Thursday, 19 June 2025

Domestic Building Contracts Amendment Bill 2025

Statement of compatibility

Nick STAIKOS (Bentleigh – Minister for Consumer Affairs, Minister for Local Government) (10:13): In accordance with the Charter of Human Rights and Responsibilities Act 2006, I table a statement of compatibility in relation to the Domestic Building Contracts Amendment Bill 2025:

Opening paragraphs

In accordance with section 28 of the Charter of Human Rights and Responsibilities Act 2006, (the Charter), I make this Statement of Compatibility with respect to the Domestic Building Contracts Amendment Bill 2025 (the Bill).

In my opinion, the Bill, as introduced to the Legislative Assembly, is compatible with human rights as set out in the Charter. I base my opinion on the reasons outlined in this statement.

Overview

The purpose of the Bill is to amend the Domestic Building Contracts Act 1995 (Domestic Building Contracts Act), the Building Act 1993 (Building Act) the Australian Consumer Law and Fair Trading Act 2012 (ACLFTA) and the Building Legislation Amendment (Buyer Protections) Act 2025 to improve consumer protections in relation to domestic building contracts and transfer certain functions of the Director of Consumer Affairs Victoria (Director CAV) to the Victorian Building Authority (VBA) as well as resolve minor technical, regulatory and consequential matters as appropriate.

In particular, the Bill will amend the Domestic Building Contracts Act to implement the following reforms:

• extend current contract content requirements to apply to all domestic building contracts;

• improve the rights of building owners to withdraw from or end a major domestic building contract,

• exempting certain rights and requirements in the Act from applying to domestic building contracts between developers and builders,

• implement a consistent variation process across all major domestic building contracts,

• prescribe deposit limits, progress payment stages and progress payment limits to be prescribed in regulations, with any payments for work completed subject to a general proportionality requirement for all MDBC and any exemptions,

• allow cost escalation clauses in domestic building contracts with additional consumer protections,

• modernise the statutory warranties in the Act so they are consistent in expression with the consumer guarantees under the Australian Consumer Law,

• ensure that dispute resolution orders are easier to issue and more effective in the resolution of disputes,

• the transfer of functions of the Director CAV under the Domestic Building Contracts Act to the VBA, which enable the VBA to carry out education, provide information and advice, undertake compliance and enforcement functions and exercise powers in relation to the operation or potential contravention of the Act and regulations, and

• other minor miscellaneous matters.

Human Rights Issues

The human rights protected by the Charter that are relevant to the Bill are:

• Recognition and equality before the law (section 8)

• Freedom from forced work (section 11)

• Privacy (section 13)

• Freedom of expression (section 15)

• Cultural rights (section 19)

• Property rights (section 20)

• Fair hearing (section 24)

• Rights in criminal proceedings (section 25)

Recognition and equality before the law (section 8)

Section 8 of the Charter provides that every person has the right to enjoy their human rights without discrimination, is equal before the law, is entitled to the equal protection of the law without discrimination and has the right to equal and effective protection against discrimination.

The term ‘discrimination’ referred to in section 8(3) of the Charter is defined as: discrimination (within the meaning of the Equal Opportunity Act 2010) on the basis of an attribute set out in section 6 of that Act.

Removal of gendered language

The Bill promotes the right to recognition and equality before the law by amending the Domestic Building Contracts Act to replace gendered terms within that Act with references to responsible office holders. The amendments have been made in accordance with contemporary drafting practices and promote the right to recognition and equality before the law under the Charter by ensuring that the language of the statute does not discriminate against a person’s gender identity, a protected attribute set out in section 6 of the Equal Opportunity Act 2010.

Contracts are written in English and readily legible

Clause 9 of the Bill inserts new section 7A(b) into the Domestic Building Contracts Act which creates an offence for a builder to enter into a domestic building contract unless the contract is written in English and readily legible. Clause 17 of the Bill substitutes section 37 of the Domestic Building Contracts Act to also require that agreed variations to plans or specifications set out in a major domestic building contract are written in English and readily legible. The purpose of these clauses is to provide greater consumer protection by creating a clearer and more accessible record of contractual agreements for domestic building work made between parties.

The introduction of these clauses may engage the right to equality before the law due to the requirement that a domestic building contract and any variation to plans or specifications set out in a major domestic building contract must be written in English and be readily legible. The requirement for a contract to be written in English does not remove the ability for a translation of a contract to be prepared to ensure accessibility for the parties involved in the contract. To the extent that the Bill may limit the right to recognition and equality before the law, the limitation is reasonable and justifiable. The Bill ensures that parties to a domestic building contract are afforded greater consumer protections by promoting greater understanding for parties of the contracts entered as well as improving accessibility and readability of contracts. The legal system of Australia has its roots in English origins that underpins the interpretation of contracts in the courts. Requiring contracts to be written in English and readily legible ensures that the terms of the contract are clearly identifiable and that contractual disputes can be resolved understanding the full intended context and meaning of the contract.

Builder’s enforcement of contractual rights and entitlements

Clause 15(3) of the Bill may limit the right to equality before the law by substituting section 31(2) of the Domestic Building Contracts Act to provide that where a major domestic building contract has not been signed by the parties, the builder has no contractual rights or entitlements under the contract, while the contractual rights and entitlements of the building owner may be enforced by the building owner. The builder may recover money from a building owner where the Victorian Civil and Administrative Tribunal (VCAT) is satisfied that there are exceptional circumstances and that it would not be unfair for the builder to obtain the money. The purpose of this clause is to ensure that consumers who make a verbal or unsigned agreement for domestic building work that exceeds the major domestic building contract threshold are not placed in an unjust position due to that agreement. This includes ensuring that consumers have access to statutory warranties regardless of how the contract is entered into.

To the extent that the Bill may limit the right to equality before the law by restricting a builder from accessing their contractual rights or entitlements under a major domestic building contract that is not signed by the parties, I am of the view that the clause is precise and appropriately prescribed, is not arbitrary and is in accordance with the law. A builder will otherwise have the right to access their rights and entitlements under a contract where it is clear from signature that both parties have agreed to the terms of the contract. The clause promotes consumer protections by protecting potentially vulnerable building owners from non-performance of an agreed major domestic building contract. The clause encourages agreements for domestic building work that exceeds the major domestic building contract threshold to be transparent and clear to the parties involved by discouraging verbal or unsigned written major domestic building contracts.

Accordingly, I consider that these clauses under the Bill are compatible with the right to recognition and equality before the law under section 8 of the Charter.

Freedom from forced work (section 11)

Section 11 of the Charter provides that a person must not be made to perform forced work or compulsory labour. ‘Forced or compulsory labour’ relevantly does not include work or service that forms part of normal civil obligations. While the Charter does not define ‘normal civil obligations’, comparative case law has considered that to qualify as a normal civil obligation, the work or service required must be provided for by law, must be imposed for a legitimate purpose, must not be exceptional and must not have any punitive purpose or effect (Faure v Australia (Human Rights Committee Communication No 1036/2001)). This has extended to obligations to undertake work in order to maintain compliance with regulatory standards.

Injunction or order requiring the carrying out of work

Clause 52 of the Bill may engage the right to freedom from forced work by inserting section 68ZE into the Domestic Building Contracts Act that allows the court to, upon application and where the statutory tests are satisfied, grant an injunction that requires a person to carry out building work, plumbing work or other work. Clause 52 of the Bill may engage the right to freedom from forced work by inserting section 68ZB(4) into the Domestic Building Contracts Act empowering a court to, where a person has not complied with a term of an undertaking, make an order directing a person to carry out building work, protection work (work required to protect an adjoining property from potential damage) or plumbing work in relation to the term of the undertaking.

Clause 38(3) of the Bill may engage the right to freedom from forced work by inserting section 49C(1)(bb) into the Domestic Building Contracts Act to provide that a dispute resolution order may require a builder to refund a building owner where there have been significant delays to the commencement or completion of domestic building work under the contract.

I am of the view that work required under an order or injunction to complete or rectify works would form part of a normal civil obligation, and as such, would not constitute a limit on this right. An order requiring the carrying out of works is provided for in accordance with the law as introduced in this Bill and is confined in its impact, including that a builder or developer can only be compelled to complete building work as opposed to being required to commence an entirely new building project. The Bill protects builders by requiring that the court may only issue an injunction where the court is satisfied that the person has engaged or is proposing to engage in conduct including the contravention of a provision of the Act or regulations. These provisions together work to ensure that the court order scheme will not operate arbitrarily.

Further, an order is imposed for the legitimate non-punitive purpose of ensuring that builders and developers deliver buildings of an appropriate standard, ultimately protecting both the health and safety of any persons who enter the building, as well as guarding against any financial loss which may be incurred by purchasers of a defective building.

Accordingly, I consider that these clauses under the Bill are compatible with the right to freedom from forced work under section 11 of the Charter.

Privacy (section 13)

Section 13 of the Charter provides that a person has the right not to have their privacy, family, home or correspondence unlawfully or arbitrarily interfered with and the right not to have their reputation unlawfully attacked.

Providing of name and address

Clause 7 of the Bill engages the right to privacy by inserting new section 31(3)(c) into the Domestic Building Contracts Act that restricts a builder from entering into a domestic building contract with a developer unless, where a registered building practitioner has entered into the contract on behalf of a partnership, the contract states the names and addresses of each member of the partnership as well as the registration numbers of registered building practitioners in the partnership. Further, Clause 9 of the Bill engages the right to privacy by inserting new section 7A into the Domestic Building Contracts Act that restricts a builder from entering a domestic building contract unless the names and addresses of all parties are included in the contract. Currently, section 31(1)(e) of the Domestic Building Contracts Act requires a major domestic building contract to include each party’s name and address. The Bill extends this requirement to all domestic building contracts covered by the Act.

Clause 52 of the Bill engages the right to privacy by inserting section 68ZD into the Domestic Building Contracts Act, which requires the register of undertakings maintained by the VBA to include names and addresses of the persons who gave the undertaking. This mirrors existing powers under the ACLFTA requiring the Director to maintain a register of undertakings given relating to contraventions under the Domestic Building Contracts Act and is part of the integration of the VBA’s functions.

To the extent that the right to privacy is engaged, I consider that each clause in relation to providing a person’s name and address is precise and appropriately prescribed, is not arbitrary and is permitted by law through the Bill. Although clauses 7, 9 and 52 of the Bill regulate the sharing or storing of personal information, the clauses require names and addresses to provide greater consumer protections for all domestic building contracts. Clauses 7 and 9 of the Bill ensure that parties to an agreed domestic building contract are clearly documented, while clause 52 ensures that the VBA can continue to appropriately monitor the use of and compliance with notices of undertakings. Further, the requirement to provide names and addresses do not require public disclosure and therefore the clauses of the Bill are not arbitrary in their application.

Powers of entry

Clause 52 of the Bill engages the right to privacy by inserting new section 68F of the Domestic Building Contracts Act to provide an authorised person with the power of entry for the purposes of determining whether the Act or regulations are being complied with. An authorised person who exercises their powers of entry may undertake an inspection of the building or land, take photographs or sketches and require a person to provide documents relating to work to the extent reasonably necessary to determine compliance with the Act or regulations. An authorised person may make copies or take extracts of documents provided. The powers of entry also include powers for the authorised person to seize or take a sample of a thing.

Clause 52 of the Bill engages the right to privacy by inserting new 68K of the Domestic Building Contracts Act which allow an authorised person who has been issued with a search warrant under section 68J(2) of the Act to enter a particular building or land and enact powers including inspection and seizure of property. A magistrate may issue a search warrant where the magistrate is satisfied on reasonable grounds that the building or land contains or will contain in the next 72 hours evidence of a contravention of the Act or regulations or that digital or electronic evidence of a contravention of the Act or regulation is accessible from that building or land.

To the extent that the right to privacy is engaged, I consider that each clause in relation to the power of entry is precise and appropriately prescribed, is not arbitrary and is permitted by law through the Bill. The powers of entry under the new Division 3 of Part 5A of the Bill are targeted to ensuring compliance with the Act and regulations and are appropriately circumscribed. The Bill provides appropriate safeguards to the exercise of the entry powers through the requirement for an authorised person to notify a person of an intended use of entry and search powers for monitoring purposes and obtain permission of the building or landowner on a residential property for entry at an agreed time, unless an exemption applies. The Bill also requires a search warrant to be issued by a magistrate to enter a building or land where an authorised person suspects on reasonable grounds that evidence of a contravention of the Act or regulations may be at the building or land. I consider these powers to be proportionate to the legitimate aim of ensuring that requirements for domestic building under the Act are being complied with.

Power to request information

Clause 32 of the Bill engages the right to privacy by amending section 48F(1) of the Domestic Building Contracts Act to expand the powers of an assessor to require production of documents or information as is reasonably necessary upon entry to a building site to include for the purpose of making a determination of whether damage was caused in the carrying out of the work or by the work of the builder. The purpose of the clause is to provide an assessor with adequate access to information to determine whether damage to a building site was caused in carrying out of work, or by the work, of the builder engaged in the domestic building contract.

Clause 52 of the Bill engages the right to privacy by inserting section 68B into the Domestic Building Contracts Act which provides the power for an authorised officer to notify a person in writing that they require information or documents where the authorised person has reasonable grounds to suspect that an offence has been committed under the Acts or regulations. The authorised person can also require a person to provide information or documents as part of the authorised person’s determination on whether the Act or regulations are being complied with. The authorised person may take copies or extracts of any documents produced and also retain possession of the document provided for the purposes of this Division.

Clause 52 of the Bill engages the right to privacy by introducing section 68C into the Domestic Building Contracts Act to allows an authorised person, where they reasonably believe that a person has contravened the Act or regulations, to apply to the Magistrates’ Court for an order that requires a person to, in relation to the alleged contravention, any questions or supply information or produce specified documents or documents of a particular class. If the order under section 68C is made, the authorised may inspect documents, make copies or extracts of documents, seize and secure documents.

To the extent that the powers to request information engages the right to privacy, the acquisition of information will be lawful and not undertaken in arbitrary circumstances. The power to request and obtain information serves the legitimate purpose of ensuring that requirements in relation to the requirements under the act in relation to domestic building work, including the standard of those work, are being complied with.

Confidentiality and information sharing

Clause 67 of the Bill engages the right to privacy by substituting section 52I of the Domestic Building Contracts Act to allow a conciliation officer, an assessor or employees of the VBA who are assisting members of the Domestic Building Dispute Resolution Victoria (DBDRV) to carry out their functions under Part 4 of the Domestic Building Contracts Act to disclose information in the circumstances listed in the Bill.

Clause 52 of the Bill engages the right to privacy by inserting section 68X into the Domestic Building Contracts Act to create an offence for an authorised person to give any person information in the exercising of their powers as an authorised person. The Bill only allows an authorised person to provide information in specified circumstances, including to carry out their functions under the Act or in administration or enforcement of the Act and where an authorised person is permitted or required to provide information under any other Act. Information can also be provided in relation to legal proceedings under the Act or with the consent of the Minister.

Clause 52 of the Bill engages the right to privacy by inserting section 68ZS of the Domestic Building Contracts Act to allow the VBA to enter into an information sharing arrangement with a relevant agency, as defined for the purposes of the clause, to share or exchange information. The VBA and a relevant agency are authorised to request and receive information held by the other party and disclose information to the other party, subject to the requirement that the information exchanged is reasonably necessary to assist in the performance of the VBA’s functions under this Act or the functions of the relevant agency. Information that is shared between relevant parties may include personal or sensitive information subject to the restrictions on the sharing of information included in the Bill.

The intent of the new confidentiality and information sharing provisions is to enable information sharing within ‘DBDRV’, meaning those persons constituting the DBDRV, as well as staff of the VBA that assist those persons pursuant to the VBA’s new function to that effect. The provisions ensure that the DBDRV continue to be able to carry out their functions under the Domestic Building Contracts Act and also allows staff of the VBA assisting DBDRV to effectively support them in carrying out their functions. Confidentiality provisions in the Domestic Building Contracts Act will continue to apply to DBDRV and staff of the VBA under this Bill.

To the extent that the Bill engages the right to privacy by allowing information sharing between specified entities, it is my view that the confidentiality and information sharing clauses in the Bill are appropriately circumscribed so as not to authorise any arbitrary interferences with privacy. I consider that the confidentiality and information sharing clauses of the Bill serve the legitimate purpose of ensuring that the DBDRV and staff of the VBA are able to carry out their functions, duties or powers under the Domestic Building Contracts Act and allow the Act to operate effectively to regulate domestic building contracts. The purposes for which information can be shared under an agreement or arrangement are prescribed narrowly in the Bill and confidentiality provisions will apply to parties to ensure that information is shared only as necessary for carrying out the functions and powers of the Domestic Building Contracts Act. Information that is shared between parties will not be made public.

Accordingly, I consider that these provisions under the Bill are compatible with the right to privacy under section 13 of the Charter.

Cultural rights (section 19)

Section 19 of the Charter protects the cultural rights of all persons with a particular cultural, religious, racial or linguistic background, and acknowledges that Aboriginal persons hold distinct cultural rights that should be protected.

Clause 9 of the Bill may engage with cultural rights by inserting new section 7A into the Domestic Building Contracts Act which restricts a builder from entering into a domestic building contract unless the contract conforms to a number of requirements listed in clause 9, including that the contract is written in English and readily legible. Clause 17 of the Bill substitutes section 37 of the Domestic Building Contracts Act to also require variations to plans or specifications set out in a major domestic building contract to be written in English and readily legible. Currently, section 31(1)(m) of the Domestic Building Contracts Act requires that a major domestic building contract be in English and readily legible, the Bill extends this requirement to all domestic building contracts covered by the Act. The purpose of these clauses is to provide greater consumer protection by creating a clearer and more accessible record of contractual agreements for domestic building work made between parties.

To the extent that the Bill may limit cultural rights, the limitation is reasonable and justifiable. The Bill ensures that parties to a domestic building contract are afforded greater consumer protections by promoting greater understanding for parties of the contracts entered as well as improving accessibility and readability of contracts. The legal system of Australia has its roots in English origins that underpins the interpretation of contracts in the courts. Requiring contracts to be written in English and readily legible ensures that the terms of the contract are clearly identifiable and that contractual disputes can be resolved understanding the full intended context and meaning of the contract.

Accordingly, I consider that these provisions under the Bill are compatible with cultural rights under section 19 of the Charter.

Property rights (section 20)

Section 20 of the Charter provides that a person must not be deprived of their property other than in accordance with law. This right requires that powers which authorise the deprivation of property are conferred by legislation or common law, are confined and structured rather than unclear, are accessible to the public, and are formulated precisely.

While the Charter does not define ‘property’, case law indicate that the term should be interpreted ‘liberally and beneficially to encompass economic interests’. This right requires that powers which authorise the deprivation of property are conferred by legislation or common law, are confined and structured rather than unclear, are accessible to the public, and are formulated precisely. Existing authority also suggests that the laws that permit or require a deprivation of property should not operate arbitrarily. Accordingly, an assessment of compatibility will depend upon the extent to which a deprivation of property does not operate arbitrarily, and is sufficiently clear and certain to be considered ‘in accordance with the law’.

Powers of entry including seizure powers

Clause 52 of the Bill engages and may limit a person’s right not be deprived of property by introducing new powers of entry for authorised persons by inserting Division 3 of Part 5A into the Domestic Building Contracts Act. Under new section 68F of the Domestic Building Contracts Act, an authorised person may enter a building or land for the purposes of carrying out an inspection authorised by the Act or regulations; however, they must obtain written consent of the building or land occupier unless an exception applies. An authorised person who exercises their powers of entry may undertake an inspection of the building or land, take photographs or sketches and require a person to provide documents relating to work to the extent reasonably necessary to determine compliance with the Domestic Building Contracts Act or regulations made under that Act. An authorised person may make copies or take extracts of documents provided. The powers of entry also include powers for the authorised person to seize or take a sample of a thing.

Clause 52 of the Bill introduces section 68J into the Domestic Building Contracts Act to allow an authorised person to apply to a magistrate to issue a search warrant for a particular building or land where the authorised person suspects on reasonable grounds that the building or land contains or will contain in the next 72 hours evidence of a contravention of the Act or regulations or that digital or electronic evidence of a contravention of the Act or regulation is accessible from that building or land.

The powers of entry in this Bill engage and may limit a person’s right not be deprived of their property, by permitting access and allowing for powers of seizure of private property by authorised persons. However, I consider that these powers are compatible with the right to privacy and reputation because the powers of entry under the new Division 3 of Part 5A of the Bill are targeted to ensuring compliance with the Domestic Building Contracts Act and are appropriately circumscribed. The Bill provides appropriate safeguards to the exercise of the entry powers through the requirement for an authorised person to notify a person of an intended use of entry and search powers for monitoring purposes and obtain permission of the building or landowner on a residential property for entry at an agreed time, unless an exemption applies. The Bill also requires a search warrant to be issued by a magistrate in order to enter a building or land where an authorised person suspects on reasonable grounds that evidence of a contravention of the Act or regulations may be at the building or land and items can only be seized under the search warrant. I consider these powers to be proportionate to the legitimate aim of ensuring that requirements for domestic building under the Domestic Building Contracts Act are being complied with.

Requirements for the payment of money

Clause 38 of the Bill engages the right to not be deprived of property by amending section 49C(1) of the Domestic Building Contracts Act to expand the circumstances where a dispute resolution order can require the builder to pay an amount of money to the building owner or a building owner is required to pay an amount of money to the builder.

The Bill expands the circumstances where a dispute resolution order can require the builder to pay an amount of money to the building owner for the following situations:

• To rectify defective building work;

• To rectify any damage caused in the carrying out of the domestic building work or by any defective domestic building work;

• To refund an amount of money paid by the building owner to the builder if the builder accepted payment without obtaining insurance as required under the Building Act or there have been significant delays in the commencement or completion of domestic building work under a contract;

• To refund an amount of money paid by the building owner to the builder where it is found that the builder had no claim or entitlement to the money under the domestic building contract.

The Bill expands the circumstances where a dispute resolution order can require a building owner to pay an amount of money to the builder for the following situations:

• On rectification of defective building work by the builder;

• On rectification by the builder of damage caused in the process of undertaking domestic building work under the domestic building contract or caused by defective building work;

• For a claim or entitlement arising under the domestic building contract.

To the extent that clause 38 of the Bill engages the right not to be deprived of property by expanding the situations in relation to domestic building work where a dispute resolution order can require the transfer of money, it is my view that the clause in relation to dispute resolution orders is appropriately prescribed, is not arbitrary and is in accordance with the law through the Bill. A dispute resolution order may only be issued if the requirements listed under section 49 of the Domestic Building Contracts Act have been satisfied. Further, the order must clearly state what the order requires of a builder or building owner and parties may apply to VCAT for a review of the decision to issue or amend a dispute resolution order consistent with section 63 of the Domestic Building Contracts Act. I consider these powers to be proportionate to the legitimate aim of resolving domestic building work disputes and ensuring that parties are fairly remunerated for works connected to a domestic building contract.

Limits on money recoverable by a builder

Clause 23 of the Bill may limit the right to property by substituting section 11(1) of the Domestic Building Contracts Act to impose a limit on the deposit that can be sought by a builder for a domestic building contract to not be more than an amount prescribed in regulations. The intention of this clause is to enshrine consumer protections for upfront payments for domestic building contracts.

Clause 25 of the Bill may limit the right to property by substituting section 40(1) of the Domestic Building Contracts Act to enforce limits on the progress payments a builder may recover under a contract specified at section 40(2) of the Act. Further, clause 25 may limit the right to property by substituting section 40(4) of the Domestic Building Contracts Act to enforce limits on the amount a builder may recover for completed building work under building contracts not specified in the Bill.

This may limit the right to property by restricting the money a builder may receive up front or for performance of completed work throughout the lifetime of the domestic building contract. I consider that any such limitation to the right to property would be reasonable, justified and for a legitimate purpose as restrictions on amounts of payments under a domestic building contract ensure that building owners cannot be required to provide disproportionate remuneration compared to the work that has been undertaken by the builder for building work agreed to under a domestic building contract.

Cost escalation clauses

Clause 11(2) of the Bill may limit the right to property by substituting section 15(2) of the Domestic Building Contracts Act to create an offence for a builder to enter a contract that includes a cost escalation clause if the contract price is either less than 1 million dollars or a higher amount prescribed in regulations. A maximum penalty of 100 penalty units applies to the contravention of the offence. The clause also substitutes section 15(2) of the Domestic Building Contracts Act to create an offence where a builder imposes a cost increase under the contract of more than 5 per cent of the total contract price or an amount prescribed in the regulations. A maximum penalty of 100 penalty units applies to the contravention of the offence. Further clause 11(2) of the Bill substitutes section 15(3) of the Domestic Building Contracts Act to restrict a builder from recovering any money under a cost escalation clause unless the builder has complied with section 15 of the Act.

The framework for cost escalation clauses introduced by the Bill clarifies the existing governance of cost escalation clauses and the ability for builders to request the price of a contract be increased due to circumstances outside of their control. The Bill seeks to balance the needs of builders who may encounter increased costs in the process of undertaking work under a domestic building contract with protections for consumers who may be at risk of financial harm as a result of additional payments beyond the initial agreed terms of the contract.

To the extent that the right to property is engaged, I am of the view that the clause in relation to cost escalation clauses is precise and appropriately prescribed, is not arbitrary and in accordance with the law. Clause 11(2) of the Bill operates to provide both a clearly defined scope for builders to recover increased costs in relation to works outside of their control and also protect consumers from unreasonable unforeseen financial impacts as a result of a domestic building contract. The Bill provides appropriate consumer protections by including an implied statutory warranty that a builder will calculate a cost increase with reasonable care and skill. Further, a copy of any invoice, receipt or document prescribed in the regulations that is provided to a builder that forms the basis of the builder seeking an increase in costs must be provided to the building owner. I consider the cost escalation clause to be proportionate to the legitimate aim of ensuring builders can retrieve reasonable costs to them for completing works under a domestic building contract and ensuring building owners cannot be subject to unreasonable additional costs.

Enforcement of contractual rights and entitlements

Clause 15(3) of the Bill may limit the right to property by substituting section 31(2) of the Domestic Building Contracts Act to provide that where a major domestic building contract has not been signed by the parties, the builder has no contractual rights or entitlements under the contract, while the contractual rights and entitlements of the building owner may be enforced by the building owner. The builder may recover money from a builder owner where the Victorian Civil and Administrative Tribunal (VCAT) is satisfied that there are exceptional circumstances and that it would not be unfair for the builder to obtain the money.

To the extent that the Bill may limit the right to property by restricting a builder from accessing their contractual rights or entitlements under a major domestic building contract that has not been signed by the parties to the contract, I am of the view that the clause is precise and appropriately prescribed, is not arbitrary and in accordance with the law. A builder will otherwise have the right to access their rights and entitlements on a contract where it is clear from signature that both parties have agreed to the terms of the contract. The clause promotes consumer protection by protecting potentially vulnerable building owners from non-performance of an agreed contract. The clause encourages agreements for domestic building work that exceeds the major domestic building contract threshold to be transparent and clear to the parties involved by discouraging verbal or unsigned written major domestic building contracts.

Clause 17 of the Bill may limit the right to property by substituting section 37(4) of the Domestic Building Contracts Act to provide that a builder will be unable to recover money in respect of the domestic building work given effect by the variation if the prescribed information that is required to be included in a variation agreement under section 37(2) of the Domestic Building Contracts Act is not included in the variation agreement. A builder may not recover money in respect to a variation agreement that does not comply with section 37(2) of the Domestic Building Contracts Act unless VCAT is satisfied of exceptional circumstances or that the builder would experience significant or exceptional hardship and that it would not be unfair to the building owner for the builder to recover money for the work undertaken.

To the extent that the Bill may limit the right to property by restricting a builder’s right to financial compensation for works undertaken under a variation to plans and specifications set out in a major domestic building contract, I am of the view that the clause is precise and appropriately prescribed, is not arbitrary and in accordance with the law. The situations where a builder may recover money in respect to work undertaken as part of a variation to plans or specifications set out in a major domestic building contract is clearly outlined in the Bill and builders who comply with requirements in the Bill for variation contracts will be able to recover money for works undertaken by them. Further, the Bill provides consumer protections by ensuring that building owners are able to enforce their rights and obligations under verbal and written agreements for domestic building work.

Termination of domestic building contract

Clause 16 of the Bill may engage the right to property by substituting section 34(4) of the Domestic Building Contracts Act to expand the ground on which a building owner may end a major domestic building contract within 5 days of the contract being signed without penalty by removing the restriction against a building owner receiving independent advice from an Australian legal practitioner about the contract before the contract is entered into.

To the extent that the clause may engage a builder’s right to property by depriving them of rights under a major domestic building contract in expanded situations, I view that the right is not limited by the clause. The situations in which a building owner may withdraw from a major domestic building contract with a builder will be clearly outlined in accordance with a publicly accessible law and the amendment is confined to ensuring building owners have extra consumer protections in relation to their property by being able to seek professional legal advice on any contract they may intend to act on.

Clause 19(2) of the Bill may limit the right to property by substituting section 41(1) of the Domestic Building Contracts Act to allow a building owner to end a major domestic building contract without being required to determine whether a builder could have reasonably foreseen the reason for the blow out in cost or time taken to complete the works in a major domestic building contract. The intention of the clause is to remove a barrier to building owners exercising their statutory right to terminate a major domestic building contract.

To the extent that the Bill limits the right to property by creating a broader right to a building owner to terminate the rights of the parties under a major domestic building contract, I am of the view that the clause is precise and appropriately prescribed, is not arbitrary and in accordance with the law. The purpose of the clause of the Bill is to strengthen consumer protections, and the Bill otherwise clearly prescribes the requirements for terminating a major domestic building contract.

Court orders

Clause 52 of the Bill may limit the right to property by inserting section 68ZK into the Domestic Building Contracts Act which allows a court to make an order that it consider fair in any proceedings or contravention of the Act. The orders available to the court under this clause includes voiding the whole or part of a contract, render provisions of the contract non enforceable, vary a contract, order redress for money or property transferred through the contract.

To the extent that the Bill limits the right to property by allowing the court to void, vary or render a contract unenforceable, I am of the view that the clause in relation to court orders are precise and appropriately prescribed, is not arbitrary and in accordance with the law. An order under clause 52 can only be made by a court where an accused has been found to have contravened a provision against the Act and another person has suffered loss or damage as a result of the contravention. An order can only be made in accordance with the law as prescribed in the Bill.

Clause 52 of the Bill may limit the right to property by inserting section 68ZJ into the Domestic Building Contracts Act to allow the court in the course of certain proceedings against a person to order that a person is prohibited from the payment of money or transferring of property, with the clause introducing an offence for not complying with the order of the court.

To the extent that the Bill limits the right to property by allowing the court to prohibit the transfer of money or property, I am of the view that the clauses are precise and appropriately prescribed, are not arbitrary and in accordance with the law. An order to deny the transfer of money or property is restricted to proceedings for an offence against the Domestic Building Contracts Act which have been bought before a court and where an accused can put their case before the court. The Bill ensures that there is appropriate judicial oversight before any limitation of property rights occur and protects the interests of justice by ensuring that the courts are not obstructed from issuing appropriate remedies for contraventions of the Domestic Building Contracts Act.

Accordingly, I consider that these provisions under the Bill are compatible with the right to property under section 20 of the Charter.

Fair hearing (section 24)

Section 24(1) of the Charter provides that a person charged with a criminal offence or, who is a party to a civil proceeding has the right to have the proceeding decided by a competent, independent and impartial court or tribunal after a fair and public hearing.

The term ‘civil proceeding’ in section 24(1) has been interpreted as encompassing proceedings that are determinative of private rights and interests in a broad sense, including some administrative proceedings. It is well recognised that judicial determination of a person’s civil rights and liabilities is a crucial element of the fair hearing right. This right will be engaged where a person is prevented from having their civil rights or liabilities in a proceeding considered by a court. However, this right does not prevent the State from amending the substantive law to alter the content of those civil rights.

Applications for injunctions may be made ex parte

Clause 52 which inserts new Part 5A into the Domestic Building Contracts Act, may limit the right a fair hearing by inserting new section 68ZE(3) into the Act. The clause provides for a court to grant an injunction restraining a person from engaging in conduct, based on an application made ex parte. The conduct that may be restrained includes a contravention of a provision of the Domestic Building Contracts Act or regulations made under that Act, or of a notice, direction, order or determination issued or made under that Act or regulations, as well as attempts to contravene, procuring the contravention and conspiring to contravene that Act or regulations.

This may limit the right to a fair hearing, because the person subject to the injunction will not have an opportunity to respond to the application for the injunction. I consider that any such limitation of the right to a fair hearing would be reasonable, justified and for a legitimate purpose, as an application for an injunction on an ex parte basis may be necessary to ensure that action is taken to prevent, minimise or remedy any material risks to consumers and builders alike that the contravention may cause.

Accordingly, to the extent that the Bill limits the right to a fair hearing under section 24(1) of the Charter, I am satisfied that any limitations are justified on the basis that they are reasonable and have a legitimate purpose. I am therefore satisfied that the right to a fair hearing is not limited by this provision.

Rights in criminal proceedings (section 25)

Right to be presumed innocent

Section 25(1) of the Charter provides that a person charged with a criminal offence has the right to be presumed innocent until proven guilty according to law. The High Court has described this right as incorporating the fundamental requirement that ‘the prosecution in a criminal case has the burden of proving guilt’, that is, that a conviction can follow only where every element of an offence has been proved by the prosecution beyond reasonable doubt.

Clause 52 of the Bill introduces a new section 68ZB into the Domestic Building Contracts Act, which provides that where a body corporate has been found by a court to have failed to have complied with an undertaking, any officer who permitted or authorised the failure is also found to have failed to comply with the undertaking and may be subject to an order from the court.

While this clause may engage the right to be presumed innocent, this offence does not limit the right because a body corporate may only act through its officers and employees and therefore acts attributed to the body corporate can also be attributed to those officers or employees. The Bill clearly sets out the mental elements where a person may be found guilty of an offence and also confines the scope of the clause to persons who knowingly authorised or permitted the offence, which ensures only higher level members of the body corporate can be found guilty under the clause.

Minimum guarantees in criminal proceedings

Section 25(2)(k) of the Charter provides that a person charged with a criminal offence is entitled not to be compelled to testify against themselves or to confess guilt. This right is at least as broad as the common law privilege against self-incrimination. It applies to protect a charged person against the admission in subsequent criminal proceedings of incriminatory material obtained under compulsion, regardless of whether the information was obtained prior to or subsequent to the charge being laid.

Clause 52 of the Bill may limit the protection against self-incrimination by inserting section 68V(2) into the Domestic Building Contracts Act which does not excuse a person from refusing or failing to provide documents required under the proposed Division 4 of Part 5A of the Domestic Building Contracts Act if the document or information would tend to self-incriminate. Proposed section 68V(3) of the Bill does not excuse a person from refusing or failing to provide information required under section 68U of the Domestic Building Contracts Act if the document or information would tend to self-incriminate.

While Clause 52 of the Bill may limit the protection against self-incrimination to the extent that the Bill does not excuse a person from disclosing information that may incriminate them, I am of the opinion that any limitation is reasonable and justified under the Charter. The protection against self-incrimination operates as part of a comprehensive framework in relation to powers of requiring information and documents for authorised persons exercising their right of entry under the proposed Division 4 of Part 5A of the Domestic Building Contracts Act and includes a reasonable excuse protection at section 68V(1) of the Domestic Building Contracts Act for a person requested to provide information requested under the Division where that information would tend to self-incriminate. Any limitation of the protection against self-incrimination is justified to ensure that an authorised person can effectively monitor compliance with and investigate potential contraventions of the Act and regulations.

Further, I note that at common law, the High Court has held that the protection accorded to pre-existing documents is considerably weaker than that accorded to oral testimony or to documents that are brought into existence to comply with a request for information. In particular, this assists the argument that there is a weaker level of engagement with the right against self-incrimination for section 68V(2) of the Domestic Building Contracts Act to be inserted by the Bill.

Accordingly, I consider that these provisions under the Bill are compatible with the rights in criminal proceedings under section 25 of the Charter.

I consider that the Bill is compatible with the Charter because it does not limit any rights under the Charter or, to the extent that the Bill may limit any rights under the Charter, the limitations are not arbitrary and are reasonable and justified.

The Hon Nick Staikos MP

Minister for Consumer Affairs

Second reading

Nick STAIKOS (Bentleigh – Minister for Consumer Affairs, Minister for Local Government) (10:13): I move:

That this bill be now read a second time.

I ask that my second-reading speech be incorporated into Hansard.

Incorporated speech as follows:

For many families, their home is the single largest investment they will make in their lifetimes – it is the foundation of their future. That’s why it is critical that the regulatory framework for domestic building contracts be clear, effective and modernised to protect the interests of consumers and meet the needs of a dynamic building industry that continues to innovate and adopt new construction methods, including modern methods of construction, to deliver more housing for Victorians.

Following the collapse of Porter Davis Homes, the Government committed to a review of the Domestic Building Contracts Act 1995 (the Act) to ensure it was fit for purpose and to strengthen protections for building owners while supporting the needs of the building industry.

Informed by the outcomes of the review, this Bill will better protect Victorians building or renovating their homes by amending the Act to:

a) strengthen requirements and protections for domestic building contracts and major domestic building contracts (MDBC),

b) authorise deposit limits, progress payment stages and progress payment limits to be prescribed in regulations, with any payments for work completed subject to a general proportionality requirement for all MDBC and any exemptions,

c) support contract flexibility by allowing the use of cost escalation clauses in Victoria for MDBC with a contract price of $1 million or higher, with a 5 per cent ceiling on price increases and additional consumer protections,

d) omit the development of plans and specifications and bills of quantity from the definition of ‘domestic building work’ so that agreements for such work can be entered into by builders and building owners outside of the framework of the Act,

e) provide for the transfer of compliance monitoring and enforcement functions from the Director Consumer Affairs Victoria to the Victorian Building Authority,

f) make a range of additional reforms to the clarify contractual requirements and strengthen consumer protections across the Act, and

g) make other minor amendments to the Australian Consumer Law and Fair Trading Act 2012 (ACLFTA), the Building Act 1993 (Building Act), and the Building Legislation Amendment (Buyer Protections) Act 2025 (Buyer Protections Act).

Contemporary and flexible Payment Timing requirements

The rules around when and how builders get paid under a MDBC have not been updated since 1995 and have fallen out of step with changes in industry practice. To enable a contemporary payment framework to be established, the Bill will amend the Act to insert a new regulatory head of power that will enable regulations to prescribe deposit limits, progress payment stages and limits specific to different types of contracts. This will provide government with the flexibility to update payment requirements to respond to differing circumstances, such as the extent to which a build utilises modern methods of construction, and to adjust requirements as building methods continue to evolve.

To prevent consumers being charged for work that has not been completed, amendments carried by the Bill also provide that a builder will not be permitted to demand or receive any amount or instalment of the contract price that is not directly related to the progress of work actually completed under the contract.

Balanced reforms to enable use of Cost Escalation Clauses with strong consumer protections

Building materials, labour costs and uncertainty around supply of materials have increased for the building industry in recent years. In response, builders have advocated for the ability to use cost escalation clauses to enable the price of a MDBC to be increased to reflect unexpected increases in the costs of materials or labour as well as unforeseen delays. However, these clauses can pose a significant financial risk to consumers, who are not well placed to anticipate or wear the impacts of changes in market supply and pricing.

To address these concerns, the Bill takes a balanced approach by allowing cost escalation clauses to be used but only in contracts where the contract price is $1 million or more and in conjunction with new strict consumer protections. In addition, cost escalation clauses must not be used to increase the price of a contract by more than five per cent in total. A builder who breaches either of these requirements will commit an offence and be subject to a penalty.

For a cost escalation clause to be valid, a warning notice must be given by the builder to the building owner before the contract is entered into explaining the effect of the clause, and the building owner must place their signature, seal or initials next to the clause in the contract.

Builders will also be required to warrant that any increased costs are calculated with due care and skill, considering all reasonable information, and to provide the building owner with a copy of any invoice, receipt, or other prescribed document that evidences the increased cost.

A builder who fails to comply with any of these requirements will not be entitled to recover any money using a cost escalation clause.

Reforms to facilitate preliminary works and agreements

Some building projects require substantial work to be undertaken to enable a builder and building owner to understand the work that will be required and agree on the detail of what will be built prior to entering a domestic building contract.

Some of these preliminary works, such as architectural designs or soil testing, have rightly been excluded from the definition of domestic building work and are not subject to the protections under the Act. Many of those preliminary works remain subject to other standards for their proper completion and may also be subject to the consumer guarantees provided under the Australian Consumer Law (Victoria).

However, the preparation of plans and specifications and bills of quantity are currently caught by the definition of domestic building work under the Act. This means that, unlike other Australian jurisdictions, builders cannot enter into an agreement to undertake these preparatory works without following all the requirements of the Act.

The Bill will align Victoria’s laws with other jurisdictions by removing the preparation of plans, specifications and bills of quantity from the definition of domestic building work, and the scope of the Act.

The reforms in the Bill will ensure that physical work completed under a MDBC continues to remain insurable and that existing requirements under section 31 of the Act will operate to require plans and specifications to be provided as part of, and incorporated into, any MDBC. Existing warranties at section 8 of the Act will also require builders to carry out domestic building work in accordance with its relevant plans and specifications.

Additional Reforms to clarify contractual requirements and strengthen consumer protections

The Bill will also make a range of additional reforms to the clarify contractual requirements and strengthen protections across the Act. Amendments carried by the Bill will:

a) clarify that if a building owner and builder enter multiple domestic building contracts that could be the subject of a single contract (which would be a MDBC), they are to be taken together to be a single MDBC. This clarification addresses the practice of ‘contract splitting’ engaged in by some builders, including Porter Davis Homes, to avoid MDBC protections,

b) extend requirements that currently only apply to a MDBC to all domestic building contracts to provide clarity on the rights, responsibilities, and expectations of all parties and reduce misunderstandings and disputes. Key reforms include that all contracts are to be in writing and legible, state the name and address of the contracting parties, describe the work to be carried out, and include the price and date of the contract,

c) enable building owners to end contracts under the Act if the agreed completion time for the work blows out by more than 50 per cent or the contract price increases by more than 15 per cent, without being required to determine whether the builder could have reasonably foreseen the cost increase,

d) extend access to statutory warranties to building owners under contracts that are verbal, unsigned, or where the work is poorly defined in a written contract,

e) provide a single, clear contract variation process for MDBC, regardless of whether a variation is initiated by a building owner or a builder. Exemptions will apply for circumstances that require an urgent variation (for example, where there may be a hazard to health and safety or a risk of damage to a property if the variation were not made),

f) enable consumer protection information products to be published in the Government Gazette by the VBA which will allow these products to be updated more easily over time to reflect new information or changing market conditions,

g) remove consumer protections designed and intended for private homeowners from commercial arrangements between developers and builders,

h) modernise the statutory warranties in the Act so they are consistent in expression with the consumer guarantees under the Australian Consumer Law,

i) support the Building Reform Program by transferring the powers and functions of the Director Consumer Affairs Victoria to the VBA as a key step in the establishment of the Building and Plumbing Commission as a single integrated building regulator in Victoria,

j) improve the effectiveness of the Dispute Resolution Order framework to provide greater clarity for consumers and builders,

k) update the confidentiality and information sharing provisions in the Act and in the Building Act to support the operation of the dispute resolution functions to be transferred to the VBA; and

l) establish new regulatory heads of power to enable regulations to be made under the Act and the Building Act to give effect to the reforms in the Bill.

This Bill will deliver a modern fit for purpose regulatory framework for domestic building contracts in Victoria to give consumers greater confidence and security when building or renovating their homes. The Bill also supports growth and innovation in the building industry by flexibility to respond as construction methods continue to adapt and evolve to new building technologies.

Importantly, the reforms in the Bill are about fairness, lifting standards and making sure that Victorians can enter into domestic building contracts with confidence.

I commend the Bill to the house.

Roma BRITNELL (South-West Coast) (10:13): I move:

That the debate be now adjourned.

Motion agreed to and debate adjourned.

Ordered that debate be adjourned for two weeks. Debate adjourned until Thursday 3 July.