Victorian Building Law Reforms – New Domestic Building Dispute Resolution Regime

A guide for design professionals, building surveyors and insurers

The Building Legislation Amendment (Consumer Protection) Act 2015 (Vic) (Act) received Royal Assent on 19 April 2016. The Act amends the Building Act 1993 (Building Act), the Domestic Building Contracts Act 1995 (Vic) (DBCA) and the Victorian Civil and Administrative Tribunal Act 1998 (Vic) (VCAT Act) with effect from 1 July 2017.

Key amendments implemented by the Act include:

the implementation of a mandatory conciliation and arbitration process to be conducted by Domestic Building Dispute Resolution Victoria (DBDRV); increased building surveyor independence; greater regulation of owner-builders; reform to building practitioner registration and regulation; and the abolition of the Building Practitioners Board. The new DBCA dispute resolution provisions of interest to design professionals, building surveyors and professional indemnity insurers are summarised below.

1. Mandatory Conciliation Process

   The amendments require a "domestic building work dispute" to be referred to DBDRV for conciliation before the building owner or building practitioners involved can commence proceedings in VCAT.

   The Act creates a lack of symmetry between the types of disputes that are subject to the conciliation provisions and those that can be heard subsequently in VCAT. Section 53 of the DBCA grants jurisdiction to VCAT to hear "domestic building disputes". The Act creates a new definition ("domestic building work dispute") for the types of disputes that must be conciliated.

   (i) Drafting ambiguity – subject matter threshold

   A "domestic building work dispute", is defined as a dispute with the following two characteristics:

   Parties: The dispute must be between a building owner, and any one or more of the following: a builder, registered building practitioner, sub-contractor, or architect; and Subject matter: The dispute must relate to a domestic building contract or the carrying out of domestic building work, including any claims by owners in respect of defective or incomplete work and claims by builders for payment under a domestic building contract. Architects, building designers, engineers, subcontractors and building surveyors, are specifically identified as potential parties to a "domestic building work dispute". It is anomalous that design practitioners are named as potential parties, given that section 6 of the DBCA states that the DBCA does not apply to them. Further, since design practitioners, building surveyors and subcontractors do not enter into domestic building contracts, disputes involving those practitioners will not have a nexus with the subject matter requirement. Nevertheless, the prevailing view among domestic building lawyers is that the intention of the Act is that disputes involving design practitioners, building surveyors and subcontractors are to be subject to the mandatory conciliation provisions, but this issue will need to be decided by the Courts.

   (ii) Suitability of disputes for conciliation

   DBDRV must accept a...