Australia: How Bright Is The Green Star? Issues With The Green Building Council Of Australia´s Green Star Certification Agreement

Since its launch in 2002, the Green Star Certification scheme, which evaluates the environmental design and achievements of buildings, has proven its value in the property industry. However, despite its popularity there are a number of significant problems with the standard form Green Star Certification Agreement that are likely to create problems for applicants and the Green Building Council of Australia (GBCA), the administrator of the program.

The Green Building Council of Australia (GBCA) is a national, not-for-profit organisation that focuses on encouraging a sustainable property industry through the use of green building practices. It administers the Green Star Certification scheme, which was introduced to establish a common language regarding the environmental sensitivity and impact of buildings and a standard of measurement for green buildings. The value of the rating scheme and of obtaining a Green Star Certified Rating has become very clear to the property industry, with 49 buildings currently possessing certified ratings nationwide and a further 500 office projects registered for certification.

Despite the scheme's popularity, there are a number of significant problems with the standard form certification agreement issued by the GBCA which, considering the volume of imminent certifications, are likely to create problems for applicants and, ultimately, for the GBCA. These problems include:

1. The standard form certification agreement does not specify a timeframe within which the GBCA must award its rating. This means that the GBCA faces no pressure to complete the assessment expeditiously, and the process could conceivably drag on, particularly considering the volume of applications facing the GBCA.
2. The agreement contains a clause providing that if the GBCA determines that an applicant has delayed the process, and the rating is not awarded within 12 months of the GBCA assessor commencing the assessment, the GBCA is entitled to terminate the agreement. Therefore, an applicant faces an indeterminate wait for an assessment and the risk of termination of the agreement if the process takes longer than twelve months, and for any reason, the applicant delayed or can be seen to have delayed the process.
3. An applicant is only entitled to four enquiries regarding the application. Further enquiries carry a $100 fee (plus GST). Although limiting correspondence is likely to be facilitative for the GBCA and may result in more expeditious certifications, it is problematic to limit contact and the right to check on the process when the GBCA is not bound by any timeframe for the completion of the certification process.
4. The agreement stipulates that an applicant must obtain the consent of the GBCA prior to undertaking any dealings in relation to the property. It would seem unreasonable for the GBCA to impose a right of consent on an applicant in regard to a proposed transfer of ownership or commercial dealing in relation to a property when such action will not affect the fee payable to the GBCA, the environmental quality of the building, or the certification process. Such dealings are unlikely to have any effect on the GBCA, and the requirement to obtain GBCA consent has the capacity to delay and potentially prejudice commercial dealings over properties subject to assessment.
5. The GBCA is entitled to terminate the agreement in a large number of situations, many of which do not relate to the GBCA or the process of assessment. The rights to terminate the agreement appear unreasonable, particularly when the major fee payable to the GBCA for the assessment is made at the time of execution of the agreement. Considering that the GBCA carries very little risk, it appears unreasonable to create a substantial list of events giving rise to a right of termination for the GBCA.
6. If the applicant terminates for any reason at all, it loses its right to recover any and all fees paid to the GBCA. The agreement stipulates that if an applicant terminates the agreement, it must also cease using the Green Star trademark or advertising the rating of the building. This requirement seems illogical, as the Green Star certified rating and the right to use the trade mark do not accrue until the completion of the assessment. This would logically represent the completion of the contract, and at that point, the rating should be irrevocable. If termination occurs prior to the completion of the assessment, no entitlements would have accrued and there would be no need to stipulate the revocation of the right to use the trade mark or advertise the rating of the building.

The Green Star Certification process is an undeniably valuable process, with the capacity to affect the property industry and the attitude of developers and principals towards sustainable building practices and environmental building impact. As outlined above, the current standard form certification agreement drafted by the GBCA is problematic and carries a significant degree of risk for applicants. It is likely that, in time, these issues will be amended by the GBCA and the certification agreement will develop into a more evenly weighted document. In the meantime, obtaining professional advice and analysis of the agreement and consideration of its application to individual projects should help to navigate the certification agreement and the process.

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