Residential construction disputes, a practical guide.

Residential construction disputes can be a nightmare for owner and builder alike, here are some practical steps for owners seeking to resolve a dispute before commencing court proceedings. For expert legal advice, our construction lawyers can help with your specific matter.

Step 1:  Keep accurate records.

As a starting point, it’s important to maintain copies of all relevant documents related to your project (contracts, invoices, emails etc…). It’s a good idea to keep a digital copy and ensure that documents are named and sorted correctly – this will save you a lot of time if a dispute does arise.

It’s also good to get in the habit of emailing your builder to record any substantive oral conversations you have.  Ensure these email are accurate, concise and are not written in a self-serving way (for example, if your builder said they would try to complete a section of the build by next Friday, you should write “you said you are trying to complete the section by next Friday” not “you promised that the section would be completed by next Friday”).

Step 2: Carefully consider the issue before raising a complaint.

When it comes to your project it is easy to become emotionally-attached to the work, especially when building a family home.  Try to stay rational when assessing issues on site.  A good external resource is to check the Victorian Building Authority's Guide to Standards and Tolerances, which details the appropriate standards and quality of work required of Victorian builders.  It can also be helpful to discuss the issues with a neutral third party, like a friend or colleague, to get a sense on the reasonableness of your position.

Step 3: Have a conversation directly with the builder.

Raise the issue directly with the builder setting out your concerns and what you would like the builder to do about them.  Keep an open mind and try to work together to find a workable solution for both parties.  If you can’t reach an agreement try to clearly identify what issues are preventing you reaching the agreement (e.g. the proposed cost of a variation, the length of a delay).  Break each issue into its individual components and consider whether there are actions you could take that would potentially resolve them (for example, getting other quotes from contractors, investigating other materials etc…)

Step 4: If you can’t resolve the dispute through conversation, write formal correspondence setting out the dispute

Carefully set out the details of the dispute in written correspondence including: a summary of what the dispute is about (e.g. “ongoing cost overruns”), a description of the matters in dispute (e.g. “payment claim of X date for Y amount contains a line item I disagree with”), the reasons you disagree with the builder’s position, a summary of the conversation(s) you have had with the builder on the matters in dispute, what you want to happen, and finally a request that the builder respond by a reasonable deadline (e.g.  one week).  You should enclose copies of any relevant photos and drawings.  Email is preferable, but ensure you use registered mail if you are sending your correspondence by post.

Step 5: Document any agreement

If the builder responds and you’re able to reach agreement, document it in writing setting out the details of the agreement.

Step 6: If you’re unable to resolve the dispute, lodge an application through the Domestic Building Dispute Resolution Victoria (‘DBDRV’).

You should check your eligibility for DBDRV before starting your application.  Visit their website to confirm: Is our service right for you? - DBDRV.

DBDRV are an independent government agency designed to help resolve domestic building disputes.  After an initial assessment, the case officer will arrange for a conciliation to attempt to reach a compromise between the parties. 

Be aware that at the time of writing DBDRV was suffering significant delays, therefore it’s better commencing the process sooner rather than later when a dispute does arise.

 The above article was written by Pippin Barry (BA, JD - 2012, The University of Melbourne), an Australian Legal Practitioner, and Hyein Kim, paralegal.