He submitted that this and subsequent wording in the letter made it clear that it was the vendor, Ocean View, which was going to fix the defects, including the parquetry floor. This meant, he submitted, that the Settlement Agreement went beyond the situation of a simple "off the plan" sale contract because defects had already been observed and, by the Settlement Agreement, the vendor was itself agreeing to undertake repair works in relation to the construction of the home.
26 Secondly, Mr Roberts submitted that even if the plaintiffs' claim against Ocean View was not regarded as a "domestic building dispute" within the meaning of s.57(1) of the Act, looked at as a whole the proceeding was now an "action arising ... predominantly from a domestic building dispute" because all of the other claims made in the proceeding centred on which, if any, of the various parties was liable for the alleged problem with the parquetry floor, which was essentially a "domestic building dispute".
27 In supporting Grocon's application for a stay, Mr Greenham, the solicitor representing Ocean View, pointed out that paragraph 5 of the statement of claim was clearly an allegation that under the Construction and Sale Agreement Ocean View was obliged to carry out the building works. He therefore submitted that the dispute between the plaintiffs and the defendant was a "domestic building dispute".
28 Mr Forrest submitted that there should be no stay. First, he submitted that, pursuant to the clarifying exception contained in s.3(4) of the Act, the Construction and Sale Agreement was not a "domestic building contract", because it was a term of that agreement that Ocean View would enter into a major domestic building contract within the meaning of the Act for a builder to carry out the Property Works.
29 Next, Mr Forrest submitted that the Settlement Agreement had to be read in that context. It was an agreement made between the Pressers and Ocean View to complete the purchase of the penthouse, whereby it was agreed that money would be retained pending rectification of the identified defects. Mr Forrest submitted that whilst Ocean View agreed that it would rectify the defects, it was understood by the parties that it would have that work performed by the builder engaged pursuant to the Construction and Sale Agreement. Mr Forrest drew attention to the fact that Mr Coker's affidavit made it clear that this is what actually happened. At the request of Ocean View, Grocon attempted to carry out the rectification work.
30 Therefore, Mr Forrest submitted that the Settlement Agreement was not a "domestic building contract" because it had only come into existence as a means of completing the Construction and Sale Agreement, which was clearly not a "domestic building contract". The Settlement Agreement, he submitted, stemmed from the Construction and Sale Agreement and was doing nothing more than what the earlier agreement contemplated would be done. That is, that the building work would be carried out by the builder, namely Grocon, engaged by Ocean View, or more correctly Beach Street. Thus, the Settlement Agreement did not stand alone.
31 Secondly, Mr Forrest submitted that if the action brought by the plaintiffs against the defendant did not arise "wholly or predominantly from a domestic building dispute" it should not be stayed because there may be no jurisdiction in VCAT to hear such a dispute, regardless of whether the subsequent third, fourth and fifth party claims did involve such a dispute. He submitted that, without such a finding, VCAT would have no jurisdiction, or might not have any jurisdiction, to hear the stayed proceeding.
32 In reply, Mr Greenham submitted that even if the Construction and Sale Agreement was not a "domestic building contract" because of the provisions of s.3(4) of the Act, that did not mean that there was no "domestic building dispute" within the meaning of s.57(1) of the Act. Such a dispute was to be found in the allegation that Ocean View was required to carry out the works described in Annexure G, which was an allegation that it was required to carry out "domestic building work" (see s.54(1) of the Act).
33 Mr Greenham also drew attention to paragraph 18 of the statement of claim which alleged that the specific works were not carried out by Ocean View. He submitted that the plaintiffs' own pleading involved the allegation that Ocean View did not carry out work which was "domestic building work".
34 In his reply, Mr Roberts emphasised that the provisions of the Settlement Agreement with respect to the commissioning of a joint expert report and the possible payment by Ocean View pursuant to findings in that report meant that s.3(4) was simply not applicable.
Consideration of the Issues
35 The first point to note is that, in my view, it is more important to see what was in fact agreed between the parties rather than concentrating on what is alleged in the pleadings, which may not necessarily be the correct analysis of a relationship. This is not so easy in this case, however, because the Construction and Sale Agreement was not in evidence. Nevertheless, there does appear to me to be an inherent conflict between the plaintiffs' allegations in the statement of claim that Ocean View was required to carry out the works described in Annexure G (paragraph 5) and that it failed to install the parquetry floor in a proper and workmanlike manner (paragraph 18) and their pleading that it was a term of the Construction and Sale Agreement that Ocean View would enter into a major domestic building contract (within the meaning of the Act) with a builder for the Property Works in accordance with the Plans and Specifications (Special Condition 5.1) (paragraph 4(b) of the statement of claim).
36 Without knowing all of the terms of the Construction and Sale Agreement it is not possible to be definite, but it seems to me that the correct analysis is that s.3(4) of the Act would apply so that the Construction and Sale Agreement is not, and is not taken to form part of, a "domestic building contract" within the meaning of the Act. Even apart from the amendment to the Act to include this provision, if the approach of Bell J in Shaw v Yarranova Pty Ltd[1] is preferred to that of Byrne J in Mirvac (Docklands) Pty Ltd v Philp[2], the Construction and Sale Agreement would not be regarded as a "domestic building contract." In Shaw Bell J held that the contract between the developer and the purchaser was not a contract "to carry out" domestic building work because it expressly contemplated that the building would be constructed pursuant to another contract into which the developer would enter with a builder[3] and that it was not a contract "to arrange or manage" the carrying out of domestic building work because it expressly recognised that the activities constituting the building work would be undertaken by someone else, namely the other party to the building contract with the developer[4] and that the developer was not agreeing to arrange or manage the carrying out of these activities.[5] I respectfully prefer this approach to the broad construction given by Byrne J to the words "arrange or manage" in Philp[6]. Also, it is probable that on the approach of Bell J any work required to be carried out by Ocean View under the Construction and Sale Agreement would not be considered as "domestic building work". I will therefore assume, without finally deciding, that the Construction and Sale Agreement is not a "domestic building contract" within the meaning of the Act.
37 Although it was necessary to consider whether the Construction and Sale Agreement was a "domestic building contract" because of Mr Forrest's argument about context, Mr Roberts' primary submission was, as I have said, that the terms of the Settlement Agreement meant that the plaintiffs' claim against Ocean View was a "domestic building dispute." The letter said to constitute the Settlement Agreement was in evidence before me. I agree with Mr Roberts' submission that this letter makes it clear that it was the vendor, Ocean View, and not Beach Street nor Grocon, which agreed with Mr and Mrs Presser that it would carry out and be liable for rectifying the outstanding defects, including the parquetry floor. Apart from the passage from the letter set out in paragraph 25 above, I refer to the following statements: