How to Improve Home Building Dispute Resolution

In recent years home builders have been having a tough time. Restrictions and business conditions arising from the COVID pandemic and subsequent outcomes have led to many home building projects taking longer than expected and clients paying more than expected.  Unsurprisingly, there has been an increase in the number of domestic building disputes as a result.

Increased inflation and continued higher interest rates have also made clients more likely to look for an opportunity to minimise what they have to pay their builder. Sometimes financial pressures lead to clients having a powerful incentive to pick fault with a builder’s work to justify not paying the builder the full amount owing.

My experience is that many builders are generally good at communicating with their clients and addressing their concerns as the home building project is underway. Any disputes are resolved quickly and the project proceeds. Usually this means that the final payment and handover process is relatively smooth. Disputes, if they happen, can often be resolved without too much work.

Unfortunately, it is not uncommon with many home building projects for the client and/or builders to leave disagreements, or potential disagreements such as undocumented variations or EOT claims, until the pointy end of the project. This can make sense at the time as the client wants the project to be finished and the builder wants to finish the project as quickly as they can so they can be paid.

Often there is tension in the relationship as the disagreements build up but are not dealt with. This all means that when the final payment and handover is due, there is a major dispute and little likelihood of an easy and quick resolution.

The Role of DBDRV

In 2017 the Victorian government established Domestic Building Dispute Resolution Victoria (DBDRV). DBDRV is a compulsory process before a home building client or builder can commence legal proceedings to resolve a dispute. It was introduced as being a free, fast and fair dispute resolution process. It is difficult to argue that it has satisfied this objective.

DBDRV uses conciliation to attempt to get the parties to get together and negotiate to resolve their differences. While conciliation can be a useful method for resolving disputes it may not be as effective if the parties have entrenched positions and don’t want to compromise. In these circumstances a compulsory conciliation can be easily used to delay resolution of a dispute.  And especially so if one party wants to delay if not avoid their financial responsibilities. With the DBDRV process often taking months with no guarantee of an outcome it is not surprising that many people wanting to enforce their rights find themselves compromising to end the dispute and move on.

Opportunities for Improvement

Late last year the Victorian government announced that it would establish a new building regulator, the Building and Plumbing Commission (BPC). The new regulator will take over DBDRV’s responsibilities, presenting an opportunity to improve the dispute resolution process.

HIA believes the government should consider removing the mandatory nature of DBDRV and instead allow builders and clients to voluntarily engage in its services for early dispute resolution. This change would empower parties who genuinely wish to negotiate while allowing others to proceed directly to legal action if necessary. Such a reform would streamline the process and reduce unnecessary delays, ensuring disputes are resolved more efficiently.

Further Help and Guidance

HIA members can contact us on 1300 650 620 for more guidance about resolving disputes.