Australia: Victoria’s Domestic Building Consumer Protection Reform Strategy

Last Updated: 5 June 2014
Article by Chris Edquist and Jarod Sack

Most Read Contributor in Australia, September 2016

New legislation is being introduced in Victoria in order to remedy widely perceived deficiencies in the current arrangements for insurance of domestic building defects, to widen the role of the Victorian Building Authority (VBA) regarding the resolution of domestic building disputes and to improve the accountability of building practitioners.

The Building Legislation Amendment Bill 2014 (Bill) is intended to implement the Government's Victorian Domestic Building Consumer Protection Reform Strategy by making reforms to building-related legislation such as the Building Act 1993, the Architects Act 1991, the Domestic Building Contracts Act 1995 and the House Contracts Guarantee Act 1987.

New Domestic Building Consumer Protection Fund to replace existing insurance arrangements

One of the key planks of the Kennett era reforms to building law was the privatisation of domestic building insurance. One of the highlights of the current package of reforms proposed by the Bill is the requirement for all persons who undertake domestic building work to be insured under a statutorily guaranteed scheme to be known as the Domestic Building Consumer Protection Fund (Fund). This statutory fund will provide much wider cover than the cover currently provided by the insurance industry, under which insurers are obliged to meet a claim only in the event of the bankruptcy, disappearance or death of a builder.

The Fund will replace the current private domestic building insurance arrangements from 1 July 2015. It will initially be managed by VMIA on behalf of VBA, but it is anticipated that the VBA will assume management responsibility by 1 July 2016.

Importantly, the wider elements of cover - which will include, for instance, where a rectification order has not been complied with by a builder - will apply from 1 July 2014.

Enhanced powers and responsibilities of the Victorian Building Authority

Another major change will be to make the VBA a "one-stop-shop" for all issues related to building practitioner registration in Victoria. To do this, the Bill proposes to abolish bodies such as the Building Practitioners Board and the Architects Registration Board of Victoria and transfer their functions to the VBA.

The Bill will enhance the VBA's disciplinary powers by doing away with the current enquiry based disciplinary process and replacing it with a show cause process. Also, the grounds upon which disciplinary action against a building practitioner can be taken will be significantly widened. Furthermore, a demerit point scheme for building practitioners will be introduced.

The Bill will also give the VBA greater discretion to examine various personal and financial probity matters when considering a registration application.

Another major development of the Bill will empower the VBA to appoint inspectors to undertake inspections and issue rectification orders to resolve disputes.

Dispute resolution

The Bill will enhance the jurisdiction of the VBA (at the expense of Consumer Affairs Victoria) to resolve domestic building disputes by offering a conciliation service.

In a critical reform, the VBA will have authority to appoint a qualified inspector to inspect disputed building work and to provide an expert opinion as to whether there is defective or incomplete work.

Another important reform is that the VBA will be entitled to issue rectification orders as part of its dispute resolution powers. In issuing such an order, the VBA will be informed by the opinion of an appropriately qualified VBA - appointed expert. A rectification order will be reviewable, at first instance at the VBA, then at VCAT.

Registration of corporations and partnerships

Another major reform will be to align Victoria with other states by requiring corporations which enter into domestic building contracts to be registered as building practitioners.

Relevantly, during the Second Reading Speech, the Minister for Innovation, the Hon. Louise Asher, indicated that it was not intended at this stage to require the registration as a building practitioner of either commercial corporations or for domestic building corporations that build residential high rises, although these corporations will be eligible to seek registration if they wish to.

The Bill will also enable a partnership which is a domestic builder or a building surveyor to hold itself out as a building practitioner if at least one of the members of the partnership is registered in their capacity as a member of the partnership.

Other reforms

Other reforms proposed by the Bill include increasing powers of building surveyors, reforming the process of collecting the building permit levy and clarifying responsibilities for local government administration of certain parts of the Building Act.

How will this affect you?

Contact the Melbourne Construction and Infrastructure Team if you would like to know further details of the Bill and how it will affect your company.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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