Building legislation and regulations are constantly changing and those in the building industry need to stay abreast of laws and reforms to avoid non-compliance issues.

The Building Act 1993 (Vic), the Domestic Building Contracts Act 1995 (Vic) and the Building Regulations 2018 govern the building industry in Victoria and form the essence of the obligations and responsibilities of building industry participants.

The Acts and Regulations prescribe various offences and set maximum penalties applicable for non-compliance. The significant penalties that may be ordered under these laws can have devastating financial implications on your business and affect your building or trade registration.

All building practitioners including tradespersons should understand those parts of the Acts and Regulations that impact on the work they carry out and have a clear understanding of their legal obligations within the industry.

Offences under the Building Act 1993 (Vic)

Carrying out works without a building permit

Sections 16(1) and (2) of the Building Act 1993 prohibit a person or entity from carrying out building work unless it is done in accordance with the Act, the Regulations and an issued permit. The Act imposes maximum fines of up to 500 penalty units in the case of an individual breach and 2,500 units for breach by a corporation.

Failing to have relevant insurance

A builder or building entity must not undertake, manage or supervise domestic building work under a major domestic building contract without having the necessary domestic building insurance in place. The maximum penalty for contravention of this section is 500 penalty units for an individual and 2500 penalty units for a corporation. Building practitioners and domestic builders should ensure that proper insurance is taken out for the type of work being undertaken.

Occupancy without an occupancy permit

Sections 39(1) and (2) provide that an occupancy permit, certifying that the building works are fit for occupation, must be obtained before a building or part of a building is occupied if the relevant permit requires. Contraventions of these provisions may incur fines of up to 120 penalty units for an individual and 600 penalty units for a corporation.

Ignoring protection works

Where contemplated building work has the potential to cause damage to adjoining property, the Building Act 1993 sets out processes to protect that property from the risk of damage. For example, protection work may be required where the proposed works involve significant excavations, changes to footings, or will be carried out close to boundary walls which risk damaging the adjacent property.

Disregarding a protection works notice will have implications for the property owner attracting fines of up to 500 penalty units for an individual and 2,500 penalty units for a corporation if an order is ignored or work carried out before the protection works are agreed or determined. Building practitioners must ensure that building does not commence until the parties are clear on any protection works required and the relevant orders are complied with.

Offences under the Domestic Building Contracts Act 1995 (Vic)

Essentially, the Domestic Building Contracts Act applies to residential building work and will be particularly relevant to domestic builders and tradespersons. Residential building work includes:

  • the erection, construction of, or renovation, repair or extension to a home including landscaping, paving, retaining structures, driveways, fencing, garages, carports, workshops, swimming pools and spas;
  • the provision of lighting, heating, ventilation, air conditioning, water supply, sewerage or drainage;
  • the demolition or removal of a home;
  • any site work related to the above work;
  • the preparation of plans or specifications for the carrying out of the above work.

Consumer Affairs Victoria may issue infringement notices for minor offences under the Domestic Building Contracts Act. Fines payable under these notices are less than the maximum amount that could be imposed by a Court, should an individual or entity be found guilty of the offence.

The issue of an infringement notice will allow the recipient to pay the fine, without an admission of guilt. Many of these types of offences relate to the administration of contracts and procedures (‘housekeeping’), such as:

  • Failing to provide a written domestic building contract (for major domestic building works) containing all prescribed terms, detailing the scope of works, the parties, relevant dates, contract price and builder’s registration number – 25 penalty units.
  • Failing to set out prime cost items and provisional sum items in writing – 25 penalty units.
  • Failing to provide the owner with proof of cost of prime cost items and provisional sums as soon as possible – 10 penalty units.
  • Failing to make allowances for delays in time when calculating completion dates – 25 penalty units.
  • Failing to provide an owner with a copy of documents received from a statutory authority, provider of services (i.e. gas, electricity, telephone, water and sewerage) or person registered under the Building Act 1993 as soon as possible – 10 penalty units.

Receiving an infringement notice

The recipient of an infringement notice may either pay the fine in full, apply to pay the fine by instalments, request an internal review on the basis that the notice has been unfairly issued or for some other valid reason, or have the matter heard in Court.

Given that a Court is able to order a greater fine than that imposed by the infringement notice, should the recipient be found guilty, it is recommended that legal advice be obtained before proceeding to have such matters heard.

Conclusion

The above is merely a summary of some non-compliance issues within the building industry and is in no way exhaustive. Understanding your obligations is not only important to avoid unnecessary fines and penalties, but assists in running an efficient, profitable and reputable business.

This information is for general purposes only. Industry participants are always encouraged to seek legal guidance if they are unsure of their obligations, whether that be under the relevant legislation and regulations, or under a building contract.

If you or someone you know wants more information or needs help or advice, please contact us on call 03 5221 7077 or email [email protected].