The role of the Domestic Building Dispute Resolution Victoria (Part Three)

Challenges Facing the DBDRV:

  1. Some of the issues at the moment with the DBDRV:
    1. What role will lawyers have in the process?
    2. Are the written guidelines or procedures in place which influence how a decision is made clear enough.
    3. What is the effect of the non-compliance with s.46B?
    4. If the dispute involves a multi-unit development with multiple owners – can this be conciliated? For example, where a builder intends to offer to rectify leaking balconies and all owners (or the OC) are involved.
    5. Is a special resolution required (under s.18 OC Act) for claims by OC’s?
      1. The dispute may be suitable for conciliation even though it involves multiple parties, such as an architect or building surveyor and a builder and an owner. However only a builder and owner are subject to DR Orders etc.
      2. How is an agreement enforceable between the parties? If it is breached, that may lead to a DR Order or breach of DR Order, but that is not the same as enforcing the original agreement.
  • And if it is not enforceable, then releases (if given) will also be of no effect.
  1. A building surveyor is a building practitioner as defined in the Building Act, but is not listed on the DBDRV website as a possible respondent.
    1. Accordingly VCAT must refuse an application against a surveyor, but an owner cannot take them to DBDRV as the online application does not allow this.
  2. If a party has purported to terminate the building contract, will DBDRV order works to continue under that contract – and if so, what about renewing the warranty insurance, building permit etc?
    1. The DBDRV is unlikely to make any orders that are at odds with the parties’ legal position, but there seems to be no reason why the parties could not reach an agreement to resume the contract through conciliation (as they do now at VCAT).
  3. If assessor’s reports do not include an estimated cost to fix/complete, parties will be forced to obtain further evidence in VCAT hearings for damages etc.
  4. Assessor’s are required to notify VBA if they observe any breaches of the Building Act or Regulations.
    1. This will lead to the end of the handyman – as anyone carrying out work without being registered or licensed will be reported.
  5. A DR Order that a builder must pay money is only to be made where the work is so defective that it is not appropriate for a builder to complete or fix (s.49C(1)(c)).
  6. What about if the standard of work is OK but there is a complete breakdown in the relationship between the parties – will a DR Order be made requiring them to continue working together?
  7. Or what about the situation where plumbing work is required to be rectified.
    1. A builder cannot legally carry this out. Nor would it (usually) have to pay its own subcontractor plumber to rectify. And a DR Order cannot be addressed to a plumber.
    2. What are the appropriate orders?
  8. If a DR Order is appealed to VCAT, what role will DBDRV take in the appeal?
    1. It would be contrary to the intention of the scheme for it to leave it to the respondent to defend its decision, and so I expect it will participate much in the same way insurers do in an insurance appeal.
    2. The Tribunal will undoubtedly make orders joining all interested parties – in the same way it does in insurance matters.
  9. An appeal of a DR Order is on limited grounds only (s.63):
    1. The description in the DRO of the work that is defective or incomplete is incorrect; or
    2. The period specified in the DR Order for carrying out the rectification or completion work is not reasonable; or
  • A requirement in the DR Order to take a specific action or to refrain from taking action is not necessary or is not reasonable.
  1. It is yet to be seen how VCAT will interpret this section. Will it allow a full review of the merits of the decision? It seemingly has wide powers (at ss.4 and 5):
    1. It may make any order it considers fair
    2. It may vary any term of the contract (including the completion date, the contract price, a provisional sum or the amount to be paid for a prime cost item);
    3. Declare that a term of the contract is, or is not, void under section 132;
    4. Declare void any unjust term of the contract, or otherwise vary the domestic building contract to avoid injustice.
  2. How will VCAT treat a dispute?
    1. There is a discrepancy between it exercising its review jurisdiction in respect of an application from DBDRV and then exercising its original jurisdiction to hear evidence and make the orders set out above.
    2. A logical answer could be for it to join the owner/builder under s.60 VCAT Act as an interested party on the review proceeding and then to require a separate proceeding to be issued in its original jurisdiction in which multiple parties, apportionment defences, etc would be made.
  • The two proceedings would presumably be listed together to avoid duplication.
  1. However there is still the risk of contradictory findings – e.g. VCAT may find that a DR Order against a builder was correctly made, given the information it had at the time, but at the same time, in the original proceeding find that the builder owes no liability to an owner.
  1. And what of the costs consequences?
    1. Because DBDRV only applies to domestic building work disputes, it excludes single trades such as electricians, carpet layers, tilers, painters (as set out in the DBC Regulations).
    2. Claims against these still need to go to VCAT, whereas DBDRV would be ideal to resolve these. VCAT’s website has new application forms for such claims.
    3. How does s.56 compare with s.57A – does the word “court” in s.57A include VCAT? If so, may a party apply to VCAT without a conciliation certificate “with leave”?
    4. DBDRV is required to notify and consult with VMIA and the VBA. How will that work; what issues of privacy, confidentiality, etc.
    5. Payments out of the Trust Fund are reviewable (s.65) but the decision to pay is made by the Director of Consumer Affairs (s.49G). How will VCAT treat his/her role compared to the role of the CDRO of DBDRV?
  2. Time limits by s.45(3)(a) a domestic building work dispute must be referred to the CDRO within 10 years after the date of issue of the Building Permit, a Certificate of Final Inspection or the date of practical completion.
    1. The effect of this is that if a defect is noticed on the last day of the 10 year period, the referral to DBDRV must be made that same day.

 

 

 

Daniel Epstein of Counsel

 

By Daniel Epstein

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