Victorian Building Authority v May21 Pty Ltd [2024] VSCA 150
Where a contract price for the whole of the building work is specified in an application for a staged building permit, the relevant building surveyor must give weight to that price as a fundamental element in estimating the cost on which the building permit levy is calculated, but may have regard to other relevant information and is not required to adopt the price as the estimate.
What the court decided
One of the developers of a project at 250 Spencer Street, Melbourne, contracted with Multiplex Constructions to design and construct Towers 3 and 4 for $660,982,768 [21]. The builder applied on the developers' behalf for a staged building permit for that work [21]. The relevant building surveyor adopted the full contract price as his estimate for the whole of the building work [21]. The dispute concerned the basis of the estimate used to calculate the building permit levy under the Building Act 1993 (Vic) [2]. The Victorian Building Authority (VBA) uses the building surveyor's estimate to calculate the levy under section 205G [5]. The developers said the price included items that were not building work, such as GST, loose furniture, the builder's margin and preliminaries [21]. The Court of Appeal noted that, on the evidence, the application specified the contract price on the basis the building surveyor required, and that this was not a concession by the developers that the unadjusted price was the relevant cost [22].
For a staged permit, section 205I(2)(a)(i) requires the relevant building surveyor to estimate what the whole of the building work will cost, "having regard to the information given under section 205H(1A)(a) or (b)" [16]. Section 205H(1A) requires the application to specify the contract price for the whole of the building work if there is a contract for it, and otherwise to give enough information for the building surveyor to estimate that cost [16]. The levy is charged on "the cost of building work for which a building permit is required" [17].
On preliminary questions, the Building Appeals Board decided that if a contract covers the whole of the building work, the estimate must be made by reference only to the contract price [6], [7]. It therefore did not answer the questions about individual items such as GST and the builder's margin [6], [7]. The developers sought judicial review of the Board's determination, which came before Stynes J [1], [8]. Her Honour held that the Act did not make the contract price the exclusive basis of the estimate, so the Board had misconstrued section 205I(2)(a)(i) [11]. The Court of Appeal (Emerton ACJ, Niall and Osborn JJA, in joint reasons) refused the VBA leave to appeal, holding that the primary judge's decision was correct [13], [50].
The Court said the question turned on the meaning of "having regard to" [18]. It noted the three shades of meaning identified by the New South Wales Court of Appeal in Manns v Kennedy: an exclusive list of considerations; considerations fundamental to the decision but not necessarily exclusive; and factors that may be weighed with other matters [31]. Following Obian v The King, it asked whether the provisions impliedly prohibited the building surveyor from considering material other than the specified contract price [33], [34]. It concluded that the better view was that sections 205H(1) and 205H(1A) require the application to state alternative forms of fundamental considerations that inform the estimate, but do not impliedly prohibit reference to other material [34]. Applying R v Hunt; Ex parte Sean Investments Pty Ltd, it held that the contract price must be given weight as a "fundamental element" in the estimate [35], [36]. The provision does not, however, impliedly prohibit regard to other relevant information [36].
The Court found support for that conclusion in the subject matter, scope and purpose of the provisions [37]. The levy is payable only on the cost of the building work that requires a building permit, and the Board's construction would levy project costs beyond that work [38], [39]. The phrase "the building work" in sections 205H and 205I means that work, and the contractual arrangements do not determine the ambit of the cost on which the levy is payable [40]. The building surveyor must actively estimate the cost, and some contract prices may need qualification or adjustment to arrive at it [41]. The two alternatives in section 205H are consistent with two kinds of fundamental evidence and do not necessarily imply exclusive alternatives [42]. The Court drew further support from the separate estimate for each stage, from the possible need to disaggregate costs for the cladding levy on mixed use buildings and from the provisions for correcting incorrect levies [43]–[47].
On the VBA's other arguments, the Court said section 205HA, which requires refusal of a permit where the building surveyor is satisfied that the contract price is substantially lower than the price normally payable, provides for rejecting anomalous claims and does not circumscribe the estimate [16], [49]. The second reading speech could not be substituted for the plain words of the statute [49]. The Court did not accept that the evidence before the Board established that a project of significant size or complexity can be expected to have an easily identifiable contract price, taking judicial notice that some developers of substantial projects build for themselves and noting cost plus contracts [49]. It added that its construction does not of itself necessarily require complex cost assessments [49].
The Court also observed, in an aside, that in a case such as this one an applicant cannot specify only a figure derived by disaggregating the contract price unless the building surveyor permits it, and must specify the full price if the building surveyor requires it [20].
Why it matters
In refusing leave to appeal, the Court of Appeal confirmed that, for a staged permit where a contract covers the whole of the building work, the contract price is a fundamental consideration in the levy estimate, but not the only one. The building surveyor must give the price weight, and the estimate must relate to the building work for which a building permit is required, which may call for some adjustment of a project contract price.
The decision concerns only the construction question. Which items, if any, should be left out of a particular estimate was not decided.
The decision applied the Act in the form the Court set out, so readers should check the current text of the Act before relying on the decision.
Numbers in square brackets are paragraph numbers of the judgment. This note summarises a decided case for education and is not legal advice. See how the notes are written.