Building Warranty Claims in Victoria | Bellini v Meldan (Vic) Pty Ltd
10 min read
11 December 2024
Are domestic building warranty claims subject to proportionate liability?
In Bellini v Meldan (Vic) Pty Ltd [2021] VCAT 833, the Victorian Civil and Administrative Tribunal considered defective building work at a Newport home and whether the builder could apportion responsibility to the relevant building surveyor.
VCAT found that the owners had established numerous breaches of the statutory warranties under the Domestic Building Contracts Act 1995 (Vic). The Tribunal ordered the builder to pay the owners $80,676 in damages.
The decision also provides guidance on when a domestic building warranty claim will constitute an apportionable claim under Pt IVAA of the Wrongs Act 1958 (Vic).
Background
Meldan (Vic) Pty Ltd constructed a detached dwelling in Newport under a major domestic building contract entered into sometime before 22 July 2011.
ARKI Building Surveyors Pty Ltd was the relevant building surveyor. It issued the building permit on 22 July 2011 and an occupancy permit on 24 August 2012.
On 11 February 2013, the Bellinis entered into a contract to purchase the property. Settlement occurred on 7 May 2013.
Although the owners were not parties to the original building contract, s 9 of the Domestic Building Contracts Act 1995 extended the benefit of the statutory warranties implied by s 8 to them as subsequent owners.
The owners alleged that the building contained numerous defects and claimed:
the reasonable cost of rectification;
alternative accommodation during rectification; and
furniture removal and storage expenses.
Claim against the building surveyor
The owners initially brought claims against both Meldan and ARKI.
Before the final determination, the owners settled their claim against ARKI for an undisclosed amount. ARKI nevertheless remained a party to the proceeding so that VCAT could determine whether any liability should be apportioned to it under Pt IVAA of the Wrongs Act 1958.
Meldan sought to limit its liability by alleging that ARKI was a concurrent wrongdoer.
When is a building warranty claim apportionable?
Section 24AF of the Wrongs Act 1958 applies proportionate liability to certain claims for economic loss or property damage arising from a failure to take reasonable care.
VCAT applied the Victorian Court of Appeal’s decision in Tanah Merah Vic Pty Ltd v Owners Corporation No 1 of PS613436T [2021] VSCA 72, commonly known as the Lacrosse decision.
The Tribunal identified two important principles:
a claim against a builder is only apportionable if it arises from the builder’s failure to take reasonable care; and
how the claimant frames the claim is an essential consideration in determining whether it is apportionable.
Most of the warranties in s 8 impose contractual obligations that do not depend on proving negligence. Liability for breach of those warranties is contractual and strict.
The only potentially relevant warranty for proportionate liability was s 8(d), under which the builder warranted that the work would be carried out with reasonable care and skill.
However, the owners alleged that Meldan had failed to ensure that the works were carried out with reasonable care and skill. They did not allege that Meldan itself negligently performed particular work.
VCAT therefore found that the successful warranty claims did not arise from a failure by Meldan to take reasonable care in the sense required by Pt IVAA of the Wrongs Act. The damages were not apportioned to ARKI.
Defects accepted by VCAT
Termite management system
The property was in a termite-prone area, but the required termite management system had not been installed.
Both experts agreed that termite protection was required, although they disagreed about the extent of the rectification work. VCAT accepted the less disruptive proposal advanced by the builder’s expert and awarded $12,596.
The Tribunal found that the absence of a compliant system breached the warranty under s 8(c) that the work would comply with all laws and legal requirements. This claim was not apportionable.
Boundary fence
The boundary fence had been constructed using machine-graded pine, cement sheeting and exposed polystyrene. Part of the fence was unclad and the timber was deteriorating.
Both experts agreed that the fence had not been properly constructed and required replacement. VCAT awarded $5,717.50.
Leaking showers and structural damage
Grout had been used at the junctions between the shower walls and floors instead of a flexible sealant capable of waterproofing the joints and accommodating movement.
Water had leaked from the ensuite shower into the roof space above the garage. The resulting damage included deteriorated structural timber.
VCAT preferred the owners’ expert evidence that the problem arose from poor workmanship rather than inadequate maintenance. It awarded $27,110 for the shower rectification and consequential damage.
Railway sleepers
The owners alleged that old railway sleepers installed in the garden were unsuitable in a termite-prone area.
Their expert ultimately acknowledged that the sleepers were a landscaping feature rather than a structure regulated by the National Construction Code. VCAT was not satisfied that their use constituted a defect and made no award for this item.
Light courtyard and missing flashing
The step down to the light courtyard was insufficient and had not been constructed as documented. The builder had raised the courtyard level using cement, contrary to AS 4654.2–2009.
The windows and door also lacked appropriate flashing, resulting in water ingress and consequential damage.
VCAT awarded $9,445 and found that the work breached the compliance warranty in s 8(c). The claim was not apportionable.
Exposed gas pipe
The gas supply pipe was exposed to sunlight and the elements, creating a risk of deterioration. VCAT awarded $862 for its replacement or protection.
Weep-hole clearance
The experts agreed that the weep holes along the southern boundary did not have the required 75 mm clearance above the finished pavement.
Rectification required the pavement to be removed and relaid at a lower level. VCAT awarded $12,245.50 and found that the defect breached s 8(c).
External weatherboards
VCAT accepted that the external weatherboards had not been adequately painted. Photographs taken less than six years after the occupancy permit showed peeling paint and exposed weatherboards.
The Tribunal preferred the owners’ expert evidence over the builder’s argument that the deterioration resulted from inadequate maintenance. It awarded $7,690.
Alternative accommodation and storage
VCAT accepted that the owners could not reasonably remain in the property during the anticipated 21-day rectification period.
The owners claimed $6,720 for alternative accommodation. Due to the limited evidence about the likely cost, VCAT allowed $5,000.
The Tribunal rejected the additional $2,500 claim for removal, packing and furniture storage because the owners had not established that the rectification work required the furniture to be removed.
Outcome
VCAT ordered Meldan to pay the owners $80,676.
Interest and costs were reserved for further written submissions.
The judgment lists the following allowances:
Item | Amount
Termite management | $12,596
Boundary fence | $5,717.50
Leaking showers and consequential damage | $27,110
Light courtyard and flashing | $9,445
Gas pipe | $862
Weep-hole clearance | $12,245.50
External weatherboards | $7,690
Alternative accommodation | $5,000
These individual figures total $80,666. However, both the conclusion and formal order specify $80,676. The ordered amount is therefore the figure that should be stated as the outcome.
Key takeaways
The decision demonstrates that:
subsequent owners receive the benefit of the s 8 statutory warranties through s 9 of the Domestic Building Contracts Act 1995;
not every domestic building warranty claim is an apportionable claim;
the manner in which the owner pleads and frames the claim is critical;
claims for breach of strict contractual warranties, including the compliance warranty in s 8(c), do not necessarily arise from a failure to take reasonable care;
a builder cannot automatically reduce its contractual liability by attributing responsibility to a building surveyor or other practitioner;
expert evidence must address both the existence of each defect and the reasonable rectification methodology; and
alternative accommodation may be recoverable where the owners cannot remain in the property during rectification, but the amount must be supported by evidence.
Conclusion
In Bellini v Meldan, VCAT found that the builder was liable for numerous defects under the statutory warranties implied by the Domestic Building Contracts Act 1995.
Applying the Court of Appeal’s reasoning in Lacrosse, the Tribunal held that the owners’ successful contractual warranty claims were not apportionable. Meldan could not reduce its liability by attributing responsibility to the building surveyor and was ordered to pay $80,676.
How we can assist…
At Bastion Legal, we help everyday Australians navigate complex legal issues with practical, straightforward advice. Our team is dedicated to resolving disputes, protecting rights, and achieving fair outcomes. Whatever challenge you’re facing, we provide clear guidance, strong representation, and practical solutions tailored to your situation.
If you’re facing a situation like the one discussed above, you do not need to face these issues alone. We’re here to protect your interests and work towards the outcome you deserve.
Contact us today for a free consultation and take the next step with confidence.