This case concerned an application for judicial review of a decision of the Building Appeals Board (BAB).   Justice Stynes was required to consider whether the BAB’s decision was tainted by an error of law on the face of the record.  The decision involved the proper construction of the Building Act 1993 (Act). The Act obliges a relevant building surveyor (RBS) to provide an estimate of construction costs for the purpose of the Victorian Building Authority (Authority) calculating the amount payable for any building permit. This case concerned the matters that an RBS may take into consideration for the purpose of such an estimate on an application for a staged building permit.

Section 205I(2)(a) of the Act places the obligation on an RBS to make an estimate of the cost of the whole building work (including the cost of labour and materials) and also an estimate of the building work (including the cost of labour and materials) of the stage the subject of such an application. The RBS must have regard to the contract price for the whole of the building work if there is a contract for the whole.

A dispute regarding the RBS’ estimate of costs of building work of a staged building permit application was referred to the BAB, who at first instance construed the statutory obligation on the RBS and determined that where a party applies for a stage permit under the Act and there is a contract for the whole of the building work, the RBS must estimate the cost of the whole of the building works by reference solely to the contract price.

Justice Stynes concluded that the BAB erred in its exercise of statutory construction and held that an RBS is not confined to the contract price for the whole of the works as the estimate to which the RBS may have regard for the purpose of making the required estimate. In so concluding, Her Honour observed that if parliament had intended an RBS to be so confined, and that the contract price be adopted as an estimate, it could have expressed the same in clear statutory text.

The Court identified the role of an RBS and the context of the obligation to produce an estimate, including the nature of the RBS as being an independent person with the necessary skills to estimate a baseline for the calculation of the statutory levy to be charged by the Authority. By reference to the decision of Australia and New Zealand Banking Group Ltd v Commissioner of Taxation (1994) 48 FCR 268, her Honour observed 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’

The Court held that:
‘…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.’

Having decided that the BAB erred in its decision, Justice Stynes ordered that its decision be quashed and that the matter be remitted to the Board to consider and determine the matter in light of the law as expounded in her decision.

Francis Tiernan KC and Andrew Blair
 

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