Owner-builders require the Building Practitioners Board’s consent. Permits are issued by building surveyors, who inspect work and issue the occupancy certificate. Architects are useful for planning. The Bushfire Building Standard applies in bushfire-prone areas. Building contracts imply warranties over the quality of workmanship and materials. Limits exist on progress payments. Home warranty insurance offers limited cover. Check your builder has public liability insurance. Definitions vary for the finish date or completion of works. Wrongfully terminating a contract may make the consumer liable for damages to the builder. The Building Advice and Conciliation Service Victoria can help with complaints about builders. The Domestic Building List of VCAT hears disputes and may require compulsory conferences. VCAT may award costs.

Contributor

Mark Attard

Partner, Clyde & Co.

Building disputes

Last updated

1 July 2020

Avoiding disputes

Avoid disputes by being actively involved in your project. Take independent advice where necessary and always seek a second opinion from a qualified professional. Stay informed, ask questions and maintain good communications with your builder.

The building process is inherently difficult, and things will go wrong; do not escalate disputes and be prepared to compromise. Keep a realistic perspective on issues as they arise. Quarrelling with the builder over minor items is counterproductive. Remember you and the builder are committed to each other until the end of the project and disputes may sour the relationship. Even if you have a good relationship with your builder, do not get complacent and do not stray from the requirements of the contract.

Building disputes can be time-consuming and very costly. Often consumers find that the money they have spent on legal proceedings would have been better spent repairing defects.

Resolving disputes

First, attempt to resolve your dispute with the builder. If this does not bring satisfaction, refer your complaint to the Domestic Building Dispute Resolution Victoria (DBDRV) (see ‘Where to get help’ at the end of this chapter). Litigation is a last resort. If litigation is necessary, ensure that your lawyer provides you with an estimate of likely legal costs so that you can decide whether to proceed with the dispute or simply repair the defects yourself.

VCAT’s Building and Property List has jurisdiction to hear disputes arising from domestic building works (see ‘VCAT’s Building and Property List’, below).

Since 4 July 2016, a building surveyor or the VBA can issue a builder, including an owner–builder, a direction to fix building works. A copy of these directions must be sent to the owner. It is an offence for a builder to fail to comply with a direction to fix building works.

Since 1 September 2016, the VBA’s powers to discipline builders and building practitioners have been expanded with a new system of ‘show cause’ notices. These may be issued following a consumer complaint. A show cause notice may not necessarily address the consumer’s concern about the work and may distract a builder from completing the work and repairing defects.

Domestic Building Dispute Resolution Victoria

The Domestic Building Dispute Resolution Victoria (DBDRV) is an independent Victorian Government agency that assists home owners to resolve disputes with their builders. It is a free service. Since 24 April 2017, all domestic building disputes have had to be lodged with the DBDRV first, before parties can proceed to VCAT.

Home owners need to take reasonable steps to try to resolve the dispute directly with their builder before the DBDRV will accept the dispute.

Once an application is received by the DBDRV, a dispute resolution officer talks to each party and assesses whether the dispute is suitable for conciliation. Section 45C of the DBC Act sets out the assessment criteria that a dispute resolution officer uses to assess whether an application should be accepted or rejected.

The DBDRV may organise an independent building expert to carry out a building assessment to determine whether or not domestic building work is defective or incomplete.

If the parties are unable to resolve their dispute at the DBDRV conciliation conference, the chief dispute resolution officer may issue the parties with a certificate indicating that the dispute is not resolved. Either party can then apply to VCAT to make a ruling about the dispute.

The DBDRV is a heavily engaged service and consumers should anticipate delays in the processing of their disputes.

VCAT’s Building and Property List

VCAT’s Building and Property List has exclusive and monetary jurisdiction to hear and determine all domestic building disputes, including home warranty insurance claims. Before VCAT can hear a dispute, an application must be filed with the VCAT registrar, with the appropriate fee. 

Applicants should be prepared. You should know what is wrong with your building, how it is to be repaired, and the repair costs. All this information should be supported with written reports and quotations.

For more information, see VCAT’s website (www.vcat.vic.gov.au). 

Mediation

The VCAT registrar may first refer a matter to mediation, where a qualified, independent mediator helps the parties resolve their dispute. If mediation is successful, the mediator notifies VCAT. If mediation is unsuccessful in smaller matters (where the dispute is for no more than $10 000), the VCAT hearing proceeds immediately.

Directions hearing

Where mediation is unsuccessful in matters involving more than $10 000, a directions hearing is held (on the same day as the mediation, if possible). More complex disputes are referred to a directions hearing. At a directions hearing, a VCAT member sets out the steps that parties must take before a dispute is heard by VCAT.

Compulsory conference

VCAT, or the principal registrar, may also require the parties to attend one or more compulsory conferences before the proceeding is heard by VCAT. The aim of a compulsory conference is to:

  • identify and clarify the issues in dispute;
  • promote settlement;
  • identify questions of fact and law; and
  • allow directions to be given concerning the conduct of the proceeding.

VCAT’s powers

VCAT can make any order it considers fair, including:

  • ordering the payment of money, including money owing, damages or restitution;
  • varying a term of a domestic building contract;
  • declaring a term of a domestic building contract is or is not void, or varying a contract to avoid injustice (note, s 14 DBC Act states that arbitration clauses in domestic building contracts are void);
  • ordering the refund of money paid under a domestic building contract; and
  • ordering rectification of defective building work or completion of incomplete work.

VCAT can:

  • award costs (s 109 Victorian Civil and Administrative Tribunal Act 1998 (Vic));
  • refer questions of law to the Trial Division of the Supreme Court or the Court of Appeal (s 148);
  • grant leave to parties to be legally represented.
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