Earlier this year, an adjoining owner made a complaint to the ARBV about their neighbours failing to obtain protection work insurance for building work being carried out on their property. The complaint arose after the adjoining owner alleged that damage was caused to their property by the building work and sought details of the protection work insurance from the property owners’ architect.
Section 93 of the Building Act 1993 requires that, before any protection work is commenced in respect of an adjoining property, an owner must ensure that a contract of insurance is in force, in accordance with the Building Act against:
- damage by the proposed protection work to the adjoining property; and
- any liabilities likely to be incurred to adjoining occupiers and members of the public during the carrying out of the building work and for a period of 12 months after that building work is completed.
The insurance must be entered into with an insurer for an amount agreed with the adjoining owner. If the owner and adjoining owner cannot agree on the insurer or amount, these are to be determined by the Building Appeals Board. A copy of the contract of insurance must be lodged with the adjoining owner before commencement of the protection work.
While the legal obligation to comply with the requirements under section 93 lies with the property owner, the ARBV investigated the conduct of the architect who was acting as agent for the property owner. The investigation focused on whether, by failing to advise their clients of the requirements under section 93, the architect may have acted unprofessionally or had otherwise fallen short of acceptable professional conduct standards.
Description of events
In November 2021, the RBS served a Determination That Protection Work is Required (Form 6) on the architect as agent for the property owner. The architect prepared a Protection Work Notice (Form 7) which detailed the proposed protection work. The complainant disagreed with the proposed protection work by serving the architect with a Protection Work Response Notice (Form 8).
The RBS reviewed the proposed protection work and issued a Notice of Determination (Form 9) setting out the RBS’ decision that the protection work proposed by the architect was appropriate. The complainant did not seek an appeal of the RBS’s decision.
In January 2022, the RBS issued the building permit for Stage One – Demolition & Site Establishment. The building work commenced in early 2022.
No protection work insurance was taken out by the architect’s clients.
When the complainant contacted the architect to complain about the water ingress, he advised them to make a claim against their home insurance.
The architect’s response
The architect admitted to the ARBV that they had been unaware of the protection work requirements under section 93 of the Building Act and, consequently, did not advise their clients about them. The architect explained that they had relied on the RBS to guide them in respect of the protection work process and that the RBS had not mentioned the need for the owners to take out protection work insurance before the building work commenced. He also stated that he had believed that the builder’s mandatory insurance would cover any issues relating to damage caused to an adjoining property during the building work.
The architect submitted to the ARBV that they had inquired among their professional network as to how many architects were aware of the requirements of section 93 and estimated that two-thirds of registered architects they spoke to were unaware of the requirements.
Investigation outcome
The ARBV noted that the role of section 93 is not insignificant. It creates a statutory obligation on the owner of a property to take out insurance to provide protection to adjoining owners and the public. Failure to have the required insurance in place meant that the adjoining owner was not able to claim directly against insurance for damage caused to their property by protection work and the property owners were not able to claim for liabilities to the adjoining owner that arose from the building work, leaving them exposed to potentially costly claims which they may not have the funds to meet (as well as exposing them to criminal liability and potentially significant financial penalties).
The ARBV was of the view that it is reasonable to expect that an architect, engaged to provide professional advice to their clients about their building projects and to act as their agent in respect of that project, should be aware of legal requirements relating to that building work.
While it appeared open to the ARBV to conclude that the architect’s conduct may have fallen within a ground for disciplinary action under the Act, the ARBV determined not to refer architect’s conduct to inquiry by the Architects Tribunal. This was because the architect, upon receiving a complaint from the adjoining owner, had proactively sought to educate themselves about the requirements of section 93 by seeking independent legal advice and advice from their insurer, and by ensuring that protection work insurance was in place for their next project where it was required. The ARBV was of the view that written advice to the architect under regulation 8 of the Architects Regulations 2015 was an appropriate response in the circumstances.
ARBV guidance
To help achieve compliance with section 93 of the Building Act within the profession, the ARBV has prepared a Guideline which sets out the insurance requirements under that section and the steps that must be taken by owners or others acting on their behalf.
Updated