Presser v Ocean View Properties [2006] VSC 143
In the Supreme Court of Victoria, Habersberger J stayed, under the Domestic Building Contracts Act, a multi-party proceeding against a developer that had itself agreed to rectify defects, holding that the purchasers' claim was a domestic building dispute and that the whole action, including later claims against added parties, arose predominantly from such a dispute [38], [39], [40], [45].
What the court decided
The purchasers pleaded that they bought a Port Melbourne penthouse from a developer, Ocean View, for $3,200,000 [2]. They pleaded that on 31 January 2002 they and Ocean View made a Settlement Agreement obliging Ocean View to remedy listed defects, including in the parquetry floor [5]. Ocean View joined One Beach Street Pty Ltd, which had a building contract with the builder Grocon, and both then claimed against Grocon [9], [12], [13]. Grocon in turn joined the flooring sub-contractor and the architect [14], [15]. After an unsuccessful mediation, Grocon applied for a stay [16]. Grocon submitted that section 57(2) of the Domestic Building Contracts Act 1995 required a stay, as the Tribunal could hear the action and no oral evidence had been heard [1].
The sale agreement itself was not in evidence before his Honour [35]. His view was that section 3(4) would apply, and he assumed without finally deciding that the sale agreement was not a domestic building contract [36]. Even apart from section 3(4), he preferred the approach of Bell J in Shaw v Yarranova Pty Ltd to the broad construction given by Byrne J to "arrange or manage" in Mirvac (Docklands) Pty Ltd v Philp [36].
The Settlement Agreement letter showed that Ocean View itself agreed to carry out and be liable for rectifying the outstanding defects [37]. After the making of the Settlement Agreement, Ocean View therefore fell within the statutory definition of a "builder" [37]. The purchasers' claim was a domestic building dispute under section 54, arising between a building owner and a builder in relation to the Settlement Agreement or the repair of a home [38]. The Settlement Agreement did not suggest that Ocean View's obligation was confined to requiring Grocon to fix the defects [38]. He rejected the argument that it did not stand alone from the sale agreement [38].
On section 57(1), his Honour initially saw a possible construction that confined attention to the action as started by the plaintiffs, which on his finding would have been sufficient for a stay [39]. On further reflection he held that one looks at the action as a whole, including subsequent claims against additional parties, when the stay is sought [39]. With the relevant deed not in evidence, it was not clear that the claims against and by Beach Street were domestic building disputes, so the action was not shown to arise "wholly" from one [40]. The action arose predominantly from a domestic building dispute, because the remaining claims each fell within section 54(1) [40].
In the alternative, he held that even if the purchasers' own claim was not a domestic building dispute, the action would still arise predominantly from one [41], [43]. The proceeding was now all about which party, if any, was liable to the purchasers for the defects in the parquetry flooring [43]. Refusing a stay would not serve the purpose of the Act of Tribunal resolution of such disputes [44]. The action therefore had to be stayed on Grocon's application [45].
Why it matters
A developer that itself undertakes to rectify defects, not merely to make its builder do so, may be a builder whose dispute with purchasers is liable to be stayed for the Tribunal. The whole-action reading of section 57(1) was decisive for the alternative holding, not the primary one, and is a single judge's view reached on further reflection [39]. Readers should check the current Act, and note that whether the sale agreement was a domestic building contract was left open [36].
Numbers in square brackets are paragraph numbers of the judgment. This note summarises a decided case for education and is not legal advice. See how the notes are written.