2024 Marks the 30-Year Anniversary of the Victorian Building Act 1993
This year marks the 30th anniversary of the year of proclamation 1994, of the Victorian Building Act 1993, a revolutionary piece of legislation that replaced the Building Control Act 1984.
This Act was significantly influenced by the National Model Building Act, published by the Australian Uniform Building Regulatory Coordinating Council (the predecessor of the ABCB). The Victorian Building Act 1993 not only set a new standard for building regulations in Victoria but also paved the way for substantial reforms in many Australian jurisdictions. Its comprehensive approach to building control introduced a suite of pioneering concepts that continue to shape the industry today.
1. The Building Act Adopted Key Principles of the National Model Building Act
In 1990, the Australian Uniform Building Regulatory Coordinating Council (AUBRCC) commissioned a consultancy to generate a National Model Building Act (NMBA). This model template was designed to be adopted by the eight states and territories to facilitate best practice building regulation and achieve uniform or harmonized building regulation. According to Dr. Anthony Lavers, a British international construction law expert, “Nothing so radical and so holistic in concept has ever been undertaken in a major jurisdiction…” (Lavers, 2000). The NMBA was intended to cut costs, increase efficiency, and reduce regulatory conflicts. It introduced several key reforms, including proportionate liability, 10-year liability capping, compulsory insurance, private certification, and compulsory registration of building practitioners.
2. A Pioneering Legislative Act
Both the Victorian and Northern Territory Building Acts of 1993 introduced several ground breaking concepts inspired by the Model Building Act:
- 10-Year Liability Limitation Periods
- Proportionate Liability Periods
- Compulsory Insurance
- Mandatory Registration of Key Actors
- Private Certification
- Broad-Church Registration of Key Actors
- Centralized Building Regulation Control via the Building Control Commission
3. Proportionate Liability vs. Joint and Several Liability
The National Model Building Act inspired the proportionate liability mechanism, replacing the joint and several liability system. The precise words in the NMBA were as follows. Section 180
- After determining an award for damages in an action, a court is to apportion the total amount of damages between all persons who are found in that action to be jointly and severally liable for those damages, having regard to the extent of each person’s responsibility for the damage.
- The liability for damages of a person found to be jointly or severally liable for damages is limited to the amount apportioned by the person by the court.
Section 131 of the Building Act 1993 (now replaced by the Wrongs Act 1958 section 24AI) was the first provision in Australia to implement proportionate liability, ensuring that responsibility for building faults was apportioned among responsible parties based on their contribution to the fault.
Even though section 131 was repealed, the groundbreaking provision provided the template for the broad-brush introduction of the proportionate liability concept in many jurisdictions across Australia. It was visionary and pre-emptive, setting the stage for reforms that lay ahead.
Section 131 Limitations on Liability of Persons Jointly or Severally Liable:
- After determining an award of damages in a building action, the court must give judgment against each defendant to that action who is found to be jointly and severally liable for damages for such proportion of the total amount of damages as the court considers just and equitable having regard to the extent of that defendant’s responsibility for the loss and damage.
- Despite any Act or rule of law to the contrary, the liability for damages of a person found to be jointly or severally liable for damages in a building action is limited to the amount for which judgment is given against that person by the court.
Section 131 has since been repealed, and its jurisdiction absorbed by the Wrongs Act 1958, specifically section 24AI, which continues to maintain the principle of proportionate liability. According to section 24AI:
- In any proceeding involving an apportionable claim—
- (a) the liability of a defendant who is a concurrent wrongdoer in relation to that claim is limited to an amount reflecting that proportion of the loss or damage claimed that the court considers just having regard to the extent of the defendant’s responsibility for the loss or damage; and
- (b) judgment must not be given against the defendant for more than that amount in relation to that claim.
- If the proceeding involves both an apportionable claim and a claim that is not an apportionable claim—
- (a) liability for the apportionable claim is to be determined in accordance with this Part; and
- (b) liability for the other claim is to be determined in accordance with the legal rules, if any, that (apart from this Part) are relevant.
4. Rationale for Reform
Problem with Joint and Several Liability:
- Solvent defendants risk assuming liability for insolvent co-defendants.
- Terms like ‘deep pocket syndrome’ and ‘insurers of last resort’ emerged, highlighting the inequity where solvent parties bear the financial burden for others’ insolvency.
Remedy: Proportionate Liability:
- Ensures each party is liable only for their portion of the fault, protecting solvent defendants from the financial liabilities of insolvent co-actors.
5. Compulsory Insurance
With the introduction of proportionate liability came compulsory insurance for key actors, such as:
- Building surveyors and inspectors
- Architects
- Residential builders
- Draftspersons
- Quantity surveyors
- Engineers
This broad insurance regime ensured an equitable risk landscape where responsibility and financial accountability lay with the responsible actors.
Historical Perspective on Compulsory Insurance:
Initially, the Act introduced a ‘run-off’ cover system, which provided protection for claims made after a policy expired, as long as the claim related to events that occurred while the policy was active. However, towards the close of the third millennium, this run-off cover disappeared, replaced by annual claims-made policies.
Under the run-off cover system, professionals could rely on their past insurance policies to cover claims made years after the work was completed. This system provided a safety net, ensuring continuous protection even after a professional ceased operations or retired. The shift to annual claims-made policies marked a significant change, as these policies only cover claims made during the active policy period. This transition increased the importance of maintaining uninterrupted insurance coverage to avoid gaps that could leave professionals exposed to liability claims without insurance protection.
6. Compulsory Registration and Licensing
The Act introduced compulsory annual registration of key actors, requiring evidence of compulsory cover as a precondition for registration. The categories of registrants included:
- Building Surveyors
- Building Inspectors
- Architects
- Residential Builders
- Draftspersons
- Quantity Surveyors
- Engineers
This role, initially handled by the Building Practitioners Board, has since been subsumed by the Victorian Building Authority. The registration process ensured that only qualified professionals could operate in the industry, enhancing overall standards and accountability.
7. 10-Year Liability Capping
The Act introduced a 10-year liability cap, inspired by the Napoleonic Code, to eliminate uncertainty about when the limitation period for legal actions started. This cap starts from the date of the occupancy permit or certificate of final inspection, streamlining legal proceedings and reducing unnecessary litigation.
8. Private Certification of Building Permits
Previously, only councils could issue building permits. The Building Act introduced private certification to expedite the permit issuance process, although this reform remains controversial due to concerns about the detachment of certifiers from fee-paying clients.
9. Key Takeaways
- Liability and Insurance Reforms: These have significantly improved consumer protection compared to the previous era. Insurance may not be all things to all people, but it is better than the alternative, which is no insurance.
- Proportionate Liability: Ensures equitable risk allocation, preventing solvent parties from being unfairly burdened.
- Compulsory Insurance: Generates a critical mass of insurance premium, encouraging insurer participation and providing better consumer protection. The historical shift from run-off cover to annual claims-made policies was regrettable, but it was not sustainable but nevertheless underscores the need for continuous coverage to maintain protection against liability.
- Private Certification: Has expedited permit delivery. It has its advocates and its critics, but there seems to be little appetite for a return to local government as councils will then be on the hook in multi-defendant proceedings, and the council building surveying fraternity one hears lacks critical mass.
10. Conclusion
Thirty years on, the Victorian Building Act 1993 continues to stand as a landmark piece of legislation that transformed the landscape of building regulation in Victoria. Its pioneering reforms introduced greater registration and licensing of key building practitioners, for the first time in history mandatory insurance and a more equitable distribution of risk among building practitioners based on proportionate liability and a clear 10-year liability cap. While some aspects, such as private certification, have sparked ongoing debate, the Act’s overall impact has proved to be sustainable.
The historical period when run-off cover was mandated is often regarded as a ‘Camelot chapter’ for insurance, providing robust and reliable coverage for professionals. The removal of this cover was seen as a step backward, though it was deemed unsustainable in the long term.
11. The More Things Change, the More They Stay the Same
Tsigereda Lovegrove stated that the foundation pillars of mandatory registration of key practitioners, compulsory insurance, proportionate liability, and a privatized option for building permit delivery have shown remarkable resilience. The more things change, she added, the more they stay the same, and these foundation pillars haven’t budged.
Tsigereda Lovegrove added that this article is an extrapolation of papers previously published by Kim Lovegrove. She emphasized the importance for historians to understand the background and history of the evolution of the Building Act and wanted to make mention of Kim’s involvement from the Model Building Act days to its core principles finding their way into the Victorian Building Act.
Captions
Left – Kim addressing the Fire Engineers Conference NZ 2023 on how to design best practice building regulation.
Right – Kim addressing a conference in Beijing on best practice approaches to building regulation. He was a senior law reform consultant to the World Bank. The conference was hosted by the WB and the Ministry of Finance of the Chinese government in 2019.
Tsigereda added, “Lovegrove & Cotton is proud of the contributions members of this firm have made to the generation of resilient and sustainable building control in Victoria and other parts of the country.”
As we reflect on three decades of progress, it is clear that the Victorian Building Act 1993 laid the foundation of modern-day building control in Victoria, one that will undoubtedly continue to evolve and improve in the years to come.
Although the future may hold new challenges and reforms, the principles established by this groundbreaking legislation show all the hallmarks of enduring.
Disclaimer:
This article is for general informational purposes only and does not constitute legal advice.
Footnotes:
- Lovegrove, Kim. “The Model Building Act in Australia – The Regulatory Template that Overhauled Liability Regimes Not Limited to Joint and Several Liability in the Early 1990s.” 21 Oct 2021.
- Lovegrove, Kim. “Building Control – From Monopoly to Free Market to Hindsight.” Published in Sourceable, 2016.
- Wrongs Act 1958, Section 24AI, Victoria, Australia.