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29 May 2017

New Building Dispute Resolution Scheme for Victoria

Victorian architects should be aware of a new dispute resolution scheme which will affect them if they are involved in a domestic building dispute with their owner clients.

Domestic Building Dispute Resolution Victoria (DBDRV)

On 26 April 2017, Domestic Building Dispute Resolution Victoria (DBDRV) was established to be the first port of call for the resolution of domestic building disputes involving owners.

Except if a party is seeking an injunction, no proceedings can be issued at the Victorian Civil and Administrative Tribunal (VCAT) or in a court for a domestic building work dispute involving an owner unless a “certificate of conciliation” has been issued by the DBDRV.

Any party can refer a dispute involving the carrying out domestic building work or involving a domestic building contract to DBDRV but one of the parties must be the owner. All such disputes must be referred to the DBDRV before a party can ask the Victorian Civil and Administrative Tribunal (VCAT) to consider a dispute. Whilst design work by an architect is not domestic building work to which other provisions of the Domestic Building Contracts Act apply, disputes between an owner client and an architect over design work relating to domestic building work as well as disputes about project management or administration of domestic building contracts will be ‘domestic building disputes’ and are captured under the new dispute resolution scheme.

Before asking the DBDRV to consider a dispute, it is assumed the party will have already taken reasonable steps to resolve the dispute and the application can be rejected if this has not occurred. The application can also be rejected on other grounds, including that there is no reasonable likelihood of the dispute being settled (maybe because of the complexity of the dispute) or because the application is frivolous, lacking in substance, vexatious or not made in good faith.

If the DBDRV does not accept a dispute, it must give reasons for rejecting the application and a certificate of conciliation is issued – which allows the parties to apply to VCAT to resolve the dispute if they wish.

DBDRV Conciliation Process

If an application is accepted by the DBDRV, it is referred to conciliation. The conciliation conference can be conducted in person on site or elsewhere, by telephone or by other electronic communication or a combination of methods.

If the dispute is resolved by conciliation, a written record of the agreement will be made and, if a party fails to comply with the agreement, the other party may notify the DBDRV and the agreement may be cancelled.

If the dispute is not resolved by conciliation, the DBDRV is to give notice to each party of the reasons why the dispute was not resolved and, following an opportunity by the parties to make submissions about the reasons, a certificate of conciliation will be issued and then the parties can apply to VCAT to resolve the dispute if they wish.

Assessors

An architect, a registered building practitioner or other prescribed person can be appointed as an assessor during conciliation or after conciliation if the dispute has not resolved, to determine if domestic building work is defective or incomplete and the number of days required to rectify or complete the work.

If the assessor prepares a report, a copy is given to each party and a party has a short time in which to make submissions in relation to the report.

If the assessor is of the opinion that there have been contraventions of building laws, the assessor must say so in the report and provide a copy of the report to the VBA, which may refer the alleged contraventions to the relevant council and the building surveyor. Also, the assessor’s report can be relied upon in subsequent legal proceedings.

Dispute Resolution Orders

Where a dispute is referred to conciliation but does not resolve, the DBDRV can issue a dispute resolution order.

A dispute resolution order may require the builder to rectify defective work or damage or complete the work (and specify a reasonable period for this to occur), the payment of money by an owner to the builder or a trust fund, require the owner to do or not do something or require the builder to pay the cost of building work to be carried out by another builder.

A failure by a building practitioner to comply with a dispute resolution order is a ground for disciplinary action and can result in the DBDRV issuing a breach of dispute resolution order. If a breach of dispute resolution notice is issued, the party not in breach can terminate a domestic building contract.

An application to VCAT can be made if a party wishes to seek a review of a dispute resolution order or a breach of a dispute resolution order. However, there are strict time requirements that must be complied with. Costs may be awarded against an unsuccessful applicant seeking a review at VCAT of a dispute resolution order or a party who wishes to withdraws an application to VCAT seeking a review of a dispute resolution order, unless it would be unfair to do so.

Conclusion

It is important that all building practitioners, including architects, who engage directly with owners be familiar with this new dispute resolution scheme.

If you become a party to a DBDRV application, there are tight timelines during which you can provide information or respond to notices and reports. As the process can lead to non-consensual binding outcomes and disciplinary proceedings, it is important that you engage in the process in a timely and fulsome manner.

Author

Nicole Feeney, Special Counsel

Lander & Rogers

Victorian architects should be aware of a new dispute resolution scheme which will affect them if they are involved in a domestic building dispute with their owner clients.

Domestic Building Dispute Resolution Victoria (DBDRV)

On 26 April 2017, Domestic Building Dispute Resolution Victoria (DBDRV) was established to be the first port of call for the resolution of domestic building disputes involving owners.

Except if a party is seeking an injunction, no proceedings can be issued at the Victorian Civil and Administrative Tribunal (VCAT) or in a court for a domestic building work dispute involving an owner unless a “certificate of conciliation” has been issued by the DBDRV.

Any party can refer a dispute involving the carrying out domestic building work or involving a domestic building contract to DBDRV but one of the parties must be the owner. All such disputes must be referred to the DBDRV before a party can ask the Victorian Civil and Administrative Tribunal (VCAT) to consider a dispute. Whilst design work by an architect is not domestic building work to which other provisions of the Domestic Building Contracts Act apply, disputes between an owner client and an architect over design work relating to domestic building work as well as disputes about project management or administration of domestic building contracts will be ‘domestic building disputes’ and are captured under the new dispute resolution scheme.

Before asking the DBDRV to consider a dispute, it is assumed the party will have already taken reasonable steps to resolve the dispute and the application can be rejected if this has not occurred. The application can also be rejected on other grounds, including that there is no reasonable likelihood of the dispute being settled (maybe because of the complexity of the dispute) or because the application is frivolous, lacking in substance, vexatious or not made in good faith.

If the DBDRV does not accept a dispute, it must give reasons for rejecting the application and a certificate of conciliation is issued – which allows the parties to apply to VCAT to resolve the dispute if they wish.

DBDRV Conciliation Process

If an application is accepted by the DBDRV, it is referred to conciliation. The conciliation conference can be conducted in person on site or elsewhere, by telephone or by other electronic communication or a combination of methods.

If the dispute is resolved by conciliation, a written record of the agreement will be made and, if a party fails to comply with the agreement, the other party may notify the DBDRV and the agreement may be cancelled.

If the dispute is not resolved by conciliation, the DBDRV is to give notice to each party of the reasons why the dispute was not resolved and, following an opportunity by the parties to make submissions about the reasons, a certificate of conciliation will be issued and then the parties can apply to VCAT to resolve the dispute if they wish.

Assessors

An architect, a registered building practitioner or other prescribed person can be appointed as an assessor during conciliation or after conciliation if the dispute has not resolved, to determine if domestic building work is defective or incomplete and the number of days required to rectify or complete the work.

If the assessor prepares a report, a copy is given to each party and a party has a short time in which to make submissions in relation to the report.

If the assessor is of the opinion that there have been contraventions of building laws, the assessor must say so in the report and provide a copy of the report to the VBA, which may refer the alleged contraventions to the relevant council and the building surveyor. Also, the assessor’s report can be relied upon in subsequent legal proceedings.

Dispute Resolution Orders

Where a dispute is referred to conciliation but does not resolve, the DBDRV can issue a dispute resolution order.

A dispute resolution order may require the builder to rectify defective work or damage or complete the work (and specify a reasonable period for this to occur), the payment of money by an owner to the builder or a trust fund, require the owner to do or not do something or require the builder to pay the cost of building work to be carried out by another builder.

A failure by a building practitioner to comply with a dispute resolution order is a ground for disciplinary action and can result in the DBDRV issuing a breach of dispute resolution order. If a breach of dispute resolution notice is issued, the party not in breach can terminate a domestic building contract.

An application to VCAT can be made if a party wishes to seek a review of a dispute resolution order or a breach of a dispute resolution order. However, there are strict time requirements that must be complied with. Costs may be awarded against an unsuccessful applicant seeking a review at VCAT of a dispute resolution order or a party who wishes to withdraws an application to VCAT seeking a review of a dispute resolution order, unless it would be unfair to do so.

Conclusion

It is important that all building practitioners, including architects, who engage directly with owners be familiar with this new dispute resolution scheme.

If you become a party to a DBDRV application, there are tight timelines during which you can provide information or respond to notices and reports. As the process can lead to non-consensual binding outcomes and disciplinary proceedings, it is important that you engage in the process in a timely and fulsome manner.

Author
Nicole Feeney, Special Counsel
Lander & Rogers

Further information

All information in this article is of a general nature only and is not intended to be relied upon as, nor to be a substitute for, specific legal professional advice. No responsibility for the loss occasioned to any person acting on or refraining from action as a result of the publication of this article can be accepted.