Whether you’re a builder or you’ve engaged one to build your dream home, delays and supply cost increases have been a prominent feature of the domestic building landscape since 2020. As the flow-on effects continue to be felt in the industry (exacerbated by rising inflation) more and more people are turning to litigation to orchestrate an outcome on their building project. This article explains VCAT delays, the jurisdiction of various courts in relation to building disputes, and solutions for those seeking outcomes.
The Domestic Building Contracts Act Explained
All domestic building contracts in Victoria are subject to the Domestic Building Contracts Act 1995 (the DBCA). The DBCA governs matters such as warranties implied into domestic building contracts, the maximum amount a builder can charge as a deposit on a domestic building contract, and most importantly, how disputes can be resolved.
Section 57 of the DBCA provides that an action brought in the Supreme, County, or Magistrates Court which arises wholly or predominantly from a domestic building dispute must be stayed and transferred to VCAT, if VCAT could hear the matter and no oral evidence has been heard by the Court. The only prerequisite to filing an application in VCAT in relation to a domestic building dispute is that you first submit an application to Domestic Building Disputes Resolution Victoria (DBDRV) and attach the certificate issued by DBDRV to the VCAT application.
What is a Domestic Building Dispute?
The DBCA defines a domestic building dispute as a dispute arising between an owner of a property and a range of building contractors including builders, subcontractors, and architects about the following matters:
- An alleged breach of a statutory warranty contained at section 8 of the DBCA that domestic building work is to be carried out in a proper and workmanlike manner, be fit for purpose, be compliant with all relevant building regulations, and be carried out with due care and skill.
- An alleged failure to maintain the standard of quality of building work specified in a domestic building contract.
- An alleged failure to complete domestic building work.
- An alleged failure to complete domestic building within the time specified in a domestic building contract.
- An alleged failure to pay money for work performed under a domestic building contract.
Submitting to VCAT and Avoiding Delays
DBDRV is responsible for conducting conciliation conferences to have disputes resolved without recourse to litigation. If a conciliation is held and is unsuccessful, or DBDRV decides the matter is not suitable for conciliation, a certificate will be issued enabling an application to be made to VCAT.
There are currently significant delays in progressing a domestic building dispute matter through VCAT, so it is vital to get advice on the nature of your claim and the correct Court or Tribunal to commence proceedings in - this will minimise delays and costs.
Understanding VCAT for Domestic Building Disputes
One feature of VCAT that differentiates it from other Courts is that it doesn’t have what is called “inherent jurisdiction”. It’s a creation of the Victorian Civil and Administrative Tribunal Act 1998 and only has jurisdiction over the areas that the Victorian Parliament explicitly delegates to it. One of those areas is domestic building disputes .
When to Seek Advice from Building Dispute Lawyers
Your matter might seem straightforward enough. Let’s say you have a dispute with a builder over alleged defects in your ensuite bathroom. You have a dispute that must be heard by VCAT, right? While this is generally true, the complicating factor is VCAT’s lack of inherent jurisdiction referred to above.
Back to the ensuite. The builder is blaming the tiler and plumber that were subcontracted to do the work. This situation usually gives rise to the builder claiming a contribution from the other parties and seeking to have them joined to the proceedings. This means the builder says that if they’re found to be liable for the claim, then the tiler and plumber should be required to pay some or all of the damages because they’re ultimately responsible for the defective work. The issue is that these sorts of claims are covered by a separate act in Victoria called the Wrongs Act 1958 and you can probably see where this is going – VCAT doesn’t have jurisdiction to hear claims that are brought under this legislation!
This position was articulated by VCAT in the recent case of Vaughan Constructions Pty Ltd v Melbourne Water Corporation (Building and Property) VCAT 233. This decision poses issues for owners bringing a claim against a builder because it will be the builder’s decision whether or not they seek to join another party and seek a contribution from them. This is why a building dispute lawyer's advice on your claim is important, because these factors can be considered and the relevant Court or Tribunal selected to minimise delays and wasted costs.
Navigating VCAT Delays and Jurisdiction for Building Disputes
Another limitation of VCAT’s jurisdiction was imposed by the case of Thurin v Krongold Constructions [2022] VSCA 226. The Court found that if a matter involves claims or defences that rely on federal legislation, then VCAT does not have jurisdiction and must transfer the matter to the relevant Court. This is important because it’s not uncommon for parties (property owners especially) to rely on the Australian Consumer Law when making a claim. An important note here is that the decision to transfer a matter from VCAT to a Court can be made up until oral evidence is heard. This is usually at the hearing of the matter and very close to its conclusion. To avoid delays and wasted costs, it’s vital to get advice from a building dispute lawyer on where to pursue your claim.
These recent decisions, along with the delays in VCAT’s administrative processes, have caused some parties to file their claims with a Court in the first instance. This course of action can be fruitful. In the cases of Uber Builders and Developers Pty Ltd v MIFA Lty Ltd [2021] VCC 1677 and Impresa Construction Pty Ltd v Oxford Building Group Pty Ltd [2021] VCC 1146, it was determined that due to the extensive delays in VCAT, a matter that would normally be heard under the DBCA could be dealt with by the County Court. These decisions were based on the circumstances in VCAT at the time (2021) and they may not be binding as of today’s date, but they have not been explicitly overturned yet.
Talk to a Building Dispute Lawyer About Your Project
If all this sounds as clear as mud, and the equivalent of a lawyer responding to your simple-sounding question with the timeless, “Well, it depends…”, then you’re an astute reader. Get in touch with one of our experienced building dispute lawyers if you’re having issues in the domestic building space and we can give you some more concrete advice on how to get your house finished or your invoices paid sooner.
Kathryn Finemore
Director
0421 209 108
kathryn.finemore@thebluerock.com.au
Tom Adamson
Lawyer
0447 859 007
tom.adamson@thebluerock.com.au
Disclaimer: This article is general commentary on a topical issue and does not constitute legal advice. If you are concerned about any topics covered in this article, we recommend that you seek legal advice.
