[2006] VCAT 440; Bonarrigo v DSF Pty Ltd trading as LaRosa Tiling Company (Domestic Building)

[2012] VCAT 1404; Brown v S & B Weerasinghe Pty Ltd (Building and Property) [2019] VCAT 1329;

Mason v Fraser [2021] VSC 461; Troise v Blue Key Properties Pty Ltd (Building and Property) [2025]

VCAT 9; and Barbour v Australian Elegant Homes Pty Ltd [2018] VCAT 1242; DTR Nominees Pty Ltd

v Mona Homes Pty Ltd [1978] HCA 12; (1978) 138 CLR 423; Belgrove and Eldridge [1954] HCA 36; (1954) 90 CLR 613; and Wang v

Moutidis [2025] VCC 1156.

Rudloff v Unik Constructions Pty Ltd [2026] VCAT 152

1. The claim pleaded in the alternative in negligence against Unik Constructions Pty Ltd ('Unik') is dismissed.
2. Tribunal's order, dated 12 February 2026, is confirmed.

1. This is an extraordinary case of a building company, contracted to construct a new home and later, purporting to hand over without first obtaining an unconditional occupancy certificate and or release by the owner of the land, to avoid the statutory warranties found in s 8 of the Domestic Building Contracts Act 1998 (Vic) ('DBCA').
2. The applicants ('Owners') are suing the respondent, Unik Constructions Pty Ltd ('Builder'). The dispute arises principally from the parties' competing contentions about whether the Owners took notice of more than 200 alleged defects in a new home being constructed by the Builder, before entering a contract of sale with Ms Shanthini Sritharan, wife of the Builder's Director and manager of the Builder ('Vendor').
3. The Owners are husband and wife and are the current owners of the home. They bring this application as subsequent owners under s 9 of the DBCA alleging breaches of the statutory warranties implied by s 8 of the Act, against the Builder, which is a corporate domestic builder.
4. In the alternative, the Owners allege a separate breach of duty is said to arise because the Builder is a registered building practitioner.
5. The Owners seek damages of $301,156.30, for rectification costs, together with general damages, interest and costs ('Application').
6. The hearing came before me on 16 to 19 September 2025 and on 18 December 2025. I conducted a site view on the last day of hearing and invited closing submissions on liability.
7. The Owners were represented by Mr Andreou of Counsel. Ms Ina Rudloff gave evidence. The second applicant did not give evidence. Mr Hender of counsel appeared for the Builder. Mr Saravanapavan, the Builder's sole director gave evidence.
8. The Owners' experts were Mr Robert Quick, plumber of QP Consulting; Mr Tom O'Dowd, building consultant of Victorian Building Consultants; Mr Greg Payne, building surveyor of TESG Building Surveyors; and, Mr Andrew Smith, engineer of Cracks in the Walls. The Builder's experts were Mr Trevor Jeffery, building consultant and quantity surveyor of Construction & Asset Management Consultants Pty Ltd; and, Leon Catherine, plumber of Alpha Drainage, Plumbing & Excavation Pty Ltd (collectively, the 'Experts'). The Experts prepared one or more reports as instructed by the respective parties.
9. On 8 November 2024, save for Mr Smith, the Experts participated in a joint conclave, facilitated by Senior Member Aird, and on 18 November 2024, they signed a Joint Report.[1]
10. On the last day of hearing, I reserved my determination on liability. To the extent that liability is established, the proceeding will be listed for a further hearing to hear from the parties as to their recommendations for the further conduct of this proceeding.

(a) I ruled that the TESG Report was excluded from evidence under s 102(2) of the Victorian Civil and Administrative Tribunal Act 1998 (Vic) ('VCAT Act'), as there was sufficient expert evidence before the Tribunal of the issues in dispute and the author of the report was not being called for cross examination;

(b) at my direction, the parties filed an amended list of defects in spreadsheet form identifying all defects in issue, that forms part of the evidence; and

(c) I ordered the parties to file written submissions addressing, among other questions:

(i) whether the occupancy permit conditions had been fulfilled?

(ii) whether an unconditional occupancy permit had been issued? and

(iii) the consequence of those answers.

1. During the hearing on 31 October 2025, because of inter alia inconsistencies in the evidence concerning termite protection certificates and the absence of an unconditional occupancy permit, I directed the principal registrar to issue and serve a summons on the Mr Jason Singh of Zonne Building Consultants ('RBS') to produce the permit file.
2. Neither party objected to the summons being issued. The documents were produced by the RBS and were released to the parties without objection.

1. The issues for determination at this liability hearing are:

1. Completion / handover: When did handover occur, if at all, as between the Builder and the Vendor; and did the Builder bring the works to completion under the building contract? 2. Notice / 'full knowledge': Whether the Owners took notice of the defects before signing the contract of sale; and, if so, was that notice given to the Owners during their brief inspection of the works under construction?

1. Defects and costing directions: If breaches of s 8 are established what is the Tribunal's preferred rectification methodology; and which defects should be the subject of updated costing evidence?

1. The Owners purchased a new two-storey townhouse with double garage situated at the rear of a two-unit development ('Home'). This is their first home in Australia, since relocating from Germany.
2. The Builder commenced the building work in about 2017.
3. The Builder is a company controlled by Mr Saravanapavan, its sole director and, coincidentally, also the spouse of the Vendor, who represented herself to the Owners as a manager of the Builder. Ms Shanthini Sritharan was not called to give evidence, and no claim is brought against her in this proceeding.
4. Prior to any contract of sale of the Home, and whilst the works were progressing, the Owners were permitted to inspect and walk through the rooms in the Home but did not conduct any 'systematic' inspection.
5. In November 2020, the Builder purported to handover the Home to the Vendor before the Owners agreed to purchase from the Vendor.
6. In November 2020, the Owners briefly inspected the Home for about five minutes, and on 1 December 2020 entered a contract of sale under the Sale of Land Act 1962 (Vic) with the Vendor ('Contract of Sale'). The Builder was not a party to the Contract of Sale.
7. On 2 March 2021, prior to settlement, the Owners obtained a building report, described as a 'pre-purchase standard property inspection report', identifying various defects in the home. Thereafter, the Owners, through their representative, provided the Builder and the Vendor with a list of defects to be rectified before settlement, which occurred on 21 May 2021.
8. The Builder failed, neglected or refused to return to rectify the items complained of by the Owners. It asserted, in substance, that the various matters were either not defects or were raised outside the relevant time frame.
9. On 11 August 2021, the Owners applied to Domestic Building Dispute Resolution Victoria. After this, a certificate was issued stating the dispute was not suitable for conciliation. The Owners alleged that the Builder did not return when requested to rectify the alleged defects and or incomplete work and now seek damages consequently.

1. The Owners bear the onus of proving the builder has breached the s 8 warranties.
2. The Builder's primary defence is that the Owners were aware of the alleged defects at, or before, purchase and, therefore, cannot recover for breach of the warranties.
3. I note that issues of rectification method and reasonable price are primarily matters for the quantum phase, however, the question of whether the works were brought to completion and the characterisation of items as incomplete work as opposed to defective work is relevant in the circumstances.

COMPLETION / HANDOVER: WHEN DID HANDOVER OCCUR, IF AT ALL, AS BETWEEN THE BUILDER AND THE VENDOR; AND DID THE BUILDER BRING THE WORKS TO COMPLETION UNDER THE BUILDING CONTRACT?

1. Mr Andreou submitted on behalf of the Owners, that the RBS issued an occupancy permit on 8 December 2020.[2]
2. The occupancy permit was conditional on a water tank being installed in accordance with the approved plans prior to handover.
3. The Owners submit that where commissioning / fit-off remained outstanding, the RBS could not properly be satisfied that the premises were fit for occupation, and accordingly, that the Builder cannot rely on such a document to establish completion. They rely upon the principals of completion found in the matters of Troise v Blue Key[3] ('Troise').
4. The Owners also submit that the air conditioning was not installed before the alleged handover and that the home was handed over not as a completed new build but with widespread defects indicative of systemic poor workmanship and incomplete work. For example, the owners' experts identified a missing shower trap under the concrete slab that requires demolition of the slab to facilitate rectification.
5. Mr Hender submitted on behalf of the Builder, that many items are not defects for which the Builder is liable; that, to its knowledge, there had been no unconditional occupancy permit issued; and that the Building Act 1993 (Vic) permits occupancy permits to be issued with conditions. He submits that the conditions do not invalidate the permit, and that neither the DBCA nor the contract requires an unconditional permit.
6. The Builder also submits that any challenge to the validity of the occupancy permit is for the Building Appeals Board, not this Tribunal, and that no specific claim is pleaded 'for the failure to reach completion' or 'failure' to satisfy occupancy permit conditions.

1. On 11 December 2017, the Vendor and the Builder executed a major domestic Building Contract for $150,000 ('Building Contract').[4] The scope included construction of what is now the Owners' Home, together with certain works to the front unit.
2. The Building Contract included various contract documents and quotation number 223.[5] The quotation is recorded as forming a part of the Building Contract at item 6 of the Appendix as the specifications. The contract of course also contained the statutory warranties implied by s 8 of the DBCA
3. The building work described in the specifications is a:

Development of one double storey dwelling with associated car parking, driveway, stormwater drainage and land scaping works and garage. Unit 1 modifications.

1. The specifications 'carved out' certain items from the Builder's scope, to be performed (or supplied) by the Vendor. I will address the significance of the 'carve out' on the facts of this case below.

1. The RBS issued a building permit for the works on 14 December 2017, which nominated inspection stages including:

(a) Pre-slab;

(b) Slab reinforcement;

(c) Frame; and

(d) Occupancy permit,

1. The Building Permit recorded the Vendor as the owner, the Builder as the owner's agent, and Mr Saravanapavan as the builder. The permit does not record the Vendor to be performing any building work.
2. The Building Permit required the work to be completed by 14 December 2019.
3. Annexure A included various permit conditions, including, inter alia, condition 6. A rainwater tank with a capacity of not less than 2,000 L and a minimum catchment area of 50 m² connected to the sanitary flushing systems or a solar hot water heater with 60% solar heat gain must be provided.
4. On 5 February 2020, the RBS issued a purported amended building permit for the works. The Builder applied for an occupancy permit on 27 October 2020.

1. The RBS caused inspections for the mandatory stages. The inspection type and outcomes were:

(a) On 16 November 2018, the inspection of the pre-slab footing for unit 2 and garage and unit 1 only - marked as approved subject to:

(i) Lag exposed pipes;

(ii) Clean out loose material and vegetation from trenches.

(b) On 29 November 2028, the inspection of slab reinforcement failed to comply with the Building Permit. The RBS requested the Builder to stop any further work and 'Do not pour concrete.' The following matters required attention:

(i) rear setback is approximately 920 mm from fence. Unable to verify on site using land surveyor pegs. Land surveyor to verify rear setback.

The Builder was required to comply with this written direction before it expired on 29 December 2018.

(c) On 28 September 2019, the inspection of the frame - marked as approved.

(d) On 27 November 2020, the inspection for occupancy permit failed and the RBS directed the Builder to stop work. The following matters required attention:

(i) Complete weatherseal @ Entry & Laundry.

(ii) Provide visual decals to windows @ Dining.

(iii) Bed 1 - Provide lift off hinge to en-suite door.

(iv) Rear setback is 900 mm in lieu of 1,050 mm. This was identified at slab stage.

(v) Provide documentation from land surveyor shows setbacks comply from title boundary line.

(vi) Water tanks yet to be installed.

(vii) Supply any outstanding statements/certificates.

The RBS's direction included a statement that the Builder, '... must comply with this written direction before it expires on 27 December 2020.'

1. On 8 December 2020 the RBS purported to issue a conditional occupancy permit, which required, inter alia, the installation of a rainwater tank to be installed in accordance with the approved plans to handover ('Occupancy Permit').

1. The material provision of s 42 of the DBCA, relevantly provides:

When work is to be considered to have been completed

A builder must not demand final payment under a major domestic building contract until -

(a) the work carried out under the contract has been completed in accordance with the plans and specifications set out in the contract; and

(b) the building owner is given either -

(i) a copy of the occupancy permit under the Building Act 1993 , if the building permit for the work carried out under the contract requires the issue of an occupancy permit; or

(ii) in any other case, a copy of the certificate of final inspection.

1. I do not accept the Builder's submission that I need not concern myself with the question of completion, including the absence of an unconditional occupancy permit because it is not pleaded as a standalone cause of action. The point is not whether the Owners have pleaded a discrete 'occupancy permit validity' issue, rather, that the Builder's defence is anchored in a purported handover date and the contention that, after that date, responsibility for all defects shifted from the Builder to the Vendor, otherwise, the Owners.
2. The Builder's defence is premised on the proposition that handover occurred in November 2020, before the issue of the conditional Occupancy Permit on 8 December 2020, that after that point the Builder was no longer responsible for the building work.
3. However, on the face of the pleadings, the Builder makes an inconsistent and self-contradictory denial followed by an admission. On one hand it denies the Owners' allegation that the works were completed in or about December 2020; on the other, it advances a case that the works were brought to completion, yet it accepts there is no unconditional occupancy permit for the building work. That internal inconsistency matters because it bears directly on whether the purported 'handover' can sensibly operate as a liability cut off.
4. The Owners rely on the VCAT matter Troise, where Senior Member Edquist, referred to the matter of Barbour v Australian Elegant Homes Pty Ltd[6] and determined that a builder could not rely upon a conditional occupancy permit as establishing completion where commissioning / fit-off or other compliance critical items remained outstanding.
5. Those authorities do not require me to determine the validity of any occupancy permit. Rather, they assist in a more practical inquiry; whether, on the evidence, the Builder had, in substance, brought the works to completion in accordance with the Building Contract, plans and specifications, and its warranties.
6. The purported handover in November 2020 is not consistent with the documentary and factual matrix. The final inspection occurred on 27 November 2020. The occupancy permit was issued on 8 December 2020, despite there being no other inspection records or land survey produced by the RBS under summons or otherwise filed by the parties. The occupancy permit included a condition that required further compliance critical work to be performed by the Builder, and trade certification accordingly.
7. It is difficult to reconcile 'handover' in November 2020 with the issue of a conditional occupancy permit in December 2020, that on its face, contemplated further works to be completed prior to handover.
8. I am entitled under s 98 of the VCAT Act to inform myself as I see fit and to make findings of fact I consider appropriate in respect of matters in issue before me.
9. Completion and the purported handover date are squarely in issue because this underpins the Builder's defence and affects the characterisation of what is said to be defective.
10. The evidence also exposes a more direct problem for the Builder's purported November handover. Mr Saravanapavan adopted his witness statement as part of his evidence and confirmed it was true and correct. He asserted in substance, that when he handed over the property in November 2020, there were no scratches to glazing, and then sought to attribute responsibility for later damage outside the Builder's period of control.
11. But the Occupancy Permit itself contained a condition that the rainwater tank be installed in accordance with the approved plans prior to handover. The Building Permit likewise required a rainwater tank meeting specified minimum criteria connected to sanitary flushing. The contract specifications dealt with the tank expressly as, 'owner to supply, builder to install', including connection and pump requirements.
12. I find that the rainwater tank was not installed until about 2 March 2021. On that evidence, the works were not complete in November 2020 and there could not then have been a proper handover. That finding also sits uncomfortably with the sustainability measures declaration signed by Mr Saravanapavan and provided to the RBS at the time of the occupancy permit application, which asserted that the construction included a 2,000 L rainwater tank connected to sanitary flushing systems. I find that statement was not accurate at the time it was made.
13. In the circumstances, I find that the Builder's purported November 2020 handover is not effective. The building works had not been brought to completion in accordance with the contract, plans, specifications and permit requirements at that time, nor in accordance with s 42 of the DBCA. It follows that the Builder cannot avoid liability by positing a handover date that precedes completion and compliance.
14. I am not determining any challenges to the Occupancy Permit for the purpose of the Building Appeals Board. The jurisdiction of the Appeals Board is not in question. What I am doing is determining, on the evidence before me, whether the Builder brought the contract work to completion and whether it complied with its warranties, including under s 8(c) of the DBCA.
15. The specifications carved out certain items as 'owner works.'
16. I find that there were excluded works to be performed by the vendor. However, the installation of the rainwater tank was expressly within the contractual obligation; the specification expressly provided that the owner to supply, and builder to install, the rainwater tank. That obligation is inconsistent with any suggestion that the rainwater tank condition was irrelevant to completion.

1. The practical consequence is that until completion is achieved, or the Builder is released, the Building Contract remains on foot, and the works remain within the Builder's contractual responsibility to bring to the warranted standard.
2. I find that the purported handover occurred at a time when the Builder was not entitled to treat the works as complete and to shift responsibility away from itself.
3. Once the Builder's obligations are not performed, whether by termination or abandonment or simply cessation of the Building Contract, any outstanding scope of work is a failure to deliver work conforming to the Building Contract and statutory warranties. The recoverable loss is the reasonable cost to complete and or rectify so as to achieve contractual conformity,[7] and that entitlement is enforceable by the Owners under s 9 of the DBCA, insofar as they apply to the Builder's scope of work.[8]
4. Notwithstanding there is no release provided by the Vendor to the Builder, s 10 of the DBCA prevents parties from contracting out of the Act, to restrict the Owners from bringing a claim in relation to the warranties.[9]
5. I infer that by May 2021, the Building Contract was in effect, abandoned or abrogated without completion. I draw this inference from the following facts. Neither the Vendor nor the Builder returned to complete or rectify the contracted works, including those items they took notice of to rectify; the Vendor settled on the Home with the Owners, with the consequence that the Vendor could no longer confer access to the site and any contractual pathway for the Builder to return was, at least practically spent; the Builder did not intend for the Building Contract to be further performed by reason of the purported handover; and neither party to the Building Contract took steps which terminated or affirmed the building contract. 'In those circumstances, the parties must be regarded as having "conducted" themselves so as to abandon or abrogate' the Building Contract.[10]
6. This matters for the characterisation of items in issue. While the contract remained on foot, some matters may properly be characterised as incomplete work capable of completion under the contract. Once the Builder failed to complete and the contractual relationship came to an end, without completion, what remained incomplete became for present purposes, defective.
7. On these findings, insofar as there is defective work (including otherwise apparently incomplete work), the Builder remains liable for its breaches of its contractual and statutory warranties, which liability is not relieved by reason of its purported handover of the Home to the Vendor.
8. If I am incorrect about the finding of abandonment or abrogation, I nonetheless find as a matter of fact that the only items properly characterised as incomplete, as distinct from defective, are confined to the limited matters identified by the experts, namely, (a) external render to the column behind the first down pipe; (b) external render to the column behind the second down pipe; and (c) unpainted PVC pipework associated with the rainwater tank. In any event, those items fall within the Builder's scope and the Builder is liable for the reasonable cost of carrying them out.

NOTICE / 'FULL KNOWLEDGE': WHETHER THE OWNERS TOOK NOTICE OF THE DEFECTS BEFORE SIGNING THE CONTRACT OF SALE, AND, IF SO, WAS THE NOTICE GIVEN TO THE OWNERS DURING THEIR BRIEF INSPECTION OF THE WORKS UNDER CONSTRUCTION?

1. The Owners submit that many defects were latent or technical and could not be appreciated by a brief walkthrough of five minutes. They rely on the reasoning in Allianz[11] and the concept of full knowledge of the existence, nature, extent and significance of any defect to submit that causation is not broken by superficial awareness of isolated issues.
2. The Builder submits, relying on the matters of Beamish;[12] Bonarrigo;[13] and Brown,[14] that a subsequent owner cannot recover for defects which were reasonably observable at purchase (whether or not actually noticed).
3. It submits this was not an 'off-the-plan' purchase, but a transfer after completion, and that the Owners could have ended the Contract of Sale prior to settlement.

1. The Contract of Sale recorded, in substance, that the Vendor had entered a major domestic building contract with a registered builder under the Building Act 1993 (Vic), and was conditional upon:

(a) the vendor producing a Certificate of Occupancy before settlement; and

(b) registering a plan of subdivision before the end of the Registration period, (defined as 60 days after the day of Sale).

1. Furthermore, the following special conditions applied:

(a) Special Condition 1 - acceptance of property:

• 1.1 The Purchaser has inspected and accepts the Property its current state of repair.
• 2.1 The Purchaser buys the Property subject to the following restrictions:

20.1 A Major Domestic Building Contract (within the meaning of the Act) has been entered ... between the vendor and a registered builder under the Builder Act 1993 for the contract of the works ....

20.2. The sale is subject to and conditional upon the execution

and completion, by the Builder on or before Settlement date, of the Works, and if the Certificate of Occupancy as referred to in special condition 22.2 is not issued on or before the Project Completion Date, then the Purchasers at any time thereafter (but not prior to such Certification of Occupancy issuing) may terminate this contract by Notice to the Vendor, and thereupon the deposit monies paid by the Purchasers (less any applicable taxes, duties, and bank fees incurred with respect to the monies paid) shall be refunded to the Purchaser.

20.6 Any defects in the construction of the dwelling (excluding minor

shrinkage and settlement cracks) due to faulty materials or workmanship where the builder has been given written notice of them within 12 weeks from date the Works are completed and handed over to the Vendor under the Major Domestic Building Contract will be repaired in a proper workmanlike manner by the Builder at the Builder's expense as soon as practicable once written notice is given.

22.1 This Contract is subject to completion of the Works under a

Major Dometic Building Contract before the Project Completion Date.

22.2 The Vendor is deemed to have discharged its obligations

under special condition 22.1 upon the Vendor producing to the Purchaser a Certificate of Occupancy.

24.1 It is a fundamental term of this Contract that, provided an

Occupancy Permit has been issued, if at settlement date any dispute arises or has arisen in relation to:

(a) The building works;

(b) The quality or standard of the goods; or

(c) The quality or standard of the fittings and finish to the Property,

the Purchaser must not make any objection or requisition and is not entitled to delay or postpone settlement.

(d) Special condition 28 - final inspection

1. The Purchasers may inspect the condition of the Property only once at any reasonable time during the period of seven (7) days preceding the Settlement Date. This Contract of Sale will not be subject to the Purchasers' building inspection feedback under this clause.

1. The case before me is materially different from the factual settings in Bonarrigo; Beamish; and Brown, relied upon by the Builder.
2. In Bonarrigo, the principle illustrated is that where the purchaser observed or was aware of defective tiling prior to purchase, the defect cannot later form the basis of a claim for damages. The purchasers contracted on that basis. They purchased the home from their neighbours, who advised them of the previous defects i.e. water leaks in a decking that was re-tiled. There was an issue with the waterproofing and the matter persisted. Senior Member Farrelly found the owners had knowledge of the defects and there was no evidence to suggest they did not protect themselves by allowing for the defects in the purchase price.
3. In Beamish, the purchase concerned a report annexed to the vendor statement under s 32 of the Sale of Land Act 1962 (Vic), that identified relevant defects. The purchasers acquired the substantially renovated property with notice. Deputy President Aird (as she then was) found as provided earlier, if a defect was reasonably observable at the time of purchase, whether the owners noticed the defect, no allowance will be made. Further, that it would be untenable for a purchaser to later establish a loss having clearly observed a defect before committing to purchase.
4. In Brown, Member Kincaid followed the same reasoning found in Beamish in relation to a driveway, alleged to be too steep.
5. Here, on the oral evidence of Ms Rudloff, the Owners inspected the Home for about five minutes, then executed the Contract of Sale in circumstances where:

(a) the builder had not brought the work to completion;

(b) compliance critical items (including the rainwater tank) were not installed by the time the conditional Occupancy Permit was issued; and

(c) many alleged defects were not reasonably appreciable without 'systematic' inspection, access equipment, and or technical testing. For example, the Owners' experts identified that a missing shower trap requires demolition and reconstruction of a shower.

1. In Bonarrigo, at [42] counsel for the applicant, submitted:

... in the circumstances where the owners did not know the extent of the problem and the owners had assumed the respondent would continue to investigate the problem, or at least had not denied liability for the problem, there was no need for an adjustment in the purchase price.

1. At [43], the Senior Member did not accept this submission because the owners were aware of the history of serious water leaks in the home and that there is no evidence as to whether an adjustment to the purchase price was considered or made.
2. The present case is distinguishable from Bonarrigo, because the Home is an entirely new construction. I find that it was reasonable for the Owners to expect the Builder to rectify any defects and incomplete works identified at the inspection, including those that were identified prior to settlement, while the Building Contract remained on foot, and the Vendor warranted that the Builder would rectify any such notified defects or incomplete works (see Contract of Sale special condition 20.6).
3. In Allianz, the Court explained:

[110] a successor in title who acquires a building in full knowledge of its defects, suffers no loss from the existence of those defects. In those circumstances, the builder's breach of statutory warranty could not be said to have diminished the successor's assets, nor increased its liabilities. Any adverse impact to the successor's financial position, and any loss to the successor, would result from the successor knowingly and deliberately paying more for the building that it was worth. The loss would be caused by the successor's own decision to purchase at the agreed price.

[111] the observations in [110] are predicated on "full knowledge" of the defects not only knowledge of the existence of the defects but also knowledge of their significance. A party may know of the existence of defects (because they are patent) but may not appreciate - even acting reasonably - that major expenditure would be required to remedy them.

1. I accept that the general proposition from the authorities is that a purchaser who contracts with full knowledge of defects may have difficulty establishing compensable loss in respect of those defects because the purchase price is taken to reflect the known condition. But that proposition depends upon the purchaser having at least a fair opportunity to identify what is being acquired, and knowledge of the existence, nature, extent, and significance of what is said to be defective.
2. Although the parties did not draw my attention to the matter of Mason v Fraser[15], it is relevant to the present case, and I am bound by it. The Supreme Court of Victoria upheld a decision at first instance in the Tribunal that concerned the extent of notice to purchasers of a renovated home and whether the notice extended to items the appellants could have identified. In that case, the respondents carried out work to an existing home as owner builders. Part of the work was performed without approval being in place. During the proceedings the appellants sought to claim for additional loss and damage, which they were largely successful. In the premise of which the Tribunal rejected the respondents' submissions that the experts report annexed to the vendors statement effectively put the appellants on notice of all issues, including those later identified in the works by the respondents as owner builder.
3. At [50] the Court found:

...the [Tribunal] relied upon a photograph of the floor of the ensuite taken after tiles had been removed, which he concluded suggested the floor was damp and showed no sign of waterproofing, and evidence that when a tradesperson touched the weatherboards external to the ensuite his hand went through the wall, which he concluded demonstrated there was no effective water resistance to the wall. In response, to the Masons' [respondents] submissions that the Scaffaro report put the Frasers [appellants] on notice of this defect, the Member said:

I consider this to be a good example of the sort of situation referred to by IPP JA in Alliance v Waterbrook [[2009] NSWCA 224] where a defect is apparent, but its significance is unknown. I find the Frasers are not disentitled from pursuing this claim simply because of the reference to leaks in the ensuite in their pre-purchase report.[16]

1. Notwithstanding the Tribunal considered other defects in issue, the Court held at [70] that the Tribunal would have been in error to rely on Allianz in relation to this issue if it rejected the appellants claim.[17]
2. I accept Ms Rudloff's evidence that the time permitted for the first inspection was very limited by those representing the Vendor, and that the Home was not fully completed. I also except the Owners are not building professionals.
3. I further accept, on the Experts' evidence and my view of the property during the hearing, appreciation of certain defects required:

(a) access to the roof to observe flashing defects, among others;

(b) tools including a spirit level to check horizontal and vertical levels;

(c) the removal of a door from the doorjamb to expose an issue relating to a door hinge; and or

(d) technical assessment beyond visual observation.

1. In those circumstances, I find that it would not have been possible for the Owners to take meaningful notice of the defects in issue during the brief inspection.
2. To the extent that Ms Rudloff accepted in oral evidence that some matters (such as Windows scratches) were obvious once identified, I find that does not equate to 'full knowledge' of the existence, nature, extent and significance of the defects later asserted. I accept the Owners' reliance on the 'full knowledge' concept discussed in Allianz.
3. The Builder's defence that the Owners had notice of the existence of defects and/or incomplete works must fail for the following two reasons. First, on my findings under the preceding issue, the Builder had not brought the work to completion at the time it asserts handover occurred or by the time of settlement of the Contract of Sale. The Owners were entitled to expect a completed new home meeting the statutory warranties in s 8. The 'reasonably observable defect at purchase' analysis has diminished force where the 'thing purchased' was not yet in its warranted state and where key compliance and completion steps were outstanding. Secondly, even if I am incorrect about the relevance of the Home being 'under construction' at the time of the Owners' inspection, I am satisfied that a reasonable person in the Owners' position could not identify the defects of the type and extent alleged, and ultimately litigated, within five minutes so as to have the requisite appreciation of the defects and their respective extent as contemplated by the Court's judgment in Allianz.
4. I reject the Builder's contention that the Owners 'could have rescinded' the Contract of Sale and, therefore, must bear the consequences on the Contract of Sale's terms. This argument is misconceived as:

(a) the contract did not provide for a general right to rescind the defective building work. Rather, it contemplated the Vendor compelling the Builder to perform rectification upon notice; and

(b) after the cooling off period, withdrawal would have exposed the Owners to forfeiture consequences. There was no contractual basis for termination of the Contract of Sale for the existence of defects.

1. Because the Vendor had contracted with a registered domestic builder, the Contract of Sale was not itself a domestic building contract for the purposes of the DBCA.[18]
2. If one or both occupancy permit and or plan of subdivision registration conditions were not satisfied, the Owners had contractual rights to terminate or rescind by written notice to the vendor. No such election was made prior to settlement of the Contact of Sale.
3. No evidence of any release of the Builder by the Vendor was adduced.
4. Finally, the DBCA displaces the common law doctrine of 'merger' that might otherwise have foreclosed a subsequent owner's warranty claim upon conveyance. DBCA s 9 gives a subsequent purchaser the benefit of the s 8 warranties as though they were a party to the original building contract, absent some identified release or other legal basis to discharge the builder. For all of the foregoing reasons, I find the Owners alleged 'notice' of defects at purchase does not defeat their claim and it does not operate to relieve the Builder of liability for breach of the s 8 warranties on the facts of this case.
5. Having regard to the volume of alleged defects, I annexe to these reasons a table setting out the various alleged defects and my findings in respect of each as to liability. Insofar as I find that an alleged defect is proved, I find that the defect contravenes s 8 of the DBCA. I will on the next hearing, explain to the parties the basis on which I have made each finding of liability and then I will hear the parties on the question of quantum thereof. I provide this initial indication of liability to facilitate the parties' understanding and preparation for the next stage of this proceeding.

1. The Owners pleaded an alternative cause of action grounded in the Builder's status as a 'registered building practitioner.' The Builder denies that any separate duty of care outside the Contract exists.
2. On the evidence, the Builder was not relevantly registered at the time the building contract was entered. Companies were not capable of being registered practitioners until 1 July 2018. A company that is not a registered practitioner can owe no duty of care. The claim in negligence against the Builder must accordingly be dismissed.
3. In any event, the Owners' principal path to relief is s 9 and s 8 of the DBCA.

DEFECTS AND COSTING DIRECTIONS: IF BREACHES OF S 8 ARE ESTABLISHED WHAT IS THE TRIBUNAL'S PREFERRED RECTIFICATION METHODOLGY; AND WHICH DEFECTS SHOULD BE THE SUBJECT OF UPDATED COSTING EVIDENCE?

1. The parties were directed to prepare a consolidated spreadsheet of defects. That spreadsheet identifies the items in issue for the purposes of liability and quantification.
2. Given the significant number of defects to be addressed, I proposed to give the balance of my determination ex tempore at the next hearing date and provide direction to their respective Experts as to the preferred methods of rectification that they take that into account when preparing their cost estimates, before listing the matter for a quantum hearing.
3. I will hear from the parties about any further costings at the next hearing.

EPS foam not sealed to underside on upper storey

EPS installed in lieu of cement sheeting to living room walls

The render finish on the east side of the building is inconsistent

Wall return on living room (external) out of plumb x 6 mm

Absence of flashing above windows [x2] pictured

Gaps around windows rubber and render - 1x photograph

Absence of metal boundary flashing and brickwork - (see 6.4.2 in Quick report)

Non-compliant flashing - east side - [over carport]

Control joints at garage contain non-compressible material

DPC not visible on masonry walls - 4x photographs

Render incomplete behind two downpipes - [at entry and brick column]

Mortar over spill has not been cleaned form slab edge

Tile size inconsistent and appears random and slippery when wet

Tiles poorly finished at each side of patio slab

Roof sheets on the north side are not turned down into the gutter

Downpipe on the north side of the building upper level not adequately

Downpipes from the upper roof are not fitted with spreaders and are

Redundant downpipe bracket has not been removed on the west side

Downpipe at east side (lower level) scratched and dirty

Mortar residue on fascia and gutter at north side

Termite treatment label not installed inside meter enclosure

Pipes connected to instant HW service not lagged

Insufficient separation of electrical cables and water pipes

Distance between glass splashback and periphery of gas cook top less than 200 mm

Gap between ceiling and range hood flu surround

Joinery shelf missing from cupboard adjacent dishwasher

Incorrect screw cap colour to laundry cavity sliding unit

Uneven gap between laundry sliding door and jamb

Ground floor bathroom door scratched on outer face

Door has not been properly prepared for painting - no photo

Tiles stepped at cornice in bathroom ground floor - 3x photographs

Fixtures in shower recess not sealed in ground floor bathroom

Uneven margin between architrave and wall in study

Uneven gap between robe sliding doors and jamb to one side

Gaps between joinery and wall in study robe not caulked

timber floor at base of stairs out of level by 14 mm

Garage brickwork contains mortar smears x3 m2 - 3x photographs

Pedestrian door from garage to rear yard not sealed on bottom side 1x photograph

Gap between door and jamb uneven - 1x photograph

Finish to handrail and balustrade poor and filler not colour matched

Crack in moulding between upper and lower levels

Green masking tap on stair baluster - 3x photographs

Non-matching caulking used between stairs and timber flooring

Scratches and marks on bedroom three door (hinge side) & adhesive on jamb

Non-matching caulking between tiles and timber flooring at first floor bathroom

Holes in grout in first floor bathroom - 3x photographs

Water proofing on window architrave in first floor bathroom

Fixtures in shower recess not sealed in first floor bathroom

Tiles stepped at cornice in first floor bathroom - 3x photographs

Cornice bowed down in first floor bathroom by 9 mm and ceiling by 8 mm

Architrave poorly installed over cistern (unfinished)

Door jamb not finished/painted to first floor toilet

Door jamb out of plumb with adjoining bedroom architrave

Hole to LHS of door handle inside first floor toilet

Holes surrounding door handle inside bedroom two

Gap between door and jamb uneven in bedroom two door

Gap between rode sliding door and jamb to LHS is uneven

Marks on door next to flush pull in bedroom two robe door

Skirting missing to LHS of entry to master at top of stairs

Gap between door and jamb uneven in master bedroom

Vanity stone top overhangs doors and gaps to doors uneven

Water proofing membrane material on door and architrave in master ensuite

Fixtures in shower recess not sealed in master ensuite

Tiles stepped in master ensuite - 1x photograph

Wall out of plumb by 6 mm in Master - north west corner

Top and bottom of doors not paints ('common issue') 2x photographs of bottoms and 2x photographs of tops - no locations

Glazing scratched throughout lower floor - 5x photographs

Gaps in corners of window jambs and mitres of architraves ('common issue') - 7x photographs

Paint and other materials not cleaned from windows internally ('common issue') - 3x photographs

Architraves not seals to walls - 4x photographs

Water proofing membrane material on door ('common issue') 4x photographs

Pans not sealed to walls ('common issue') - 4x photographs

Gaps in window gaskets ('common issue') -3 3x photographs

Doors fitted with lift off hinges contained insufficient clearance with jambs

External double GPO not sealed ('common issue') - 1x pictured

Rebate not exposed for termite inspection & blue Home Guard not visible

Kitchen window sill flashing folded at sides of frame (external)

Sub-stair access door from garage not finished with in-fill

Freeboard is less than 150 mm at north-west corner of the home

EPS foam cladding installation is not in accordance with manufacturer's

Garage boundary walls not sufficiently fire rated

Flashings are missing over the window and entry door

Cracks in the junctions of the skirting, architraves, mouldings and cornice

Gap between plasterboard and electrical switchboard near front entry

Windows in living/master and bedroom two do not open/close properly

Water closet not sealed to wall repeated from 426 above

Insufficient grade in gutter - ponding - 1x photograph

Downpipe mitres not riveted and sealed - 2x photographs

Fixings to downpipes brackets not fit for purpose and not holding - 2x photographs

Downpipes not offset around fascia - 1x photograph

Excess silicone installed underside gutter at pop

Downpipe discharges without spreader and into valley repeated from 114 above

Render repair to wall in two locations - 2x photographs

Apron flashing not dressed and not adhered to tiles - 4x photographs

Apron flashing at eastern boundary non-compliant repeated from 98 above

Parapet flashings insufficient grade and fixings

A/C condenser installation defects (supports/penetrations/roof flashing)

Condensate drains to discharge to the nearest downpipe

Flashing to the tiled roof on the western side of the roof has been siliconed to the tiles and a fixing has been installed through a tile

Sheets not turned down repeated from 17(f) above

Flashing not installed over ridge cap repeated from 20 above

External condenser supported by treated pine timbers and other matters

Reverse cycle drains x2 does not drain to gutter

Un-flashed gaps between the windows and the cladding repeated from 30 above

Gap between cladding and flashing on eastern side repeated from 30 above

Agreed except (g) - PVC pipe not supported (see Photo 57)

Stormwater drain inspection shaft not connected to stormwater drain

The pressure pump serving the stormwater recycling storage tank is

The concrete base for the stormwater recycling storage tank is moving

Shower mixer in upper-level bathroom leaks when the water pressure

[1] Common Tribunal Book ('CTB'), pages 717 to 756.

[3] Troise v Blue Key Properties Pty Ltd (Building and Property) (Costs) [2025] VCAT 976.

[6] [2018] VCAT 1242.

[7] Belgrove v Eldridge [1954] HCA 36; (1954) 90 CLR 613.

[8] Wang v Moutidis [2025] VCC 1156.

[9] DBCA, s 10.

[10] DTR Nominees Pty Ltd v Mona Homes Pty Ltd [1978] HCA 12; (1978) 138 CLR 423.

[11] Allianz v Waterbrook [2009] NSWCA 224.

[12] Beamish v Rosvoll (Domestic Building) [2006] VCAT 440.

[13] Bonarrigo v DSF Pty Ltd trading as LaRosa Tiling Company (Domestic Building) [2012] VCAT 1404.

[14] Brown v S & B Weerasinghe Pty Ltd (Building and Property) [2019] VCAT 1329.

[15] [2021] VSC 461.

[18] DBCA, s 3(4) A contract for the sale of land on which a home is being constructed ... that provides ... that the construction of the home will be completed before the completion of the contract is not, and is not to be taken to form part of, a domestic building contract within the meaning of this Act if- (a) the home is being constructed under a separate contract that is a major domestic building contract;