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Building & Construction News Alert: Have a building contract or defect problem? A new system starts in

News Alert 26 April 2017

From Wednesday 26 April 2017, a new dispute resolution procedure will take effect and operate in Victoria in respect to all domestic building works disputes which may arise between owners, Owners Corporations, architects, subcontractors and builders.The new system is known as Domestic Building Dispute Resolution Victoria or DBDRV.

A party will no longer be able to immediately proceed to VCAT and instead will be required to file an application with DBDRV to have a building dispute dealt with.

The process will start with an online application. A newly appointed Chief Dispute Resolution Officer will make an initial determination as to whether the issues in dispute can be resolved by the use of a compulsory conciliation service.

The conciliation service may take place by way of written submission, telephone, meetings or any other manner an allocated Conciliation Officer determines. If the parties to the dispute are able to resolve their differences through the process, a conciliation agreement may be drafted and signed. This may require a Builder to pay money, an owner to pay money, the Builder to carry out works or some other form of agreement. If no agreement can be reached, a 'Certificate of Conciliation' may be issued by the DBDRV, which will then enable the parties to issue separate legal proceedings in VCAT.

The new process also introduces Assessors who will have very broad powers to assess defective or incomplete works, enter buildings, take photos, request documents, conduct tests, obtain evidence, produce reports and propose methods for rectification. It is yet to be seen if the new process for issuing Dispute Resolution Orders will be effective and whether they will require compliance only with contractual obligations.

Heavy penalties can be applied if a party does not participate nor comply with the system. 

It will still be critical for owners and builders alike to have their applications properly prepared. A lot of extra time and costs may be wasted if the issues to be resolved in the new system are not properly set out from the beginning.

Unlike a court and VCAT which require a form of pleading and a statement setting out what the case is about, the new system might enable some cases to roll along with an endless stream of additional items.

There are also concerns as to whether the new system may cope with large Owners Corporation disputes which can involve millions of dollars and multiple lot owners and parties.

The statutory legal rights which protect owners and Owners Corporations in respect to defective works have not changed, and legal advice and expert reports should still be obtained to ensure the system does not produce an unfair outcome by forced conciliation.

There may also be the need for more litigation, and not less, if parties look to appeal determinations or decisions made by the DBDRV on questions of administrative fairness.

It has also been asked whether this new system merely duplicates a dispute resolution process already in existence and available via VCAT. It may cost owners and builders more time and money to start here before maybe ending up in VCAT in any event.

While the DBDRV has been established as a means for consumer protection, and may very well provide for a timely and cost-effective resolution for small-scale disputes, the DBDRV is not a Court and may become an expensive hurdle to overcome before owners and builders can litigate claims in VCAT.  Time will tell.

If you have problems with your building contract or a building dispute and require legal assistance, please contact Andrew Whitelaw and the Building and Construction Team at TressCox Lawyers on (03) 9602 9702.

Andrew Whitelaw, Partner

News Alert 26 April 2017
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