Building contracts dealing with “homes” between builders and developers are not subject to the Domestic Building Contracts Act
Written by Stephen Adorjan, Special Counsel, Lovegrove Solicitors
18th February 2011
In 2004 the Appeals Court of the Victorian Supreme Court considered an appeal against a decision by a single judge of Court concerning the scope of the DBCA. In allowing the appeal, Hansen AJA (with whom Callaway and Buchanan JJA agreed) held that it was incorrect to restrict the enquiry to sections 5 and 6 of the Act alone , but one had to consider the entire “statutory framework” to discern “the wider object and purpose of the Act” and thus ascertain the true intent of Parliament. The consideration and review of the relevant framework by Hansen AJA should be required reading for all those involved in using and interpreting the DBCA. The conclusion reached by His Honour was that
“ … the intent of the DBC Act is to protect individual home owners rather than commercial developers …”
and added that His Honour was in agreement with the appellant’s submission
“ … that the DBC Act was enacted to regulate the rights of home owners and builders as distinct from developers… “
Chief Justice Warren had occasion to re-visit this question in the case of Kane Constructions Pty Ltd v Cole Sopov & Ors  where the facts concerned a “combined, mixed use development”. Her Honour held that the above views expressed by the Court of Appeal in Winslow were “authority … of assistance” in the case under consideration, notwithstanding that strictly speaking they were “confined to the narrow ambit before the Court on that occasion, and therefore obiter”. Warren CJ concluded that
“[p]icking up on the observations of Hansen AJA in Winslow Constructions, it seem[ed to Her Honour] that the Act was not intended to apply to developers…” 
Shaw v Yarranova Pty Ltd & Anor  concerned an “off the plan” contract of sale between a developer/owner and a purchaser, in which the purchaser argued that the contract in question was a major domestic building contract within the ambit of the DBCA. In rejecting this proposition, Bell J observed that “… in Kane Constructions Warren CJ [had] considered that the provisions of the domestic Building Contracts Act 1995 at issue in the case before her did not apply to developers.”  Although Bell J had clearly approved of this view, His Honour’s arguments in other parts of the decision seem to lend support to a contrary view, namely that a contract between a developer (who is not also a registered builder) and a builder (whether registered or not) is indeed a major domestic building contract.
The first question to be decided in the case of Glenrich Builders Pty Ltd v 1-5 Grantham Street Pty Ltd & 415 Brunswick Road Pty Ltdwas squarely whether a building contract for the construction of 103 residential units, between a registered builder and its client owners who were incorporated developers, was or was not a domestic building contract subject to the DBCA – and therefore whether the dispute between the parties was or was not a “domestic building dispute” to be stayed in the County Court and transferred to VCAT. In considering this question, Judge Sheldon traced the line of decisions discussed above. In the course of this review His Honour rejected the defendants’ argument that Hansen AJA’s statement in Winslow or the Chief Justice’s statement in Kane Constructions cited above were to be confined to the facts of those cases. He decided unequivocally that he would “… follow the approach of Hansen AJA, the Chief Justice and Bell J, and conclude that the DBC Act does not apply to owner-developers.” 
This is a decision clearly on point and of broad application; it is also the ratio decidendi for refusing the defendants’ application for a stay of proceedings. Therefore it is, with respect, a binding precedent unless and until overturned by higher authority. In view of the authorities discussed here pointing in the same direction, this is unlikely to happen any time soon.
In passing, it is interesting to note that the Queensland version of the DBCA expressly excludes from the definition of “domestic building work” the erection or construction of all but “a detached dwelling”. 
 Winslow Constructors Pty Ltd vMt Holden Estates Pty Ltd  VSCA 159 (8. 9.04) – hereafter: “Winslow”
 These are the provisions said, in section 3, to define what constitutes domestic building work under the Act
 Op Cit at 170
  VSC 237 – hereafter: “Kane Constructions“
 Ibid at 892
  VSC 45
 ibid at 35
 at 26, 32
  VCC 1170 – hereafter: “Glenrich Builders”
 ibid at 28 (emphasis added)
 Domestic Building Contracts Act 2000 (Qld), s8(1)(a). Note however that the scope of this Act extends beyond this narrow class of building where the work involves renovation, alteration, improvement or repair – as opposed to erection or construction – of a “home” [s8(1)(b)].