Lilli v Building Professionals Board

Legal principles

1. The general rule is that an application for administrative review of a decision does not prevent the decision from taking effect. The Tribunal may make an order "staying or otherwise affecting the operation of the decision under review".
2. The power to do so is conferred by s 60 of the ADR Act: 60 Operation and implementation of decisions pending applications for administrative review (1) Subject to this section, an application to the Tribunal for an administrative review under this Act of an administratively reviewable decision does not affect the operation of the decision under review or prevent the taking of action to implement that decision. (2) On the application of any party to proceedings for an application for an administrative review under this Act of an administratively reviewable decision, the Tribunal may make such orders staying or otherwise affecting the operation of the decision under review as it considers appropriate to secure the effectiveness of the determination of the application. (3) The Tribunal may make an order under this section only if it considers that it is desirable to do so after taking into account: (a) the interests of any persons who may be affected by the determination of the application, and (b) any submission made by or on behalf of the administrator who made the decision to which the application relates, and (c) the public interest. (4) While an order is in force under this section (including an order that has previously been varied on one or more occasions under this subsection), the Tribunal may, on application by a party to the proceedings, vary or revoke the order by another order.
3. In QLD Protection Security Pty Ltd v Commissioner of Police, NSW Police Force [2018] NSWCATAP 113 the Appeal Panel discussed the principles concerning stays and other orders under s 60 in the following terms: 31. The Tribunal recently considered the power under s 60 of the ADR Act in Loveday v Commissioner for Fair Trading [2018] NSWCATAD 80 (Loveday). In that decision it was held at [8]: "… Section 60(2) and (3) give the Tribunal a single discretionary power to make a stay order or to refuse to make such an order taking into account all relevant considerations. Secondly, the words "to secure the effectiveness of the hearing" include a situation where the applicant will suffer irreparable loss in the sense that no recompense for it can be obtained if the application is ultimately successful: Re Pelling and Secretary, Department of Aviation [1984] AATA 179; (1984) 5 ALD 638 at 639. It is not confined to the situation where a hearing would be pointless because the applicant will go out of business if a stay is refused. …" 32. The relevant considerations in deciding whether to make an order under s 60(2) include: (1) whether the order is appropriate to secure the effectiveness of the determination of the application for review: ADR Act, s 60(2); (2) whether the order is desirable taking into account: (a) the interests of any persons who may be affected by the determination of the application for review: ADR Act, s 60(3)(a), Loveday at [10], Re Scott and Australian Securities and Investments Commission [2009] AATA 798 (Re Scott) at [4]; (b) any submission made by or on behalf of the administrator who made the decision to which the application relates: ADR Act, s 60(3)(b), Loveday at [10], Re Scott at [4]; (c) the public interest: ADR Act, s 60(3)(c), Loveday at [10], Re Scott at [4]; (3) the applicant's prospects of success on the application for review: AVS Group of Companies Pty Ltd v Commissioner of Police [2010] NSWCA 81 (AVS Group) at [129], Loveday at [10] and [11], Re Scott at [4]. 33. The circumstances that are relevant in any particular case to the considerations identified above may well overlap or be interrelated.
4. In Loveday DP Hennessy referred to the Court of Appeal decision in AVS Group of Companies Pty Ltd v Commissioner of Police [2010] NSWCA 81: 11. Significantly, in AVS Group of Companies Pty Ltd v Commissioner of Police [2010] NSWCA 81, the Court of Appeal saw it as relevant, when determining whether a stay was appropriate, to take into account not only whether there is any practical point in reviewing the decision if a stay was not granted, but also the likelihood that the decision will be affirmed and the correct decision will not have been implemented for some time. The Court held at [129] that: There is an express statutory power for the Tribunal to grant or refuse a stay or other order "as it considers appropriate to secure the effectiveness of the determination of the application". In other words, the purpose of granting a stay or other order is connected with the determination of the application. "[S]ecur[ing] the effectiveness of the determination of the application" involves matters such as ensuring that the lapse of time before the determination is actually made does not deprive the review of practical point. It also involves considering the possibility that the result of the review might be that the decision is affirmed, with the consequence that if a s 60(2) order is granted the decision that the review ultimately decides was correct has not been implemented during the period of the s 60(2) order.

Evidence and submissions on the stay application

1. The grounds stated in the application for a stay were that the effect of the disciplinary findings and action would result in the business Vic Lilli & Partners (VLP) having to cease operating almost immediately requiring the termination of all Mr Lilli's employees; the five year period of cancellation would make it impossible for him to re-establish VLP as a viable business; Mr Lilli would cease to have a livelihood; he would not be able to complete his role as Principal Certifying Authority (PCA) on a large number of matters, as he is currently appointed as PCA on 400 matters; it would place his clients in a position where they would have to appoint a new PCA which may cause delay on projects; and the disciplinary action is disproportionate to the gravity of the matters addressed.
2. Mr Lilli provided two affidavits, sworn on 4 December 2019 and 11 December 2019. He stated he has been an accredited certifier for 21 years, summarising his background in council employment since 1985, and initial accreditation in 1998. He stated he commenced business on his own account and established the firm DLM Certification Pty Ltd, a company incorporated in 1999. He has run that business trading as Vic Lilli & Partners since 2006, when the two other shareholders resigned, and it currently employs 11 staff comprising 4 certifiers, 2 cadets and 5 administrative staff. It was clarified in the course of the hearing that VLP is the business name under which Mondan Management Pty Ltd trades. In the past 5 years VLP has completed approximately 2000 projects across NSW including mixed multi residential units, commercial developments, large industrial projects and other developments. He estimates that 80% of the business work is A1 certification work.
3. Mr Lilli's evidence as to the number and roles of the employees of VLP is confirmed in an affidavit of the General Manager of VLP sworn 11 December 2019, who states that if Mr Lilli has to close the business the employees would suffer very significant personal and professional hardship.
4. In his affidavit of 11 December 2019 Mr Lilli states that he has two employees capable of performing certification work at an A1 certification level, Mr Maruisz Para who is now an A1 accredited certifier without restriction, and Mr Joshua Harvey who is an A1 accredited certifier with restriction being unable to issue a number of different types of certificates without referral to other bodies such as Fire & Rescue NSW. In their affidavits Mr Para and Mr Harvey confirm that they are willing to peer review work undertaken by Mr Lilli. Mr Lilli states: 6. …The effect of the proposed condition would be to run down the business which would lead to my need to terminate employment contracts for staff with the passage of time and would lead to reputational damage to the business (which has already been suffered by my business as a result of this decision). The goodwill of my business has been developed by me over the last 20 years.
5. In oral submissions Mr Lilli submits that the decision under review is extremely harsh and the justice of the case requires a stay. The findings involve one building project and one occupation certificate, and all the allegations are denied. The Board took 428 days in Investigation 1-07/18 between the date the investigation report was published and the disciplinary findings, and 353 days for Investigation 1-08/18, in which time he was able to continue practice. There was a period of only two weeks before the orders came into effect. The requirement to give notice to his clients is a taint on the business. He should be permitted to continue to practice, with peer review by Mr Para and Mr Harvey, pending determination of the substantive review application. Mr Lilli has some 1835 projects open, since January 2016. When compared to previous Tribunal decisions including Qiu v Building Professionals Board [2013] NSWADT 289, McGufficke v Building Professionals Board [2013] NSWADT 296, Hallal v Building Professionals Board [2016] NSWCATOD 78 and Levick v Building Professionals Board [2018] NSWCATOD 125 where the Board has imposed fines and reprimands for breaches involving many sites and where serious harm occurred or was threatened, it is not appropriate to take away Mr Lilli's livelihood, when he disputes on reasonable grounds many of the factual findings of the Board.
6. In responding to the Board's written submissions of 11 December 2019 after the hearing, Mr Lilli submits that the decisions referred to in those submissions, Pinnacle Homes (Sydney) Pty Ltd v Director General, Department of Fair Trading [2001] NSWADT 222, Williamson v Director General, Department of Transport [2000] NSWADT 165, and Broadbent v Civil Aviation Authority [1999] FCA 1871, are distinguishable. The Board's decision needs to be stayed to secure the effectiveness of the determination of the application for review; and if not stayed it is highly likely if not certain that Mr Lilli's business will cease to operate, as he is the sole founder and managing director of the business and the effect on his reputation and the good will associated with his name and business will be irreparably damaged. The primary purpose of disciplinary proceedings is protective, and not punitive. Mr Lilli comments on QLD Security that the threshold is met based on his evidence of detriment to be experienced by Mr Lilli, VLP as a business, the persons employed by Mr Lilli and their families, and the current clients for whom Mr Lilli is nominated as PCA.
7. The Board opposes the grant of a stay, submitting it would not be in the public interest, would not safeguard and protect the community, would not promote standards of building certification, and would undermine public confidence in the building certification process. Mr Para has, since the decision, been granted accreditation as an A1 certifier and so VLP has an employee capable of performing A1 certification work. The non-compliances detected in Matters 1 and 2 had the potential to directly impact on the safety of residents and the public: in particular, fire hazards were not properly assessed, evacuation egress in the event of an emergency was not properly considered and there was missing fire fighting equipment.
8. The Board opposes the proposal that Mr Para and Mr Harvey peer review work by Mr Lilli, on the basis that peer review by an employee under supervision is not appropriate. If the two A1 accredited employees do not have time to undertake the work that would otherwise be done by Mr Lilli, they would not have time to peer review. The Board submits that there is not sufficient evidence that the business is not able to manage with those persons doing Mr Lilli's certification role in the interim before the determination of the review. The Board accepts that the refusal of a stay would cause inconvenience and that Mr Lilli would need to increase employee salaries; it also accepts that some or all of its factual conclusions are challenged. However, the public interest, including concerns about safety issues and building certification, has to be weighed in that consideration.

Discussion and findings

1. At the beginning of the hearing on the stay application the Board provided a form of order which it considered appropriate if an order were to be made. That proposal was that Mr Lilli not personally undertake any certification work as an A1 certifier; that any work presently contracted to VLP requiring certification by an A1 certifier be undertaken by Mr Para, or by Mr Harvey to the extent that his restrictions permit that; and that neither Mr Lilli nor VLP accept any new work requiring A1 certification until the review is determined.
2. Mr Lilli opposed that form of order, instead proposing that an order be made permitting him to continue in practice subject to peer review, analogous to the order made by the Tribunal in proceedings 2019/250150 concerning Mr Stanly Spyrou. Mr Lilli proposed that the peer review be undertaken by Mr Para and Mr Harvey rather than by a reviewer who is not employed by or associated with Mr Lilli's business, as was specified in proceedings 2019/250150. On 13 December 2019 Mr Lilli provided, with his response to the Board's written submissions, a revised form of order. The terms of that proposed order would permit Mr Lilli to continue to work as a certifier including as PCA for current and new matters under the supervision of Mr Para and Mr Harvey, such supervision to require those certifiers to prepare a peer review report of any certificate prepared and issued by Mr Lilli, and with publication of those orders on the Board's website. While that document is headed "Terms of Consent", it is apparent from further submissions received from the Board on 16 December 2019 that the Board would not consent to an order in those terms.
3. As noted above, s60(2) enables the Tribunal to make such orders staying or otherwise affecting the operation of the decision under review "as it considers appropriate to secure the effectiveness of the determination of the application", taking into account the matters specified in s60(3) (a), (b) and (c) in considering whether it is desirable to do so. In QLD Security the Appeal Panel endorsed the reasoning in Loveday, in which DP Hennessy had held (contrary to that part of the reasoning in Williamson) that there is no "threshold test" that needs to be passed, rather there is a single discretionary power to make or refuse a stay order taking into account all relevant considerations.
4. Considering first the interests of any persons who may be affected by the determination of the application for review. The Tribunal accepts that if Mr Lilli is not permitted to continue as an A1 accredited certifier pending the hearing and determination of the substantive application, in circumstances where he is the PCA for a significant number of projects and where 80% of the work of VLP is A1 certification work, there will be an immediate loss of work and therefore income for Mr Lilli personally, and for the business. The Tribunal accepts that the need to transfer the PCA role to others either in his business or elsewhere will involve an administrative process and take some time, and would no doubt be inconvenient to the clients who would have to make those arrangements. The Tribunal accepts that the cancellation of Mr Lilli's accreditation, with the consequence that he is required by s74 of the BP Act to notify those persons who had appointed him as PCA in relation to development, would likely cause some reputational damage, which of itself may result in a loss of such work.
5. Mr Lilli's case was that the business would be likely to close resulting in the termination of employment of his employees. Mr Lilli provided an email from the business accountant stating the turnover figures for 2018 and 2019, and a list of current projects in the bundle of documents for the stay hearing. However, that evidence does not substantiate a claim that the business would likely close. The disciplinary orders are made against Mr Lilli personally as holder of Accreditation No BPB0229, and not against the company. In contrast to the decision in Boyce v Building Professionals Board [2019] NSWCATOD 94, to which Mr Lilli referred, Mr Lilli is not the only A1 accredited certifier engaged in the business. Based on Mr Lilli's evidence, the business employs 4 certifiers, two of whom are A1 certifiers (acknowledging that Mr Harvey's accreditation is subject to some restrictions). The fact that Mr Lilli has proposed that Mr Para and Mr Harvey undertake peer review of Mr Lilli's certification work indicates that they would have at least some capacity to take on work that Mr Lilli is not able to do while the substantive review application proceeds.
6. The Board opposes the stay and submits that there are public interest considerations against the grant of a stay. The Tribunal acknowledges, as does the Board, that Mr Lilli disputes the allegations and findings in the investigation and disciplinary determination. However, the nature of the allegations is serious, in particular for Matters 1 and 2 of Investigation 1-08/18. In oral submissions Mr Lilli outlined his response to the findings in Matter 6 in Investigation No 1-07/18, that is the allegation that in issuing the occupation certificate Mr Lilli had failed to ensure that each precondition specified in the development consent was met: his argument being that the conditions referred to are not critical to the issue of an interim occupation certificate, and that ensuring they were met before issue of a final occupation certificate is an industry wide approach; and that there is an ambiguity in the wording of the development consent which refers in some instances to both interim and final occupation certificates, making it reasonable for him to proceed in the basis that other references to an occupation certificate were to a final occupation certificate. In contrast, the Board's oral submissions focussed on the findings in Matter 1 of Investigation 1-08/18, namely the finding that Mr Lilli could not reasonably have determined that the building was suitable for occupation or use in accordance with its BCA classifications. The Board raised specific concerns as to the findings that the authorised emergency/evacuation egress was blocked at the boundary by a road closure, and that Mr Lilli had failed to obtain sufficient documentation to determine compliance of the external wall cladding. The Board submits that issues of emergency egress, non-compliant construction of exits stairways and egress, missing or non-compliant fire-fighting equipment, and inadequate evidence of compliance with requirements for fire resistance of building elements or the fire hazard properties of materials, inform the public interest.
7. Mr Lilli relies on there being one building and one occupation certificate: however, the building project for which the occupation certificate was issued was for two buildings, 20 and 21 storeys high, with 378 apartments. Mr Lilli submits that the Board took 428 and 353 days between the report of the investigations and the disciplinary determination, during which time he was permitted to continue in practice and his accreditation was not suspended, which he submits is an indication as to the significance of any public interest concerns. The evidence before the Tribunal does not indicate whether or not suspension was considered by the Board; in any event, and whether or not there may have been a basis for such a course, the documents provided with the Notice of Decision indicate that at least part of the period was taken with provision of submissions to the Board by Mr Lilli, on 8 November 2018 and 30 January 2019, and on 16 September 2019.
8. The Tribunal agrees with the Board that issues of fire safety and emergency management as matters going to public safety are central to the role of an accredited certifier, and that the public interest is a factor against the grant of a stay pending determination of the application for review.
9. In considering the prospects of success on the application for review, the Tribunal acknowledges that Mr Lilli disputes many of the factual findings. Mr Lilli acknowledges the importance of fire safety, and points to there being no issue of which he is aware of the adequacy of the cladding used. The submissions made by Mr Lilli to the Board before the determination was made as summarised in the notice of decision, and the delegate's responses, indicate that most of the matters raised will be strongly contested. The findings of the Board traverse a broad range of functions encompassed in the certification role, including carrying out of inspections and the adequacy of documentation on which Mr Lilli relied. The substantive review will require the Tribunal to consider the totality of the evidence then before it in determining the correct and preferable decision. In that context, on the limited material available on this stay application, it is difficult to determine the strength of Mr Lilli's case. The Tribunal regards this factor as a neutral matter in determining whether to grant a stay.

Conclusion

1. The Tribunal accepts that if a stay is not granted and if Mr Lilli is not permitted to continue as a certifier pending the determination of the review application, he will suffer loss to his business, and personally, which could not be recompensed if the application is ultimately successful. The Tribunal accepts that refusal to grant a stay would be likely to have serious and potentially irreversible financial consequences for Mr Lilli and possibly his business. However, this is not a situation where it is clear that determination of the substantive review would be rendered futile, there being sufficient evidence to indicate that the work that Mr Lilli would otherwise have done could be undertaken by the accredited certifiers, two of whom are A1 accredited certifiers, employed by Mr Lilli's business. The Tribunal accepts that any effect on the business in the period before the determination of the review may impact adversely on employees of the business; and that there is likely to be inconvenience to clients of the business who will need to appoint another PCA. In considering whether it is desirable to grant a stay, the Tribunal takes into account not only whether there is any practical point in reviewing the decision if a stay is not granted, but also the possibility that the decision will be affirmed and the correct decision will not have been implemented for some time. Having regard to those factors, the Tribunal is satisfied that the public interest in maintaining the protection of the public afforded by the decision under review, in particular ensuring appropriate standards of certification of buildings as a matter involving public safety, is a matter that outweighs the financial consequences for Mr Lilli or his business. The public is entitled to have confidence in the certification system and to be protected from the consequences of unsatisfactory professional conduct.
2. The Tribunal concludes that a limited order is appropriate to secure the effectiveness of the determination of the application for review of the decision of 28 November 2019. The Tribunal agrees with the Board that it is not appropriate to permit Mr Lilli to continue in practice subject to peer review, or supervision, by his two employees Mr Para and Mr Harvey: while peer review by an independent person might provide confidence that the initial certification is compliant, peer review by an employee would not provide that confidence. Mr Lilli opposes any requirement for independent external peer review, on the ground that that cannot be readily obtained. In that context, the appropriate order is that Mr Lilli not personally undertake certification work pending determination of the application for review. Mr Lilli objected to the reference in the Board's proposed order to "any certification work" as too broad; the Tribunal considers that the wording of the conditions imposed by the Board pursuant to s 31(4)(b) of the BP Act provides appropriate clarity. The Board proposed an order that no new work be accepted by VLP until the determination of the review, on the basis that it has concerns as to the capacity of Mr Para and Mr Harvey to manage the workload. The Tribunal does not consider such a condition necessary, as both individuals should be presumed to have sufficient experience in the building and certification industry to manage their workload and not take on work they cannot adequately perform in accordance with their professional obligations as A1 accredited certifiers.
3. At the conclusion of the stay hearing on 11 December 2019 the parties were directed to provide to the Tribunal an agreed timetable for filing and exchange of evidence and submissions including provision by the Board of its documents under s 58 of the ADR Act; an indication of the estimated length of hearing time required; and available dates. That direction was made to enable orders to be made in chambers, so as to expedite the hearing of the substantive review. The parties have provided an agreed timetable, and directions are made in accordance with that timetable.

Orders

1. The Tribunal orders: 1. The decision of the Building Professionals Board dated 28 November 2019 to take disciplinary action against Valerio Lilli (Accreditation Number BPB0229) is stayed, subject to the following conditions: 1. Mr Lilli is not authorised to determine and/or issue any complying development certificates, construction certificates, compliance certificates and/or occupation certificates, nor any modified certificates of any kind. This condition includes and applies to any undetermined applications and any determined applications where the certificate has not been issued. 2. Mr Lilli is not authorised to accept the lodgement with him of an application for a complying development certificate, construction certificate, compliance certificate and/or an occupation certificate. 3. Mr Lilli is not authorised to carry out any final inspections, that is, after building work has been completed and prior to any occupation certificate being issued in relation to the building. 4. Mr Lilli is not authorised to carry out any functions, nor issue any certificates or notices, under the Swimming Pools Act 1992. 1. The following directions are made: 1. The Respondent is to give to the Tribunal and the other party the documents required under s 58 of the Administrative Decisions Review Act 1997 on or before 28 February 2020; 2. The Applicant is to give to the Tribunal and the other party, any written submissions and material on which that party relies on or before 13 March 2020; 3. The Respondent is to give to the Tribunal and the other party, any written submissions and material in reply on or before 27 March 2020; 4. The Applicant is to give any reply to the Respondent's evidence and written submissions on or before 10 April 2020; 5. The proceedings are listed for hearing for three days from 27 April to 29 April 2020 commencing at 10 a.m. on 27 April 2020 at John Maddison Tower, Level 10, 86-90 Goulburn Street, Sydney; and 6. The parties have liberty to restore on the giving of three (3) days notice.

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: 19 December 2019