When do lawmakers give an investor a second chance? | In Principle

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When do lawmakers give an investor a second chance?

Before the first contractors appear on the construction site, the investor must comply with many formalities, including obtaining a building permit. But what if the documentation filed with the construction authorities proves incomplete or does not comply with the regulations? Does this necessarily bar completion of the project?

The Supreme Administrative Court of Poland wrestled with these doubts recently in a judgment issued on 9 October 2019 (case no. II OSK 2878/19). The case involved the following facts:

In May 2018 the investor obtained a building permit from the Mayor of Kraków for construction of a complex of five single-family residential buildings (duplex units), with internal installations and internal roads, with the project to be carried out in five phases. In the proceeding it was found that the planned venture complied with the applicable regulations, including the local zoning plan.

Soon after that, the Małopolska province governor, as the authority of second instance, overturned the decision and remanded the case to the Mayor of Kraków for reconsideration. Hearing the appeal, the province governor concluded that the designer had improperly calculated the construction density, ignoring the total area of the attic level in four buildings. Due to this error, the first-instance authority had incorrectly found that this factor did not exceed the permissible value in the zoning plan, which in the province governor’s view resulted from inadequate analysis of the evidence by the mayor’s office. Moreover, in the view of the appellate authority, the construction design violated the regulations on scope and form (Regulation of the Minister of Transport, Construction and Maritime Economy of 25 April 2012 on the Detailed Scope and Form of Construction Designs).

The appellant objected to this, arguing that in such situation the authority should deny the construction permit and not simply set aside the decision issuing the permit. In the appellant’s view, it is erroneous to remand the case for reconsideration when the investor submitted a construction design inconsistent with the conditions for construction.

But this view was rejected by the Province Administrative Court in Kraków and by the Supreme Administrative Court.

Both of the courts held that the irregularities found by the province governor demonstrated that the local authority did not conduct a sufficiently thorough procedure. This made it necessary to re-examine the evidence gathered by the mayor and, if infringements were found, to summon the investor to cure them. Only the investor’s failure to cure the defects within the designated period could provide grounds for issuing a decision denying the building permit.

The position of Supreme Administrative Court should be viewed as correct under the Construction Law of 7 July 1994. Under Art. 35(3) of the law, if infringements are found, the authority should issue an order requiring the applicant to fix the irregularities and setting a period for compliance with the order. If that deadline is not met, i.e. if the investor does not act, then the authority should issue a decision refusing to approve the project and issue a building permit.

Under the facts presented in this case, the documents submitted by the investor violated the Construction Law, but were complete—as the defects involved issues of substantive law. The situation is different if the investor’s application is incomplete in procedural respects, for example if it lacks certain enclosures or the applicant’s signature. Then the authority must summon the investor to supplement the application under Art. 64 §2 of the Administrative Procedure Code (commentary on Art. 35 in R. Dziwiński & P. Ziemski, Construction Law: Commentary, Warsaw 2005).

Regardless of the circumstances, lawmakers allow the investor to cure the defects within a reasonable time and not suffer further consequences from such oversights. As a matter of principle, it is the task of the public administrative authorities to cooperate with citizens and act in furtherance of their individual interests, which often proves necessary in the meanderings of construction law.

Paulina Wojtkowska, Dispute Resolution & Arbitration practice, Wardyński & Partners