Building Legislation Amendment (Consumer Protection) Act 2016 (Vic)

Summary 

On 26 April 2017, sections 3, 6 to 13, 14(2), 15 and 59 to 68 of the Building Legislation Amendment (Consumer Protection) Act 2016 (Vic) (Act) came into force. These provisions create a new framework for resolving domestic building work disputes by requiring parties to attempt to resolve a dispute through conciliation before they can commence legal proceedings.

The new dispute resolution framework – a focus on conciliation

The new dispute resolution framework for domestic building disputes is centred around conciliation. The Act also creates Domestic Building Dispute Resolution Victoria, comprising a chief dispute resolution officer (CDRO), conciliation officers, and assessors, to administer domestic building disputes.

Under the previous dispute resolution framework, conciliation was optional and the process could only be initiated by a building owner. Parties could initiate proceedings in the Victorian Civil and Administrative Tribunal(VCAT) at any stage of the dispute.

Under the new framework, conciliation is a prerequisite for initiating proceedings in VCAT. Builders, building practitioners, sub-contractors or architects can now also initiate the conciliation process.

The new conciliation process

In general terms, the conciliation process will operate as follows:

  1. A party to the dispute refers the dispute to the CDRO.
  2. A conciliation officer will conduct an initial assessment and recommend to the CDRO whether to accept or reject the referral.
  3. The CDRO will review the conciliation officer's recommendation and accept or reject the referral, and provide written notice to the parties within 10 business days after making a decision.

The CDRO may take the following actions after receiving a referral under step 1 above, namely:

  • issuing a dispute resolution order to a builder or building owner, at any time until the dispute has been resolved; or
  • stopping the builder from undertaking further domestic building work for up to 30 days (which may be extended by a further 30 days).

Among other things, dispute resolution orders can impose obligations on builders to rectify defective or damaged work, or require building owners to pay money to the builder to complete certain works.

What happens if parties do not conciliate

Parties to a dispute must comply with the conciliation process outlined in the Act before they can commence proceedings at the VCAT. Parties unwilling to conciliate could face adverse consequences, such as the imposition of a dispute resolution order.

Other changes introduced by the Act

Some other significant changes that will come into operation on 26 April 2017 include:

  • a party's failure to comply with a dispute resolution order may constitute grounds for disciplinary action by the Victorian Building Authority, including a suspension or cancellation of registration; and
  • inspectors under the old framework have been replaced by 'assessors', who now have greater investigative powers

Implications for the industry

The new framework for domestic building dispute resolution incentivises parties to work collaboratively to resolve disputes, as and when they arise. The focus on conciliation under the new domestic building dispute resolution framework is likely to improve efficiency and reduce delays in the completion of domestic building works, which can often arise when parties are tied up in costly litigation.