Personal liability for builders after Lacrosse fire: Lessons from the Victorian Building Practitioners Board sanction of LU Simon director

By Scott Higgins, Partner and John Hibbard, Lawyer

A director of the building company responsible for the construction of the ill-fated Lacrosse building in Melbourne’s Docklands (previously discussed by us here) was reprimanded and ordered to pay costs by the Building Practitioners Board (BPB) in Victoria late last year.[1] In its decision, recently made public following the lapse of appeal time periods, the Board ordered that Jim Moschoyiannis, a director of building company L. U. Simon Builders Pty Ltd be reprimanded and pay costs of $54,000.

The decision reads:

Jim Moschoyiannis – The Building Practitioners Board found the practitioner guilty of failing to comply with section 16 of the Building Act 1993 (the Act) in that, he carried out building work in relation to the construction of a building (the Building Work) which did not comply with the Building Regulations 2006 (the Regulations) in that the builder had installed Alucobest aluminium composite cladding on the external walls to the apartments which did not comply with the performance requirements of Building Code of Australia (BCA) and pursuant to Regulation 109 of the Regulations, the BCA is adopted by and forms part of the Regulations. As the practitioner was a director of the company that carried out the Building Work and as the registered builder named on the Building Permit, that failure was taken to be the practitioner’s conduct and his failure to comply with section 16 of the Act.

The BPB is also investigating several other practitioners in relation to the Lacrosse Building, though no decision has been made public as of writing. As discussed in a previous article, L.U Simon itself was the subject of recently concluded VCAT proceedings. Given the Tribunal’s decision as to LU Simon’s reliance on the architect, building surveyor and fire engineer and those parties’ respective failures to comply with contractual requirements and to take reasonable care, one would assume that the reprimands issued by the Building Practitioner’s Board for the individuals are likely to be significantly more severe than the sanction imposed on Mr Moschoyiannis.

Comparison between current Victorian and NSW regimes

In NSW, an individual can receive personal sanctions for the improper conduct of a company, including suspension or cancellation of a licence to conduct residential building work and a fine of up to $11,000 under the Home Building Act 1989 (NSW).

A unique feature of the Victorian regime is that sanctions are published on a public register and remain publicly available for five years. There is currently no public sanctions register in NSW, though public warnings are issued in relation to a licensee that poses an immediate risk to the public.

The Victorian regime is also notable in that it applies to a broad range of building practitioners, including building surveyors (known as certifiers in NSW) and engineers. By contrast, the NSW regime is limited to builders and related subcontractors that are involved in residential building work, with certifiers and engineers regulated under a separate Act.

Recent proposals of substantial reform by the NSW government look set to change all that and bring better consolidation under a single NSW Building Commissioner with greater powers of audit, investigation and disciplinary action.  These are discussed in another article.

The incoming NSW Building Commissioner and his or her regulator counterparts in other jurisdictions may well find the Moschoyiannis decision by the Victorian Building Practitioners Board a useful guidepost for considering similar investigations and action.

[1] Building practitioners in Victoria should note that the inquiry process and the BPB itself were replaced in 2016 by a slightly more passive and less resource intensive ‘show cause’ regime conducted by the Victorian Building Authority.

 

For further information, please do not hesitate to contact us.

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