It is common to hear that an issue has come up between a homeowner and a builder due to works not being completed in the allocated time frame as agreed at the commencement of the project. When time delays occur, a dispute between the homeowner and the builder can arise, causing tension between the parties. If you are experiencing time delays on your construction project or a dispute arises between yourself and your builder, you can consider taking the following steps to resolve the issue:
Step 1: Communicate directly with your builder:
In this step we suggest that you rationally discuss the time delay issue with your builder and jointly seek to resolve the matter to avoid further delays. This can either be done directly between the parties, or you can engage a representative to communicate on your behalf. We recommend that any communication with your builder be documented either by confirming your discussion in writing or making a file note of any discussion you may have had. However, the builder may not be open to communication and you may become frustrated with the lack of resolution. If this occurs, keeping a record of your communication as recommended can then show that you have tried to contact the other party to raise and resolve the matter, but have been unsuccessful in finding a solution.
If you have been unsuccessful in receiving a response from your builder within a reasonable time frame or the builder refuses to engage with you, you can consider taking a more formal approach which is making application to Domestic Building Disputes Resolution Victoria (DBDRV)
Step 2: The DBDRV Process:
DBDRV provides services to help resolve disputes between homeowners and their builders and it is a requirement that you must have first tried to resolve the dispute with the other party directly before submitting an application to DBDRV. (as outlined in Step 1)
Following an application to DBDRV, a dispute resolution officer is assigned to the matter and makes contact with all parties involved to obtain further information about the dispute. The officer’s role at this stage is to make an assessment as to whether the dispute is suitable for conciliation and if deemed appropriate, a date will be scheduled with an experienced conciliator.
Conciliation is a confidential process where the parties are brought together to discuss the dispute with the assistance of a conciliator (usually an expert within the building industry) to try and resolve the dispute.
As part of the dispute resolution process, DBDRV may organise an assessor to examine the disputed building work and provide a report to the parties (although this will often not occur unless a certificate of final inspection of occupancy permit has first been issued). The assessor must also determine if there have been any contraventions of building legislation and if so, must report this to the Victorian Builder Association. The assessor’s report is ordinarily admissible as evidence in proceedings before the Victorian Civil & Administrative Tribunal (VCAT) or in any other legal proceedings.
If the parties are unable to resolve the dispute or if the dispute resolution officer decides that the matter is not suitable for conciliation, a certificate of conciliation will be issued, and the parties are then entitled to make an application to VCAT if they wish to pursue the matter further.
Step 3: Make application at VCAT:
VCAT has exclusive jurisdiction to hear building disputes however, before you can commence a building dispute in VCAT, you need a certificate of conciliation from the dispute resolution officer from DBDRV. You cannot commence proceedings in VCAT without this certification.
It is important for you to be aware that VCAT is a ‘no costs or low costs’ jurisdiction. This means that each party will bear their own legal costs. That is, if you win, unless special circumstances apply, you will not be able to recover your legal costs from the builder.
Prior to commencing any VCAT application, we would strongly recommend that you seek advice on the merits of whether you are likely to be successful in any such application.
Terminating your Construction Contract and other Contractual Rights:
Depending on the terms of your Contract with the builder, you may have certain contractual rights including:
- Terminating the Contract where there are terms in the Contract that allow you to do so, including for example, where there has been a breach of an essential term of the Contract;
- Seeking liquidated damages from the builder for delays.
We recommend you seek formal legal advice before taking any action to terminate the Contract (as this could otherwise have unintended consequences where you wrongfully end the Contract by repudiation and the builder may then have a claim against you) or seek liquidated damages.
It is important to understand that if you engage a new builder to complete the works, you will be agreeing to incurring the costs of the new builder. You should seek advice about whether there are any rights to off-set such costs for any loss suffered by you.
Our Property and Property Development lawyers have extensive experience in dealing with all aspects of property, real estate and property development law. Our team of property lawyers, including an accredited specialist have assisted many clients with their building dispute requirements.
If you have any questions about your builder taking too long or would like to find out how our property lawyers can assist you with any of your property dispute needs, please don’t hesitate to contact our office on +61 3 9822 8588 or email us here.