Building and Construction Law

Phillip Graham enjoys a particular interest in building and construction law.

Phillip is a member of the Building Dispute Practitioners Society of Victoria. Phillip subscribes to V.C.A.T.'s Domestic Building List case mail outs and receives copies of that List's latest important decisions within moments of them being released.

Phillip acts for and receives referrals in connection with building and construction law from a number of prominent Building Consultants, Architects, Builders, Developers and other lawyers. Phillip is also listed with the Law Institute's Legal Referral Service regularly giving advice to owners, builders and trade contractors.

Owners about to enter into domestic Building Contracts should obtain Phillip's advice before they sign the Building Contract. A special Building Contract Advice service is provided by Graham Legal.

Generally speaking, a domestic building dispute is one between a building owner and a builder, or between a builder and an owner or subcontractor. However, Phillip also handles disputes concerning builder's warranty insurance claims. Other building disputes even involve an architect, engineer or other building practitioner.

What commonly begins as a happy and friendly relationship between an owner and a builder all too often deteriorates into a total breakdown and much hostility. For many owners, building a new home is a once in a lifetime experience. The expectations are high. The builder's promises regarding quality of workmanship and the fixtures and fittings are exciting. Much of what is promised is by word of mouth. When the works finally begin, the reality of the situation is that some owners become disappointed (some even very angry).

Where disputes occur, in the majority of cases the dispute relates to claims by owners that their builder has breached the warranties as to quality and fitness of work (defective works), or that the builder has failed to complete the works either at all or within the agreed construction period. Special warranties apply if the home under construction is similar to a display home made available by the builder for inspection to encourage people to enter into contracts.

Sadly, when an owner faces a dispute with their builder they come to realise that they should have sought legal advice about their contract before they signed it. All too often owners realise that their rights are sadly disadvantaged by what appears or is altogether missing from the Contract they thought was "standard".

From a builder's perspective, building disputes generally relate to the failure of the owner to pay the price by the instalments specified in the contract.

However, building disputes can and often do involve several issues, including:

• The consequences when progress payments are weighted heavily in favour of the early construction stages;
• The consequences of unusual and/or onerous Special Conditions included in the Building Contract (sometimes without the Owners being aware of the nature and effect of them);
• The circumstances in which the price payable under the Contract may have varied after the signing of the Contract;
• Whether or not the Owners have complied with their obligations before the Builder was required to begin work;
• Issues caused through non-compliance with registered or unregistered easements, restrictions or covenants applicable to the owner's title;
• The means by which the construction period is actually calculated;
• The Builder's obligations in connection with calculation of the cost of constructing the foundations;
• The Builder's obligations in connection with calculation of the cost of prime cost and provisional sum allowances and the Owner's rights in connection with such claims;
• The circumstances in which a Builder may lawfully obtain an extension of time in the calculation of the construction period;
• The contractual relevance of the "plans" and "specifications" and the consequences when there is an inconsistency between them;
• The consequences of post-contract variations and whether or not those variations have occurred in breach of the Domestic Building Contracts Act;
• The implications of the "Builder's Margin" and how that may affect the Building Contract price;
• Responsibility for the costs of conveying, connection and/or installation of gas, electricity, telephone and water and sewerage services;,
• Penalties for late payments and whether or not a builder's claim for payment was made prematurely and in breach of the Domestic Building Contracts Act;
• Damages for late completion and how those damages are calculated and paid;
• Whether an Owner is entitled to claim General Damages;
• What to look for in connection with the Certificate of Builder's Warranty Insurance and the circumstances (and limitations) in which an Owner may claim for defective and/or incomplete works;
• The Builder's obligations under the Contract;
• Whether or not the Builder has claimed and/or retains funds paid in advance of the proper date and the consequences of doing so;
• The Owner's rights to enter the construction site before completion and the risks associated with doing so;
• The special obligations a Builder must observe when constructing a home similar to a display home;
• When and in what circumstances a party may lawfully end or terminate a Building Contract;
• The consequences when a party unlawfully ends or terminates a Building Contract;

Whereas some domestic building disputes involve proceedings before the Victorian Civil & Administrative Tribunal (VCAT), most disputes do not get that far.

A typical domestic building dispute ordinarily begins with Phillip Graham seeking to resolve the dispute by negotiation with the other party.

In some cases (where there are grounds for doing so), a decision needs to be made as to whether or not it is in the interests of a client to take steps to terminate the Building Contract. This is a very important step. An owner who ends a Building Contract incorrectly (including by their conduct) may, by doing so, unwittingly commit a breach of the Contract. This is certainly a situation where two wrongs do not make a right.

Building disputes are generally not referred to VCAT as a matter of first option. It is now the law that domestic building disputes must first be referred to Dispute Building Resolution Victoria (DBDRV) for conciliation by a Dispute Resolution Officer (DRO).

In complex cases, parties may well require legal representation throughout the conciliation process. In less complex cases, parties may not require legal representation at conciliation, but it is nevertheless recommended that parties obtain legal advice before the conciliation process begins.

This is extremely important in situations where parties are contemplating whether or not they (or the other party) are in breach of the Building Contract. It is not the function of the DRO to decide questions of law and the conciliator is not qualified to do so in any event.

Parties to DBDRV disputes will require legal advice as to their legal rights and/or liabilities before they attend any conciliation. Parties will require advice as to the evidence they should be in a position to provide to the DRO. That evidence will not only relate to the legal contractual elements of the dispute but also as to the damages that should be assessed as payable.

A party who agrees to settle a building dispute in the DBDRV conciliation process may regret that settlement if all relevant factors and implications were not taken into account.

A domestic building dispute may be referred to the DBDRV within 10 years after the date of issue of the Building Permit or Certificate of Final Inspection. Where neither a Permit nor Certificate has been issued with respect to the work the subject of the dispute, the referral must made to the DBDRV within 10 years after the date of practical completion.

A dispute should not be referred to the DBDRV at the last minute. In the event that proceedings at VCAT are to follow the conclusion of the DBDRV conciliation, those proceedings must also be commenced within the same 10 year period.

Many building disputes arise during the course of construction. It is very important to remember that the referral of a dispute to DBDRV does not automatically stay or suspend parties' obligations under the Building Contract. A provision in a Building Contract requiring an owner to pay an instalment of the price within a defined period and before penalty interest accrues, still applies. Similarly, a builder's obligation to complete the works within the construction period with damages for late completion being payable where that period is exceeded, also still applies.

Legal advice regarding these matters should be sought immediately a building dispute occurs and whether or not a referral to DBDRV is intended.

Graham Legal

Graham Legal acts for clients who require assistance in connection with domestic building disputes. The merit of each case has to be considered against its own facts. The costs of the process will vary from case to case.

Clients are invited to make an initial appointment for a face-to-face conference. Clients should bring to the appointment all relevant documents. The first 30 minutes of such an appointment are provided free of charge and without obligation. During this time Phillip will give advice as to the merits of the client's claim and as to the costs the client is likely to incur if instructions to act are received.