This enables both a stage‑specific and cumulative estimation of the building costs.
(c)Section 205I(2)(a)(i) requires the relevant building surveyor to have regard to the information given under s 205H(1A) by way of two alternative kinds, namely specification of the contract price for the building work or provision of sufficient information to enable the cost of the building work to be established.
[35]Act, s 205G, the full terms of which are set out as Appendix A of this judgment.

The question before this Court turns on the meaning of the phrase ‘having regard to’. The VBA contends that if there is a contract for the building work (including a project contract which also provides for further and other goods and services to be provided), the relevant building surveyor is required to treat the contract price as the exclusive basis of the estimate.
Thus, as explored in the course of oral argument, the VBA’s case is that, if a building owner agrees to pay a rolled‑up price under a contract for the construction of a factory which also involves the supply, installation and initial maintenance of equipment or machinery, the relevant cost of the building work falls to be estimated by reference to the contract price as a whole. If the building owner retains a builder to construct the factory shell, purchases the machinery from a separate supplier to the contract, retains a separate contractor for the installation of equipment within the factory, and retains a further separate contractor for the maintenance of the machinery, only the contract price for building construction work will be relevant to the estimation task.
We interpolate that, as the primary judge noted, one element of the statutory scheme is the grant of power to the relevant building surveyor to determine the content of the application for building permit.[36] It follows that in a case such as the present, the applicant cannot disaggregate a figure for the cost of building work as a component of the contract price and make application on the basis that this derived figure ‘specif[ies] the contract price for the building work’ unless the relevant building surveyor permits the applicant to do so. If the relevant building surveyor requires the rolled‑up figure to be specified, then the applicant must do so in order to obtain a permit.
[36]Ibid s 18, sch 2 cl 2(1).

Background facts

The primary judge summarised the background facts as follows:
27The 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.
28On 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.
29The Builder, on behalf of the plaintiffs, applied for a staged permit in relation to the Stage 2 Works for the Project.
30The plaintiffs engaged the second defendant (‘the Building Surveyor’) to assess their application for a staged permit to carry out the Stage 2 Works.
31On 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.
32The Building Surveyor described how he performed this cost estimation task in an email to the Board on 3 September 2021. He stated:
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 [the Board] 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.
33The 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.
34In October 2022, the dispute was referred to the Board under s 156 of the Act. In short, the plaintiffs contended that:
(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.
35The 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.[37]
[37]Reasons, [27]–[35] (citations omitted).

The Board’s determination

It should be noted that the evidence demonstrated that the building permit application ‘specified’ the contract price on the basis required by the relevant building surveyor. The specification did not reflect a concession by the developers that the price stated (without adjustment) reflected the cost of the building work for which a permit was required.
The Board’s central reasoning is expressed in the following paragraphs of its reasons:[38]
[38]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 [relevant building surveyor] 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.[39]
[39]Citing Cole‑Sinclair v Building Practitioners Board (Review and Regulation) [2014] VCAT 902 (Senior Member Riegler).
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.
The Board thus made clear that, in its view, the contract price to be assessed by it in the permit application must be the full price of a contract for a building project which includes building work for which a building permit is required and not simply the price of only those works for which a building permit is required.

The judge’s reasons

After setting out the legislative scheme, background facts and the Board’s decision, her Honour then set out the parties’ submissions and recorded that she was entitled to consider the reasons of the Board as part of the record of the decision in issue.[40]
[40]Reasons, [52] citing s 10 of the Administrative Law Act 1978.
Her Honour characterised the Board’s determination in terms which are not the subject of challenge.
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.[41]
[41]Reasons, [55].
Her Honour rejected this construction of the Act for the following reasons:
(a)The building surveyor’s task is to ‘estimate’ the cost. This term is not defined in the Act. Its ordinary meaning implies an active formation of opinion and not simply the adoption of a figure specified in the application for permit.[42] In Australia and New Zealand Banking Group Ltd v Commissioner of Taxation, the Court observed:
[42]Reasons, [58]–[59].
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.[43]
[43](1994) 48 FCR 268, 280 (Hill J, Northrop agreeing at 269, Lockhart J agreeing at 269).
(b)The Board’s interpretation of s 205I(2)(a)(i) would result in two materially different tasks:
(i)the adoption of a prescriptive figure when the application specifies a contract price for the whole of the building work; and
(ii)an exercise in judgment in any other case where information is supplied relevant to the cost of building work.[44]
(c)The use of the phrase ‘having regard to’ does not operate to confine the relevant building surveyor to consider only the contract price. The meaning of this phrase depends on its context.[45] In this case, the task of the relevant building surveyor is to perform an estimate of costs. To construe ‘having regard to’ as requiring exclusive reference to the contract price would denude the word ‘estimate’ of meaning.[46]
(d)Section 205I(2)(a)(i) does not expressly prohibit consideration of information other than the contract price. Having regard to the broader role of the relevant building surveyor, it does not make sense to confine consideration to the contract price for the purpose of estimating the cost of the whole of the building work under s 205I(2)(a)(i).[47]
(e)The broader construction of s 205I(2)(a)(i) is consistent with the purpose of that provision and is capable of practical application.
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.[48]
[44]Reasons, [60]–[61].
[45]Citing Manns v Kennedy [2007] NSWCA 217, [112] (Campbell JA, Santow JA agreeing at [1], Bryson AJA agreeing at [154]) (‘Manns’).
[46]Reasons, [62].
[47]Ibid [63]–[65].
[48]Ibid [66] (emphasis in original).
Her Honour then gave further reasons for rejecting or qualifying the submissions made on behalf of the VBA:
(a)The developer’s construction would not require relevant building surveyors to necessarily undertake lengthy and burdensome exercises of estimation. The method chosen may be as complex or as simple as the demands of the relevant application dictates. The task is the same as that required, on the VBA’s construction, to produce an estimate in the absence of a contract for the whole of the building work.[49]
(b)The use of the word ‘specify’ in s 205H(1A) points to the centrality of the contract price to the estimation process. Nonetheless, the word ‘specify’:
(i)is directed to the applicant; and
(ii)does not operate to define the task to be undertaken by the relevant building surveyor under s 205I.[50]
(c)Section 205HA sets out certain circumstances in which the relevant building surveyor must refuse to issue a building permit. It is not directed to the method by which the relevant building surveyor is to undertake the task of estimation imposed by s 205I.[51]
[49]Ibid [68].
[50]Ibid [69].
[51]Ibid [70].

The parties’ submissions

On the application for leave to appeal, the VBA submitted:
(a)Sections 205H(1A) and 205I(2)(a)(i) establish binary scenarios. Either there is a contract, in which case the contract price must be specified (and it is the contract price to which the relevant building surveyor must have regard), or there is not. It is only in the latter case that the permit application must include sufficient information to enable the relevant building surveyor to estimate the cost of the whole of the building work by reference to alternative information.
(b)The words ‘the cost of building work for which a building permit is required’ utilised in s 205G should be understood to be the cost that is ascertained pursuant to the process prescribed by ss 205H and 205I. Parliament has selected the contract price (where one exists) as the reflex of the cost referred to in s 205G.
(c)In turn, ‘building work’ is broadly defined in the Act to include ‘work for or in connection with the construction, demolition or removal of a building’.[52]
[52]See Act, s 3(1).
(d)The cost of the building work is the aggregate cost of the building work whether or not the contract to perform such work includes matters which would not individually be classified as ‘building work for which a permit is required’.
(e)The absence of the words ‘for which a building permit is required’ in ss 205H and 205I indicates that these words in s 205G do not limit ‘the cost of the building work’ on which the levy is payable.
(f)Section 205HA specifies and describes the circumstances in which the relevant building surveyor is authorised to look behind the contract price.
(g)The second reading speech for the Bill for the Act strongly supports the Board’s interpretation of s 205I. The essential features of the statutory scheme have been in place since the enactment of the Act in 1993. In the second reading speech of the Bill for the Act, the Minister said:
The building permit levy is set at 0.064 per cent of the contract sum for the work. This will mean that the cost to an owner for a project costing $100 000 will be $64. The levy will be payable to the commission at the time an application for a permit is granted.[53]
(h)Section 169AA of the Act prohibits a registered builder subcontractor from entering into a contract for carrying out ‘domestic building work’, or ‘building work that requires a building permit’, ‘if the cost of the building work exceeds’ prescribed amounts. Section 169AA(4) provides that for the purposes of s 169AA, ‘costs of the building work includes any increase to the contract price resulting from a variation to the building work’. The VBA submits that this provision indicates that under the Act the ‘cost’ of the ‘building work’ is the ‘contract price’.
(i)The primary judge’s reasoning overlooks the reality that for a building project of any significant size or complexity it is to be expected that there will be a contract and a contract price. Thus, it is submitted that the fact that the Act provides for a back‑up cost estimate procedure where there is no contract does not indicate that building surveyors are equipped to perform complex costs assessments. Deference should have been given to the views of the Board, the relevant building surveyor and the VBA on this issue.
(j)The word ‘estimate’ in the present context should be understood as an approximate statement of what would be charged for certain work to be done.
(k)One ‘shade of meaning’ that the phrase ‘having regard to’ may bear, is that ‘the listed factors are the only matters on which the decision‑maker can rely in reaching a decision’.[54] This meaning should be adopted having regard to the context of the relevant statutory provisions.
[53]Victoria, Parliamentary Debates, Legislative Assembly, 11 November 1993, 1693 (emphasis added).
[54]Citing Manns [2007] NSWCA 217, [112].

The developers join issue with the submissions of the VBA and emphasise, amongst other things, that:
(a)The Act does not support the contention that s 205I is designed to necessarily create a simple task for the relevant building surveyor.
(b)The result of the VBA’s construction is the imposition of a levy upon something different from that which the Act contemplates.
(c)Section 205G is the predominant provision which states the basis on which the levy is to be imposed.
(d)The requirement to perform a real ‘estimate’ arises under s 205I, whatever is the evidentiary basis of that estimate.
(e)The statute requires that the applicant provide one of two minimum inputs for the relevant task.
(f)‘Having regard to’ is not used as an exclusive phrase.
(g)Section 205HA is an anti‑avoidance measure, not a confining step in the estimation process. Moreover, if the VBA’s construction permits the relevant building surveyor to look behind the contract price for the purposes of s 205HA, then there is no reason that the relevant building surveyor cannot look behind it when performing an estimate under s 205I.

Analysis

In Manns v Kennedy, the New South Wales Court of Appeal identified three potential shades of meaning to the phrase ‘having regard to’ as an introduction to the description of factors relevant to a decision.[55] The Court listed cases in which the phrase has been held to introduce an exclusive list of relevant considerations; cases in which the phrase has been held to introduce a list of considerations which are fundamental to the decision but not necessarily exclusive; and cases in which the phrase has been held to do no more than introduce factors to which regard may be had together with other matters.
[55][2007] NSWCA 217, [112].
In the present case, the critical issue is whether the phrase ‘having regard to’ utilised in s 205I(2)(a) introduces mutually exclusive considerations by reference to s 205H(1)(a) and (b), and s 205H(1A)(a) and (b).
In Obian v The King,[56] the High Court considered the operation of the phrase ‘having regard to’ in s 233(2) of the Criminal Procedure Act 2009. Their Honours concluded that the text, context and purpose of the provision spoke against concluding that in deciding whether the content of the evidence of an accused could not have been reasonably foreseen by the prosecution, the trial judge may have regard only to two categories specified in the sub‑section. Analysis of this issue commenced as follows:[57]
As to text, it is a commonplace that if ‘the statute expressly states the considerations to be taken into account, it will often be necessary for the court to decide whether those enumerated factors are exhaustive or merely inclusive’.[58] There is nothing unusual in a statute directing a court that it must have regard to certain matters without expressly or implicitly prohibiting it from considering other matters. Section 233(2) does not expressly say that the trial judge may have regard only to the two specified documents and no other documents. Accordingly, any implied prohibition on the trial judge considering other material relevant to the question to be decided (namely, whether the accused has given evidence which could not reasonably have been foreseen by the prosecution) must be found in ‘the subject‑matter, scope and purpose’ of the statutory provisions.[59]
[56][2024] HCA 18.
[57]Ibid [14] (Gageler CJ, Gordon, Gleeson, Jagot and Beech‑Jones JJ) (citations in original).
[58]Minister for Aboriginal Affairs v Peko‑Wallsend Ltd (1986) 162 CLR 24, 39.
[59]Minister for Aboriginal Affairs v Peko‑Wallsend Ltd (1986) 162 CLR 24, 40. See also Minister for Immigration and Citizenship v Li (2013) 249 CLR 332, 348 [23].
The same ultimate question arises in the present case. Do the provisions in issue here give rise to an implicit prohibition upon the relevant building surveyor considering material other than the specified contract price in cases which are governed by ss 205I(2)(a), 205H(1) and 205H(1A)? The better view is that ss 205H(1) and 205H(1A) require the statement of alternative forms of fundamental considerations which inform the task of estimation which the relevant building surveyor must undertake. It does not however implicitly prohibit reference to other material.
The provisions should be understood in the same way as the provision considered in R v Hunt; Ex parte Sean Investments Pty Ltd.[60] In that case, the administrative decision‑maker was empowered to fix nursing home fees having regard to costs necessarily incurred in providing nursing home care. Mason J, with whom Gibbs CJ agreed,[61] said:
When sub‑s. (7) directs the Permanent Head to ‘have regard to’ the costs, it requires him to take those costs into account and to give weight to them as a fundamental element in making his determination. There are two reasons for saying that the costs are a fundamental element in the making of the determination. First, they are the only matter explicitly mentioned as a matter to be taken into account. Secondly, the scheme of the provisions is that, once the premises of the proprietor are approved as a nursing home, he is bound by the conditions of approval not to exceed the scale of fees fixed by the Permanent Head in relation to the nursing home. In many cases it is to be expected that the scale of fees will be fixed by ascertaining the costs necessarily incurred and adding to them a profit factor. In the very nature of things, the costs necessarily incurred by the proprietor in providing nursing home care in the nursing home are a fundamental matter for consideration.
However, the sub‑section does not direct the Permanent Head to fix the scale of fees exclusively by reference to costs necessarily incurred and profit. The sub‑section is so generally expressed that it is not possible to say that he is confined to these two considerations.[62]
[60](1979) 180 CLR 322.
[61]Ibid 324 (Gibbs CJ).
[62]Ibid 329 (Mason J).
In the present case, the contract price specified in the permit application is the only matter expressly mentioned in the first alternative stated in the relevant sub‑section. Moreover, where a contract price exists, it is also a matter which in the very nature of things, must be a fundamental consideration bearing on the estimation of the probable costs of the building work in issue. It follows that the relevant building surveyor must give weight to the contract price as a fundamental element in making their estimate. This said, however, the sub‑section is not expressed in a way that impliedly prohibits the relevant building surveyor from having regard to other relevant information.
There are four aspects of the subject matter, scope and purpose of the provisions which support this conclusion.
First, the obligation to pay a building permit levy which is imposed by s 205G arises with respect to ‘the cost of building work for which a building permit is required’. There is no obligation under the Act to pay a levy with respect to any other cost. Whilst it is true that the definition of ‘building work’ is broad, nonetheless work must fall within this defined category before an obligation to pay the levy arises.
As the Board acknowledged, its construction of the statute would involve the imposition of a levy upon project costs going beyond the cost of the building work for which a building permit is required.
Secondly, the phrase ‘the building work’ contained in ss 205H(1), 205H(1A), and 205I(2)(a) must mean the building work for which a building permit is required. The power to impose a levy and the obligation to pay it are restricted to such works. It cannot sensibly be that the legislation is understood to intend that the contractual arrangements governing the carrying out of the building work determine the ambit of the cost of the building work for which a levy is payable. As the primary judge held, the cost estimate must bear an intelligible relationship to the building work (as defined by the Act) that is to be permitted.
Thirdly, the primary judge was correct to place weight upon the concept of estimation. There will be many cases where a building contract does provide a proper basis for the estimation of the cost of the building work for which a building permit is required. There may be others where the contract price for a building project requires some qualification or adjustment in order to ascertain the cost of the building work for which a building permit is required. In each case, the relevant building surveyor must actively estimate the cost of the building work for which a building permit is required.
Fourthly, the fact that ss 205H(1) and 205H(1A) postulate alternative kinds of information is entirely consistent with the stipulation of two alternative kinds of fundamental evidence. It does not necessarily imply binary alternatives of exclusive information.
There are four contextual matters which further support this reasoning:
(a)The fact that the Act contemplates that in the absence of a specified contract price the relevant building surveyor will consider other material which enables the cost of the building work to be estimated, supports the view that the role of the relevant building surveyor in making an estimate based on contract price is not necessarily confined in the way for which the VBA contends.
(b)The fact that the provisions of the Act require an estimate of the cost of a particular stage in addition to an estimate of the cost of the whole of the building work gives rise to further potential complications in relation to the construction propounded by the VBA.
(c)The provisions of the Act requiring the disaggregation of the costs of the different classes of building within a mixed use development necessarily contemplate the possibility of disaggregation of a contract price as a measure of cost. It is accordingly difficult to accept that the act of estimation of cost by a relevant building surveyor is intended to be necessarily free of such disaggregation.
(d)The provisions of the Act relating to the rectification of incorrect levies also support the view that the estimate must be of the cost of the building work for which a permit is required. It is this estimate which founds the correct calculation of a levy.
The last three points require some elaboration. Section 205I(2)(a)(ii) requires the relevant building survey to estimate the cost of the stage of the building work (including the cost of labour and materials) for which the permit is sought. As a matter of practical reality, a building contract may not necessarily provide for progress payments fixed wholly by reference to completion of building permit stages. Some other measure of progression of the project may be adopted. Thus, hypothetically, whilst a first stage building permit might be granted for foundation works in relation to the construction of the Parthenon, initial progress payments might be required under the contract which in part funded the excavation of marble and the creation of sculptures intended to be installed as part of the final stage of the building work. Progress payments under the contract will not necessarily be a direct measure of relevant cost for the purpose of estimating the cost of the stage of the building work for which a particular stage permit is sought.
The provisions of s 205G, which contemplate the imposition of what is known as the ‘cladding levy’ contained in s 205G(2A), apply to buildings which comprise elements falling within different classes provided for under the Act and regulations. The classes relate to different building uses (which give rise to a different fire and other risks). In the case of a mixed use development, which falls to be assessed under this scheme, it may be necessary to disaggregate the contract price in order to estimate the cost of parts of the building which fall within different classes.
Section 205L provides for the correction of levies in circumstances which include an incorrect estimate under s 205I.[63] Section 205L(2) provides that ‘[a]n amount of building permit levy reassessed under this section is to be calculated on the cost of the building work in accordance with section 205G’.
[63]Section 205L(1) and (1A) provide:
205LAuthority may reassess levy after building permit issued
(1)The Authority may reassess the amount of building permit levy required to be paid in relation to building work after a building permit for that work has been issued because—
(a)of a variation made to the building work which has resulted in an increase in the estimated cost of the building work; or
(b)the estimate under section 205I(1) or (4) by the relevant building surveyor of the cost of the building work was incorrect; or
(c)the Authority considers that the information provided by the applicant in the application for the building permit required under section 205H(1) or (1AA) was incorrect or misleading.
(1A)If a staged permit has been issued, the Authority may also reassess the amount of building permit levy imposed by section 205G(2A) after a building permit for the final stage of the building work has been issued because—
(a)of a variation made to the building work which has resulted in an increase in the cost of the whole of the building work; or
(b)the estimate under section 205I(2) or (3) of the cost of the whole of the building work was incorrect; or
(c)the Authority considers that the information provided by the applicant in the application for the building permit required under section 205H(1A) was incorrect or misleading.
The estimate may be ‘incorrect’ if, amongst other things, it relates to matters other than the cost of the building work for which the building permit is required. The reassessed levy also falls to be imposed on the cost of the building work for which the building permit is required. It is only in these circumstances that it can be said to be ‘calculated on the cost of the building work in accordance with s 205G’. The express terms of s 205G refer to the cost of the building work for which a building permit is required.
It follows that we accept the primary judge’s essential conclusions were correct.
For completeness, we note the following with respect to the subsidiary contentions of the VBA to which we have not explicitly given attention above:
(a)The absence of the words ‘for which a building permit is required’ in ss 205H and 205I does not indicate that the cost of the building work on which a levy is payable may exceed the limits of the proper basis of the obligation under s 205G.
(b)Section 205HA does not circumscribe the task of estimation required by s 205I. It provides for the rejection of anomalous claims on the basis stated.
(c)The second reading speech cannot be substituted for the plain words of the full text of the statute.
(d)Section 169AA of the Act does not assist in the construction of the relevant provision. It does not demonstrate a general intention that, under the Act, the cost of building work is to be calculated exclusively by reference to a contract price. The very terms of the sub‑sections with which we are concerned demonstrate that this is not so.
(e)We do not accept that the evidence before the Board satisfactorily established that for a building proposal of any significant size or complexity it is to be expected that there will be an easily identifiable contract price. The possibility exists that development projects will be undertaken by a builder as both developer and builder. The cost of the building work will be the cost of the work undertaken by the builder itself, potentially supported by subcontractors. We take judicial notice of the fact that the history of the Australian construction industry demonstrates that there are some developers of substantial projects that proceed in this fashion. In addition, building contracts may be written on a cost plus or other basis, alternative to a fixed price. The alternatives provided by the Act with respect to essential information required to be included in a building permit application cover this situation.
(f)For the reasons stated by the primary judge, the statutory construction which we prefer does not, of itself, necessarily require complex cost assessments.

Conclusion

The primary judge’s decision was correct. Leave to appeal should be refused.

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Appendix

Building Act 1993, s 205G

205G Building permit levy must be paid

A building permit levy must be paid in the amount of 0·064 cents in every dollar of the cost of building work for which a building permit is required.
Note
A levy paid under this subsection is paid into the Building account of the Victorian Building Authority Fund and credited to the building permit levy account (see section 205A(2)).
In addition to the levy imposed by subsection (1), a building permit levy must be paid in the amount of 0·064 cents in every dollar of the cost of building work for which a building permit is required.
Note
A levy paid under this subsection is paid into the Building account of the Victorian Building Authority Fund and credited to the domestic building dispute account (see section 205A(4)).

(2A)In addition to the levies imposed by subsections (1) and (2), a building permit levy in the amount calculated under subsection (2B) or (2C) must be paid in relation to the cost of building work for which a building permit is required in respect of a building—
(a)      that is not, or will not be, in regional Victoria; and
(b)      that is, or will be, of any of the following classes of building—
(i)       a class 2 building;
(ii)      a class 3 building;
(iii)     a class 4 building;
(iv)     a class 5 building;
(v)      a class 6 building;
(vi)     a class 7 building;
(vii)    a class 8 building.

Note
A levy paid under subsection (2A) is paid into the Cladding Safety Victoria account of the Victorian Building Authority Fund (see section 205DA(a)).
(2B)If the building permit is a permit other than a staged permit, the levy imposed by subsection (2A) is calculated as follows—
(a)if the cost of the building work for which the permit is required is $800 000 or more but less than $1 000 000—0·128 cents in every dollar of the cost the building work for which the permit is required;
(b)if the cost of the building work for which the permit is required is $1 000 000 or more but less than $1 500 000—0·256 cents in every dollar of the cost of the building work for which the permit is required;
(c)if the cost of the building work for which the permit is required is $1 500 000 or more—0·82 cents in every dollar of the cost of the building work for which the permit is required.

(2C)If the building permit is a staged permit, the levy imposed by subsection (2A) is calculated as follows—
(a)if the cost of the whole of the building work is $800 000 or more but less than $1 000 000—0·128 cents in every dollar of the cost the building work for which the permit is required;
(b)if the cost of the whole of the building work is $1 000 000 or more but less than $1 500 000—0·256 cents in every dollar of the cost of the building work for which the permit is required;
(c)if the cost of the whole of the building work is $1 500 000 or more—0·82 cents in every dollar of the cost of the building work for which the permit is required.

(2D)In the case of a building permit for which the building work relates to more than one class of building, and those classes of building include one or more class of building referred to in section 205G(2A) and a class 1, 9 or 10 building, the levy paid under subsection (2A) and calculated under subsection (2B) or (2C) must not include an amount that relates to the class 1, 9 or 10 building.

A building permit levy is not payable under subsection (1) or (2) if the cost of the building work (including the cost of labour and materials) is $10 000 or less.
In this section a reference to a particular class of building is a reference to that class of building within the meaning of the Building Code of Australia.

[2024] VSCA 150

28 June 2024