building

New law. You could go to jail for building without a building permit.

Prior to 24 May 2017, if you build or make renovations to a property without the required building permits, you could be fined or asked to replace/demolish the building/addition, or both.

From 24 May 2017, section 16B of the Building Act (1993) has been amended to include new penalties.

Now, anyone who is in the business of building [including architects, landowners and builders] connected to a project the value of which exceeds the prescribed amount and that has no building permit, can face up to 5 years of jail, or fines of up to $93,000.

A company associated with an illegal renovation [including demolition] can be fined up to $466,000.

This amendment applies to any type of construction or alteration that requires a building permit to be obtained – which generally includes any major structural alteration, or a range of small jobs including adding a window, moving a wall, adding a pergola etc.

Implications for Landowners

A landowner is specifically prohibited from permitting building work to be done on their land without a building permit and/or in breach of the Act, the Regulations or the permit.

It is a defence for the land owner if a building practitioner or architect has been engaged to carry out the building work.

The penalties of this amendment of this law will not apply to projects completed before 24 May 2017 – but you could still be subject to prosecution. If you need assistance in this area, we can help you.

Implications for Builders and other professionals

Building practitioners and architects are specifically prohibited from carrying out building work without a building permit and/or in breach of the Act, the Regulations or the permit.

When engaged to carry out building work, building practitioners and architects must ensure that a building permit has been issued and is in force for that building work, and that the work complies with the Act, the regulations and the permit.

For more details – contact us, or click here for a fact sheet.

Expert evidence – in building disputes

The following is the link to the VCAT Practice Note which sets out the requirements for expert evidence.
file:///C:/Users/RJH/Downloads/practice_note_vcat_2_expert_evidence-effective_1_october_2014_0.pdf
We recommend that every Owner undertaking building works (unless they are a qualified experienced builder or similar) engage someone with experience to act as “certifier” or “building consultant” to assure them, the Owner, that their builder’s work is in accordance with the contract, the plans and the specifications and the prior agreed and signed variations (“the contract documents”).
Many experienced people sign contracts without actually reading them – after all the contract documents are “standard” contracts – and often a builder will say – it’s a “standard contract” to help the Owners decide to sign it.
If you are an owner and you suspect or you know your builder has not built the house in accordance with the contract, the plans and the specifications, or has made alterations without getting signed variations beforehand you need to obtain expert help so you know what to do next.  The first thing is to arrange a building consultant who is worth hiring and get a report that complies with the VCAT Practice Note.
Apart from the above, for the Owner there at least 3 reasons why you engage an expert to assist you in assessing the building works carried out by any builder.
Some of the larger building companies suggest that their owners engage a building consultant to assist the owner (its good marketing and it shows the builder has nothing to hide.)
First and in most cases, the most important thing is if you are not a builder you would not know whether or not the building works match the contract documents in all respects.  You can give a list, prepared by your building consultant to the builder after the first Progress Claim – if there are any items – and then you both need to determine what has to be done to reach that stage of the building works for which the Progress Payment has been claimed and you can get the building consultant back to cross-check the items are done.  But you need to be very careful selecting your building consultant.
IF YOU ARE A BUILDER – Why would a builder encourage an Owner to pay for an independent building consultant?  Answer – Because you want your owners to trust you and it takes the stress away from you, the builder, dealing with the owner in respect to any items that are not defective nor incomplete and it gives the owner the comfort of dealing with someone other than the Builder who knows about building and the owner has the comfort that their builder is a good builder and does the work properly in the first place or rectifies anything he has missed without any problem.  But you do need a sensible building consultant, not one that will pump up every basis for dispute by inflating problems and giving legal advice (see below).
Secondly, if the building works do not match the contract documents you want to know as soon as possible, before it’s too late and your building consultant’s report should be VCAT compliant, because you want to give the builder an itemised list of all items of either defective or incomplete work with the detailed specification for rectification and your building consultant’s calculation of how much it will cost you to rectify the item if you have to get someone else to rectify that item. (Which amount you might be entitled to deduct from the contract price or claim from the builder or the building warranty insurer (in specific circumstances).
Thirdly, if the builder does not rectify or complete as per the report you have an itemised list with a cost (owner’s loss and damage) and you can take that complaint to the Domestic Building Dispute Resolution Victoria (DBDRV) for adjudication and direction and if the complaint is too complex for DBDRV then when DBDRV will issue a Certificate for you to take your complaint to VCAT – you are ready – having paid for #1, only report which has all you need in it to substantiate your allegations (because it’s from a qualified experienced person who knows) and it has a proper amount (not inflated by quote or guess work) identifying the value of the owner’s claim.
The internet link for DBDRV is: https://www.dbdrv.vic.gov.au/dispute-resolution-process
No one should have to pay a building consultant that will not do his job.  In a recent report we were given by an owner the building consultant said
“The level of description and location of defects will reflect assumed builder’s skill. Thus for example a general comment “fixing is below acceptable standard because of uneven door margins and architrave quirks” will mean that the builder is required to examine find and rectify every door and architrave that is defectiveIt is not intended or necessary that a building expert guides builder to every individual defect. Or in the case of items not complying with regulations it is sufficient to point out nature of the defect and the builder can verify compliance requirements for himself.”   We added the underlining.
Had the builder done the work properly in the first place the owner would not have needed a building consultant who tells the owner to rely on the defaulting builder to fix all the faults even though the building consultant has not bothered to list them! The owner already knows the builder cannot be relied on to identify all the “items not complying with regulations” and therefore it is NOT “sufficient to point out nature of the defect and the builder can verify compliance requirements for himself”.
From our point of view the most important thing we can assess from a properly prepared report is – is it worth having a dispute over.

We can make this assessment when the report has been provided to the builder or the owner by someone of worthwhile reputation, qualification and experience as a building consultant who has appeared as an expert witness at VCAT – AND whose evidence is accepted as reasonable and will usually be accepted by VCAT whether it is the builder complaining about an owner or an owner complaining about a builder.  It becomes a cost –v- benefit analysis.

The question is: What are the legal costs of a dispute compared to the costs of rectification and/or completion of all items listed in a VCAT compliant report.  Would you better off paying to fix any items and avoid proceedings?

From the one report you have all of the above possible options and you need to know your options.  Contact us at admin@hls.net.au if you need to make an application to DBDRV or arrange for a building consultant.

 

This article provides information that is general in nature and is not a substitute for legal advice.

What are the challenges for a Builder?

The biggest challenge for any builder, big or small is maintaining a proper record of the progress of the works. Paperwork!
The easiest way to maintain paperwork records is to include in the contract a clause that allows for the Contract to be varied as provided for in the Electronic Transactions (Victoria) Act 2000 (ETA).
This means you have to read the Contract and ensure that the “Notices” clause provides for variation to the Contract by electronic communication.
The ETA permits the creation (formation) and variation of contracts using electronic transmission.  It says – “any transaction in the nature of a contract, agreement or other arrangement” is a transaction for the purposes of the ETA.
Another method is the use of IPADs that are capable of accepting writing with a stylus and which can be signed once the agreement is recorded. (We used to tell people to write the agreement in their hardcopy diary and both sign and date it as a record of their agreement – a signed variation in writing.)
REMEMBER – if using emails in communications between Owner and Builder do not continue any exchange of emails for more than two (2) A4 pages because the cost of printing repetitious emails for litigation is enormous and for the moment it is still necessary to print an email in most cases to be able to show it to a witness in the witness box and/or the judge or other adjudicator.  This will change as electronic record systems develop to a stage where large volumes of documents can be scanned, sorted into relevant and irrelevant and produced page by page to witnesses and simultaneously to others, such as opposition barristers, parties and/or the judge or other adjudicator.  This is currently available in matters involving large amounts but not in smaller amounts because it is uneconomical.
 

Email us your challenges at admin@hls.net.au .

 

This article provides information that is general in nature and is not a substitute for legal advice.

Can the Builder Return to Fix Defects or Complete

Yes is the short answer. In the NSW case of The Owners- Strata Plan No 76674 v Di Blasio Constructions Pty Ltd [2014] NSWSC 1067, the Supreme Court in NSW agreed that the Builder does have the initial right to return and fix defects if there is an opportunity to do so offered by the owner.

BUT if there is “an inadequate response” by the Builder then the Builder will lose the right to return and fix.

The Owners’ Corporation (“OC”) got a report of defects (“Report”) and gave it to the builder with the request the Builder fix the defects as set out in the scope of works provided in the Report.
The Court found that the owner who suffers a loss due to a breach of contract is required to act reasonably so as to recover the loss, and this includes making reasonable attempts to mitigate (reduce) the loss.
By the same token the plaintiff who has suffered the loss is entitled to recover the costs of reinstating the property so it corresponds to the contract.
And it is for the defendant – the Builder in this case – to prove the owner acted unreasonably and taking Court proceedings is one factor taken into account when deciding if the owners acted reasonably.
Making offers and trying to avoid litigation is an indicator of acting reasonably – for both Owners and Builder – in every case.
Making an offer is a matter of expertise as to the exact terms, and whether or not it qualifies as reasonable – the Builders offer was not reasonable.
Case Note – Can the Builder Return & Fix:
In a current matter a Builder client of ours was locked out on the basis that the Builder had exceeded the building period. Using the default provisions in the Contract the Owners’ lawyer sent the Builder a “Notice of Default” carefully worded to comply with the law. Completion was due on 17 September 2013 and the building works were not complete by 19 November 2015. The Builder claims it was waiting for decisions to be made by the Owners. The Owners claim the Builder asked for payment of Progress Claims before the payments were due to be paid.  Subsequently the Owners’ lawyer served a Notice of Termination. Our argument is that the Notice of Termination is invalid and therefore is repudiation of the Contract by the Owners which would entitle the Builder to the money owing and damages for loss of profit.  The cheapest option is a commercial settlement – if we can get one.
It would be cheapest for both parties if a compromise could be reached as to what amount, if any, is paid to the Builder and the Builder goes back and finishes the work – or some variant of that is able to be negotiated.
In our case the Builder was waiting for a decision by the Owners on what type of roof should be installed on a pergola but as the Builder had finished all other building works for a Lock-Up Stage payment claim – the Builder claimed the Lock-Up Stage payment.  The Builder also claimed the Fixing Stage payment because that work (in the house) was completed too.
The case of Cardona & Anor v Brown & Anor [2012] VSCA 174, an Appeal case in the Victorian Supreme Court decided that a Builder can only ask for Progress Payments in the order fixed in the Contract. So if the Builder is waiting for the Owners to make a decision on the roof (tiles or colour bond) before putting on the roof the Builder cannot claim Lock-Up Stage payment or any part of it unless all the roof is on – even if the Builder has gone on with the building works and completed all work necessary to be able to claim Fixing Stage. The Builder has to finish Lock-Up Stage before being entitled to claim Fixing Stage.
The answer might be to have the parties sign a variation to the Progress Payment stages which will permit – by the variation – a reduced amount to be paid for a partial Lock-Up Stage and provides for some of that payment to be set aside until the owners make a decision.
Another option is for the Builder to suspend the building works and claim an extension of time until such time as the owners provide written instruction in respect to the type of roof selected.
Another option in Victoria is for the Builder to suspend the building works and claim an extension of time – as above but also put the owners on notice that if the decision is not made within (a reasonable time), for example, 14 days, an application can now be made to Domestic Building Dispute Resolution Victoria (DBDRV) (go to https://www.dbdrv.vic.gov.au/dispute-resolution-process) who will if the dispute is too complex issue a Certificate for the dispute to be referred to VCAT for an order directing a variation to the Progress Payment amount/s for the Lock-Up Stage and also provide for some of that Lock-Up Stage payment to be set aside until the owners make a decision. The type and variety of orders that can be sought will depend on each set of circumstances in each case.
Contact us at admin@hls.net.au if you need to make an application to DBDRV or draft a Variation or special conditions to allow variation of the Progress Payment Schedule.

This article provides information that is general in nature and is not a substitute for legal advice.

Changes to the Building Act & You!

Building Disputes and the Building Legislation Amendment (Consumer Protection) Act 2016 (“BLAA”)

Changes to the Building Act 1993, by the Building Legislation Amendment (Consumer Protection) Act 2016 (or “BLAA”) commenced on Monday 4 July 2016. It amended the Building Act 1993 (BA) and the Domestic Building Contracts Act 1995 (DBCA).

The main changes so far are as follows:

Appointing Building Surveyors

Builders are no longer allowed to appoint a Building Surveyor.  This amendment has been introduced to stop some Building Surveyors from a premature certification of mandatory stages for builders who may be their friends.

Building Surveyors will also now have to be very careful in carrying out their functions and from being engaged in a situation that may give rise to conflict of interests.

There will be a new check list that Building Surveyors must complete.  This check list will have to be lodged with the local Council.  Non-compliance with this requirement will cause the Surveyors to be fined.

Directions To Fix Work and Written Undertakings

The Authority (Victorian Building Authority) may issue a direction to a builder to:

(1)    Fix work;

(2)    Carry out work in substantial compliance with the Building Act; or

(3)    Stop work.

 

Any such direction should be either complied with or appealed to the Building Appeals Board.  An extension of time can be sought to comply with the direction.  Non-action in respect to any direction can result in a fine up to $75,000.

Written undertakings may be provided by a builder to do or not do something.  If a written undertaking is provided by a builder, it becomes public record.  Non-compliance with a written undertaking can result in prosecution of the builder.

 

Owner-Builders’ responsibilities and Regulations for Owners generally.

Owner-Builders can be audited by the Authority to ensure that the works are carried out properly, in compliance with the Building Act and its Regulations, and without posing any danger to anyone.

There are new penalties that could be imposed on the Owners who allow building works to be carried out on their property before a Building Permit is issued.  The penalties are high.

The above information completes the changes to the Domestic Building Contracts Act and the Building Act that are currently in force.

There will be further amendments, the most significant one that will come into force in February 2017 is as below:

Before a dispute can proceed to VCAT Under the new act, to resolve a domestic building work dispute, a certification of conciliation is required to bring proceedings to VCAT. [DP to link back to old building disputes / myth articles].

Cannot Issue at VCAT for a Domestic Building Work Dispute without a Conciliation Certificate

(s.56 DBCA)

The major change being that proceedings in respect to a domestic building dispute cannot be issued at VCAT unless accompanied by a Conciliation Certificate issued by the Chief Resolution Officer (“CDRO”) for Victoria or one of what is being termed the “experienced dispute resolution officers” (“DROs”) (see new s56 & s57A DBCA).

All domestic building work disputes (as defined s44(1), DBCA) relating to any “domestic building work matter” (as defined in s44(2) DBCA) are to be referred to the CDRO for an assessment under s45A of the amended DBCA as to whether not the dispute qualifies for conciliation under the amendments.

The CDRO has been appointed. She is Gina Ralston (“Ralston”). She and her team of “experienced dispute resolution officers” (“DROs”) will initially asses all building disputes (s45A, DBCA). The DRO can call for evidence (s45B, DBCA), accept or reject the referral (s45C, DBCA)

The CDRO must give written notice of the decision to either accept or reject a referral (under s45C DBCA) and give notice of the decision to accept or reject the referral for conciliation under, S45E(1) DBCA) within 10 business days after making the decision!!

HOW LONG WILL MAKING THAT DECISION TAKE?

NOTE – it will be necessary to amend domestic building contracts to include a right to suspension of the building works and the extension of time for the completion of the building works for the period between the referral and the issue of the decision under S45E(1) DBCA and up to and including the implementation of any decision or direction resulting from a conciliation.

A certificate is to be issued if the dispute is not resolved by conciliation (s46D, BLAA) or if an agreement is recorded (s46F, DBCA).

NOTE – Any such conciliation agreement should always include an agreement as to the period for which the building period is to be extended and include a period for the builder to organise trades and materials and return to site.

A Domestic Building dispute is defined as between an owner, a builder, any other Building Practitioner, Sub-contractor, or Architect in relation to domestic building work.

When making an application to the Chief Dispute Resolution Office, section 45 of the DBCA requires you to specify the particulars of the dispute, in addition to other relevant information and documents.

WHAT DOES THIS MEAN? – It means that you need to prepare for the Conciliation if it proceeds and carefully, and in as much detail as if it were a proceeding in a Court or at VCAT – and that’s where we can help.

WHY SO MUCH PREPARATION? – Because the DRO can issue a certificate stating that a party did not participate in good faith s46E,DBCA), can issue a stop work notice (s.47A DBCA), recommend an assessor’s report as to the building works (s48,DBCA) issue a dispute resolution order (s49 & 49B, DBCA) including the payment of money.  There is also a right to appeal to VCAT for review of a dispute resolution order – which must be within 20 business days after the date of the order and on limited grounds.

To give yourself the best chance of settling the dispute and avoid going to VCAT – speak with us as soon as any “dispute” is referred to the CDRO for assessment for conciliation.

The Conciliation may not proceed if you establish that the dispute does not satisfy the requirements in section 45 – WHAT IS THE REAL DISPUTE?

Proper preparation is far better than never ending discussion and expense.

 

This article provides information that is general in nature and is not a substitute for legal advice.