Owners Corporation 1 Plan No PS543073S and Ors v Eastrise Constructions Pty Ltd [2019] VCAT 1639
In Owners Corporation 1 Plan No PS543073S & ors v Eastrise Constructions Pty Ltd [2019] VCAT 1639 (Eastrise), the Victorian Civil and Administrative Tribunal (VCAT) has handed down an important decision in the context of expiring actions against builders pursuant to the Building Act 1995 (Vic) (Building Act).
Legislative framework
Firstly, an important refresher of the processes regarding “domestic building disputes” (between a building owner and a builder/architect/subcontract):
In 2017, following amendments to the Domestic Building Contracts Act 1995 (Vic) (DBC Act), Domestic Building Dispute Resolution Victoria (DBDRV) was introduced to provide a dispute resolution service for domestic building disputes.
The DBDRV is governed by the DBC Act, which contains the following relevant provisions:
section 57: VCAT is chiefly responsible for resolving domestic building disputes (proceedings commenced in other jurisdictions must be “stayed” on application by a party); and
section 56: a party to a domestic building dispute must not make an application to VCAT in relation to the dispute unless a certificate of conciliation has been issued by DBDRV (requiring an application to be made).
Importantly in the context of Eastrise, section 134 of the Building Act provides that a building action cannot be brought more than 10 years after the date of issue of an occupancy permit.[1]
While the DBDRV aims to assist in resolving domestic building disputes at an early stage, unfortunately, in practice it often causes significant delay in hearing disputes inevitably bound to proceed to VCAT. It is no secret that the DBDRV is under resourced with a large backlog of applications.
The lesson from Eastrise is that if a proceeding is not bought promptly in VCAT, that delay may be more costly than initially thought.
Eastrise
In Eastrise, the builder constructed an apartment building in or about June 2008. In May 2018, an application on behalf of the owners was made to the DBDRV (which was followed by individual applications by each apartment owner in August 2018) and, subsequently, certificates of conciliation were issued by DBDRV entitling the apartment owners to commence VCAT proceedings (see section 56 of the DBC Act).
It was not until March 2019 that proceedings were commenced in VCAT.
After commencement of the proceeding, the builder made an application for orders that the apartment owners’ claims be “summarily dismissed as misconceived” pursuant to section 75 of the Victorian Civil and Administrative Tribunal Act 1998 (Vic). The premise for the application was that a “building action” had not been commenced within the 10-year limitation period, and the claims were statute barred.
The apartment owners opposed the application and asserted, among other things, that an application to the DBDRV should be regarded as the commencement of a “building action” (particularly as it is a mandatory step before proceedings can be commenced in VCAT).
Ultimately, Deputy President Aird agreed with the builder and held that an application to DBDRV could not amount to the commencement of building action having regard to the relevant definition at section 129 of the Building Act: “…a building action means an action … for damages for loss or damage arising our of or concerning defective building work.”
Aird DP set out the principles and powers of the DBDRV, noting that the DBDRV’s primary role is conciliation and does not determine parties’ legal rights. For those reasons, Aird DP held that an application to the DBDRV was not a claim for damages for loss or damage.
Importantly, while VCAT has the power to allow a party to commence a proceeding without a certificate of conciliation from the DBDRV (section 57A(1)(b) of the DBC Act), Aird DP confirmed that VCAT has taken the view that where an application is lodged shortly prior to the expiration of the limitation period, it is appropriate that VCAT accept the application pending receipt of a certificate of conciliation. In practice, the proceeding in VCAT is stayed (postponed) pending a certificate of conciliation from the DBDRV and the claimant’s cause of action is preserved.
In short, lodging an application with the DBDRV will not preserve an owner’s cause of action against a builder and VCAT will be prepared to simply stay a proceeding commenced without a certificate of conciliation until the dispute has run its course with the DBDRV.
If you require advice or for more information related to building and construction law, please contact:
Ben Broadhead
Principal Lawyer
T 03 5226 8549
E bbroadhead@ha.legal
Zac Griffiths
Associate
T 5225 5229
E zgriffiths@ha.legal
[1] For discussion on this particular provision, see Brirek Industries Pty Ltd v McKenzie Group Consulting (Vic) Pty Ltd [2014] VSCA 165.
