In late 2013, Mr John Beveridge (‘Beveridge’) purchased an apartment in Fitzroy North from Prudentia Avitas Pty Ltd (‘Prudentia’) who was the developer and builder of the apartment complex. Integrated Construction Management Pty Ltd (’ICM’) had been engaged as a construction manager for the construction of the apartment complex and the subsequent defects liability period. In 2016, Prudentia was deregistered.

Shortly after purchasing the apartment, Beveridge sent a list of defects to ICM. ICM agreed to fix several of these defects. However, it failed to fix a persistent leak. A dispute arose between the parties as to liability for the defects and Beveridge lodged an application in VCAT claiming that ICM had breached the statutory warranties set out in section 8 Domestic Building Contracts Act 1995 (Vic) (‘DBCA’) and seeking $18,600 in damages.

‘Builder’ or ‘Subcontractor’

Pursuant to section 8 of the DBCA a builder warrants, amongst other things, that work it carries out under a domestic building contract will be free from defects (‘the Warranties’). The DBCA defines a ‘domestic building contract’ as excluding a contract between the builder and a subcontractor.

Beveridge asserted that ICM owed the Warranties. Member Calabro determined that Prudentia was the builder of the apartment complex (rather than ICM) for the following reasons:

  • the majority of the building permits identified Prudentia as the builder;
  • the building insurance was in Prudentia’s name; and
  • there were no major domestic building contracts tendered as evidence.

ICM was found to be a subcontractor of Prudentia. That being the case, Member Calabro found that ICM did not owe Beveridge the Warranties as Prudentia would have and dismissed the claim.

We note that Beveridge had an ongoing claim with the VMIA, Prudentia’s domestic building insurer.

Takeaways

This case demonstrates the difference between a builder and a subcontractor and is an important reminder to homeowners (particularly Owners Corporations and those lot owners who have purchased an apartment which was recently constructed or renovated by the previous owner) that they need to properly identify who the contracting builder was before issuing proceedings for breach of the Warranties.

Further information / assistance regarding the issues raised in this article is available from Fabienne Loncar, Partner, Christopher Philactides, Senior Associate, or your usual contact at Moray & Agnew.

The content of this publication is intended to provide a summary and commentary only. It is not intended to be comprehensive nor does it constitute legal advice, and has been prepared based on applicable legislation at the date of publication. You should seek legal advice on specific circumstances before taking any action.