The Victorian Civil and Administrative Tribunal (VCAT) has provided further guidance on extent which claims for breach of the warranties implied into domestic building contracts by the s.8 of the Domestic Building Contracts Act 1995 (Vic) (DBC Act) may be apportioned between building practitioners.
Background Meldan (Vic) Pty Ltd (Builder) was engaged under a major domestic building contract (Contract) to construct a detached dwelling unit in Newport (Works). ARKI Building Surveyors Pty Ltd was the building surveyor for the Works (RBS). The RBS issued an occupancy permit for the Works in August 2012. In 2013, Bellini (Owners) purchased the Property. As subsequent owners of the Property, the Owners were entitled to the benefit of the warranties implied by s.8 of the DBC Act (Warranties).[1] The Owners complained that the Builder was in breach of certain Warranties because of defects in the Works. The Owners commenced proceedings, claiming damages from the Builder for the costs of rectification, and the costs of alternate accommodation while rectification occurred. The Builder sought to apportion its liability to the Owners with the RBS, and thereby limit its overall liability for breach of the Warranties. At the time of commencement of the proceeding the Owners’ claim against the RBS was settled, but it remained party to the proceeding for the purposes of apportionment.[2] The Owners argued that the claim was not apportionable. Decision Consistent with the ‘Lacrosse’ decision of the Court of Appeal,[3] the VCAT determined that the only Warranty that could give rise to an apportionable claim was a breach of the warranty relating to a failure by a builder to take reasonable care. [4] The VCAT further held that defects arising from breaches of the other Warranties were not apportionable. In coming to this decision, the VCAT determined that to ascertain whether a claim arising from a failure by the Builder to take reasonable care was apportionable, regard must be had to the terms in which the Owner’s claim is framed. On the facts at hand, given that the Owners claimed that the Builder failed to ensure that the works were carried out with reasonable care and skill, not that the Builder itself had failed to carry out the work in such a manner, the VCAT determined that the claim was not apportionable. Accordingly, to the extent which the Builder was in breach of the Warranties, its liability for such breach was solely under contract.[5] On this basis, the VCAT held that the damages which flowed from such breach were not apportionable.[6] Conclusion While each case will turn on its facts, the VCAT’s decision confirms the decision in ‘Lacrosse’ and underscores the relevance of the terms of the claim in determining whether breach of the DBC Act warranty to take reasonable care and skill is apportionable. Further information / assistance regarding the issues raised in this article is available from the authors, Bill Papastergiadis – Partner, Nathan Cutts – Partner, Phillip Vassiliadis – Senior Associate or your usual contact at Moray & Agnew. [1] Domestic Building Contacts Act 1995 (Vic), ss 8-9. [2] Wrongs Act 1958 (Vic), Part IVAA. [3] Tanah Merah (Vic) Pty Ltd v Owners Corporation No.1 of PS613436T & Ors. [2021] VSCA 72, 94. [4] Bellini v Meldan (Vic) Pty Ltd (Building and Property) [2021] VCAT 833, 17. [5] Bellini v Meldan (Vic) Pty Ltd (Building and Property) [2021] VCAT 833, 19. [6] Ibid, 32, 53 and 61.
The content of this publication is intended to provide a summary and commentary only. It is not intended to be comprehensive nor does it constitute legal advice, and has been prepared based on applicable legislation at the date of publication. You should seek legal advice on specific circumstances before taking any action.
