The use of modular homes constructed off-site in a factory, often with the use of converted shipping containers that contain domestic living features, is becoming more popular.

The question then is, to what extent the consumer requirements in the building legislation apply to this form of construction and is it truly domestic “construction” at all? 

If the dwelling is a “movable structure” that is not fixed to the land, is it actually (strictly speaking) even a “building” and does the use of the container or cabin as a home require a Building Permit?

Relevant Legislation

To commence, we set out the relevant provisions of the legislation, starting with section 3 of the Domestic Building Contracts Act 1995 (“the DBCA”) which reads:

“home means any residential premises and includes any part of a commercial or industrial premises that is used as a residential premises but does not include –

a) a caravan within the meaning of the Residential Tenancies Act 1997 or any vehicle used as a residence…”

Section 3 of the Residential Tenancies Act 1997 (“the RTA”) defines a caravan as:

“caravan” means –

• a movable dwelling; or
• an immovable dwelling situated in a caravan park –

but, except in Part 14, does not include such a dwelling occupied in pursuance of a contract of employment;

“caravan park” means an area of land on which movable dwellings are situated for occupation on payment of consideration, whether or not immovable dwellings are also situated there;”

Section 517 of the RTA states:

“The Building Act 1993, except Part 12A, does not apply to movable dwellings situated in a caravan park but does apply to buildings situated in a caravan park that are not movable dwellings.”

Significantly, the definition of a “building” in section 3 of the Building Act 1993 reads:

“building includes any structure, temporary building or temporary structure and also includes any part of a building or structure;..”

In the Building Act 1993 (s3) “building work” is defined as meaning “work for or in connection with the construction, demolition or removal of a building“.

In section 3 of the Planning & Environment Act 1987, there is a similar broad definition of “building” that reads:

“building” includes –

• a structure and part of a building or a structure; and
• fences, walls, out-buildings, service installations and other appurtenances of a building; and
• a boat or a pontoon which is permanently moored or fixed to the land.

The definition of “building” is therefore very broad and should not be given an unduly restrictive interpretation. There is a wide ambit of structures that fall within the definition, with little to suggest they need to be immovable structures that are independently fixed to the land.

Case Law

Case law in this area suggests that the most significant factor is the intended use of the building at the time of design and construction, rather than the design itself. 

If the design could lend itself to use as a habitable dwelling, then most likely the consumer protection and safety provisions in the DBCA and the Building Act 1993 will be applicable.

To that end, case law also suggests that technicalities based on possible semantic interpretation of isolated sections in the legislation will be less important than:

(i)         A purposive interpretation that will be consistent with the overall purpose and objectives of the legislation; and

(ii)        The overall “spirit” and intention of the building legislation, which is geared towards consumer protection for domestic habitable dwelling occupants (as per the DBCA) and building regulation and safety provisions (as found in the Building Act 1993).

Given the above factors, any approach to this area of law should be conservative, and with one eye on the overall purpose and intention of the legislation. 

If there is any uncertainty about the correct interpretation of these laws, then the courts will tend to favour the interpretation that is most consistent with the overall purpose and intention of the entire Act or Regulation.

Analysis

We will look at a case study of an attempt to place refurbished shipping containers on land, that have internal features to suggest they will be sold as liveable “cabins”.  These cabins are fabricated off site in a factory and are not secured to the land by footings or foundations.

We consider that cabins consisting of shipping containers could potentially come within the definition of “caravan” because they are each likely to be regarded as a “movable dwelling” as per the definition of section 3 in the RTA. 

If the cabins are not regarded as “movable”, they could still come within the definition if they are situated in a “caravan park”. 

It follows that if the cabins are caravans within the RTA definition, then they can fall outside the definition of a “home” in the DBCA (section 3) and thereby fall outside of the requirements in that legislation (the DBCA).

One problem is that the definition of “caravan” in the RTA goes on to state:  “but, except in Part 14, does not include such a dwelling occupied in pursuance of a contract of employment”.

If the intended use will be to house staff or employees then this will be “in pursuance of a contract of employment”, based on the plain and ordinary interpretation of those words.

What are the secondary options if an intended vendor cannot rely on the “caravan” exception found in the RTA?

One option could be to remove as many features as possible from the refurbished containers, so that potentially the cabins if they are on-sold may be less likely to come within the definition of a “dwelling”.

We do not see this as any form of guarantee that the cabins would not be seen as a “dwelling” by the regulator, if in fact they retain some features that suggest the cabin could be used for habitation/accommodation.

In the case of Maclaw No 651 v HIH Casualty [1999] VCAT 24, a board interpretation was adopted in relation to what constitutes a “home”.  In that case it was held that serviced apartments can constitute a “home” under the DBCA because from a design perspective they have all the facilities necessary for a residence (eg kitchens, bathrooms, toilets, bedrooms, storage etc).

In the case decision of Clark v Shire of Yarra Ranges [2018] VBAB 32, a converted shipping container had been converted to include a shower, a toilet and a window and it had been connected to sewerage. 

It was held that the converted shipping container was a “structure” within the dictionary meaning and of a nature, type, and size suggesting it was meant to be covered by the regulatory regime of the Building Act 1993. The Building Appeals Board also found that given the intended use of the converted container, it was a Class 1a building, ie a habitable dwelling. 

Notably, in the Clark decision the Board also concluded that the converted shipping container may not be a movable dwelling given it’s potential difficulty to be moved from the land within 24 hours (which seems arguable), and that in any case the container was not located in a caravan park.   

This case underscores the conservative approach taken by the Building Appeals Board (and likely the courts and other tribunals) in such matters.

Of specific note, the features that suggested a permanently habitable dwelling in the Clark decision made no mention of a kitchen. 

This suggests that it may not be enough to remove kitchen features, or even a living room area from a design, in order to avoid a cabin being regarded as a habitable dwelling. If other features remain that suggest the use could be as a habitable dwelling, then the finder of fact (ie: the BAB or a tribunal) is likely to find that it is.

In any event, if habitable dwelling features are removed from the cabins as designed, this may make the end product more unpalatable for potential purchasers.

While an intended vendor can adopt a combination of measures such as:

(a) a condition about the use to be put for the cabins

(b) inclusion of some building warranties as to quality that are similar to the DBCA warranties and/or

(c) deletion of some features that suggest a permanently habitable dwelling, there can be no guarantees that the outcome would not be seen as problematic (by a regulator) later on.

If converted containers / cabins are regarded as Class 1a buildings under the Building Act 1993 then a regulator is likely to form the view that they should by constructed by a builder that is a registered domestic builder under the legislation.

The exception is if the cabins are within the definition of a “caravan” because they are each likely to be a “movable dwelling” as per the definition in section 3 of the RTA.  In that situation the requirements of the DBCA may not crystallise, depending on all the surrounding facts.

To avoid the requirement of a Building Permit is a separate question entirely, and the only way to avoid this would be to argue that the converted shipping container:

• is not a building or structure within the meaning of the applicable laws; or
• is a building/structure but one of the exceptions to the need for a Permit found in Schedule 3 of the Building Regulations 2018 applies; or
• is a building/structure but it does not come within any of the Classes of building found in the Building Code of Australia.

The definition of “building” in section 3 of the Building Act 1993 is a broad one and can include any structure, rather than a building with a front door and a roof in the traditional sense.  Therefore, we consider a shipping container, even before any work is done to convert it, is a “structure” within that definition. 

This seems to be supported by case decisions such as Blankfield v Petridis [2021] VBAB 9, where the Board determined that a shipping container was a “structure” within the meaning of a “building” under the Act. 

Accordingly, in that case the Board determined that a Building Permit should have been obtained pursuant to section 16 of the Building Act 1993.

This is a Lovegrove and Cotton publication, authored 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.