VCAT Rejects Builder’s Apportionment Of Liability Defence

Wrongs Act 1958 (Vic) - Bellini v Meldan (Vic) Pty Ltd (Building and Property) [2021] VCAT 833

Introduction

Property owners will typically commence legal proceedings against a builder in the event of defective works for a breach of the warranties implied into each domestic building contract. In response to this, a builder may seek to apportion fault to other construction professionals involved in the project such as the building surveyor to reduce its liability to the owners.

To succeed in such an any such apportionment defence, it will be necessary to demonstrate that the defects arose from a failure to exercise reasonable care.

Case Background

In 2011, the builder (Meldan) was engaged by the previous owners to construct a detached dwelling unit in Newport under a major domestic building contract. ARKI Building Surveyors issued an occupancy permit for the unit in 2012.

In 2013, the owners purchased the unit. The owners alleged various building defects in the unit and issued VCAT proceedings against the builder alleging that it had breached the implied warranties, which they were also entitled to the benefit of.  

In response, the builder sought to apportion fault to the building surveyor based on a concurrent wrongdoing pursuant to section 24AF of the Wrongs Act, thereby reducing its liability to the owners.  

Under section 24AF of the Wrongs Act, a concurrent wrongdoer may seek an apportionment of its liability with another concurrent wrongdoer where there is a claim for economic loss or damage to property, which arises from a "failure to take reasonable care".  As a result, its liability is reduced relative to the amount of liability apportioned to the other concurrent wrongdoer.

VCAT Rejected Apportionment of Liability

In this case, VCAT rejected the builder’s request to apportion liability between it and the building surveyor on the basis that only a breach of the warranty relating to a failure by a builder to take reasonable care was apportionable. 

The reason for this is that the owners successfully argued that the builder failed to ensure that the works were carried out with reasonable care and skill and not that the builder itself had failed to carry out the work in such a manner. This approach is consistent the recent Lacrosse decision on apportionment of liability in the context of combustible cladding.

Conclusion

In order for a builder to successfully seek an apportionment of liability between itself and another construction professional based on a concurrent wrongdoing, it is necessary to establish that the defects have arisen from a failure to take reasonable care.

To learn more about the decision, or if you require legal assistance, please contact Chris Moshidis, Director and Principal Lawyer on +61 9521 7956 or chris@urbanlawyers.com.au.