Domestic Building Disputes

Both homeowners and builders need to be aware of their rights and obligations when carrying out domestic building works.

There are many sources of those rights and obligations, and they will vary depending on the particular contract used. The Domestic Building Contracts Act 1995 provides the framework for those rights and obligations and simply cannot be ignored during any domestic building dispute.

What is domestic building work?

Domestic building work is work related to the construction, renovation or improvement of a residential premises, or part of a commercial or industrial premises that is used as a permanent residential premises.

It includes associated work such as preparation of plans and specifications (except for design work carried out by a practitioner registered under the Building Act 1993), landscaping, internal fit-out (ie, lighting, heating and cooling), demolition and site work.

Domestic building work excludes relating to:

• farm buildings;
• buildings used only for business purposes;
• buildings used to accommodate animals; and
• transporting building between sites.

What laws apply?

Domestic building work is regulated by legislation and common law.

Legislation:

The primary legislation dealing domestic building work is: 

Domestic Building Contracts Act (Vic) 1995 (the ‘DBCA’)

The DBCA is a state law that regulates contracts for carrying out domestic building work. The DBCA imposes requirements and limitations on builders with respect to matters that must be contained in a contract covering the domestic building work the builder will perform for the home owner.

The DBCA also prescribes certain warranties that apply in relation to the work performed, rights of termination and provides framework for resolution of domestic building disputes.

The DBCA requires that all major domestic building works (greater than $10,000) must be subject to a written contract.

Building Act (Vic) 1993 (the ‘BA’)

The BA provides the framework for regulation of the broader building industry and building industry practitioners. The BA’s objectives are to protect the safety and health of people who use buildings and public entertainment places. The BA does this by establishing:

• regimes to regulate the qualification and licensing registration of building practitioners;
• regimes to regulate compliance standards for the delivery and inspection of building and plumbing works; and
• regimes to facilitate costs effective and environmentally efficient construction and maintenance of buildings.

The BA requires that a ‘certificate of occupancy’ be issued in respect of domestic building work. The certificate of occupancy means the domestic building work is considered compliant with laws and suitable for residing in.

Common law

Common law is the body of law that is developed by and applied by the courts. Common law requires an application of legal precedents and principles to a particular set of facts.

Domestic building work is typically performed under a contract and is therefore subject to the common law. A contract is a written agreement between the home owner and the builder that sets out each parties’ respective rights and obligations with respect to the building works. The contract will determine, amongst other things,  what works the builder is required to deliver, the time in which those works must be performed, the standard to which the works must be performed, the price which is to be paid (and when) the method for varying that price and the builder’s ongoing obligations in relation to the works.

When can I commence a dispute?

If a builder is in breach of its written contract, or a provision of the legislation, an owner may have cause to pursue the builder for and losses that flow from the breach.  Typically, such claims relate to building defects.

In limited circumstances, an owner may also pursue a builder’s sub-contractor in relation to building defects.

In broad terms, to be compensated for any ‘loss’ an owner alleges to have suffered from a breach of contract, the law requires that there be a connection between the action (or inaction) of the builder and the loss or damage that has resulted from that conduct. In other words, the builder must have caused the loss.

Proving this causal connection, and loss, requires expert evidence from a suitably experienced and qualified person who can provide an opinion to support the application of the law to the facts. Expert evidence is an important part of assessing whether you have a legal claim that can be pursued or defended, as the case may be.

The DBCA requires that domestic building disputes must be commenced within 10 years, usually from when a certificate of occupancy or final inspection is issued. The applicable limitation period depends how, when and whether or not completion of the domestic building work has been certified, or otherwise determined under the DBCA.

What are my options to resolve a dispute?

Disputes arising in the domestic building industry, are unfortunately quite common place. As a result, specific forums have been established who have the legal authority to hear and resolve disputes concerning domestic building work. This referred to as ‘jurisdiction’.

Parties to a domestic building dispute are generally required to take ‘reasonable steps’ to resolve a dispute directly, prior to commencing formal dispute processes (ie, litigation).

Most disputes commence with a party alleging an infringement of their legal rights issuing a written demand on the other party. Where a breach of contract is alleged, the other party is usually entitled a period to remedy the alleged breach. If the dispute remains unresolved and the aggrieved party still wishes to pursue the domestic building dispute, the following jurisdictional steps apply.

Domestic Building Disputes Resolution Victoria (DBDRV).

A ‘domestic building dispute’ commences under the DBCA with a referral to the DBDRV. The DBDRV makes an initial assessment of how the dispute should proceed.  The DBDRV aims to resolve disputes between the parties by a process called ‘conciliation’.  Conciliation involves a DBDRV appointed officer and independent experts (‘assessors’) working directly with the parties to resolve the dispute.

Disputes that cannot be resolved through conciliation are referred to VCAT. The DBDRV may in some circumstances by-pass conciliation and refer the matter directly to VCAT.

The DBDRV contains useful guidance material to assist with understanding the DBDRV process https://www.dbdrv.vic.gov.au/

Victorian Civil and Administrative Tribunal (VCAT)

VCAT proceedings are the first step in formal dispute proceedings (litigation).  A VCAT matter commences with filing an application that sets out the basis of your claim against the builder and the supporting documentation that establishes your claim.  An application fee must be paid.

Parties may be required to attend mediation or compulsory conference to seek to reach agreement. Disputes that remain unresolved, proceed to a hearing at which a VCAT ‘member’ will hear your case and make a determination concerning the dispute. In some cases, interim hearings may be required at which dates will be set for the parties to exchange documents or resolve specific issues. These interim processes are designed to assist with efficient handling of the dispute.

The outcome of the final hearing is binding on the parties. In circumstances where VCAT makes an error in the way it applied the law, an appeal to a court for a review of the decision may be possible. A party seeking review of the VCAT decision is required to ‘seek leave’ of the court, that is, the court’s permission to hear the case is required.

The litigation process is multi-faceted, complex and beyond the scope of this information.

Do I need a lawyer?

The domestic building dispute process is designed to be simple,  cost effective and can be suitable for self-representation.

The DBDRV process is an informal one, and applications can be commenced directly through the DBDRV website.

Similarly, the VCAT process is also intended to be simple and cost effective. In some instances, legal representation is not permitted. Legal representation at VCAT is permitted for more complex and costly matters, but requires the permission of VACT. The other party should be notified where legal representation is proposed.

Notwithstanding that DBDRV and VCAT are designed for self-representation, we recommend seeking assistance from a lawyer if you are unfamiliar with, or do not understand procedural requirements or the risks involved with the DBDRV or VCAT dispute resolution process. An experienced lawyer can assist you with preparing your case, including procuring the best expert evidence, in a way which increases your prospects of a successful outcome.

Court processes are altogether different. Court rules and procedures are formal, complex, time bound and the consequences for non-compliance can be significant and costly. We strongly recommend engaging legal representation when contemplating commencing any litigation process in any court jurisdiction.