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Level 11, 456 Lonsdale Street, Melbourne,
Victoria 3000
45 Gheringhap Street, Geelong,
Victoria 3220
62 Kepler Street, Warrnambool,
Victoria 3280
Articles
May 27, 2024

Out of Court Resolutions for Construction & Building Disputes

Construction Worker During Interior Decoration

From residential and commercial to municipal and infrastructure works, the building and construction industries are incredibly important to the state of Victoria. In the period between 2021-22, approximately 119,970 building permits were approved. However, with so many works and projects underway, conflict between parties can and does occur on a regular basis.

In the construction and building sector, disputes and breaches to industry regulations are a common occurrence. Disputes may be raised on behalf of property owners, contractors, architects, engineers, designers, and various other parties involved with the project. This also includes contractual disputes between subcontractors and head contractors.

While receiving a formal dispute notice is a daunting prospect, the good news is that many of these issues can be resolved outside of court. Throughout this article, we will explore how and when an out of court resolution is viable. 
If you are currently involved in a building or construction dispute in Victoria and require immediate assistance, we advise that you contact a law firm for advice now.

Receiving a VCAT Notice for a Building and Construction Dispute

If you receive a notice from VCAT, it means that someone has lodged a formal application against you to the Victorian Civil and Administrative Tribunal. In simple terms, they have made a dispute against you and are seeking to get it resolved through VCAT. However, this does not mean that the dispute cannot be settled prior to the tribunal hearing

The Victorian Civil and Administrative Tribunal or ‘VCAT’ as it is commonly known, is the chief governing body for construction disputes. VCAT is currently home to approximately 200 members. The majority of these members have a strong legal background and all are appointed by the Governor in Council based on recommendations from the Attorney General.

As the respondent, you also have the ability to lodge a counterclaim. Remember, this is not the same as defending yourself against the application, but rather an additional measure enabling you to contest the actions of the other party.

While you can represent yourself throughout the VCAT process, professional legal advice and representation is highly recommended, particularly if you or your firm is facing a criminal charge. 


Please note; VCAT can only hear certain cases. Here is a list of what they cannot do.

Common Building & Construction Disputes

A construction dispute generally occurs when a specific party is accused of not meeting contractual obligations. Some common causes of construction disputes include:

  • > Substandard workmanship by the builder
  • > Delays, incomplete work, or abandonment
  • > Disputes over debt,overcharging and variations
  • > Noncompliance under the Building Act 1993 (VIC)

This is just a snapshot of the various cases that can be referred to and heard at VCAT proceedings. Due to the overwhelming backlog, recent changes have also been made that matters requiring more than a 1 day hearing will not be granted a date until “interlocutory steps are complete.”

Dispute Resolution Clauses

A dispute resolution clause is common practice for companies in various different industries and sectors. These causes are normally standard and included in most construction contract agreements. 

Written confirmation of this clause is incredibly important. Without it, the only course of action to achieve resolution may be legal proceedings. The clause will often include clear notice periods and timelines outlining the resolution process, as well as alternative dispute resolution methods, and specification of the timing and venue for potential legal proceedings (if necessary).


In Victoria, there are currently no formal requirements specified in either the Domestic Building Contracts Act 1995 (Vic) (DBC Act) and the Building Act 1993 (Vic) (Building Act) for contracts involving commercial building projects.

Why Pursue an Out of Court Resolution?

There are many reasons why legal clients prefer to settle a dispute outside of court. Beyond the financial implications, a trial can also be a lengthy process that takes an emotional and physical toll on both parties. 

Legal fees, court charges, and even ancillary expenses such as travel and time off work can quickly add up. This is compounded further by the fact that VCAT and Domestic Building Dispute Resolution Victoria (DBDRV) have a long waiting list of pending complaints and disputes. This current waiting period has been widely publicised.

On the other hand, an out-of-court settlement is a more cost-effective and time-friendly alternative. This is primarily because it bypasses many of the costs associated with a court trial, which ultimately makes it a more financially viable option.

Another motivation lies in the uncertainty around the outcome. While apportionment may be possible through mediation or arbitration, a court may rule in favour of a single party and place the burden of responsibility and liability solely on their shoulders.

What Are Your Options?

If you are wanting to avoid litigation or tribunal hearings, there are many pathways available that can allow you to reach an agreement and settle outside of court. This will also depend on the nature of the contract and whether a dispute resolution clause is involved or explicitly states which method of resolution is to be used. Of course, you can also reach out to a construction and building lawyer for advice or guidance. Here, your legal representative will be able to lay out your options, rights, and responsibilities in clear terms.


If your dispute involves a criminal charge, we recommend that you contact us as soon as possible. Whether you need a criminal lawyer in the Latrobe Valley, Shepperaton or Melbourne, we can provide expert advice and help you to navigate the legal process with confidence.

Communication Between Parties

Construction and building disputes can be a major disruption to your business and even get in the way of other ongoing projects or commercial obligations. This is why reaching an agreement without a lengthy process of hearings and court proceedings can be the best course of action.

Being open, honest and transparent from the beginning may dramatically improve your chances of reaching an amicable settlement, and help to avoid a lengthy litigation process.

Mediation

This is one of the most common methods to achieve a resolution outside of court. Mediation occurs in an informal setting where mutual discussions between parties are facilitated by an independent third party or ‘mediator’. These meetings may also involve the input and presence of consultants related to the project or works that are being disputed.

It is not the role of a mediator to impose an outcome, but rather to give both parties the chance to introduce relevant points and details that may be able to aid the process of reaching a resolution.

Facilitation

In the context of construction and building disputes, facilitation can be used to ensure that all involved parties have the opportunity to express their perspectives and concerns. This process aims to foster a more cooperative atmosphere, paving the way for mutually agreeable solutions.

The facilitator’s role is to manage the communication dynamics, ensuring that discussions remain focused and respectful. By encouraging transparent communication, facilitation contributes to the identification of common ground and the exploration of alternative resolutions.

Facilitation can be particularly beneficial in complex disputes that involve multiple stakeholders, such as contractors, architects, engineers, and subcontractors. Here, the impartial facilitator helps to maintain a balanced dialogue that prevents power imbalances and promotes a fair negotiation process.

Arbitration

More formalised than mediation, arbitration is a process that is similar to going to court, yet is ultimately more affordable and efficient than litigation. In Victoria, arbitration is currently prohibited for domestic building contracts, yet can be an option for commercial building disputes.

Rather than facilitating an agreement through mutual negotiations, this approach involves a binding verdict that is made by an arbitrator. Here, the arbitrator assesses the evidence and details presented by all parties, then rules on a binding outcome. Lawyers representing each party are also present throughout. While this takes place outside of a traditional court environment, hearings, pleadings, and cross-examinations remain an important part of this process.

Getting Legal Representation for Court & Tribunal Hearings

If all other options have been exhausted, or formal hearings are set to take place at Victorian Building Authority, the Building Practitioners Board, or the Victorian Civil and Administrative Tribunal (VCAT), strong legal representation can make a significant difference to the eventual outcome. 

Building and construction disputes, particularly those that involve criminal charges, are complex matters. Without the right legal guidance, you may end up having to pay hefty fines or risk further legal action. 

Gallant Law provides specialised legal assistance in the following areas:

  • > Out of Court Dispute Resolution, Mediation and Negotiation
  • > Disputes over Construction and Building Defects
  • > Litigation representation at VCAT
  • > Regulatory and disciplinary proceedings by the Victorian Building Authority, the Building Practitioners Board and VCAT
  • > Contractual Disputes Between Builders, Contractors and Subcontractors
  • > Occupational Health and Safety (Workplace) Prosecutions
  • > Domestic and Commercial Building Disputes
  • > Noncompliance with Warnings and Notices
  • > Breaches and Offences Against the Building Act and Building Regulations
  • > Building Work by Unregistered Builders
  • > Building Safety Issues

Work with Leading Building and Construction Lawyers in Victoria

At Gallant Law, we have extensive practical and legal experience in the building industry, including the field of dispute resolution. Before joining the firm, our General Manager George Cassimatis was the General Manager of Boral Bricks (roofing, clay and concrete); Director of Ideal Building Products, and CEO of Casa Geo. As a result, George brings to our firm a wealth of knowledge and associations in the building industry.

Drawing on this knowledge and practical experience, our legal team can help you to navigate building disputes and explore pathways to reach a resolution. For further information, please contact our nearest law firm in Melbourne, Geelong, or Warrnambool.  

Disclaimer: Legal Information and Advice
The information provided on this blog is for general informational purposes only and should not be construed as legal advice. The content is not intended to create, and receipt of it does not constitute, a solicitor-client relationship. Readers should not act upon this information without seeking professional legal counsel.

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