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New building Bill introduced into Parliament

The Building Legislation Amendment (Consumer Protection) Bill 2015 (Bill) was introduced into the Victorian Parliament last week. The Bill proposes to amend the Building Act 1993 and the Domestic Building Contracts Act 1995, and is said to be the government’s first step in ‘tackling the longstanding flaws in the building system.’ Further legislative reform is also foreshadowed for 2016.[1]

Building Legislation Amendment (Consumer Protection) Bill 2015

The Bill is heavily focused on the domestic building sector and domestic builders.

Key highlights of the Bill are as follows:

  • The establishment of a new dispute resolution procedure for domestic building disputes to be run from Consumer Affairs Victoria under a body called Domestic Building Dispute Resolution Victoria (DBDRV). The new provisions provide a comprehensive regime which must be used before a party can go to the Victorian Civil and Administrative Tribunal (VCAT) with a dispute and includes the ability for the DBDRV to order works and payments from both parties. The failure to comply with orders made by DBDRV will be a ground for disciplinary inquiry.
  • The abolition of the Building Practitioners Board, with certificates of consent for owner builders, registration of building practitioners and disciplinary functions moving to the Victorian Building Authority (VBA). There will be no requirement for industry representatives to participate in the registration or disciplinary procedures.
  • Domestic builders will not be able to appoint building surveyors on behalf of an owner. This new prohibition only applies to domestic building work which includes multi storey residential building work.
  • When issuing a building permit for domestic building works, the relevant building surveyor (RBS) will be required to ensure that the builder’s name and registration details on the insurance certificate are identical to those in the major domestic building contract. Amendments to s 136 also make it clear that a person is taken not to have insurance unless the details in the insurance certificate are identical to those in the major domestic building contract.
  • For building permit documents lodged with councils under s 30, there will be a requirement for the RBS to certify an approved checklist of the documents being submitted.
  • All building practitioner registrations will last up to five years (as opposed to indefinitely) and practitioners will have to demonstrate compliance with Continuing Professional Development (CPD) requirements and any other prescribed matters in order to have their registration renewed.
  • Owner-builders will only be allowed to obtain a certificate of consent to be an owner builder on a new property every five years (the current restriction is every three years). The work of owner builders will also be able to be audited by the VBA in the same way as the work of registered building practitioners can be the subject of a performance audit.
  • There is an enhancement of s 16 of the Building Act 1993 to include a requirement that an owner not engage a person to carry out building work unless there is a building permit for that work. The Minister described the changes saying that ‘every building practitioner in the chain must ensure that the building work they are engaged to perform is compliant and covered by a building permit’[2]. He went on to state that every building practitioner should be held accountable and made reference to the investigation into the Swanston Street wall collapse.
  • There are new provisions for the VBA or an RBS to issue directions to a builder to ‘fix’ building work. The ‘builder’ is defined as the person specified on the building permit as the builder. Therefore, like the current s 37 direction, these new powers cannot be used for building works without a building permit. These provisions provide for a significant change to the current s 37 powers in the Building Act 1993. Builders who do not comply with a direction to ‘fix’ will be committing an offence and non-compliance can also be a ground for disciplinary inquiry. In addition, where an RBS issues a direction to ‘fix’ and the builder does not comply, the RBS must refer the matter to the VBA. The recipient of a direction to ‘fix’ will be entitled to appeal to the Building Appeals Board. Under a new s 118A, a municipal building surveyor (MBS) or private building surveyor (PBS) will not be able to issue a building notice or order to an owner unless a direction to fix has been issued and will not be complied with, or such direction is not possible or appropriate. This effectively means that an RBS should issue notices and orders to an owner only after a direction to a builder to ‘fix’ has been unsuccessful in resolving the matter, or where such direction is not appropriate (for example where there is no building permit). It is not clear how far these new powers will extend after the issuing of a certificate of final inspection or occupancy permit, if at all.
  • There will be provision for the VBA to approve codes of conduct for building practitioners and, once approved, they will have legislative force in that a breach of a code of conduct will be a ground for disciplinary inquiry. The VBA can develop these codes or can accept a proposed code put forward by an organisation representing practitioners. In either case the VBA is required to consult prescribed organisations before approving or amending a code of conduct. The creation of codes of conduct have the potential to lift the standard of conduct of registered practitioners but also to define clearly the roles and responsibilities of the various practitioner categories and classes.
  • The disciplinary inquiry process has been overhauled. As well as the new grounds for inquiry referred to above, the failure to comply with an adjudication order under the Building Construction Industry Security of Payment Act 2002 will be a ground for inquiry as will the failure to comply with CPD requirements. Inquiries will be able to proceed by the VBA issuing a ‘show cause’ notice to the practitioner and there is a potential that oral hearings will not be held. In addition, the grounds to immediately suspend registration have been broadened to include insolvency and where the practitioner no longer holds insurance. The VBA also has a new power to accept undertakings from practitioners who have breached the Act and must publish a register of undertakings.
  • There are provisions allowing for the VBA to appoint a manager for a private building surveyor’s business where the private building surveyor requests, dies, becomes insolvent, is in prison or has their registration suspended or cancelled.

The debate on the Bill has been adjourned. The earliest the Bill can be debated is 9 February 2016 when Parliament resumes sitting. If the Bill is passed, the amendments could be introduced at different times but all amendments will come into force by 1 July 2017 at the latest.

We will keep you updated about the Bill and any further legislative amendments. View the second reading speech for the Bill.

[1] Victorian Parliamentary Debates, Legislative Assembly, 10 December 2015 pages 39, 42 (Mr Wynne).

[2] Victorian Parliamentary Debates, Legislative Assembly, 10 December 2015 page 41 (Mr Wynne).

The Building Legislation Amendment (Consumer Protection) Bill 2015 (Bill) was introduced into the Victorian Parliament last week. The Bill proposes to amend the Building Act 1993 and the Domestic Building Contracts Act 1995, and is said to be the government’s first step in ‘tackling the longstanding flaws in the building system.’ Further legislative reform is also foreshadowed for 2016.[1]

Building Legislation Amendment (Consumer Protection) Bill 2015

The Bill is heavily focused on the domestic building sector and domestic builders.

Key highlights of the Bill are as follows:

  • The establishment of a new dispute resolution procedure for domestic building disputes to be run from Consumer Affairs Victoria under a body called Domestic Building Dispute Resolution Victoria (DBDRV). The new provisions provide a comprehensive regime which must be used before a party can go to the Victorian Civil and Administrative Tribunal (VCAT) with a dispute and includes the ability for the DBDRV to order works and payments from both parties. The failure to comply with orders made by DBDRV will be a ground for disciplinary inquiry.
  • The abolition of the Building Practitioners Board, with certificates of consent for owner builders, registration of building practitioners and disciplinary functions moving to the Victorian Building Authority (VBA). There will be no requirement for industry representatives to participate in the registration or disciplinary procedures.
  • Domestic builders will not be able to appoint building surveyors on behalf of an owner. This new prohibition only applies to domestic building work which includes multi storey residential building work.
  • When issuing a building permit for domestic building works, the relevant building surveyor (RBS) will be required to ensure that the builder’s name and registration details on the insurance certificate are identical to those in the major domestic building contract. Amendments to s 136 also make it clear that a person is taken not to have insurance unless the details in the insurance certificate are identical to those in the major domestic building contract.
  • For building permit documents lodged with councils under s 30, there will be a requirement for the RBS to certify an approved checklist of the documents being submitted.
  • All building practitioner registrations will last up to five years (as opposed to indefinitely) and practitioners will have to demonstrate compliance with Continuing Professional Development (CPD) requirements and any other prescribed matters in order to have their registration renewed.
  • Owner-builders will only be allowed to obtain a certificate of consent to be an owner builder on a new property every five years (the current restriction is every three years). The work of owner builders will also be able to be audited by the VBA in the same way as the work of registered building practitioners can be the subject of a performance audit.
  • There is an enhancement of s 16 of the Building Act 1993 to include a requirement that an owner not engage a person to carry out building work unless there is a building permit for that work. The Minister described the changes saying that ‘every building practitioner in the chain must ensure that the building work they are engaged to perform is compliant and covered by a building permit’[2]. He went on to state that every building practitioner should be held accountable and made reference to the investigation into the Swanston Street wall collapse.
  • There are new provisions for the VBA or an RBS to issue directions to a builder to ‘fix’ building work. The ‘builder’ is defined as the person specified on the building permit as the builder. Therefore, like the current s 37 direction, these new powers cannot be used for building works without a building permit. These provisions provide for a significant change to the current s 37 powers in the Building Act 1993. Builders who do not comply with a direction to ‘fix’ will be committing an offence and non-compliance can also be a ground for disciplinary inquiry. In addition, where an RBS issues a direction to ‘fix’ and the builder does not comply, the RBS must refer the matter to the VBA. The recipient of a direction to ‘fix’ will be entitled to appeal to the Building Appeals Board. Under a new s 118A, a municipal building surveyor (MBS) or private building surveyor (PBS) will not be able to issue a building notice or order to an owner unless a direction to fix has been issued and will not be complied with, or such direction is not possible or appropriate. This effectively means that an RBS should issue notices and orders to an owner only after a direction to a builder to ‘fix’ has been unsuccessful in resolving the matter, or where such direction is not appropriate (for example where there is no building permit). It is not clear how far these new powers will extend after the issuing of a certificate of final inspection or occupancy permit, if at all.
  • There will be provision for the VBA to approve codes of conduct for building practitioners and, once approved, they will have legislative force in that a breach of a code of conduct will be a ground for disciplinary inquiry. The VBA can develop these codes or can accept a proposed code put forward by an organisation representing practitioners. In either case the VBA is required to consult prescribed organisations before approving or amending a code of conduct. The creation of codes of conduct have the potential to lift the standard of conduct of registered practitioners but also to define clearly the roles and responsibilities of the various practitioner categories and classes.
  • The disciplinary inquiry process has been overhauled. As well as the new grounds for inquiry referred to above, the failure to comply with an adjudication order under the Building Construction Industry Security of Payment Act 2002 will be a ground for inquiry as will the failure to comply with CPD requirements. Inquiries will be able to proceed by the VBA issuing a ‘show cause’ notice to the practitioner and there is a potential that oral hearings will not be held. In addition, the grounds to immediately suspend registration have been broadened to include insolvency and where the practitioner no longer holds insurance. The VBA also has a new power to accept undertakings from practitioners who have breached the Act and must publish a register of undertakings.
  • There are provisions allowing for the VBA to appoint a manager for a private building surveyor’s business where the private building surveyor requests, dies, becomes insolvent, is in prison or has their registration suspended or cancelled.

The debate on the Bill has been adjourned. The earliest the Bill can be debated is 9 February 2016 when Parliament resumes sitting. If the Bill is passed, the amendments could be introduced at different times but all amendments will come into force by 1 July 2017 at the latest.

We will keep you updated about the Bill and any further legislative amendments. View the second reading speech for the Bill.

[1] Victorian Parliamentary Debates, Legislative Assembly, 10 December 2015 pages 39, 42 (Mr Wynne).

[2] Victorian Parliamentary Debates, Legislative Assembly, 10 December 2015 page 41 (Mr Wynne).