Building and property development disputes in Victoria
Reviewed by Justin Chua, principal, Chua Tan Associates · Updated 18 October 2026
Most Victorian home building disputes must first go to Domestic Building Dispute Resolution Victoria (DBDRV), now part of the Building and Plumbing Commission, before VCAT will hear them. Strict time limits apply, including a 10-year limit for building actions. The cases that go well usually have early expert evidence, good records and a realistic view of costs.
Who ends up in a building dispute
Home owners say the builder left defects, ran late, overcharged for variations or walked off the job. Owners corporations face defects across a whole apartment building. Developers and builders argue over payment and delay. Off-the-plan purchasers wait years for a building, or find the vendor trying to cancel. Many clients are investors or family members overseas who need the dispute run without being in Melbourne.
Homeowners and builders: the implied warranties
Every domestic building contract in Victoria carries warranties implied by section 8 of the Domestic Building Contracts Act 1995 (Vic). In substance, the builder warrants that the work will be done in a proper and workmanlike manner, in line with the plans and specifications, in compliance with the law, with reasonable care and skill, and by the date (or within the period) in the contract. These warranties cannot be contracted out of, and they pass to later owners.
The usual problems are:
- Defects: leaks, failed waterproofing, cracking, structural or non-compliant work.
- Delay: work not finished by the contract date, often blamed on weather, variations or the owner.
- Variations: extra charges for changes not agreed in writing as the Act requires.
- Abandonment: the builder stops work, over a payment dispute or financial trouble.
The usual measure of loss for defects is the reasonable cost of making the work comply with the contract. In [Bellgrove v Eldridge [1954] HCA 36](https://www.austlii.edu.au/cgi-bin/viewdoc/au/cases/cth/HCA/1954/36.html), a Melbourne house was built on foundations so far from the specifications that it was unstable. The High Court upheld an award of the cost of demolishing and rebuilding, because that was the only reasonable way to make it conform. Rectification is assessed on what is necessary and reasonable, which is why expert evidence matters from the start.
Owners corporations, apartment defects and cladding
In apartment buildings, defects in roofs, facades, basements and services are usually common property, so the owners corporation normally sues. It needs proper resolutions and a clear plan for funding legal and expert costs before it begins.
Combustible cladding is the best-known example. In [Owners Corporation No 1 of PS613436T v LU Simon Builders Pty Ltd [2019] VCAT 286](https://www.austlii.edu.au/cgi-bin/viewdoc/au/cases/vic/VCAT/2019/286.html), arising from the Lacrosse tower fire in Docklands, VCAT found the builder liable to the owners for breach of the statutory warranties, then passed most of that liability to the architect, building surveyor and fire engineer. The Court of Appeal refused leave to appeal in [Tanah Merah Vic Pty Ltd v Owners Corporation No 1 of PS613436T [2021] VSCA 72](https://www.austlii.edu.au/cgi-bin/viewdoc/au/cases/vic/VSCA/2021/72.html). The warranties can apply to large apartment projects, and consultants as well as builders may have to answer for the loss.
Developers, builders and subcontractors
Disputes between developers, head contractors and subcontractors turn mostly on the written contract: payment, extensions of time, liquidated damages and termination. The Building and Construction Industry Security of Payment Act 2002 (Vic) lets builders and subcontractors make a payment claim and, if it is not paid or properly answered, seek a fast interim decision through adjudication or court. A party receiving a payment claim generally has 10 business days to serve a payment schedule, or risks owing the full amount. The Act generally does not apply against a home owner building their own home, but can apply where the owner is a developer.
Off-the-plan purchasers and sunset clauses
Off-the-plan contracts usually have a sunset date by which the plan of subdivision must be registered. Under sections 10A to 10F of the Sale of Land Act 1962 (Vic), a vendor under a residential off-the-plan contract cannot simply rescind under a sunset clause. It needs each purchaser’s written consent after proper notice, or a Supreme Court order that rescission is just and equitable. These rules followed cases of developers cancelling contracts and reselling at higher prices. If asked to consent to rescission, get advice before you sign.
Builder insolvency and home warranty insurance
When a builder becomes insolvent, dies or disappears, a claim against the builder is often worth little. For contracts signed before 1 July 2026, domestic building insurance is generally last-resort cover that responds only in those situations, within its limits and time periods. For eligible contracts signed on or after 1 July 2026, a new Home Warranty Scheme run by the Building and Plumbing Commission allows claims for lost deposits, incomplete work and defective or non-compliant work when the problem is first identified, without waiting for the builder to fail. Check which scheme applies to your contract early.
The process: DBDRV, VCAT and the courts
For most disputes between home owners and builders, the first step is conciliation through DBDRV, which since 1 July 2025 has operated within the Building and Plumbing Commission. DBDRV can help the parties agree and, in some cases, make dispute resolution orders. If the matter does not resolve, a certificate issues and the dispute can go to VCAT, the usual forum for domestic building disputes. Large or complex claims sometimes proceed in the County Court or Supreme Court.
Expert evidence decides most building cases. Have a building consultant inspect early, before work is rectified or covered up, and keep photographs, emails, variations and payment records together.
Time limits
Section 134 of the Building Act 1993 (Vic) provides that a building action cannot be brought more than 10 years after the occupancy permit is issued or, if there is none, after the certificate of final inspection. In [Brirek Industries Pty Ltd v McKenzie Group Consulting (Vic) Pty Ltd [2014] VSCA 165](https://www.austlii.edu.au/cgi-bin/viewdoc/au/cases/vic/VSCA/2014/165.html), the Court of Appeal held that this 10-year period applies to building actions in contract as well as negligence, in place of the ordinary six-year period. Other deadlines are much shorter, including insurance notification periods and security of payment timeframes. In NSW the position differs: the Home Building Act 1989 (NSW) sets statutory warranty periods of generally six years for major defects and two years for other defects, and home building disputes usually go to NCAT.
Costs exposure
At VCAT, section 109 of the Victorian Civil and Administrative Tribunal Act 1998 (Vic) starts from the position that each party bears its own costs. VCAT may order costs where it is fair to do so, having regard to matters such as the parties’ conduct, the complexity of the case, the strength of each side’s claims and any offers made. In complex, expert-heavy building disputes, costs orders are not unusual. In the courts, the loser generally pays a large part of the winner’s costs. In both, well-timed written settlement offers can change who pays.
How we help
Chua Tan Associates acts in building and development disputes in English, Mandarin and Cantonese, for owners, owners corporations, purchasers and businesses. Where both sides are willing, a private resolution can be arranged through the Chinese Australian Dispute Resolution Centre (CADRC). Contact us on +61 3 9602 3988.
FAQs
Can I go straight to VCAT against my builder?
For most domestic building disputes between an owner and a builder, no. You must first go through DBDRV conciliation and obtain a certificate, although urgent cases may be treated differently.
The builder has gone into liquidation. What can I do?
Check which insurance scheme applies to your contract and lodge a claim within the required time. You may also be able to lodge a proof of debt with the liquidator, but insurance is usually the more practical source of recovery.
How long do I have to sue for defects?
Generally no more than 10 years from the occupancy permit or certificate of final inspection under section 134 of the Building Act 1993 (Vic). Insurance and contractual notice periods can be much shorter, so act promptly.
The developer wants me to agree to cancel my off-the-plan contract. Do I have to?
No. For residential off-the-plan contracts the vendor needs your written consent or a Supreme Court order, so take advice on the reasons given before you respond.
Will I get my legal costs back if I win at VCAT?
Not automatically. Each party bears its own costs unless VCAT considers a costs order fair, and settlement offers can make a real difference.
Talk to us about your matter
Book a confidential consultation in English, Mandarin or Cantonese, or call +61 3 9602 3988.
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General information only, not legal advice. Every matter turns on its own facts. Reviewed by Justin Chua, principal, Chua Tan Associates.
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