Conciliation process

The Building Legislation Amendment (Consumer Protection) Act 2016 (Vic) (Act) received Royal Assent on 19 April 2016. Its purpose, among other things, is to amend the Domestic Building Contracts Act 1995 (Vic) (DBCA) to introduce new procedures for the resolution of domestic building disputes. Most of the key changes that impact on the resolution of building disputes are expected to commence on 1 July 2017.

The Act introduces the Domestic Building Dispute Resolution Victoria (DBDRV) to facilitate conciliation, which is a more interventionist style of mediation. After it commences, parties to a domestic building dispute will only be able to commence legal proceedings if:

  • they have attended conciliation; or
  • they have been issued with a certificate of conciliation; or
  • a court exercises its discretion to grant leave to bring proceedings; or
  • they are seeking an injunction.

A domestic building dispute can be referred to the DBDRV by a builder, a building practitioner (as defined in the Building Act 1993 (Vic)), a sub-contractor or an architect. Under the legislation a dispute can be conciliated even if one or more of the parties refuse to participate or refuse to participate in good faith. Conciliations need not necessarily be conducted in person and may also be conducted by teleconference, by electronic communication, by post or a combination of these.

The DBDRV will be governed by the chief dispute resolution officer, who will be supported by qualified conciliators and technical assessors. An assessor may be appointed by the DBDRV (or requested by a party to the dispute) to examine domestic building work and determine whether the building work is defective or incomplete. The findings and recommendations in the assessor's report are admissible in evidence in legal proceedings.

At any time after the referral to conciliation the DBDRV may require the builder to stop all or some of the domestic building work under the contract for a period of up to 30 days, though this may be extended by a further 30 days in certain circumstances. If the dispute is:

  • not resolved after conciliation; or
  • determined as being unsuitable for conciliation (for instance, if all issues have been or are subject of proceedings before the VCAT or a court, or if the claim is frivolous or vexatious)

then the DBDRV will issue a certificate of conciliation, allowing the parties to litigate their claims in the VCAT.

Importantly, the VCAT can make an award of costs against an unsuccessful party to a domestic building dispute determined by it, if that party refused to participate in conciliation or did not participate in good faith.

Dispute Resolution Orders

If the dispute is resolved at conciliation, the DBDRV will prepare a conciliation agreement setting out the actions to be undertaken by the parties. If the dispute is not resolved, the DBDRV has the power to issue a Dispute Resolution Order (Order) requiring a builder to do one or more of the following:

  • rectify defective domestic building work;
  • rectify damage caused in the carrying out of the domestic building work;
  • complete work under the domestic building contract; and/or
  • meet the cost of rectification by an alternative builder where the building work is so defective that it would not be reasonable to allow the original builder to attempt rectification.

Additionally, an Order may require a building owner to:

  • pay a builder;
  • pay money into the new Domestic Building Dispute Resolution Victoria Trust Fund pending completion of rectification work; and/or
  • refrain from doing anything that would prevent or restrict the builder from satisfying a term or condition of the domestic building contract or meet the requirements of a warranty set out in section 8 of the DBCA.

Orders may also contain findings which can be produced as evidence in the VCAT or court regarding the quality of the residential building works.

If a party to the dispute does not comply with an Order the other party (be it the owner or builder) has the right to terminate the building contract. Parties will be able to seek a review of Orders both internally at the DBDRV and subsequently at the VCAT.