Lilli v Building Professionals Board

Decision under review

1. The Board delegate found that Mr Lilli was guilty of unsatisfactory professional conduct in accordance with s 19(1)(a), (b), (d) and (g) of the BP Act on the following grounds: 1. Mr Lilli issued CC No J150345 for the site after building works commenced, authorising a CC that was in direct conflict with the Council's cease work order, and which, in accordance with s 109F(1A) of the EPA Act, had no effect as it was issued after building works had commenced. In issuing the CC, Mr Lilli's conduct fell short of the standard of competence, diligence and integrity that a member of the public is entitled to expect, and was unsatisfactory professional conduct under s 19(1)(a) of the BP Act; 2. Mr Lilli's Inspection Report dated 18 May 2016 recorded "No" in response to whether any building work had commenced. That statement was incorrect. Mr Lilli acknowledged that he was aware that building work had commenced. His response "No" was therefore false and misleading in a material particular in contravention of s 85(1)(b) of the BP Act, and unsatisfactory professional conduct under s 19(1)(b) of the BP Act; 3. Mr Lilli's "No" response breached his statutory duty under cl 143C of the Environmental Planning and Assessment Regulation 2000 (the Regulation) when carrying out a site inspection to accurately record whether building works had commenced, and was unsatisfactory professional conduct under s 19(1)(d) of the BP Act; 4. Mr Lilli breached the Board's Code of Conduct: 1. Requirement 1 (Acting in the public interest) in issuing a CC that had no effect; 2. Requirement 3 (Regard for interests of principals and other parties) in failing to inform the principal of the CC having no effect; 3. Requirement 5 (Duty of care) in failing to exercise reasonable care and attention in carrying out his duties by issuing a CC that had no effect; and 4. Requirement 6 (Making decisions) by failing to take all reasonable steps that were necessary as a certifier in assessing and issuing the CC, 1. Being unsatisfactory professional conduct under s 19(1)(g) of the BP Act.
2. The delegate considered the Board's Disciplinary Penalty Guidelines, and assessed Mr Lilli's conduct as falling within Category E - Significant infringements, where the range of fines was $20,000 to $50,000. On the basis that the development was not a small project, and that Mr Lilli knowingly issued a CC after works had already commenced on a large-scale project, the delegate concluded that the appropriate disciplinary action would be to impose a reprimand, and a fine in the amount of $30,000. The delegate considered Mr Lilli's certification history and previous disciplinary action taken against him, noting that he had been an accredited certifier for 11 years and had had four disciplinary matters in that time resulting in three reprimands, two fines, and one caution. Most recent was in 2015 when Mr Lilli was fined $2,000 and reprimanded for issuing a construction certificate and Occupation Certificate without ensuring development consent conditions had been complied with beforehand.
3. The delegate noted the matters in mitigation. Mr Lilli had stated in his submissions to the Board that he acknowledged that he was aware that building works had commenced on site as this was disclosed by the applicants at a meeting; that the applicants had advised him that Council had issued a notice to cease work; that the applicants had confirmed that an application for a building certificate was made to Council on 11 May 2016 and based on that he issued the CC for the remainder of the development works; and that he had knowledge of the status of building works at the time of the Pre-Inspection Report, having stated that "it would appear that an error had been made in completing the pre-inspection report …".
4. The delegate concluded that while not satisfied that the matters raised reduced the severity or seriousness of Mr Lilli's conduct, it was accepted that he had made some admissions to the conduct, and accordingly the penalty was reduced so the appropriate disciplinary action was a reprimand and a fine of $25,000.

The review proceedings

1. The grounds on which Mr Lilli sought administrative review of the decision were that the disciplinary decision was manifestly unreasonable; that the decision maker had taken into account irrelevant matters or failed to take into account relevant matters; the penalty was grossly disproportionate to the infringements and the circumstances in which they occurred; the penalty of $25,000 was inconsistent with the Disciplinary Penalty Guidelines; and the way in which those Guidelines were used was illogical or constituted an impermissible fetter on the discretion to be exercised.
2. Directions were made on 4 December 2018 for the Board to provide its documents under s 58 of the ADR Act, for the applicant to provide his material on which he relied by 12 February 2019, and for the Board to provide its material in reply by 5 March 2019. The matter was listed for hearing on 13 March 2019. That date was subsequently changed to 22 March 2019.
3. At the commencement of the hearing, Mr Lilli filed an affidavit sworn by him on 21 March 2019 and an affidavit by the builder, Mr Kanaan Kanaan affirmed on 21 March 2019. The hearing was adjourned with directions for the Board to provide evidence and submissions in reply to the affidavits by 5 April 2019 and for Mr Lilli to provide any material in reply by 12 April 2019, to include a statement as to the facts found in the CIR and/or the decision under review that are not in dispute. An order was made for Mr Lilli to pay the costs of the Board for the hearing of 22 March 2019 in the amount of $1,000.
4. The hearing was adjourned to 17 April 2019.
5. The evidence before the Tribunal is as follows: 1. The Board provided documents as required by s 58 of the ADR Act on 17 January 2019. Those documents (ex R1) include: 1. Correspondence between the Board and Mr Lilli including his submissions in response to the complaint and investigation dated 3 August 2017 and 5 September 2017; 2. Correspondence between the Board and the Council, and the Board and the original complainant; 3. Copies of plans and specifications; 4. Copies of the application for a CC, the CC, the PIR, the building certificate, and Order made on 12 May 2016 under s 121B of the EPA Act; 1. Further s 58 documents provided by the Board on 11 April 2019 (ex R2) including those relating to the Board's investigation in 2014 of a complaint made in 2013; 2. Documents provided by Mr Lilli were: 1. Affidavits of Mr Lilli (21 March 2019) and Mr Kanaan Kanaan (21 March 2019); 2. Testimonials (ex A4); and 3. An annotated copy of Excavation/Shoring Plan provided with the CC showing detail of the shoring piling work that had been done at the time of issue of the CC (ex A5).
6. In his affidavit Mr Kanaan Kanaan states that he demolished the existing dwelling house and commenced construction of shoring piles before he got a CC. The contractors had arrived at the site before the Council had released certain documentation related to a stormwater easement which had to be created in favour of a neighbouring property to permit him to start. He states that he told Mr Lilli at the time he was preparing the CC that he had done piling work; Mr Lilli said he needed to apply for a building certificate in respect of the work done before he could issue a CC; he immediately applied for a building certificate and advised Mr Lilli accordingly. In the week ending 20 May 2016 he was told by a Council officer that the building certificate had been approved and would be sent, and he recalled ringing Mr Lilli to advise him. He received the building certificate on or about Monday 23 May 2016 and sent a copy to Mr Lilli. Mr Kanaan was not required for cross examination.
7. Mr Lilli gave oral evidence at the Tribunal hearing. Both parties provided written submissions.

Accreditation and disciplinary proceedings

1. The accreditation scheme for accreditation of certifiers is established under the BP Act. Part 3 of the BP Act provides for disciplinary proceedings against accredited certifiers, including investigation of complaints. Section 27 of the BP Act provides that the Board must conduct an investigation into a complaint made to it. Section 31(4) specifies the actions that may be taken following an investigation: 31 Decision after investigation of complaint (1) After the Board has completed an investigation into a complaint against an accreditation holder, the complaint is to be dealt with in accordance with this section. … (4) If the Board is satisfied that the accreditation holder is guilty of unsatisfactory professional conduct or professional misconduct, the Board may take any one or more of the following actions: (a) caution or reprimand the accreditation holder, (b) by order impose such conditions as it considers appropriate on the accreditation holder's certificate of accreditation, (c) order that the accreditation holder complete such educational courses as are specified by the Board, (d) in the case of an accredited body corporate, order an accredited certifier who is a director or employee of the body corporate to complete such educational courses as are specified by the Board within the time specified by the Board, (e) order that the accreditation holder report on his, her or its practice as an accredited certifier or building professional at the times, in the manner and to the persons specified by the Board, (f) order the accreditation holder to pay to the Board a fine of an amount, not exceeding 1,000 penalty units, specified in the order, (g) order the accreditation holder to pay to the complainant such amount (not exceeding $20,000) as the Board considers appropriate by way of compensation for any damage suffered by the complainant as a result of the unsatisfactory professional conduct or professional misconduct, (h) suspend the accreditation holder's certificate of accreditation for such period as the Board thinks fit, (i) cancel the accreditation holder's certificate of accreditation, (j) disqualify the accreditation holder from being an accredited certifier director of, or otherwise being involved in the management of, an accredited body corporate or a specified accredited body corporate for such period (including the period of his or her lifetime) as may be specified by the Board, (k) in the case of an accredited body corporate, disqualify an accredited certifier director of the body corporate from being an accredited certifier director of, or otherwise involved in the management of, the body corporate for such period (including the period of his or her lifetime) as may be specified by the Board, but only during any period when the body corporate holds a certificate of corporate accreditation, (l) order that the accreditation holder cannot re-apply for a certificate of accreditation within such period (including the period of his or her lifetime) as may be specified by the Board, (m) order that no further action is to be taken by the Board in relation to the complaint if satisfied that the accreditation holder is generally competent and diligent and that no other material complaints (whether or not the subject of a disciplinary finding) have been made against the accreditation holder.
2. The term "unsatisfactory professional conduct" is relevantly defined in s 19(1) of the BP Act: unsatisfactory professional conduct of an accredited certifier means any of the following (whether consisting of an act or omission): (a) conduct occurring in connection with the exercise of the accredited certifier's functions as a certifying authority that falls short of the standard of competence, diligence and integrity that a member of the public is entitled to expect of a reasonably competent accredited certifier, (b) a contravention of this Act, the Environmental Planning and Assessment Act 1979 or the Strata Schemes Development Act 2015, or the regulations under any of those Acts, by the accredited certifier, whether or not the accredited certifier is prosecuted or convicted for the contravention, … (d) a failure to comply with a statutory or other duty, or a contractual obligation, imposed on the accredited certifier by or in accordance with a law (whether or not a New South Wales law) that relates to the functions or obligations of a person as an accredited certifier or the holder of an equivalent authorisation, … (g) a failure by the accredited certifier to comply with any relevant code of conduct contained in the accreditation scheme, …

Construction Certificate

1. A construction certificate is one of four types of certificates issued under the former Part 4A of the EPA Act. At the time the CC was issued in May 2016, s 109C(1)(b) provided that a construction certificate is "a certificate to the effect that work completed in accordance with specified plans and specifications will comply with the requirements of the regulations referred to in section 81A(5)".
2. Section 81A(2) provided: 81A Effects of development consents and commencement of development … (2) The erection of a building in accordance with a development consent must not be commenced until: (a) a construction certificate for the building work has been issued by the consent authority, the council (if the council is not the consent authority) or an accredited certifier, and
3. Section 109F relevantly provided: (1A) A construction certificate has no effect if it is issued after the building work or subdivision work to which it relates is physically commenced on the land to which the relevant development consent applies.
4. Section 4 defined "building work" to mean "any physical activity involved in the erection of a building". The term "building" was defined to include "part of a building, and also any structure or part of a structure…".
5. The relevant provisions of the Environmental Planning and Assessment Regulation (the Regulation) were: 143B Restriction on issue of certain construction certificates without inspection (1) A certifying authority must not issue a construction certificate for development on a site which affects an existing building unless a council, a consent authority or an accredited certifier has carried out an inspection of the building. (2) If the development affects an existing building that is a class 1b, 2, 3, 4, 5, 6, 7, 8 or 9 building, an inspection of the site of the development must include an inspection of: (a) the parts of the building affected by the development, and (b) the egress routes from those parts of the building. 143C Record of site inspections (1) A council, consent authority or accredited certifier must make a record of each inspection carried out by the council, consent authority or accredited certifier for the purposes of clause 143B. (2) Any council, consent authority or accredited certifier who is required to make such a record but is not the certifying authority in relation to the issue of the construction certificate concerned must, within 2 days after the carrying out of the inspection, provide a copy of the record to the certifying authority. (3) The record must include the following: (a) the registered number of the relevant development application, (b) the address of the property at which the inspection was carried out, (c) the type of inspection, (d) the date on which the inspection was carried out, (e) if the inspection was carried out by a council, the name of the council and the identity and signature of the individual who carried out the inspection on behalf of the council, (f) if the inspection was carried out by an accredited certifier, the identity of the accredited certifier, including, in a case where the accredited certifier is an accredited body corporate, the identity of the individual who carried out the inspection on behalf of the body corporate, (g) if the inspection was carried out by an accredited certifier, the accreditation number of the accredited certifier, including, in a case where the accredited certifier is an accredited body corporate, the accreditation number of the individual who carried out the inspection on behalf of the body corporate, (h) details of the current fire safety measures in the existing building the subject of the inspection, (i) details as to whether or not the plans and specifications accompanying the application for the construction certificate adequately and accurately depict the condition of the existing building the subject of the inspection, (j) details as to whether or not any building or subdivision work authorised by the relevant development consent has commenced on the site.

Issues

1. Mr Lilli's position is that while he does not dispute that he issued the CC, it was an oversight that the shore piling that had been undertaken was not excluded. The failure to correct the Pre-Inspection Report was due to inadvertence and oversight, and in any event a PIR was not required in the circumstances. He has admitted the error, and there was no harm or loss by reason of his mistake. He accepts that his conduct was unsatisfactory professional conduct, however denies that the circumstances reflect on his integrity. His position is that the penalty imposed is not appropriate having regard to all the facts and circumstances of the case. Mr Lilli disputes a number of the findings in the decision under review, including that although the CC was dated 20 May 2016, it was not sent or issued to the client until 24 May 2016; and that he did not authorise work in direct conflict with the stop work order by issuing a CC (ex A4).
2. The issues for determination by the Tribunal are: 1. Whether the correct and preferable decision is that the applicant is guilty of unsatisfactory professional conduct as defined in s 19 of the BP Act; and 2. If so, what is the appropriate action to take under s 31(4) of the BP Act.

Mr Lilli's evidence

1. In his affidavit Mr Lilli states that the work was being undertaken by Nabil Kanaan and his brother Kanaan Kanaan. He had certified other work for Kanaan Kanaan and at the time of issuing the CC he was of the opinion that he was a competent, conscientious builder. He states that when Kanaan Kanaan applied to him for a construction certificate he provided him with documents including a CC application form and a PCA appointment form. He states at paragraph 16 that he "visited the site and observed that no construction work had commenced". Mr Kanaan provided him with some of the relevant documentation. Before the CC was issued Kanaan Kanaan visited him at the office, showed him a Stop Work Order and some photographs of works that had commenced at the site. Mr Kanaan told him they had commenced works and demolished the dwelling and commenced piling. Mr Lilli says that he told Mr Kanaan that he must cease work, apply to Council for a building certificate for work already commenced, and that once he had applied for a building certificate he would issue a CC for the balance of the works.
2. Mr Lilli states that at the time he received the balance of the documentation to enable him to issue the CC Mr Kanaan said that he had made the application for a building certificate. Mr Lilli states that in the accompanying documents there was "an excavation/shoring plan option 2 which showed a piling system with a ring beam on top of the piles and concrete load bearing walls". He did not go to the site before he issued the CC and he was unaware how many piles on the plan had actually been constructed: "all I knew was that some of the piling work had been carried out". He did not believe the ring beam had been constructed and he did not believe the load bearing walls had been constructed. He states that the CC was typed up by one of his support staff and presented to him for signature. In May 2016 he was under a very significant workload; when he signed the certificate he read it carefully "but not carefully enough and I failed to notice that I had not excluded from the certificate the shoring piles that had in fact been constructed".
3. Mr Lilli states: 24.It was not deliberate on my part. It was a pure oversight. Included in the documentation which was prepared by my support staff was a Pre-Issue Inspection Report (PIR). That report needs to be completed where there is an existing building on the site. When I signed the construction certificate, I was aware that there was no building on the construction site having already been demolished. 25.In those circumstances, no PIR was required. My Support staff included the PIR, completed it and tagged it for my signature. Through inadvertence I signed the PIR and dated it and I acknowledge unreservedly that I should not have done that because the structures on the site had been demolished. 26.I should have removed the document from the Construction Certificate documentation altogether as it was not legally required.
4. Mr Lilli outlined the steps he has taken including instructions to his technical staff not to include a PIR where no building exists on site, and weekly meetings with certifiers to discuss regulatory matters. He states that he "sincerely regrets" signing the PIR which was entirely unnecessary, issuing the CC without excluding the piling works, and issuing a CC which did not specifically exclude the piling.
5. In oral evidence Mr Lilli said he regrets his action, and he did not intend to mislead. He made an error in not excluding the piles, and it was workload pressure. The PIR of 18 May 2016 was not required because he was aware the building on the site had been demolished. He had inspected the site months earlier when there was a building there, and there was a re-inspection after the works. The piling works did not constitute an existing building so as to require a PIR. To issue the CC without exclusions was an error on his part. He released the CC on 24 May 2016, based on his mail record. The workload in May 2016 was constant pressure, but that was the normal work pressure at the time.
6. Mr Lilli was questioned about his statement in a submission to the Board dated 5 September 2017 that he had full knowledge that building works had commenced on site before the issue of the CC, and that on that basis "it would appear that an error has been made in completing the pre-inspection report and the inspection report should have stated that works had commenced on site along with a description works which had been undertaken". Mr Lilli said that he still thinks no PIR was required because there was no building on site. He agreed that at the time he knew some piling had been done but he did not know how many. Mr Lilli agreed that the PIR dated 18 May 2016 (ex R1, p 78) should have stated "yes" to the question whether any building or subdivision work authorised by the development consent had commenced on the site. He knew that some piling work had been done at the time of issuing the CC, and agreed that it should have excluded the piling works. He normally gets the applicant or architect to identify the works that are excluded, and he should have asked for the plans to be annotated. He was given a copy of the building certificate application, and in hindsight it would have been more complete if the CC included the building certificate documents as they were relevant to enable the issue of a CC for the remainder of the works. In response to a question about whether he acknowledged that a CC issued after works have commenced has no effect, Mr Lilli stated that if the legislation was applied it would require that the applicant to demolish the piles and then issue the CC; he considers there is a need to review the legislation. He understands that the legislation provides that the CC has no effect. He agreed that a certifier needs to be careful if physical works have commenced.
7. In his affidavit Mr Lilli addressed the previous disciplinary matters. Decision No 394 of 23 June 2015 concerned a development at Towradgi, in which he was reprimanded and fined $2,000 for issuing a CC and OC without ensuring development consent conditions requiring stormwater requirements were satisfied beforehand. He states that the development consent Condition 8 required a design to be prepared for disposal of roof water to absorption pits at the rear of the property. He states that the applicant had found after commencing works that the ground conditions were unsatisfactory for disposal of stormwater to the rear and altered the design to dispose of stormwater to the street. Mr Lilli states that he was of the view that the consent conditions were not relevant to the construction. He did not regard the consent as requiring stormwater to be disposed to the absorption pit but, if that was proposed, the design had to be provided and approved. He reviewed the council's stormwater policy which permitted roof water to be discharged to the street. The street was kerbed and guttered and drained and stormwater was diverted to the street and collected in the street water drainage system. The issue was not raised by the council. The Board investigated a neighbour's complaint and formed the view that the CC had been consistent with the consent in that regard. In his view based on conditions 23 and 24 the consent authorised stormwater to be disposed of to absorption trenches or the street. He brought the condition to the attention of the Board's officer investigating the complaint and she said "it's too late, I've already written my report". He was reprimanded and fined but it was not commercial for him to take the matter further. Further in his affidavit Mr Lilli states (at [72]) that in his view he could not have been disciplined: his actions were consistent with the development consent and he was dismayed that the investigating officer was not inclined to revisit her report and correct it. He sought legal advice, which was that the costs of disputing the fine would make it uncommercial to dispute the finding and fine and recommended that he not appeal.
8. In oral evidence Mr Lilli stated that he was surprised he had received a fine in that matter. He accepts the decision of the Board, and has raised the conversation with the Board's officer in these proceedings because it is relevant to the fine imposed. Mr Lilli was taken to the Board's documents relating to the investigation of that complaint (ex R2), and to the running sheet (pp 108-110). He recalled the telephone conversation with the Board's officer on 2 December 2014. He agreed he had engaged a solicitor to make submissions on his behalf in response to the report recorded as having been posted on 24 November 2014.
9. In re-examination Mr Lilli stated that he should have made no entry (instead of marking "yes") on the PIR in response to the question whether the plans and specifications accompanying the application for a CC adequately and accurately depicted the condition of the existing building the subject of the inspection. In response to questions from the Tribunal Mr Lilli stated that in relation to the Towradgi matter, he did not go back to the stormwater engineer and in hindsight agreed there should have been a s96 Modification application. He made an assessment that discharging stormwater to the street was a better outcome and it would have tied up council resources to delete the conditions.

Mr Lilli's submissions

1. Mr Lilli concedes that it was an error not to exclude the piling work from the ambit of the CC. He submits there was no breach of statutory duty as no inspection was required for the purposes of cl 143B of the Regulation, as the development did not affect an existing building. All buildings had been demolished from the site when Mr Lilli inspected it. In those circumstances, he accepts it was an error on his part to include with the CC a PIR, however the error caused no harm to anyone and was the result of compilation of the draft by others in Mr Lilli's staff and his failure, upon signing, to detect the inappropriate inclusion of the PIR.
2. Mr Lilli submits that the conduct was not a "significant infringement" within the meaning of the Disciplinary Penalty Guidelines, but a "minor infringement" which attracts a fine of up to $5,000. There have been four disciplinary decisions against Mr Lilli, two in 2005, one in 2010, and one in 2015, and no disciplinary decisions in the 12 months before the subject decision was made on 28 September 2018: a monetary fine in the upper range of fines for minor infringements would be appropriate. Mr Lilli submits that the Tribunal should take into account the following matters: 1. Mr Lilli has been working in the building industry as a building surveyor, fire safety officer and senior building surveyor from 1987 to 1997, and thereafter as a building regulations consultant, commencing business on his own account in 1999; 2. His current business commenced in 2006 and by 2016 he employed 10 staff; 3. He is a highly skilled, valued, hard working and responsible accredited A1 certifier undertaking a significant contribution to the building and construction industry; 4. There is no suggestion that Mr Lilli authorised, sanctioned, encouraged or otherwise condoned commencement of construction work without a CC; 5. His advice to Mr Kanaan that he must cease work and apply for a building certificate in respect of the works undertaken was correct, and he did nothing to authorise, sanction or condone work contrary to the stop work order; 6. Mr Lilli's failure to notice he had not excluded the shoring piles was not deliberate and was an oversight; 7. He was under significant workload at the time; 8. The inclusion of the PIR in the CC documentation is a distraction, as no PIR was required in the circumstances; 9. He has given instructions to staff and now has in place a weekly meeting regime within the firm; 10. Mr Lilli has shown regret; 11. There was no loss damage or prejudice to anyone from the issue of the CC, the Council has issued a building certificate in respect of the piling; 12. There is no evidence that Mr Lilli has made the same mistake before over a 20 year career of issuing construction certificates; 13. Mr Lilli has sought to explain the circumstances of the disciplinary matters in 2010 and 2015, in the latter case the circumstances concerning the issue of a CC being understandable and not consistent with the conduct of an accredited certifier who is neglecting his duties; 14. Mr Lilli's conduct was not careless or wilful, he acknowledges his mistake, and he is conscious of his obligations under the legislation.
3. In reply submissions Mr Lilli submitted that the PIR is included in the matrix of documents, and there was a document with an erroneous entry. It is not necessary for the Tribunal to determine whether or not it was required. The CC was signed on 20 May and not released until after Mr Lilli saw the building certificate and forwarded it to Council on that day; there was no complaint by the Council, and whether or not there was a failure to comply with cl 142(2) of the Regulation is not a material particular. The value of the work is not a relevant factor to be taken into account in the Guidelines. It was not put to Mr Lilli that he was acting recklessly. It was not put that he was careless, and one failure in the issue of a CC would not support a finding of failure in Mr Lilli's systems. The introduction of weekly meetings is a reasonable method of quality control.
4. Mr Lilli submits that the matter should be characterised as Category C under the Guidelines, no reprimand should be imposed, and a fine truly reflective of the gravity of the conduct should be imposed. If a penalty is imposed it should be significantly less than $5,000 which is the upper limit of the range of fines for minor infringements.

The Board's submissions

1. The Board submits that a PIR was required in the circumstances, as the existing building on site was being demolished. Accordingly, it is not correct to say that Mr Lilli's oversight or error related to only one document. In issuing a CC which had no effect there was a failure to comply with the statutory duty. That conduct had the potential for serious consequences for the builder and owner, and potential harm is relevant in considering penalty. The CC was issued on 20 May 2016 but not provided to Council until 24 May 2016, in breach of cl 142(2) of the Regulation, which requires that the documents be forwarded to the council within two days.
2. The Board submits that it is open to the Tribunal to find that Mr Lilli was reckless; that given the work taken on and his business practices there was a level of carelessness and a lack of the diligence expected of a certifying authority, or that his conduct was merely careless. Even in the absence of a finding that Mr Lilli knowingly issued a false CC, a finding that he was recklessly careless would warrant a Category D penalty, and in the context of the size of the development, the level of profit, the history of breaches and the serious potential harm, a fine of $25,000 may be appropriate. If the Tribunal finds that Mr Lilli was careless, a fine of $15,000 may be appropriate. If the evidence of Mr Lilli is accepted and a finding made that he was merely careless with no system failings, a fine of up to $5,000 may be appropriate.
3. The Board submits that the Tribunal should find: 1. The CC was issued after building work had commenced and did not contain an exclusion and was therefore void; 2. There were potential adverse consequences for any person relying on it, and breaches of the EPA Act; 3. Mr Lilli has taken some steps to improve his office processes, but has not conducted an audit of past files or implemented any external system of quality control; 4. The CC required a PIR, and the PIR contained false statements.

Findings

1. The Tribunal finds, based on Mr Lilli's evidence, which is supported by a number of testimonials (ex A3), that after qualifying with a Graduate Diploma in Health and Building Surveying in 1985 he worked for a number of years with councils as a building surveyor and then fire safety officer; that he commenced work in the private sector in 1997; and that he obtained accreditation under the Building Surveying and Allied Professions Scheme in 1998, which authorised him to issue construction certificates and occupation certificates. His accreditation number BPB0229 was issued on 5 February 2002. While the Board's reasons state that Mr Lilli has been an accredited certifier for 11 years, the Tribunal acknowledges that he had previous experience as a building inspector before the scheme came into effect. He commenced business on his own account in 1999, and since 2006 has run the business himself, by May 2016 employing 10 staff including 4 certifiers and 2 technical staff. The Tribunal accepts Mr Lilli's evidence as to his work in 2016, that is, that in that year he issued between 300 to 400 construction certificates, and the same order of occupation certificates; his workload included inspections, review of documents including development consents, and managing the business; he would spend between two hours to a week on a construction certificate, depending on the complexity; and for a project of this size, he would charge in the order of $15,000 to $20,000.
2. The following documents are in evidence: 1. CC No J150354 (Annexure A to affidavit of Valerio Lilli), signed by Mr Lilli and dated 20 May 2016: Description of Development This certificate relates to the demolition of existing structures and construction of a four (4) storey boarding house with basement car parking accommodating and comprising of twenty-four (24) boarding rooms. Limitations This Construction Certificate is limited to structural works only. 1. Demolition and Construction Management Plan (Natasi & Associates): Excavation/Shoring Plan Option 2 Sheet S0200A, annexed to CC (ex R1, p 52); 2. Pre Issue Inspection Report signed by Mr Lilli, "date of inspection 18/5/16" (ex R1, p 78): … Do the plans and specifications accompanying the application for the Construction Certificate/Complying Development Certificate adequately and accurately depict the condition of the existing building the subject of the inspection: Yes/No (If no, provide details below ["No" crossed out] … Has any building or subdivision work authorised by the relevant development consent commenced on the site: Yes/No (If yes, provide details below ["Yes" crossed out] 1. Ashfield Council Building Certificate No 30.2016.11.1 dated 23 May 2016 (ex R1, pp 873-4): … Identification of Building Location: … Particulars … Whole/Part: Part Description of Part: 450mm diameter, concrete piles drilled and poured for basement car parking (approx. 45 piles in all). Owner: … Date of Inspection: 18 May 2016 1. Order under s 121B of the EPA Act dated 12 May 2016 (ex R1, pp 98-99) directing that "any and all building works" cease immediately, stating as the circumstances: Building works have commenced on the subject premises without a Principal Certifying Authority being appointed and without a Construction certificate being issued… …
3. Based on those documents the Tribunal finds that as at the date the CC was signed on 20 May 2016, construction work had commenced on the site. The extent of the piling work that had been undertaken is shown on a copy of the Excavation/Shoring Plan annotated to indicate the shoring piles that had been constructed (ex A5). That was "building work" as defined in the EPA Act. It was not in dispute that that work should have been excluded from the CC issued by Mr Lilli. Pursuant to s 109F(1A) of the EPA Act, to the extent that the CC purported to authorise that work, it was of no effect.
4. The PIR in evidence records the date of inspection as 18 May 2016. That was incorrect, Mr Lilli's evidence being that he had inspected the site some time earlier, before the dwelling was demolished, and after the construction works were complete. Mr Lilli did not specify a date for the earlier inspection, and his submissions to the Board dated 3 August 2017 (ex R1, pp 40-42) and 5 September 2017 (ex R1, pp 43-45) do not assist. The earliest date specified in those submissions is 24 June 2016 for completion of excavation, recorded in the submission of 5 September 2017. The PIR states that no building work authorised by the development consent had commenced on site as at the date of inspection: that was also incorrect.
5. The parties were in dispute as to whether a PIR was required by cl 143B of the Regulation, which provides that a construction certificate cannot be issued for "development on a site which affects an existing building" without an inspection of the building. It is not necessary to decide whether a PIR was required: even if it was not required for the issue of a construction certificate in circumstances where at the date of issue the former dwelling had been demolished, an inspection report was provided by Mr Lilli, and the information required to be provided in that report under cl 143C(3)(d) and (j) of the Regulation was incorrect.
6. Mr Lilli acknowledged in September 2017 in response to notification of the complaint that he knew that work had commenced on site when he issued the CC. He states that it was an oversight, and not deliberate, that the piling work was not excluded from the CC; and that he signed the PIR through inadvertence (affidavit 21 March 2019, [24], [25]).
7. While in his affidavit he states (at [19]-[20]) that he told Mr Kanaan he would issue a CC for the balance of the works once he had made an application for a building certificate, in oral evidence Mr Lilli stated that he wanted to make sure the building certificate was issued and he signed it once Mr Kanaan said the building certificate had been released. The latter statement is not consistent with his submission to the Board dated 5 September 2017 (ex R1, p 44) where he states that based on confirmation that the building certificate application had been made on 11 May 2016, the CC was issued. Given his acceptance in oral evidence that his awareness of events was likely in 2017 to be keener than now, the Tribunal finds that Mr Lilli based his issue of the CC on the confirmation that the application for a building certificate had made. At that time, Mr Lilli could have had no guarantee that the Council would issue a building certificate.
8. The Tribunal finds that: 1. In issuing a CC after building work had commenced, and with knowledge that it has commenced, which failed to exclude the already constructed works, Mr Lilli's conduct fell short of the standard of competence, diligence and integrity that a member of the public is entitled to expect of a reasonably competent accredited certifier; 2. In providing incorrect information on the CC and the PIR, Mr Lilli failed to comply with the requirements of s 85(1)(b) of the BP Act and the Regulation; 3. In issuing a CC after building work had commenced, and without excluding the already constructed works, and in signing a PIR which included incorrect information as to the date of inspection and status of the construction work, Mr Lilli failed to comply with requirement 5 of the Code of Conduct, namely that he exercise reasonable care and attention in carrying out his duties.
9. The Tribunal is satisfied that on that basis, Mr Lilli's conduct was unsatisfactory professional conduct as defined in s 19(1)(a), (b) and (g) of the BP Act.

Penalty

1. Being satisfied that the applicant is guilty of unsatisfactory professional conduct as defined in s 19(1)(a), (b) and (g) of the BP Act, the Tribunal may take any one or more of the actions specified in s 31(4) of the BP Act.
2. The Board's reasons for decision state that Mr Lilli's conduct falls within Category E of the Board's Disciplinary Penalty Guidelines - "significant infringements" ($20,000-$50,000), and that the appropriate disciplinary action was a reprimand and a fine of $25,000. The Guidelines are in evidence (ex R1, pp 105-115), and are routinely referred to in disciplinary proceedings in the Tribunal. The Guidelines direct attention to the seriousness of the conduct (ranging from minor to significant to major infringements), and prior disciplinary history. The Guidelines make clear that all individual extenuating or aggravating circumstances of the matter are to be considered.
3. In Qiu v Building Professionals Board [2103] NSWADT 289, drawing on the earlier decision in Director General, Department of Fair Trading v Cohen [2000] NSWFTT 3, the former Tribunal identified factors relevant to consideration of appropriate disciplinary orders: 98. That case involved disciplinary proceedings against a licensed home building contractor. In addition to factors of deterrence, personal and general; and the importance of upholding the objectives of the relevant legislation, the following considerations might be relevant: (a) the nature, width and extent of the contraventions (b) the loss or damage and prejudice in consequence of the contraventions (c) the circumstances in which the contraventions took place (d) whether the licensee has been seen to have engaged in any similar conduct (e) the presence of fraudulent or dishonest intent and deliberation on the part of the licensee (f) the extent of carelessness or wilfulness of the conduct (g) the efforts made to correct the situation and what measures have been taken by the licensee (h) what consciousness the licensee had and displayed of its obligations under the relevant statute and to the owners (i) the effect upon the licensee (j) antecedents (k) attitude, building history and future compliance (l) the penalty range.
4. More recent decisions of this Tribunal, including Hallal v Building Professionals Board [2016] NSWCATOD 78, Levick v Building Professionals Board [2018] NSWCATOD 125, and Treble v Building Professionals Board [2019] NSWCATOD 34, have been guided by consideration of those factors. Relevant factors in the circumstances of this case are the circumstances in which the contraventions took place; the nature and extent of the conduct; Mr Lilli's previous disciplinary history; the extent of carelessness or wilfulness of his conduct; any loss or damage or prejudice; and what measures have been put in place to ensure future compliance.

Circumstances in which the contraventions took place

1. The Tribunal accepts the evidence of Mr Lilli that he was told at a meeting by his client that construction work had started and that the Council had served a stop work order. His evidence that he told his client at that meeting that work had to stop, and that a building certificate was required, was not disputed, and in the Tribunal's view was appropriate advice. While the Tribunal has, for the reasons above, found that Mr Lilli's position then was that he would issue a CC once an application for a building certificate was lodged, rather than when a building certificate was issued, the Board did not take issue with the proposition that there was no barrier to the issue of a CC if the certificate made clear what work was included. The Tribunal does not accept the Board's submission that the issue of the CC conflicted with the Council's cease work order: that order served a different purpose, and in any event was based on factors in addition to the commencement of construction work without a construction certificate.

Nature and extent of the conduct

1. The conduct was serious. While Mr Lilli states that it was inadvertence or oversight that led to his signing the CC and the PIR, the Tribunal is of the view that to sign documents that are fundamental in the regulation of building construction without proper checking is a significant process failure. Mr Lilli is a Grade A1 certifier of many years standing, and as such, the public would have a reasonable expectation that he would perform his functions as a certifier diligently and with care, and that he would have a comprehensive knowledge of the relevant matters he was required to consider: Levick v Building Professionals Board [2018] NSWCATOD 125 at [23].

Carelessness and wilfulness

1. The evidence does not establish that Mr Lilli's conduct was deliberate or intentional. However, the Tribunal is satisfied that it was extremely careless. As an experienced accredited certifier Mr Lilli should have been well aware of the requirements for the issue of a construction certificate, including whether a PIR was required in the circumstances. Whether or not one was required, Mr Lilli signed documents that to his knowledge contained incorrect information, namely that construction work had not commenced. Mr Lilli signed the CC without ensuring that it excluded the piling work which he knew had already been undertaken. The documents supporting the CC did not include the building certificate issued by the Council on 23 May 2016, or any documents relevant to the application for a building certificate. Mr Lilli accepted in oral evidence that with the benefit of hindsight it would have been more complete had the CC included the building certificate documents. However, an experienced certifier could reasonably be expected to take more care in ensuring that the works which could not be included in the construction certificate were appropriately authorised through a process such as the issue of a building certificate.
2. Mr Lilli states that he signed the documents prepared by his staff. An accredited certifier is required to ensure that he or she has all relevant facts (Code of Conduct Requirements 6 and 7), and cannot delegate that function to staff. While the Tribunal accepts Mr Lilli's evidence that he was under pressure because of his workload, that evidence did not suggest that there was anything unusual or extreme about his workload at the time.

Loss or damage

1. The Tribunal accepts that the piling work undertaken before the CC was issued was subsequently the subject of a building certificate, and that there is no evidence of any financial loss or other harm. However, Mr Lilli's conduct was not consistent with an expectation of compliance with all legislative requirements which is fundamental to ensuring the integrity of the certification scheme. The project was relatively large, and had, as recorded on the CC, been the subject of proceedings in the Land and Environment Court to obtain development consent.

Previous disciplinary history

1. There are four previous disciplinary actions recorded. On 24 July 2005 (Decision 023) Mr Lilli was cautioned, and on 14 October 2005 Mr Lilli was reprimanded (Decision 047). On 18 February 2010 (Decision 266) Mr Lilli was reprimanded and fined $2,000, and on 23 June 2015 (Decision 394) he was reprimanded and fined $2,000.
2. In his affidavit Mr Lilli addressed the 2010 and 2015 disciplinary decisions. For the former, his evidence was that he had issued a CDC for development on a steeply sloping site, in the honest belief that the development did not exceed the allowable floor to ceiling height. His opinion that it did not exceed the control was based on an assessment by a qualified planner in his employment who had previously worked for the council. He paid the fine and did not dispute it as it was not commercially justifiable to take it further.
3. Mr Lilli's evidence relating to the 2015 disciplinary decision is discussed above at paragraphs [36]-[38]. That matter concerned a single development in respect of which 11 allegations were made, 6 of which (including the allegation about stormwater disposal) were found to be established. Having regard to the documents relating to that matter provided by the Board on 10 April 2019 (ex R2), the Tribunal is satisfied that there is no basis on which it could be said that Mr Lilli was denied an opportunity to have his submissions considered before the Board made its decision in that matter. The complaint was made in March 2013, and the Complaint Investigation Report was completed on 21 November 2014. The running sheet records (ex R2, pp 108-110) that Mr Lilli had been reminded on 6 May 2013, and was granted an extension of time, to provide submissions, which were received by the Board on 17 May 2013. Mr Lilli was advised in the telephone call on 2 December 2014, which was after the report had been posted and before submissions were due on 15 December 2014, to make submissions on s 190O of the EPA Act and cl 161 of the Regulation regarding the stormwater disposal system. Mr Lilli's lawyer was granted an extension of time to provide those submissions responding to the Complaint Investigation Report. The submissions were received on 27 January 2015, were summarised by the investigator (ex R2, pp 119-120), and referred to in the decision on that complaint on 23 June 2015 (ex R2, p 127).
4. The submissions were based on what was said to be inconsistency between the relevant consent conditions, in which Mr Lilli relied on condition 23 (stated in the consent to apply during demolition, excavation or construction) which required that stormwater be piped to a suitable absorption disposal system in accordance with the approved construction certificate plans. The decision found that condition 8 of the development consent had not been complied with before the issue of the construction certificate, in breach of cl 146(c) of the Regulation. In response to a question from the Tribunal Mr Lilli acknowledged that in hindsight a modification of the consent would be preferable: he did not go back to the stormwater engineer, and his assessment was that taking the stormwater to the street was a better outcome and it would tie up council resources to delete the condition.
5. The Board submits that the 2015 disciplinary finding is similar to the present proceedings. Mr Lilli disagrees. The Tribunal regards the proceedings as similar to the extent that both in 2011 and in 2016 Mr Lilli was prepared to issue a construction certificate in circumstances where the precondition for the issue of the certificate had not been met: in the earlier matter, by compliance with consent condition 8 (specified in the consent to be complied with before the issue of a construction certificate), and in the present circumstances, in relation to construction work that had been undertaken. The penalty in Disciplinary Decision 394, being a reprimand and a relatively modest fine, was imposed taking into account Mr Lilli's record as an accredited certifier, the absence of fraudulent or dishonest intent, that the conduct was not wilfully inappropriate, provision of appropriate assistance in the investigation, his reasonable attitude to dealing with the complaint.

Measures taken by Mr Lilli and future compliance

1. The evidence of Mr Lilli that since this event he has instructed technical staff not to include a PIR where no building exists on site, and insisted that accredited certifiers in the firm meet each week to discuss regulatory changes, building compliance issues and administrative issues relating to their certifying practice, was not disputed. While Mr Lilli disputed that there were any systemic issues in the business, and could not recall having made a similar mistake before, the need for such a change in practice indicates at least the potential for errors to have occurred. The testimonials provided by Mr Lilli attest to his work history and skills up until 1997, and there is no recent confirmation of his skills and competence or as to the regard in which he is currently held in the building industry.

Appropriate penalty

1. The parties relied on previous Tribunal decisions in support of their submissions. In support of the submission that categorisation as a Category E infringement and imposition of a fine of $25,000 in the present circumstances is unreasonable and disproportionate, Mr Lilli relied on Hallal v Building Professionals Board [2016] NSWCATOD 78, in which the penalty was a reprimand and a fine of $10,000, on the basis that that decision concerned developments at 7 sites, involving 17 complying development certificates, and 27 separate allegations of unsatisfactory professional conduct, and where the conduct caused significant financial detriment to the owners. He also relied on Qui, where the certifier was fined $7,000, with 9 allegations of unsatisfactory professional conduct involving several sites; and on McGufficke v Building Professionals Board [2013] NSWADT 307, a $10,000 fine, where the certifier had issued a construction certificate and occupation certificate for a development which he had inappropriately classified under the BCA, where the Tribunal found that he had not given proper consideration to the safety of the building's occupants. Mr Lilli submits that those decisions each involve conduct which is much more egregious than the conduct in the present case, and that the fine of $25,000 is manifestly unreasonable and not in line with the financial penalties imposed in at least those decisions.
2. The Board relied on the decision in Levick v Building Professionals Board [2018] NSWCATOD 125, in which the Tribunal varied a fine imposed by the Board of $110,000 to $50,000, in circumstances where the certifier issued a construction certificate for a large seniors living development in contravention of cl 145(1)(a) of the Regulation, where there were a number of variations between the plans submitted with the development application and the construction certificate plans. Mr Lilli submitted that Levick can be distinguished, when regard is had to the number of variations in the plans.
3. Those decisions provide some guidance, however, all the circumstances of this matter must be taken into account. The Tribunal acknowledges that this matter involves a single development on one site. However, Mr Lilli knew that work had commenced on site before he issued the CC, and he did not take sufficient care to ensure that the CC properly excluded that work. As a consequence that CC had no effect. He included a PIR which stated that construction work had not commenced. This was not a matter involving contested interpretations of complex planning controls, on which informed minds might reasonably differ. Mr Lilli is an experienced Grade A1 certifier, and in making such fundamental errors he did not demonstrate the qualities of care and diligence reasonably expected of him.
4. The Board's Guidelines provide examples of conduct, based on the Board's experience in investigating complaints, falling within the relevant categories. Category E - Significant infringements matters include the issue of a construction certificate that does not comply with the BCA, or that is inconsistent with the development consent, or the issue of an occupation certificate where the preconditions are not satisfied. Category D - Moderate infringements include minor visual departures from development consent, lesser departures from the consent, or lesser BCA non compliances. Category C - Minor infringements include minor regulatory matters for which penalty infringement notices may be issued or minor PCA monitoring incidents.
5. The Tribunal is of the view that to issue a construction certificate that has no effect because work has already commenced, and to provide a PIR which contains incorrect information, is conduct analogous to that reflected in Category E in the Board's Guidelines, and not Category D or C. The Guidelines state that any fine is to be determined within the range of $20,000 to $50,000 having regard to the history of disciplinary determinations. If there have been three or more disciplinary decisions in the previous 12 months, or six or more in the previous 5 years, and the delegate is not satisfied that further infringements are unlikely, consideration should be given to suspension or cancellation. Mr Lilli has had four disciplinary decisions since July 2005, the most recent being No 394 of 23 June 2015. That was some four years before the Tribunal's decision, and less than one year before the events that led to the present complaint. There is sufficient similarity between the present circumstances and those that led to the 2015 disciplinary determination for the Tribunal to consider that a fine substantially higher than that imposed then is required. Mr Lilli should not have made the errors that he did.
6. The Tribunal considers that that a reprimand signals to the profession and to the community the significance of those errors, and the extent of Mr Lilli's failure to ensure that his certification work meets acceptable standards. Accordingly, we agree with the Board's decision to reprimand him. In determining an appropriate fine to impose we have had regard to the finding that Mr Lilli's conduct was extremely careless, rather than deliberate; that Mr Lilli has expressed regret; the absence of harm or loss to others despite the detriment to due public process, and his previous disciplinary history. The Tribunal considers that a fine at the lower end of the range in Category E is appropriate, $20,000.00.
7. Mr Lilli has paid the fine of $25,000.00, and the balance of $5,000.00 is to be refunded to him.

Orders

1. The orders of the Tribunal are:
2. Valerio Lilli is guilty of unsatisfactory professional conduct.
3. The decision of the Building Professionals Board of 28 September 2018 is varied to be: 1. Pursuant to s 31(4)(a) of the Building Professionals Act 2005 Valerio Lilli is reprimanded; 2. Pursuant to s 31(4)(f) of the Building Professionals Act 2005 Valerio Lilli is to pay to the Building Professionals Board a fine of $20,000.00.
4. The respondent is to refund the balance of $5,000.00 to Mr Lilli within 28 days of this decision.

I hereby certify that this is a true and accurate record of the reasons for decision of the New South Wales Civil and Administrative Tribunal. Registrar I hereby certify that this is a true and accurate record of the reasons for decision of the Civil and Administrative Tribunal of New South Wales. Registrar DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 05 August 2019