It is common practice in the building industry, particularly with more high-end residential construction, for the builder and owner to enter into “architect administered” domestic building contracts.

In such contract arrangements, the architect (who is usually also the designer for the project and involved in the tender selection process for a builder) will be the assessor of progress payment claims, variations, extension of time claims, and the resolution of defective work items.

Architect administrators must both act as an agent for owners in one sense and be a neutral and impartial claims assessor on the other hand.

Needless to say, an architect administered contract will usually mean one that has contractual protection and a defined role for the architect (even though the architect is not actually a party to the contract). Therefore, the architect as a project administrator that an owner defers to, will have some say on what form of contract agreement is used.

As always, the legislation (including any regulations) that governs domestic building in Victoria is focused to a large degree on consumer protection. Obviously many owners under building contracts are not “mum and dad” owners and are in fact developers. However, that does not change the consumer focus protection in many of the legislative requirements.

Ensuring architects are fully abreast of any regulatory changes will ensure they only promote or recommend the use of domestic building contracts that are up to date and current. This is because if a contract agreement the architect is recommending for use is not fully in accordance with all Victorian legislation criteria, including the Domestic Building Contracts Act 1995 and the Regulations, then the following problems could arise:

• The building contract could be void or unenforceable between the parties, at least to the extent of any inconsistency with the legislative requirements
• The builder under the contract could be subjected to penalty fines or other disciplinary action for not using a compliant domestic building contract.

An architect may not be subjected to the disciplinary censure for use of a non-compliant contract, as indeed a builder would. Nevertheless, a party to the contract could potentially seek civil redress against an architect if perchance a contract was later found to be void or unenforceable and that contract (in that form) had been used at the architect’s insistence.

If an architect is project managing or administering a building contract, it is common in Victoria that the builder and owner (the architect’s client) sign an ABIC (Australian Building Industry Contracts) form of contract.

This form of domestic building contract is published by the Australian Institute of Architects in conjunction with Master Builders Australia, and has a defined role for an Architect to administer the contract and building works.

Examples of commonly used forms of agreement are the ABIC Simple Works Contract for Housing in Victoria and the ABIC Major Works Contract. There are unique aspects of these agreements not found in standard domestic building contracts where no Architect is engaged, for example:

• the architect is assessing and making determinations on progress payment claims, variations and extension of time claims (as mentioned above)
• there is a definition of “practical completion” (which effectively means substantial completion and then defect rectification of outstanding minor items) rather than just “completion” – being the finishing of works in accordance with the plans and specifications and an occupancy permit having been issued
• the architect must issue notices to the builder on behalf of the owner in regard to such matters as variation claims and directions to rectify defects, and also is responsible for issuing a “final certificate” after the end of a defect liability period.

Obviously the ABIC contracts are intended to comply with all legislative requirements including the current Domestic Building Contracts Regulations. There is no option but to comply, as it is not possible to “contract out” of the legislation.

Anecdotally, in Victoria there are still instances where builders are being required by architects to sign ABIC contracts that are not fully up to date. This is an impost on builders because they are in a position where they will be responsible in a disciplinary sense to ensure that the building contract fully complies with all legal standards.

A primary example of this is where ABIC contracts have been provided by architects for use that have not been updated to include the current version of the Consumer Checklist that must be included in every major domestic building contract in Victoria. If the checklist does not contain a reference to the Domestic Building Consumer Guide, then it is out of date.

Another deficiency is where the ABIC contract does not include a copy of the Domestic Building Consumer Guide that must be given to owners before contract signing.

Therefore, architects and builders alike should ensure that the checklists accompanying ABIC contracts are the current versions, and include a copy of the Domestic Building Consumer Guide as part of the contract agreement document (or ensure it is given to the owner before signing).

In regard to the statutory penalties, a builder can be fined if the checklist is out of date and if the builder does not give the owner a copy of the guide.

This is a Lovegrove and Cotton publication. Article written by Justin Cotton.

Disclaimer

This article is not legal advice and discusses it’s topic in only general terms. Should you be in need of legal advice, please contact a construction law firm. The experienced team at Lovegrove & Cotton can help property owners and building practitioners resolve any type of building dispute.