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A consumer or builder who finds themselves with a failed building contract only has one course of action to seek justice: to instigate legal proceedings in a tribunal.

The tribunals were set up initially as a cost-effective method to resolve a building dispute by self-representation, but that was short lived as the legal profession has well and truly instilled legal representation into the member’s mindset and that of any consumer or builder.

It's no secret that consumer protection in our industry is a complete failure and efforts to improve it have played second fiddle to the top end of town and big business. The premiums builders pay on behalf of their consumers who in fact pay in the long run appear largely to go to private enterprise such as trade associations and insurers instead of the intended recipients, the building consumers.

Then there is the legal profession, which in many instances milks builders and consumers for all they are worth because once on the legal merry-go-round it is nigh on impossible to get off until the money runs out or they are mentally burnt out.

A building dispute can last up to five years and it is conducted in a manner that can almost be viewed as a kindergarten process if the consequences weren’t so serious.

Let’s take the case of a building consumer in Victoria who endeavoured to seek justice for a failed property and the lawyer who insisted the case would be successful, resulting in a claim of some $600,000 being mooted. As the matter progressed, the lawyer asked for funds to be paid into their trust account even though previously a statement was made that they would conduct the case on a pro bono basis.

The lawyer had failed to advise the consumer of the costs in running such a case and yet allowed their costs to mount up even though it was now clear the case would never achieve an outcome of some $600,000 and it appears they were unable to achieve a settlement and settle the matter.

A third party was requested to intervene by the consumer and within days a settlement was achieved which was a far cry from the mooted sum put forward by the lawyers.

The consumer was aggrieved with the lawyer's conduct on many levels and chose to take the issue to the Victorian Legal Services Commission, the body that takes complaints about lawyers and endeavors to resolve issues. However, the Commission refused to accept a conduct complaint and would only access the lawyer's bill of costs, which they did and came to a settlement amount.

In an endeavour to find justice, the consumer took the matter to another lawyer who advised the consumer was badly treated and promised that by employing this new lawyer, justice would be delivered. All was fine until the new lawyer felt the most cost effective outcome would be to settle the matter on the Legal Commissioner's settlement amount. It appeared to the consumer at this time that they would never achieve justice as the legal profession had complete control of the legal process in building matters of the type this consumer faced. Then came the final crunch as this lawyer’s final bill came to an amount almost equaling the settlement sum.

In another case, a Sydney builder received a claim on a building project some two days prior to the expiry of the warranty period, and the claim appeared excessive as the report totaled some 500 pages.

The builder employed lawyers, and an expert building consultant was commissioned to write a report which exceeded 600 pages. Neither the builder nor the consumer had opportunity for dialogue at that point in time, and the consumer has spent just on $30,000 while the builder’s costs have exceeded $50,000. The stupidity of the situation is the claim may only amount to some $6,000.

The building industry has been exploited on a massive level following the collapse of HIH in 2001 and initially by the HIA, who concocted the Last Resort Builders Warranty Insurance in conjunction with the insurer Royal & Sun Alliance. When implemented in July 2002, this insurance was touted as the savior for builders and their consumers.

This was followed by the legal profession hijacking the tribunals for their own gain, which has spawned an unregulated industry of building consultants employed by lawyers for their specific talents that may favour either a builder or a consumer. These consultants' documents have no regulation accountability.

A building dispute in our current environment could be considered the most stressful, illogical, and damaging experience a consumer or builder can face.

Do all you can to ensure your dispute is settled without litigation even if you feel justice is not delivered. Sometimes the best course of action is to learn to just live with it, and move on.

 
  • I gather, Phil, that you don't like lawyers very much, and that you don't like trade associations or builders warranty insurance.

    You don't seem to feel that the system is working very well.

  • I concur with Phil "…that consumer protection in our industry is a complete failure and efforts to improve it have played second fiddle…" to all of the third party 'parasites' and consultants that plague this Industry! Although, there is a solution to the ADVERSARIAL approach accepted as "THE NORM" being that of 'Alliance Contracting' in this process we effectively bi-pass the TRADITIONAL TENDER PROCESS, replacing that with a two staged bi-partisan partnership. Ignorance and miss-representation of a bidding process not even the legal profession comprehend, reduces, in fact can in a large majority of cases eliminate the Lawyers meal ticket of litigation and / or arbitration. Premiums builders avoiding the Tripartite aggressive unwinnable arguments prompted by the ignorance of the Traditional Tender process are already reaping the rewards of multiple projects with repeat clients who in fact pay less in the long run and cannot be more pleased with the informed process of the two staged bi-partisan partnership,an enterprise that ensures a 'win-win' scenario for ALL Building Consumers.

  • Look what lawyers have done to our parliaments in Australia. Please don't kid yourself that Builders are always victims.
    Builders are using insolvency [pre-packaged liquidation] to avoid their obligations for defects, home warranty insurance and payment. In QLD there has been over 30 building company pre-packs since Xmas costing small business and consumers in excess of $100m. Peak Industry associations, builders and lawyers deserve each other.

  • Agreed Phil, the PI insurance of building practitioners is a basket case as well, it just gives lawyers and VCAT licence to pressure insurance providers into costly settlements regardless of the right and wrong, which they just pass on via massive premium hikes. The result is professional fees go up, the lawyers, building consultants etc get paid and often the owner is still out of pocket for the required remedial works. My solution to both problems is to dump compulsory PI and domestic building insurances and to register all sub contractors. Building professionals would in lieu of PI insurance pay as part of re registration into a HGF type fund, say $5000 for turnover up to $0.5m, $10,000 for $0.5-1m etc. Sub contractors would pay into the same fund an appropriate payment range based on turnover and builders would pay into that fund an amount per project similar to domestic building insurance. You will then have a large pool of contributors and a large pool of money the vast majority of which could be used to carry out remedial works as authorised by the fund inspector/mediators within guidelines. Professionals would have future instead of being insurance premiumed out of existence, the sub contractors who often carry out the poor work would become accountable and the money raised would be directed to rectification works and not legal fees.

  • All good points and very well made well. I've said it before but its worthwhile stating the obvious once more. If you want to start to solve a problem you start by analysing the origins of that problem. The detritus that now passes as our National Training Package for the construction industry sector, combined with the wholesale deregulation of those that deliver it is turning out a generation of fraudulently 'qualified' tradespersons and builders that are being issued with occupational licences allowing them to deliver a miserable standard of workmanship and professional service to their unsuspecting clients. Then they call the lawyers.
    The army of 'get your qualifications instantly' private training providers are simply selling a contaminated product. They guarantee to pass their customers and tick off the so called required 'competencies' based on the entirely spurious method of 'recognition of prior experience'. I guess they don't actually have to care whether any of their applicants alleged work 'experience' was good or bad? Doesn't matter so long as they collect the cheques before they print the qualification.And our universities are also to blame. They have become greedy in their new business models by admitting scores of students each year that have completely failed to achieve any sort of ATAR ranking commensurate with being able to satisfactorily undertake tertiary studies. No maths, no science, NO WORRIES! Barely literate year 12 graduates now seem to be welcome with open arms. And of course the uni's pass their students too in the long conveyor belt of churning out grad numbers. Our vocational and tertiary educational systems, that once, not too long ago, enjoyed very high quality standards are now entirely flawed educational rent seekers.. We are rapidly becoming a nation of inept idiots by ignoring the root cause. You want better building construction standards in Australia? Then you better start implementing strategies to rapidly improve the standards associated with getting to become a builder in the first place.

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