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Domestic Building - Major Reforms

“The Victorian Government has embarked upon the most significant reforms of domestic building in Victoria since the Building Act of 1993 and the Domestic Building and Contracts Act of 1995. The reforms have commenced and will be progressively rolled out during 2014. The rationale behind the reforms was the view that consumer’s needs were not being adequately addressed by the existing legislative framework and the policies and procedures underpinning it.”

Background

The Victorian Government has introduced a strategy known as “Victorian Domestic Building Consumer Protection Reform Strategy”.

The strategy is intended to address, among other matters, the inadequacies of compulsory domestic building warranty insurance; to reform and minimise the costs associated with disputes; and to improve registration, disciplining and oversight of those engaged in the building industry including registered builders, surveyors etcetera.

VBA

Central to the reforms is a new body, VICTORIAN BUILDING AUTHORITY (VBA). The VBA was established in May 2013 and incorporates three previous regulatory bodies, The Building Commission, The Plumbing Industry Commission and The Architects Registration Board.

The changes include:
  • VBA Building Inspectors will be empowered to resolve building disputes between consumers and builders.
  • A party to a dispute (or the VBA itself) will now be able to authorise an inspector to attend a building site, inspect building works in dispute, and make recommendations as to rectification required, and importantly, may then, provide binding orders of rectification (what will be known as an RO).
  • Registration of building practitioners will also be tightened and only those builders who have demonstrated technical and financial capacity will be registered. Registration will be for five years and then it will be necessary for re-registration. Registration will also be expanded to include not only individuals, but partnerships and corporations.

Domestic Building Insurance

The present insurance arrangements have been long criticized. They provide limited protection for consumers as a building owner only had access to Builders Warranty Insurance where the builder was dead, had disappeared, or had become insolvent.

The new proposals will see the Warranty Insurance extended beyond “last resort” insurance to provide higher protection for consumers.
  • The insurance can now be triggered where a project is incomplete or where there is a defect and in circumstances where, as previously, the builder has died, disappeared or is insolvent.
  • Where the VBA has certified that an RO has not been complied with or that a contract has not been completed or where a builder is suspended or has become incapacitated.
  • The insurer will also be able to recover from a recalcitrant builder monies that they have had to pay out to consumers.
  • The maximum payout under insurance is to increase to $300,000.00 (previously $200,000.00).

VCAT

The intention of the reforms is to limit the number of building disputes finding their way to VCAT. Where they do however, the discretion to order costs against an unsuccessful party will be enhanced. Previously the discretion to award costs was sparingly applied and most parties were required to bear their own costs of proceedings before VCAT. It is now likely that a party will be obliged to pay a successful party’s costs where VCAT is satisfied that it was considered fair to do so.

In considering whether costs ought be ordered, VCAT will also consider the prior conduct of parties. Where a party, for example, has refused to participate in dispute resolution or otherwise has behaved badly, then greater the likelihood of costs being ordered. In a sense these matters mirror the Civil Procedure Act requirements that apply in Courts where parties and their advisers are obliged to certify that attempts have been made to resolve the dispute prior to the issue of proceedings.

Conclusion

The reforms will be undertaken progressively throughout 2014 as they will require changes to legislation and regulation.
 
 
Published April 2014


For further advice or assistance

Contact Peter Wilson on 5337 0252 or pwilson@nevetts.com.au

The information in this publication or on this website is of a general nature only. It is not, nor is it intended to be, legal advice. You should consult a lawyer for individual advice about your particular circumstances.
The information on this website is of a general nature only. It is not, nor is it intended to be, legal advice. You should consult a lawyer for individual advice about your particular circumstances. Nevett Ford do not warrant that information contained in links to third party sites are correct and accept no responsibility for the accuracy and reliability or any other matter in relation to a third party site.