Articles

Practitioner Update

Victorian construction law has undergone a fundamental transformation over the past four decades. When the author commenced practice in 1987, there was no specialist dispute resolution tribunal, no proportionate liability regime, and no private certification system. Building permits were issued exclusively by municipal councils, and residential dispute resolution was via arbitration.

Since then, Victoria has experienced successive waves of reform that have reshaped dispute resolution, liability allocation, insurance settings, and regulatory enforcement. These reforms were not incremental. They were structural, and in several instances, foundational.

The Pre-Reform System (Late 1980s–Early 1990s)

1.1 Entry into Practice and Industry Advisory

The author entered the construction law field in 1987 as a Legal and Contracts Officer at the Master Builders Association of Victoria. That role involved advising builders on contracts, disputes, and regulatory compliance at a time when risk allocation was driven almost entirely by contract and common law.

This position provided direct exposure to the operation of the residential and commercial building market under the pre-1993 framework.

1.2 Council-Based Building Control

At that time:

• All building permits were issued by municipal councils
• There was no private certification system
• Building control was administered through local government departments.

The later privatisation of permit delivery would represent a complete departure from this model.

1.3 Arbitration as the Dominant Dispute Mechanism

In the late 1980s:

• VCAT did not exist
• The Major Domestic Building Contracts Act was not in force

Most significant building contracts contained arbitration clauses. It is estimated that 85–95 percent of residential building disputes were resolved through private arbitration.

1.4 Liability and Limitation Settings

Liability allocation was governed by traditional common law principles:

• Joint and several liability applied
• Proportionate liability did not exist

Plaintiffs needed only to establish liability against one solvent defendant, who then bore the entire loss regardless of others’ culpability or insolvency.

There was:

• No long-stop liability cap
• No statutory 10-year limitation period

The six-year limitation regime applied inconsistently, with uncertainty as to whether time ran from damage occurrence or discoverability.

The First Seismic Shift: The Building Act 1993

The Building Act 1993 (Vic) marked the most significant structural reform of the Victorian building system in modern history.

By this stage, the author had moved from industry advisory work into government and was directly involved in the development of the Act, acting as:

• Instructor to Parliamentary Counsel, and
• Assistant Director, Building Control, Victoria

1 Structural Re-Engineering

For the first time, the Act introduced:

• Privatised building permit delivery
• Private certification
• Mandatory registration of key building practitioners
• Statutory chains of responsibility
• Mandatory insurance for defined actors
• A 10-year long-stop liability cap
• Proportionate liability principles
• Expanded enforcement powers

The shift from council-only permit issuance to a mixed public–private certification system fundamentally altered the building control landscape.

2 Institutional Change

The Act also established:

• The Building Practitioners Board
• The Building Control Commission, replacing the former departmental model

This marked a decisive move to a centralised, independent regulatory framework.

Mid-1990s:  A Domestic Building Contracts Act

The Domestic Building Contracts Act introduced another major realignment:

• Residential building contracts became statutorily designed
• Arbitration was removed from residential disputes
• Jurisdiction transferred to VCAT
• Charging clauses and caveats over residential property were prohibited

This ended the arbitration-dominated dispute culture that had prevailed in the late 1980s in the residential sector.

Insurance Reform and the Collapse of Long-Tail Cover

During the 1990s, mandatory 10-year run-off insurance (often referred to as Camelot cover) protected claims arising after retirement or cessation of practice.

By the end of the decade, insurers successfully argued that long-tail exposure was unsustainable. Run-off insurance was repealed and replaced with annual, claims-made cover.

Performance-Based Regulation: BCA 1996

In parallel with legislative reform, the Building Code of Australia 1996 introduced Australia’s first performance-based building code. The BCA which is now called the National Construction Code drew inspiration from a New Zealand building code which was used as a conceptual template.

At that time, the author was:

• Deputy Director, Australian Building Codes Board
• Head of Policy and Legal

This shift from prescriptive rules to performance outcomes had lasting implications for certification, compliance, and liability.

Post-2000 Adjustments

Proximate to the turn of the century:

• The Building Control Commission became the Building Commission
• A series of inquiries examined regulatory effectiveness
• There were question marks over enforcement effectiveness

Although there were some reforms, none matched the structural impact of the early-to-mid-1990s reforms.

The Second Seismic Shift: The 2025 Reforms

The Building Legislation (Buyer Protection) Amendment Act 2025 (Vic) marked a renewed assertion of regulatory authority, introducing:

• Mandatory performance bonds for developers
• Massively expanded rectification order powers
• First resort insurance.

These reforms shifted the system decisively from post-loss remediation to front-end risk containment.

From Victorian Reform to International Model Law

The cumulative experience of Victorian reform has informed the development of the International Model Building Act (MBA) under the auspices of the International Building Quality Centre (IBQC), chaired by the author.

The MBA imports some core principles that were refined and proved sustainable in Victoria, including:

• A centralised building Act and a centralised overarching building regulatory authority
• Proportionate liability
• Mandatory insurance
• Licensing and registration of key actors

It represents the internationalisation of lessons first encountered in Victoria decades earlier. The proportionate liability and mandatory insurance framework has since informed the design of the 2026 amendments to New Zealand’s Building Act, which will adopt a mandatory insurance and proportionate liability regime.

Conclusion

From council-issued permits and arbitration-dominated disputes in 1987 to performance bonds and proactive enforcement in 2025, Victorian construction law has undergone a profound transformation. Yet ten-year liability capping, proportionate liability, and the mandatory insurance and registration of key actors, which are foundational elements of the Victorian Building Act, not only remain intact but continue to form the core of the state’s regulatory DNA.

Author Biography

Adj Professor Kim Lovegrove Doc Hon Causa is a construction and building-regulation lawyer with over four decades’ experience. He commenced his career in 1987 as Legal and Contracts Officer at the Master Builders Association of Victoria, before playing a direct role in the development of the Building Act 1993 (Vic) as Instructor to Parliamentary Counsel and Assistant Director, Building Control.

He later served as Deputy Director and Head of Policy and Legal at the Australian Building Codes Board, contributing to the introduction of the performance-based Building Code of Australia 1996. He is the founding principal of Lovegrove & Cotton Construction & Planning Lawyers, chairs the International Building Quality Centre (IBQC), and leads the development of the International Model Building Act for the IBQC. He is a Barrister at FortyEight Chambers Auckland.

Disclaimer: This article is for general informational purposes only and does not constitute legal advice. For advice specific to Owners Corporations, building defects, or dispute resolution, please contact Lovegrove & Cotton at enquiries@lclawyers.com.au or call (03) 9600 4077.

Image Acknowledgements:
The digital renders used in this article were developed collaboratively by Lovegrove & Cotton and ChatGPT. The photo images that are not digital renders are stock images sourced from Shutterstock.