A new section 45 under the Domestic Building Contracts Act 1995 enables a party to a domestic building contract to refer a dispute to the Victorian Building Authority.

The VBA will have the power to direct building inspectors to attend domestic building sites, in circumstances where the builder and owner cannot resolve the matter themselves, for the purpose of examining alleged defective works and (where necessary) issuing rectification orders.

The orders are made to enhance consumer protection by ensuring builders are accountable for the domestic building work they perform. Consequently, builders may incur penalties for non-compliance of rectification orders. Importantly, both builders and owners may appeal a rectification order. 

When will a rectification order be issued?

Generally, an owner will make an application for a rectification order to compel the builder to rectify defective, damaged or incomplete work that the builder has performed. The owner can also apply for a rectification order to prevent or restrict the builder from performing further work.
The VBA can issue a rectification order even after the dispute has been settled between the builder and the owner. 

The effect of a rectification order

A rectification order made against a builder will take effect as soon as it is made. The builder will have a specific time period (generally 20 business days) as determined by the VBA, to comply with the order. This time period may be extended if the builder fails to comply with the order.

Where the builder completes the rectification work, the VBA can appoint another inspector to examine the works and the inspector will then prepare a report stating whether the rectification order has been complied with. Where the builder fails to complete the rectification works, VCAT will make an order it considers appropriate in the circumstances, e.g. refund money paid under the domestic building contract. 

The VBA will determine whether a rectification order has been complied with, and if not properly satisfied, the owner may make a claim under the builder’s warranty insurance.

In support of the builder, the inspector will have the capacity to include in the rectification order, not only terms as to the rectification and completion of works but also orders that the owner to pay money to the builder at a certain time or pay monies into a trust account pending completion.

What if I want to appeal a rectification order?
An owner can appeal a decision not to issue a rectification order or on the basis that the order does not rectify the defective, damaged or incomplete works.
A builder can appeal a decision within 20 business days of receiving notice of the rectification order. The builders appeal must be on the grounds that; the rectification order was not, or is no longer, correct.