Winslow Constructors Pty Ltd v Mt Holden Estates Pty Ltd; Lanigan Baldwin... [2004] VSCA 159 | Case summary

Court of Appeal (Vic)|2004-09-08|Before: CALLAWAY and BUCHANAN, JJ.A. and HANSEN, A.J.A.

Building and construction - Design and civil engineering works for subdivision of land - Claim by developer in Victorian Civil and Administrative Tribunal for damages under Domestic Building Contracts Act 1995 - Whether dispute a "domestic building dispute" under that Act - Whether works fell within that Act or Subdivision Act 1988 - Jurisdiction of Victorian Civil and Administrative Tribunal - Statutory interpretation - Subdivision Act 1988 - , s., s..

We have had the advantage of reading in draft the reasons for judgment prepared by Hansen, A.J.A. We agree that these appeals should be allowed, and generally for the reasons his Honour gives.

(a) In s.5 of the Domestic Building Contracts Act 1995 "a home" does include "homes", so that, for example, paving work for two adjacent homes, would be "associated work" within the meaning of s.5(1)(a)(i), but that does not change the operation of the section, which does not apply to work performed in contemplation of merely prospective homes on a proposed residential subdivision.

(b) Section 5(1)(a)(i) does not apply, because, for the reason we have just given, there was insufficient nexus with the erection or construction of a home or homes for the work done by the appellants to be "associated work" of the kind referred to in that sub-paragraph.

(c) Section 5(1)(a)(ii) does not apply, because there was no provision of the specified services to a property on which it could be said that a home or homes was or were to be. Again homes were simply in prospect.

(d) Section 5(1)(e) does not apply, because, even if "a building" in that paragraph does include a home, the work the appellants did was not work in respect of which a building permit was required under the Building Act 1993.

(e) The other paragraphs of s.5(1) need not be considered, because paragraph (f) depends on the preceding paragraphs and it was conceded that, if Winslow's appeal succeeded, Lanigan's appeal must succeed too. We therefore say nothing about s.5(1)(g).

We would also leave open whether "a building" in s.5(1)(e) might include a home. We agree with the learned trial judge that, in Fletcher Construction Australia

Ltd. v. Southside Tower Developments Pty. Ltd.[1], Byrne, J. did not decide that "a building" in s.5(1)(e) does not include a home. On the contrary, his Honour said that "any structure or part of a structure is included", that the work must be associated with the construction or erection "of a building of whatever kind" and that "a building" in s.5(1)(e) "cannot be restricted to a residential building" (emphasis added). [2]

The Court was not asked to consider the question whether a judge of the Trial Division may rescind a master's order granting leave to appeal pursuant to s.148(1)(b) of the Victorian Civil and Administrative Tribunal Act 1998. We express no opinion on that question, simply noting that, in addition to the cases mentioned by Ashley, J. in Ewert v. Audehm[3], reference may now be made to R. v. GAM (No. 2). [4]

These are appeals against orders made by a judge on appeals under s.148 of the Victorian Civil and Administrative Tribunal Act 1998 ("the VCAT Act") from orders of the Victorian Civil and Administrative Tribunal ("VCAT") in a proceeding in which the plaintiff/respondent sought damages by an application filed 25 October 2002 against each of the defendants/appellants under the Domestic Building Contracts Act 1995 ("the DBC Act") and the Fair Trading Act 1999 ("the FT Act"). The plaintiff claimed, inter alia, that the defendants, in breach of contract, failed to carry out works at a site known as the Mt. Holden Estate in Sunbury in a proper manner and

in accordance with the contracts. The plaintiff claimed a total amount of $372,983.00.

The defendants, by summonses filed on 21 November 2002 and 17 December 2002, sought the dismissal or striking out of the proceeding under s.75 of the VCAT Act on the ground, inter alia, that VCAT had no jurisdiction to deal with the claims under the DBC Act.

The hearing of the summonses, which occurred before a Deputy President of VCAT ("the VCAT Proceeding"), required the determination of three agreed questions:

(a) Whether any part of the works carried out by either of the Respondents falls within s.5 of the Domestic Building Contracts Act 1995?

(b) Whether either of the Respondents is a builder as defined in such Act?

(c) Whether the dispute between the parties is a domestic building dispute as defined in such Act?

For the purpose of the hearing the parties provided the following statement of agreed facts:

1. The applicant (`Mt Holden') is and was at all material times the:

(a) owner of the land known as Mt Holden Estate situated at 250 Reservoir Road, Sunbury (`the Land'); and

(b) developer of a residential subdivision on the Land.

2. The first respondent (`Lanigan') is and was at all material times a consulting engineer.

3. The second respondent (whose correct name is Winslow Constructors Pty Ltd) (`Winslow') performed earthmoving and civil engineering works at all material times.

4. The Land was to be the subject of a subdivision into residential lots by Mt Holden in four stages, namely Stages 1, 2, 3 and 4 (`the subdivision').

5. Lanigan was retained by Mt Holden in relation to each Stage of the subdivision to:

(a) design the construction of roads, drainage, water and sewer reticulation works upon the Land for each stage of the subdivision in accordance with the requirements of the Hume City Council and the relevant utility authorities (`the works');

(b) act as superintendent under the respective contracts for each stage of the subdivision.

6. The works for Stage 1 of the subdivision are not in dispute in this proceeding (as someone other than Winslow performed them).

7. Mt Holden engaged Winslow to carry out the works for Stage 2 of the subdivision on the Land.

8. The engagement of Winslow to perform the Stage 2 works was pursuant to a written contract made on or about 13 February 2001 between Mt Holden and Winslow.

9. The scope of the works for Stage 2 of the subdivision and the works to be performed under that contract by Winslow are set out in the contract documents, including the engineering drawings.

10. The scope of works described for Stage 2 of the project in the contract is stated as ´earthworks, roadworks, drainage, sewer and water reticulation construction' (section 4 paragraph 2 specification for contract No 3078/2).

11. The Stage 2 works by Winslow for Mt Holden achieved practical completion on 12 December 2001, alternatively 16 November 2001 and a three month maintenance period in accordance with the Subdivision Act 1988 commenced.

12. On or about 21 September 2001, Winslow was engaged by Mt Holden [to] carry out the works for Stages 3 and 4 of the subdivision on the Land.

13. This engagement was pursuant to a written contract constituted by agreed contract documents.

14. The scope of works for Stages 3 and 4 of the subdivision and the works to be performed under that contract by Winslow are set out in such contract documents, including the engineering drawings.

15. The scope of works described for Stages 3 and 4 of the project in the contract is stated as ´earthworks, roadworks, drainage, sewer and water reticulation construction' (section 4 paragraph 2 specification for contract No 3078/3).

16. Practical completion of the Stage 3 and 4 works by Winslow was achieved on 23 July 2002 and a three month maintenance period in accordance with the Subdivision Act 1988 commenced.

17. Winslow performed the works on the Land set out in the contract documents for Stage 2 and for Stages 3 and 4 of the subdivision, including performing the works set out on the engineering plans which form part of those contract documents.

18. A statement of compliance in relation to each stage of the project to be issued under the Subdivision Act 1998, is a pre-condition to the issuing of titles by the Registrar of Titles in relation to a plan of subdivision.

19. As at 25 October 2002, the date of the Application, no statement of compliance was issued under the Subdivision Act 1988 in respect of the Stage 2 or Stages 3 and 4 works performed by Winslow for Mt Holden and no Titles relating to Stages 2, 3 and 4 had been issued.

20. The works were carried out before the subdivision plan was approved and titles were issued by the Registrar of Titles.

21. Neither Winslow nor Mt Holden has built any homes on the Land.

(b) no homes being constructed or completed on the Land; and

in respect of that part covered by the Stage 2 works, at any time from the time when Winslow commenced those works until practical completion was achieved.

23. As at 28 February 2003 there was one home in the process of being constructed on the Land in respect of that part covered by the Stage 2 works. This home is a display home constructed by or on behalf of Mt Holden.

24. During the time that the works on stage 2 and stages 3 and 4 were performed by Winslow, there were:

(b) no homes being constructed or completed on the Land;

(d) no titles issued by the Registrar of Titles in relation to the land; and

(e) no sales of any titles to any prospective home owner.

25. As at 28 February 2003 there were still no homes, in the process of being constructed or completed, on the Land in respect of that part covered by the Stage 3 and 4 works.'

26. The planning authorities, permits and regime applicable to the Land are set out in:

(d) the agreed extracts from the Hume planning scheme."

On 1 August 2003 the Deputy President gave judgment on the applications, answering the questions as follows:

(a) yes; the whole or as indicated;

(b) yes;

(c) yes.

Accordingly, the Deputy President determined that VCAT had jurisdiction and he dismissed the defendants' summonses.

Application for leave to appeal

On 13 and 27 August 2003 the defendants each filed an originating motion seeking leave to appeal to the Supreme Court against the Deputy President's orders made on 1 August 2003.

In support of the application for leave to appeal an affidavit was sworn by Mr Loris Francis Sartori on 20 August 2003 on behalf of Winslow. The purpose of this affidavit was, in part, to introduce into evidence the contract documents pursuant to which the appellants carried out the works. The contract documents incorporated the General Conditions of Contract (AS 2124-1992) and also comprised specific correspondence, Winslow's tender, specifications, technical standards, drawings and an indemnity for QA works. Mr Sartori also deposed that, according to Mr Dino Strano, the director of Winslow, and Mr Rod Jeffrey, the Executive Director of the Civil Contractors Federation, contracts for civil and engineering infrastructure or subdivisional works relating to the subdivision of future residential land, have never been said to fall under the scope of the DBC Act and that the principal contracts used within the civil engineering industry for these works, namely the AS 2124-1992 and the updated AS 4000-1997, do not conform with the DBC Act. Winslow currently had about 81 contracts for the performance of earthmoving and civil engineering works for residential subdivisions in Victoria of a similar nature to the Mt. Holden contracts. The contracts for those works were of a similar nature to the Mt. Holden contracts. The purpose of this evidence was to highlight the importance of this decision to Winslow and other contractors in the earthmoving and civil engineering industry in providing certainty as to the appropriate statutory framework within which such works should be carried out.

The scope of the works of both contracts is described in the two letters of acceptance from Lanigan (as superintendent) to Winslow dated 13 February 2001 and 21 September 2001. This provided for the construction of roads and drainage works, sewer reticulation works and water reticulation works.

A supplementary affidavit sworn by Mr Sartori on 10 September 2003 on behalf of Winslow outlined concurrent Federal Court proceedings between the parties, which for present purposes are not relevant, and introduced into evidence extracts from the Hume planning scheme covering the land, amendment L10 to the planning scheme, the planning permit No.P5644 and the planning certificates. The planning permit allows for a 30 lot subdivision in three stages. Set out in the permit are the conditions which apply to the permit. Clause 6 sets out the works which are to be completed to the satisfaction of the Hume City Council under the Subdivision Act 1988 prior to the issue of a statement of compliance. In particular, sub-cls.(v) and (vi) specify the provision and laying of drains between property lines and the underground drain for all blocks sloping towards the road and the provision of conduits for the more efficient or easy laying, repairing or replacing of water services and gas services to premises fronting on each such private street.

Leave was subsequently granted by Master Wheeler on 29 September 2003 who ordered that the appeals be heard together and that the VCAT Proceeding be stayed until the hearing and determination of the appeals.

The matter was heard by a judge in the Common Law Division in December 2003 and judgment was given in February 2004. The appeals were dismissed with costs, and the decision of VCAT was affirmed.

At the outset the judgment dealt with a submission of counsel for the respondent that the Master's orders granting leave to appeal should be rescinded. Her Honour refused the application. This part of her Honour's judgment is not in question.

Her Honour then turned to the substantive questions raised by the notice of appeal and noted that the essential question was the first of the three questions before VCAT, as the answers to the second and third questions followed from the answer to the first question. This is clearly the case as the definitions of "builder", "building owner", and "domestic building dispute" in s.3(1) of the DBC Act rely on the existence of "domestic building work". If the work carried out by the appellants constitutes "domestic building work" then it necessarily follows from the definitions in s.3(1) and from these circumstances that the appellants are each a "builder", the respondent is a "building owner", the dispute between them is a "domestic building dispute" and accordingly VCAT had jurisdiction to deal with the dispute by virtue of Division 2 of Part 5 of the DBC Act.

As the appellants were separately represented and their position was not identical, her Honour dealt with their submissions separately. It is necessary to summarise, in turn, her Honour's analysis and conclusions in relation to those disputes.

However, before doing so, it is necessary to set out the provisions of the DBC Act which are relevant to the proceeding. These are set out below:

"1. Purpose The main purposes of this Act are- (a) to regulate contracts for the carrying out of domestic building work; and (b) to provide for the resolution of domestic building disputes and other matters by the Victorian Civil and Administrative Tribunal; and (c) to require builders carrying out domestic building work to be covered by insurance in relation to that work; and (d) to amend the House Contracts Guarantee Act 1987, and in particular, to phase out the making of claims under that Act. 3. Definitions (1) In this Act - ... "builder" means a person who, or a partnership which- (a) carries out domestic building work; or (b) manages or arranges the carrying out of domestic building work; or (c) intends to carry out, or to manage or arrange the carrying out of, domestic building work; "building" includes any structure, temporary building or temporary structure and also includes any part of a building or structure; "building owner" means the person for whom domestic building work is being, or is about to be, carried out; "building site" means a place where domestic building work has been, is being, or is about to be, carried out; ... "contract price" means the total amount payable under a domestic building contract and includes- ... (c) the amount any third person is to receive (or it is reasonably estimated will receive) directly from the building owner in relation to the domestic building work to be carried out under the contract- (i) for conveying to the building site or connecting or installing services such as gas, electricity, telephone, water and sewerage; or ... ... "domestic building contract" means a contract to carry out, or to arrange or manage the carrying out of, domestic building work other than a contract between a builder and a sub-contractor; "domestic building dispute" has the meaning set out in section 54; ... "domestic building work" means any work referred to in section 5 that is not excluded from the operation of this Act by section 6; "major domestic building contract" means a domestic building contract in which the contract price for the carrying out of domestic building work is more than $5000 (or any higher amount fixed by the regulations); 4. Objects of the Act The objects of this Act are- (a) to provide for the maintenance of proper standards in the carrying out of domestic building work in a way that is fair to both builders and building owners; and (b) to enable disputes involving domestic building work to be resolved as quickly, as efficiently and as cheaply as is possible having regard to the needs of fairness; and (c) to enable building owners to have access to insurance funds if domestic building work under a major domestic building contract is incomplete or defective. 5. Building work to which this Act applies (1) This Act applies to the following work- (a) the erection or construction of a home, including- (i) any associated work including, but not limited to, landscaping, paving and the erection or construction of any building or fixture associated with the home (such as retaining structures, driveways, fencing, garages, carports, workshops, swimming pools or spas); and (ii) the provision of lighting, heating, ventilation, air conditioning, water supply, sewerage or drainage to the home or the property on which the home is, or is to be; (b) the renovation, alteration, extension, improvement or repair of a home; (c) any work such as landscaping, paving or the erection or construction of retaining structures, driveways, fencing, garages, workshops, swimming pools or spas that is to be carried out in conjunction with the renovation, alteration, extension, improvement or repair of a home; (d) the demolition or removal of a home; (e) any work associated with the construction or erection of a building- (i) on land that is zoned for residential purposes under a planning scheme under the Planning and Environment Act 1987; and (ii) in respect of which a building permit is required under the Building Act 1993; (f) any site work (including work required to gain access, or to remove impediments to access, to a site) related to work referred to in paragraphs (a) to (e); (g) the preparation of plans or specifications for the carrying out of work referred to in paragraphs (a) to (f); (h) any work that the regulations state is building work for the purposes of this Act. (2) A reference to a home in sub-section (1) includes a reference to any part of a home. 6. Building work to which this Act does not apply This Act does not apply to the following work- (a) any work that the regulations state is not building work to which this Act applies; (b) any work in relation to a farm building or proposed farm building (other than a home); (c) any work in relation to a building intended to be used only for business purposes; (d) any work in relation to a building intended to be used only to accommodate animals; (e) design work carried out by an architect or a building practitioner registered under the Building Act 1993 as an engineer or draftsperson; (f) any work involved in obtaining foundations data in relation to a building site; (g) the transporting of a building from one site to another. 54. What is a domestic building dispute? (1) A "domestic building dispute" is a dispute or claim arising- (a) between a building owner and- (i) a builder; or (ii) a building practitioner (as defined in the Building Act 1993); or (iii) a sub-contractor; or (iv) an architect- in relation to a domestic building contract or the carrying out of domestic building work; or ...."

In relation to Winslow's appeal, her Honour addressed each of the 12 grounds of appeal which appeared in its amended notice of appeal dated 8 December 2003.

The first ground of appeal concerned whether VCAT erred in construing s.5(1)(a), (e) and (f) of the DBC Act in holding that the infrastructural works carried out by the appellants to enable possible future homes or buildings to be constructed on the land, in circumstances where there was no actual or contemplated home or building on the land and there were no residential lots, were "domestic building works".

Counsel for Winslow submitted that the specificity of "a home" and "a building" in s.5(1)(a) and (e) indicated that the section was intended to refer to an actual or contemplated home or building, not to the hypothetical future home or building possibly to be built. Works carried out before there was an actual or contemplated home or building were not intended to be included in the expression "associated work". That expression referred to work such as connecting the specific home, or the lot on which it was to be erected, into the main sewer or drainage system, and not to the construction of that main sewer and drainage system.

Her Honour referred to s.37 of the Interpretation of Legislation Act 1984 which provides that unless the contrary intention appears, words in an Act in the singular include the plural and concluded that there was no such contrary intention in the DBC Act. On that basis her Honour read s.5(1)(a), (e) and (f) as using the plural form of "home", "building" and "site". Her Honour then held that the works carried out by the appellants, described in the statement of agreed facts as "earthworks, roadworks, drainage, sewer and water reticulation construction", on land which is stated "to be the subject of a subdivision into residential lots by Mt Holden", fell within s.5(1)(a)(ii), (e) and (f) upon a literal reading of them set out in plural form. On this basis, her Honour held that "earthworks and roadworks" fell within para.(f), and "drainage, sewer and water reticulation construction" fell within sub-para.(a)(ii).

Her Honour rejected the submission of counsel for Winslow that the works must be "associated with" the erection of a specific actual or contemplated home.

Counsel for Winslow further submitted that s.5(1)(a) could not operate until the provisions in the Subdivision Act were fulfilled, resulting in the registration of a plan of subdivision by the Registrar of Titles. Consequently, it was the Subdivision Act which covered the infrastructural works, rather than the DBC Act. Her Honour, rejecting this submission, held that the fact that the Subdivision Act regulates the provision of infrastructure does not necessarily mean that the provision of such works cannot be affected by other legislation.

Grounds 2 to 4 contended that VCAT erred in its construction of s.5(1)(a)(i) and (e) of the DBC Act, in particular, the construction of "associated work" in those sub-sections. Counsel for the appellants submitted that the test VCAT had adopted for the meaning of "associated" was too wide and referred to several dictionary definitions. Her Honour acknowledged that the appropriate interpretation of "associated" was a matter of degree. She found that the works carried out by the appellants fell within the meaning of "associated work" whilst finding that the examples of works submitted by Winslow's counsel, namely timber production for housing, domestic house brick manufacture and home roofing material manufacture would be too remote to fall within the section. Her Honour noted that a line must be drawn somewhere but found it unnecessary to make any finding as to where that line should be drawn.

Grounds 5 and 6 related to s.5(1)(a)(ii) and concerned the provision of water supply, sewerage or drainage. Counsel for Winslow submitted that there was a distinction between the connection of the subdivision as a whole to the main water supply, drainage and sewerage systems, which did not constitute "domestic building work", and the connection of individual homes to these systems, which did constitute "domestic building work". Counsel, in support of this submission, relied upon the definition of "public works" in the Subdivision Act, and sub-para (c)(i) of the definition of "contract price" in s.3(1) of the DBC Act. Her Honour acknowledged the distinction, but found that the definition of "public works" could not be used in the interpretation of the DBC Act, and that the definition of "contract price" did not draw the clear distinction in the DBC Act contended for.

Ground 7 concerned the interpretation of s.5(1)(e) and whether VCAT erred in construing "building" within the meaning of that provision and s.3(1), to include a "home". Counsel for Winslow relied on the decision of Byrne, J. in Fletcher Construction Australia Ltd. v. Southside Tower Developments Pty. Ltd.[5] to submit that "building" in s.5(1)(e) did not include a home, but only non-residential structures. Her Honour rejected this interpretation of the decision, holding that "building" has its normal wide meaning.

Ground 8 contended that VCAT erred by construing s.5(1)(e)(i) and (ii) to hold that the sub-paragraphs were satisfied in circumstances where the relevant land was not "zoned for residential purposes", and/or there was no building being constructed or erected on the land which would require a building permit under the Building Act 1993. The principal issue between the parties was at what stage the land acquired "zoning for residential purposes". Counsel for Winslow submitted that the land would not acquire such zoning until after the approval of the plan of subdivision, while the respondent submitted that the land was already zoned residential at the time of the contract between the parties. Her Honour adopted VCAT's finding that the land was at the relevant time "zoned for residential purposes". In relation to the second limb, her Honour noted that s.16 of the Building Act required a building permit for building work, and construed literally the definition of "building work" in the Building Act, namely "work in connection with the construction ... of a building", to hold that Winslow's work must be "domestic building work" under s.5(1)(e) of the DBC Act.

Ground 9 contended that VCAT had misapprehended Winslow's submissions. Her Honour did not make any finding in relation to this ground.

Ground 10 concerned the construction of s.5(1)(f) of the DBC Act and whether the infrastructure works were "site works" and also whether such works related to work referred to in s.5(1)(a) to (e). This ground was rejected by her Honour based on earlier submissions which she had rejected.

Grounds 11 and 12 referred to VCAT's answers to questions 2 and 3. Since these depend upon the answer to question 1, as noted above, her Honour did not have to specifically deal with these.

Her Honour then considered Lanigan's grounds of appeal contained in its notice of appeal dated 30 September 2003, which numbered eight in total. These grounds simply submitted that VCAT was wrong and that the terms of the DBC Act did not apply. Unlike with Winslow, her Honour did not deal with these grounds separately, dealing only with the submissions that were additional to those of Winslow. Her Honour rejected counsel for Lanigan's submission that "associated work" in s.5(1)(a)(i) was limited by the examples which followed it, namely "landscaping, paving and the erection or construction of any building or fixture associated with the home". Her Honour found that those expressions were not examples of "associated work", but extended the meaning of that expression. Accordingly, Lanigan's work was work associated with the erection or construction of homes on the land. Her Honour also rejected the submission of counsel that Lanigan's work fell within s. 6(e) of the DBC Act, on the basis that no evidence had been presented that Lanigan was "an architect or building practitioner registered under the Building Act as an engineer or draftsperson".

Her Honour then acknowledged that, to this point, she had interpreted the DBC Act literally according to the ordinary and natural meaning of its terms. Since both appellants submitted that a literal interpretation led to a result inconsistent with the purpose of the DBC Act, her Honour then examined the wider purpose and object of the DBC Act in accordance with s.35 of the Interpretation of Legislation Act and in doing so referred to authorities on the interpretation of statutes,[6] the second reading speech of the Domestic Building Contracts and Tribunal Bill[7] ("DBC Bill") and judicial authorities.[8]

Counsel for Winslow submitted that there were several provisions within the DBC Act, with which Winslow and other similar construction companies could never comply, for example s.31(1)(d) and s.42(b). Counsel further submitted that there were numerous provisions within the DBC Act, which, if applied, would lead to an absurd, irrational, illogical, inconvenient, improbable or unjust result. These sections included ss. 11, 13, 14, 29, 31, 33, 35, 37 & 38, 40, 132, the inspection regime established under Part 4, and the provisions of Part 9 of the Building Act in relation to insurance for domestic building work.

Counsel for Lanigan also submitted that there were a number of provisions which could not sensibly apply to Lanigan's contract for the design and superintendence of infrastructure works with the respondent and similarly listed a number of provisions comprising ss.8, 11, 31(g) to (i), 31(n) and (q), 32, 40, 42, the inspection regime under Part 4, and Part 9 of the Building Act relating to insurance for domestic building work.

Counsel for Winslow also relied on the evidence of Mr Sartori that Winslow had 81 contracts for works on residential subdivisions in Victoria based on standard contracts used in the construction industry which were similar to the contracts the subject of these proceedings. They did not comply with the DBC Act. If the construction industry was forced to comply with the DBC Act when engaged in infrastructural works for residential subdivisions, there would be additional cost and significant uncertainty about earlier contracts.

Her Honour acknowledged that the operation of the provisions listed by the appellants above would cause them inconvenience and expense but stated that very few of those provisions would actually be impossible for them to perform. Her Honour equated the position of the appellants with that of builders, electricians, plumbers, installers of swimming pools and others who carry out domestic building work, and held that the DBC Act applies equally to both. Given the nature of the DBC Act as remedial legislation and statements of Byrne, J. in Fletcher Construction Australia that it was Parliament's intention to "protect parties to more conventional domestic building projects from the consequences of an inequality of bargaining power",[9] her Honour concluded that it was not inconvenient or unjust that the provisions of the DBC Act apply to the appellants' work.

Her Honour also rejected counsel's submission that the intention of the DBC Act was to govern only contracts for the construction of a single home, entered into between a builder and "the average Victorian family"[10] finding no such purpose in the DBC Act itself, or in extrinsic materials.

Ultimately her Honour refused to depart from the ordinary and natural meaning of the words used in the DBC Act and ordered that the appellants' appeal be dismissed, that the Deputy President's decision be affirmed, and subject to the extension of the stay of the VCAT Proceeding for a further period, that the proceeding be remitted to VCAT for further hearing and determination. Her Honour also ordered the appellants to pay the respondent's costs on a party/party basis of or incidental to the appeal.

It is from these orders that the appellants now appeal having sought, and been granted, leave on 26 March 2004. Pursuant to their notices of appeal, filed by Winslow and Lanigan on 2 April and 6 April 2004 respectively, the appellants seek orders, in lieu of those ordered by her Honour, that the appeal be allowed, that the orders of VCAT be set aside and in lieu it be ordered that

(a) the work carried out by the appellant did not fall within s.5 of the DBC Act and did not constitute "domestic building work" within the meaning of s.3 of that Act;

(b) the appellant was not a "builder" within the meaning of s.3 and s.54(1) of the DBC Act;

(c) the dispute between the parties was not a "domestic building dispute" within the meaning of s.54(1) of the DBC Act;

(d) VCAT does not have jurisdiction under the DBC Act to determine the dispute between the parties,

and an order remitting the proceeding to VCAT for further directions, and costs.

The appellants rely on several grounds of appeal. In summary the grounds of appeal attack the learned judge's conclusions based upon her literal construction of s.5 of the DBC Act and her failure to have regard to the underlying object and purpose of the DBC Act as evidenced by the Act as a whole and extrinsic materials.

Having considered the questions of law and the grounds of appeal stated in the respective notices of appeal and the parties' submissions, it is clear that the issue on these appeals remains the three questions contained in the statement of facts in dispute, namely whether the appellants' work was "domestic building work" as defined in s.5 of the DBC Act and, following on from this, whether the appellants were each a "builder" and the dispute between the parties was a "domestic building dispute" within the meaning of the DBC Act. This will result in a finding of whether VCAT had jurisdiction under the DBC Act to determine the dispute (insofar as it relates to the DBC Act and not the FT Act between the parties).

Before I consider the parties' submissions I should note that during the course of the hearing the Court asked counsel whether, in the event of a difference between Winslow's and Lanigan's notices of appeal, it would be in order to assimilate Lanigan to Winslow. I also note that Lanigan adopted in its submissions the submissions of Winslow as the work Lanigan performed was preliminary, or, it is submitted, at most ancillary to Winslow's work. Counsel agreed that it would be appropriate to proceed in this manner and I do so accordingly, save for certain grounds which are specific to Lanigan only. I now turn to the parties' submissions.

At the outset the appellants submitted that the trial judge's approach to construe s.5(1)(a)(ii), (e) and (f) literally in the first instance, and then to consider whether the literal construction was displaced by the purpose of the Act was incorrect. Further, by considering the context separately from and subsequent to considering the literal meaning, the situation to her Honour became in effect that there was an onus to displace her earlier conclusions. In so doing, her Honour misconceived the correct approach.

The appellants submit that the modern approach to statutory construction is set out in the recent High Court decision of CIC Insurance Ltd. v. Bankstown Football Club[11] where Brennan, C.J., Dawson, Toohey and Gummow, JJ. said:[12]

"Moreover, the modern approach to statutory interpretation (a) insists that the context be considered in the first instance, not merely at some later stage when ambiguity might be thought to arise, and (b) uses `context' in its widest sense to include such things as the existing state of the law and the mischief which, by legitimate means such as those just mentioned, one may discern the statute was intended to remedy. Instances of general words in a statute being so constrained by their context are numerous. ... if the apparently plain words of a provision are read in light of the mischief which the statute was designed to overcome and of the objects of the legislation, they may wear a very different appearance. Further, inconvenience or improbability of result may assist the court in preferring to the literal meaning an alternative construction which, by the steps identified above, is reasonably open and more closely conforms to the legislative intent."

Thus, the earlier decision of Amalgamated Society of Engineers v. Adelaide Steamship Co Ltd[13], a decision which is frequently cited in support of the so-called "literal approach" and to which the respondent referred, is to be read in light of more recent decisions, including CIC Insurance and K & S Lake City Freighters Pty Ltd v. Gordon & Gotch Ltd.[14] These authorities set out the approach which her Honour should have taken, but which she did not take.

The appellants submitted in the alternative that a literal construction of those paragraphs in s.5(1) could not support her Honour's finding that the work carried out by Winslow fell within them.

In relation to s.5(1)(a)(ii) the appellants submit that the work performed by Winslow did not constitute "the provision of ... water supply, sewerage or drainage to the home or the property on which the home is, or is to be". Rather, the appellants submit that the work could only be described at most as work "associated with" the provision of such services. However s.5(1)(a)(ii), unlike s.5(1)(a)(i), does not include "associated work", which her Honour wrongly construed sub-para.(ii) to include.

Furthermore and alternatively, if such work did constitute the provision of services, it did not constitute the provision of those services "to the home or the property on which the home is, or is to be". There were no homes in existence at the time the works were performed. Further, no statement of compliance had been issued in relation to the plan of subdivision, the plan had not been registered, no titles had been issued by the Registrar of Titles and no building contract had been entered into for the construction of a home. Pursuant to the requirements of the planning permit, no home could be constructed on the land until Winslow had completed its work to the satisfaction of the "Responsible Authority". Accordingly "the property" on which "the home" was "to be" did not exist as a title on a registered plan. The defendants submit that the phrase "is to be" imports certainty that there will be a home erected on the property and that it is being or is about to be erected. This is said not to be the case in these circumstances where approvals remain outstanding.

The appellants submitted that it is necessary to judge the character of the work when it is carried out. It is not permissible to have regard to "what has since occurred on the land" in determining the nature of previous works. In these circumstances the work ought to be characterised at the time of contract. Moreover, the appellants submitted that the respondent, in its submissions, wrongly described the nature of the works performed by the appellants, or that there is no evidence to support its submissions, or that the submissions are not supported by the trial judge's findings. In particular, the appellants submitted there was no evidence to suggest the appellants provided power to the sites or constructed driveways on site. Secondly, the trial decision provides no support for the submission that the appellants carried out landscaping, constructed driveways on site, provided power to the sites or constructed pits which constitute domestic building work.

In relation to s.5(1)(e) the appellants submitted that the work was not "associated with the construction or erection of a building" as there was no building being constructed or erected on the land. Given that s.5(1)(a) refers to "home", the reference to "building" in s.5(1)(e) must exclude homes, otherwise sub-para (a)(i) would be superfluous. Support for this proposition is found in Fletcher Construction Australia where Byrne, J. said in relation to s.5(1)(e) that: "A number of things need to be noted about para.(e). First, it is work related to a building, not to a home. Therefore, the residential flavour introduced by the definition of `home' in s.3 is not present".[15] As no buildings other than homes were to be constructed on the proposed subdivision, the appellants submit that this subsection has no application.

The appellants also noted that in Fletcher Construction Australia, the parties accepted that "home" covered a multi-residence building or multi-storey residential building. Thus, Byrne, J. did not have to decide this issue but noted that there were some indications in the DBC Act and in the second reading speech which suggest that the definition may not be so wide.

Secondly, the appellants submitted that the criteria in sub-paras (i) and (ii) attach to the noun "work" rather than "building". Thus the subsection would logically apply to any work on land that is zoned for residential purposes under a planning scheme under the Planning and Environment Act 1987 and in respect of which a building permit is required under the Building Act provided that it is associated with the construction or erection of a building. Section 16 of the Building Act provides that "A person must not carry out building work unless a building permit in respect of the work has been issued and is in force...". It is clear from this that a permit is required in relation to building work. "Building work" is defined as "work for or in connection with the construction, demolition or removal of a building".[16] The appellants submitted that their work does not constitute "building work" within the meaning of s.16 of the Building Act because it does not meet this description.

Thirdly, the appellants submitted that "associated" means "accompanying" or "allied to" the erection or construction of a building, based on the ordinary dictionary meaning of the word. "Associated", it is said, indicates a relationship beyond a mere nexus or connection. In the present circumstances there may have been a nexus in the sense that the works carried out by the appellants were a necessary pre-condition. However, that does not mean that they are "allied to" or "accompany" the construction or erection of a building. Reference was also made to the use of "related to" in s.5(1)(f) and "in relation to" in s.6, in contrast to the use of "associated" in s.5(1)(e). "Related to", it was submitted, denotes a mere connexion, whereas "associated with" went beyond this. In contrast, the use of "in conjunction with" in s.5(1)(c) is a cognate concept to "associated with". As the matters in s.5(1)(c) are similar to those in s.5(1)(a)(ii) it seems apparent that Parliament intended a similar concept of unity involving some degree of contemporaneity. The appellants referred to Kia Australia Pty Ltd v. Chief Executive Officer of Customs[17] where Finkelstein, J. referred to the dictionary meaning of "associate" as "to join (persons, or one person with another), in common purpose, action, or condition; to link together, unite, combine, ally, confederate".[18] His Honour adopted this as the meaning of "associate" for the purpose of s.155 of the Customs Act 1901. However, his Honour also noted that: "To arrive at a meaning that requires a choice between several ordinary meanings it is appropriate to adopt that meaning which better carries out the objects of the Act".[19] His Honour later stated that to establish an association in that case there must be something more than a connection between the agent and the vendor.

The appellants then referred to para.2 of the respondent's submissions which contended that the works carried out by the appellant are domestic building works necessary for the erection or construction of homes. In so submitting, the respondent had equated "necessary" with "associated", with the latter not necessarily following from the former.

Nonetheless, the appellants submitted that the work carried out by Winslow was not "work associated with" the construction or erection of a building within the meaning of s.5(1)(e). The appellants submitted that the examples of "associated work" in s.5(1)(a)(i) are illustrative of the type of work covered by the meaning of "associated" and indicate that it refers to work that occurs on the particular building site and accompanies the erection or construction of the home. At [45] of the trial judgment her Honour noted the submission of Lanigan as being that "associated work" in s.5(1)(a) was limited by the examples which followed. Her Honour found that those expressions were not examples of "associated work" but rather extended the meaning of that expression. If her Honour is correct in this regard, it is submitted that the meaning of "associated work" is further limited and would not include Winslow's work. Counsel submitted that "including" in s.5(1)(a)(i) means "including", not "also", but that if it does operate to extend the meaning of "associated work", there still remains the necessary link with "the erection or construction of a home".

In any event, regardless of whether the examples are simple illustrations, it is submitted that their nature is significantly different from the work carried out by the appellants. Counsel for Lanigan further submitted that the examples provided in s.5(1)(a)(i) refer to work of a physical or manual nature which occurs on a building site and accompanies the erection or construction of a home. Lanigan's design and superintendent work are plainly not of a physical or manual nature and could not be described as work "associated" with the construction or erection of a home.

The appellants also submitted that the adoption of the plural form of the expression "home" and "building" in sub-para.(a)(ii) and para.(e) respectively does not provide any support for a conclusion that Winslow's work fell within the literal meaning of those provisions. Reading the section in the plural cannot alter the reach of s.5 when it is read in the singular. Consequently if the works performed by the appellants do not apply in the case of one home to s.5, they will not apply to the case of where there is more than one home. The question in each case is whether the works constitute "domestic building work".

In relation to s.5(1)(f) the appellants submitted that no "site" was in existence. "Building site" is defined in s.3 of the DBC Act to mean "a place where domestic building work has been, is being, or is about to be, carried out". Furthermore, as there was no work being carried out of the kind referred to in paras (a) to (e), this paragraph did not have any application to Winslow's work. A similar submission was also put forward by counsel for Lanigan in relation to s.5(1)(g), namely that the design work of Lanigan was not work of the type contained within paras.(a) to (f) of s.5(1).

The appellants then turned to the appropriate approach to construing a statutory provision. The appellants submitted that the correct approach is set out in the High Court decisions of CIC Insurance, as set out earlier, and K & S Lake City Freighters. In K & S Lake City Freighters Mason, J. (as his Honour then was) stated that:

"The modern approach to interpretation insists that the context be considered in the first instance, especially in the case of general words, and not merely at some later stage when ambiguity might be thought to arise." [20]

Part of this context, the appellants submitted, was to consider both s.5 and the DBC Act as a whole, and to have regard to other relevant legislation and the mischief which the DBC Act was designed to remedy.

Turning first to the DBC Act as a whole, the appellants submitted that s.5(1)(a)(ii) applies to work typically performed to connect services such as water, sewerage and drainage from the home itself or other parts of the property on which the home is to be, to the mains. Support for this is found in the definition of "contract price" in s.3(1) which is defined as "the total amount payable under a domestic building contract and includes - ... (c) the amount any third person is to receive (or it is reasonably estimated will receive) directly from the building owner in relation to the domestic building work to be carried out under the contract - (i) for conveying to the building site or connecting or installing services such as gas, electricity, telephone, water and sewerage...". Further support for this proposition is said to exist in the Subdivision Act which the appellants submitted deals specifically with the kind of work carried out by Winslow as seen in the definition of "public works" in s.3(1), namely:

"(a) the provision of roads, reserves, open spaces or services within a subdivision; or (b) fencing, landscaping, and road works outside the subdivision for roads, reserves or public open space related to the subdivision; or (c) works for sewerage, drainage, water supply, power, gas or telephone to connect the subdivision to the system serving properties outside it, excluding works to connect any particular property to the system for the subdivision; or (d) prescribed works."

The appellants submitted that the Subdivision Act does not apply to "works to connect any particular property to the system for the subdivision" as such works are excluded from the above definition of "public works". Thus, in construing the DBC Act, it is appropriate to have regard to the Subdivision Act as the background against which the DBC Act was enacted. The appellants emphasised the distinction between infrastructural works carried out by Winslow which connect the subdivision as a whole to the main water supply, sewerage and drainage system, which the Subdivision Act is intended to cover, and works connecting services such as sewerage, water and drainage from the home to the mains which fall within s.5(1)(a)(ii). In the absence of a clear legislative intention, the appellants submitted that the DBC Act should not be construed as further regulating the performance of "public works".

The appellants also relied upon the second reading speech of the DBC Bill. The Attorney General, in discussing the compulsory insurance cover for domestic building work, stated that:[21]

"Secondly, ambiguities and inconsistencies in the current coverage will be removed - that is, in the case of new home construction, everything from the house itself to paving, driveways, fences and swimming pools will be covered if included as part of the initial contract." [Emphasis added]

The appellants relied on the final phrase of the above sentence to further support its proposition that the work carried out by Winslow was not intended to be covered by s.5 of the DBC Act. The appellants also noted that in the second reading speech there is no mention of any antecedent works such as those performed by the appellants.

The appellants then referred to two mandatory provisions in the DBC Act, which it is submitted, are incapable of applying to the type of work performed by the appellants. First, s.31(1)(d) of the DBC Act provides that a builder must not enter into a major domestic building contract unless the contract includes the plans and specifications for the work and those plans and specifications contain sufficient information to enable the obtaining of a building permit. The appellants submitted that this section cannot apply because a building permit is not required for, and cannot be granted in respect of, work of the type carried out by the appellants.

Secondly, s.42 of the DBC Act provides that a builder must not demand final payment under a major domestic building contract until, inter alia, either an occupancy permit or a certificate of final inspection is given to the building owner. The appellants submitted that neither of these documents can be issued when the work carried out by Winslow is complete. Thus, Winslow would be prevented from ever demanding final payment for the work it carried out.

Counsel for Lanigan further developed this submission and listed a number of provisions which are said to be incapable of application to Lanigan or incapable of any intelligible application. Such sections include ss.8, 9, 11, 31(g)-(i), 31(n), 31(q), 32, 40 and 42 of the DBC Act.

The appellants submitted that in construing the language of a statute, the court should prefer a construction which will avoid inconvenience, injustice, unreasonableness or absurdity. The fact that several mandatory provisions of the DBC Act are incapable of applying to Winslow's work, as noted above, and other provisions have no intelligible or sensible application, is a clear indication that the trial judge's literal construction was not intended by Parliament. Moreover, the consequence of her Honour's literal approach is not merely "expense or commercial inconvenience". Rather, the appellants' inability to comply with mandatory provisions of the DBC Act results in them being unable to engage in the type of work they carried out in these circumstances without breaking the law. Such an interpretation is absurd and unjust and cannot have been intended.

The appellants also submitted that s.43 of the DBC Act which concerns display home contracts does not support the trial judge's construction but provides support for the appellants' construction of the DBC Act by emphasising that the DBC Act is concerned with the erection or construction of homes and with the protection of home owners against builders.

The appellants then turned to other relevant legislation which, it submits, is relevant to the context in which the DBC Act was enacted. Sections 135 and 136(2) of the Building Act provide that a builder must not carry out domestic building work under a major domestic building contract unless the builder is covered by the required insurance which the Minister may prescribe by order. The appellants submit that the risks insured by this insurance cover have no sensible application to the type of work carried out by the appellants, which further indicates s.5 of the DBC Act was not intended to cover these circumstances.

In HIA Insurance Services Eames, J.A., with whom Callaway and Vincent, JJ.A. agreed, observed that in respect of the compulsory insurance scheme that:

"It is equally plain that Parliament intended that the protection which would be provided by a scheme of compulsory insurance was to apply not to developers - who might be assumed to be conducting a business for profit upon re-sale - but to small home owners."[22]

The appellants submitted that the trial judge erred in failing to have due regard to the Ministerial order concerning compulsory insurance which is an important part of the legislative scheme involving the DBC Act.

The appellants next had regard to the objects of the DBC Act and the mischief intended to be remedied. It was submitted that by referring throughout to "builders" and "home owners", the second reading speech indicates that the DBC Act was enacted to regulate the rights and obligations of home owners and builders, as distinct from developers. Having regard to this and to the objects set out in s.4 of the DBC Act, the appellants submitted that the general objective of the DBC Act is to protect the average Victorian home owner against defective and incomplete building work and from the consequences of an inequality of bargaining power. This purpose was recognised by the Court of Appeal in HIA Insurance Services. The appellants submitted that her Honour erred in holding that the objects and purpose of the DBC Act was not inconsistent with her literal construction of s.5.

In response to the respondent's submission that unless the works carried out by the appellants fell within the DBC Act there would be a significant gap in the consumer protection offered by the DBC Act, the appellants submitted that that was predicated on an erroneous assumption that the DBC Act intended to provide comprehensive statutory remedies to home owners against civil contractors. Such a function is not evident within the DBC Act or any extrinsic materials.

The appellants also noted that the judge's literal construction would produce a number of anomalies which the legislature could not have intended. By way of example, s.17(5) of the Subdivision Act provides that the council or referral authority are responsible for maintaining the public works carried out by Winslow after the expiration of three months or as otherwise agreed under sub-s.(4). The appellants submitted that this would result in the council being a "builder" for the purposes of the DBC Act obliged to register as a builder under the Building Act and take out compulsory domestic builder's warranty insurance. Similarly, a council or referral authority will come under the regulation of the DBC Act insofar as it prepares standard specifications and drawings that relate to a proposed residential subdivision and insofar as it specifies alterations to the engineering plans produced pursuant to s.15(2) of the Subdivision Act. A further instance of unintended coverage of the DBC Act is if the council supervises work under s.17(2) of the Subdivision Act.

Finally, the appellants submitted that a consequence of the trial judge's decision is to confer exclusive jurisdiction upon VCAT in relation to commercial disputes between developers and contractors involving large scale residential subdivisions and to remove such disputes from their current forum in the Supreme Court. In particular, Dixon, J. in Magrath v. Goldsbrough, Mort & Co said:

"...statutes are not to be interpreted as depriving superior Courts of power to prevent an unauthorised assumption of jurisdiction unless an intention to do so appears clearly and unmistakably."[23]

At the outset counsel for the respondent conceded that if the work carried out by Winslow does not fall within s.5 of the DBC Act, then neither will the work carried out by Lanigan. However the respondent submitted that VCAT would have jurisdiction to hear the dispute even if only some of the works carried out by the appellants were "domestic building works". Thus, while some of the works, for example the road construction, may not be "domestic building works", some of the works, for example the drainage, sewerage and water supply, is "domestic building works" and that would be caught by the DBC Act. If this were the case, the respondent submitted that it should succeed to that extent and the matter should be remitted to VCAT. If the Court is clear on whether particular works constitute "domestic building works", counsel submitted that the Court should answer accordingly. If however, the Court were of the opinion that an item of work might fall under the DBC Act, the Court should state the appropriate law and remit the matter to VCAT for findings of fact.

In relation to the correct approach to interpretation the respondent relied upon the two well known canons of statutory interpretation known as the "literal approach" and the "purposive approach" which were expounded by the High Court in Amalgamated Society of Engineers and Cooper Brookes (Wollongong) Pty Ltd v. Federal Commissioner of Taxation.[24] It is unnecessary to repeat the relevant statements here, suffice to note that the respondent submits that there is no absurdity or inconsistency in the DBC Act to justify a departure from the literal approach. Expense or inconvenience does not equate to absurdity or inconsistency. Although regardless of which approach is used in this case, it was submitted that the same result occurs, namely that s.5 of the DBC Act covers the appellants' work.

The respondent submitted that a number of conclusions could be drawn from the plain meaning of s.5 of the DBC Act. First, the main focus is on works performed. Secondly, it is contemplated that different aspects of "associated work" may be performed by different persons. I infer that this is due to the various examples of works provided as examples in s.5(1)(a)(i) requiring specialised expertise. Thirdly, s.5 does not suggest that there could not be a separate contract for the associated works. Indeed s.3(2) of the DBC Act contemplates that a builder and building owner may agree to carry out domestic building work on a home in stages under a series of separate contracts. Fourthly, the section contemplates preliminary work done prior to any house construction work. This is evident from s.5(1)(a)(ii), (f) and (g) which deal with site work, the preparation of plans and specifications and the provision of sewerage, drainage and water supply. Fifthly, the respondents submit that there is nothing within the DBC Act from which it could be inferred that an existing contract to construct a home is a precondition to "associated works" being governed by the DBC Act. Otherwise, an inconsistency would arise whereby identical works would not be covered by the DBC Act either in the absence of a housing construction contract or if such a contract was entered into subsequently. Sixthly, s.5(1)(a)(ii) and (f) contemplate work performed outside the particular building site on which the home is to be constructed. This is clear from para.(f) which covers work required to be performed to gain access to a site. Finally, the respondent submits that the singular "home" can also mean the plural based on ordinary principles of interpretation under s.37 of the Interpretation of Legislation Act. This contention appeared to find favour with Eames, J.A. in HIA Insurance Services.[25] Furthermore, the plural references in s.5(1)(a)(i) and (c), which include "driveways", "garages", carports", "swimming pools" and "spas", strongly suggest that the singular "home" was intended to import the plural.

In relation to the scope of the DBC Act, the respondents said that it has been applied to multi storey developments as well as single housing items on the basis that the key question is always whether the sites in question are for the purpose of residential living. A further indication is their absence from s.6 which specifies what works are excluded. To the extent that the comments of Byrne, J. in Fletcher Construction Australia are inconsistent with that, where his Honour noted that it may have been the intention of Parliament to provide a legislative framework for contracts concerning building work of a "more modest character", the respondents invited the Court to disregard them.

In relation to s.5(1)(a) the respondents submitted that it is largely a question of fact whether any particular work is "associated" with the erection or construction of a home. On that issue, regard should be had to all the relevant circumstances, including what has since occurred on the land, that is the zoning of the land, the owner's intent, the nature of the work, whether statements of compliance and titles have been issued under the Subdivision Act, whether there has been any housing construction and whether there has been any public sales. In these circumstances it is submitted that the work was not a stand alone project but was associated with something, namely home construction.

The respondent submitted that the appellants' work was associated in the following ways with the erection or construction of homes:

(a) the levelling of land;

(b) the clearing of land;

(c) filling in farm dams;

(d) compacting the fill;

(e) installing driveways and crossovers;

(f) constructing concrete pits on the various sites into which the services of power, sewerage, storm water, water and telephone were installed;

(g) construction of roads and footpaths;

(h) construction of retaining walls.

The respondent also detailed in its submissions the nature of and how it could be said that the works were in the following areas or related to them: landscaping; lighting, heating, ventilation and air conditioning works; water supply; sewerage; drainage; pit construction; and driveway construction to illustrate how such work fell within s.5(1)(a), (e) or (f). In summary, the respondent submitted that the appellants provided power, water and sewerage to, and drainage from, each of the sites through the construction of pits situated on each site and that this work naturally fitted the description of "associated work". I note that it was not disputed that pits were constructed as so described.

In relation to s.5(1)(e) the respondent submitted that this subsection is wider than s.5(1)(a) and applies to any building, including but not merely a home, on land zoned for residential purposes and for which a building permit is required whether the building is residential or not. In other words, the paragraph is not limited to "associated works" but is designed to catch any building on residential land. As the relevant land was zoned residential at the time the contract was entered into, the DBC Act applies to any work associated with the construction or erection of a building, for which a building permit is required.

In respect of s.5(1)(f) the respondent submitted that the construction of roads and the provision of cross-overs and driveways by the appellants fell within the definition of "site work" which includes work required to gain access to a site. The clearing of the land and the filling in of dams is also said to fall within this description.

Finally, the respondent submitted that the work done by Lanigan in preparing plans and specifications falls within s.5(1)(g).

The respondent also noted that neither s.6 of the DBC Act, nor the Domestic Building Contracts and Tribunal (General) Regulations 1996, exclude work of the kind carried out by the appellants. Further, the fact that s.43 of the DBC Act deals with "display home contracts" demonstrates that Parliament had considered large subdivisional developments as falling within the parameters of the DBC Act. The agreed statement of facts acknowledges that as at 28 February 2003 there was a display home in the process of being constructed on the land in respect of that part covered by the Stage 2 works.

In response to the appellants' submissions that a literal construction of the DBC Act would result in an absurdity whereby the appellants would be unable to comply with mandatory provisions, the respondent submitted that this, in itself, is not a ground for ousting the overall operation of the DBC Act. Rather, the correct approach is to either excuse compliance with that particular requirement, or, citing Tasker v Fullwood,[26] "turn the question of impossibility of compliance round a little and find that the impossibility of compliance, or the possibility of it, is indicative of the fact that the requirement is not obligatory".[27]

Having regard to the main objects of the Act, the respondent submitted that the objects stated in s.4 and indicated in the second reading speech not only specify the protection of the average Victorian home owner against defective and incomplete building work, but also include enabling the speedy, efficient and cheap resolution of disputes involving domestic building works.

The respondent referred to other provisions in the DBC Act in support of its submissions. In particular, s.9 of the DBC Act provides that the statutory warranties in respect of the domestic building work outlined in s.8 run with the land for the benefit of any future owner. If the appellants' work were to be excluded from the operation of the Act, the respondent submitted that a future home owner would not have any claim under the DBC Act against persons in the appellants' position for the negligent design or performance of site levelling, compacting, pit construction or driveway construction, and plumbing and sewerage systems. It cannot have been intended, so the argument ran, that there would be this significant gap in the consumer protection offered by the DBC Act.

The approach to be taken to the interpretation of the DBC Act is that stated in CIC Insurance Ltd and K & S Lake City Freighters. These authorities require consideration of the context in which the relevant statutory provision appears when considering the correct interpretation of the words in question. It is clear that the learned trial judge failed to follow this approach, considering the literal meaning of s.5 in the abstract, and only subsequently considering the wider object and purpose of the DBC Act as a check in relation to the conclusions she had drawn. While her Honour nevertheless reached the same conclusion using both interpretative approaches, her approach was incorrect.

Moreover it is apparent that it is necessary, in accordance with the High Court decisions, to consider the existing statutory framework regulating the subdivision of land and construction of domestic buildings. Furthermore, Kirby, P. in Commissioner of Stamp Duties v. Permanent Trustee Co Ltd stated that:

"... it is proper for courts to endeavour to so construe inter related statutes as to produce a sensible, efficient and just operation of them in preference to an inefficient, conflicting or unjust operation. This is the approach which I take to the task of statutory interpretation in hand".[28]

Before turning to the relevant provisions of s.5 of the DBC Act, I therefore propose to make some observations about the existing state of the law covering domestic building work, including the relationship between the Subdivision Act and the DBC Act.

Turning first to the Subdivision Act, the purpose of this Act is to set out the procedure for the subdivision and consolidation of land.[29] A person seeking to subdivide land must prepare and submit a plan to council for certification. The relevant land must be brought under the Transfer of Land Act 1958 if it is not already thereunder.[30] The relevant council must refer the plan to a referral authority, a body specified in the planning scheme, if required by the permit or the planning scheme.[31] Either the council or the referral authority may require the applicant to submit an engineering plan including specifications for works required under the planning scheme or permit.[32] These works may not commence until after the certification of the plan and the approval of the engineering plan.[33] The works must comply with the certified plan, the approved engineering plan and the standards specified in the planning scheme or the permit[34] and the applicant is responsible for the maintenance of the completed works in good condition and repair for three months, unless otherwise agreed. Thereafter, the maintenance becomes the responsibility of the council or referral authority.[35]

If works are required in connection with a plan of subdivision the applicant must, between the date of completion of the works and one month thereafter, submit to the council written advice by a licensed surveyor that roads and reserves are marked out and the boundaries of the land in the plan, the lots and the common property are marked out or defined.[36] After receiving this information, the council must issue a statement of compliance to the applicant as soon as possible provided that it is satisfied that all of the above requirements have been met including those within the Planning and Environment Act 1987 that relate to public works.[37] "Public works" is defined as "(a) the provision of roads, reserves, open spaces or services within a subdivision; or (b) fencing, landscaping, and road works outside the subdivision for roads, reserves or public open space related to the subdivision; or (c) works for sewerage, drainage, water supply, power, gas or telephone to connect the subdivision to the system serving properties outside it, excluding works to connect any particular property to the system for the subdivision; or (d) prescribed works".[38]

Finally, the Registrar of Titles may register a plan, if, among other things, the plan has been certified by the council and the certification remains valid and the applicant provides a statement of compliance.[39]

Registration by the Registrar of Titles is important as s.9AA of the Sale of Land Act 1962 prevents the sale of a lot on a plan of subdivision to persons, other than a statutory body or authority, in the absence of registration unless two conditions are satisfied. First, the contract for the sale of that lot must provide that the deposit moneys payable by the purchaser are to be paid to a legal practitioner or licensed estate agent acting for the vendor to be held by them on trust for the purchaser until the registration of the plan of subdivision, or such monies be held in a special purpose account in the joint names of the vendor and purchaser. Secondly, the deposit moneys payable under the contract must not exceed ten per cent of the purchase price.

It is clear from the Sale of Land Act that registration of the plan of subdivision is necessary before completion of any contract of sale of individual lots can occur.

Turning now to the DBC Act, s.1 provides that the Act has four main purposes. These are to regulate contracts for the carrying out of domestic building work; to provide for the resolution of domestic building disputes by VCAT; to require builders to hold insurance if carrying out domestic building work; and to amend the House Contracts Guarantee Act 1987 and phase out the making of claims under that Act. It seems apparent that the DBC Act and the Subdivision Act seek to regulate two distinct activities, namely domestic building work and the subdivision of land. That the DBC Act applies to work, as distinct from land, is evident from s.5 of the DBC Act ("Building work to which this Act applies") and the objects of the DBC Act contained in s.4.

Section 5 outlines the types of building work to which the DBC Act applies, whereas s.6 outlines the types of building work to which the DBC Act does not apply. The DBC Act also distinguishes between two types of domestic building contract: those with a contract price above $5000 and those with a contract price of $5000 or less. In relation to the former, the builder is subject to additional obligations, and further consumer safeguards exist for the building owner. Excluded from domestic building contracts are contracts between builders and subcontractors. This indicates that the DBC Act is only intended to apply to a restricted scope of building activity rather than building activity generally.

It is also necessary to consider the Building Act as some provisions contained therein impact upon domestic building work. Section 135 of the Building Act allows the Minister, by order, to require certain builders to be covered by insurance and s.137A of that Act outlines what insurance cover may, by order, be required in respect of domestic building work. Section 137B covers owner builders and provides that a person who constructs a building must not enter into a contract to sell the building within the prescribed period unless the person is covered by insurance which includes the warranties specified in s.137C and has obtained a building report. Section 137B(4) allows a person who enters into a major domestic building contract with a builder for the construction of more than four homes to apply to the Director of Consumer Affairs to exempt the builder from the requirement to be covered by the insurance in respect of that building work and defer compliance until any of the homes are to be sold. The Explanatory Memorandum to the DBC Bill explains the intent of this provision as providing an option to a financier/developer who may not wish to obtain the benefit of insurance cover but will be required to provide insurance cover to a purchaser at the time of sale. This is reflected in cl.5.5.4 of the Ministerial Order. This provides one indication that the intent of the DBC Act is to protect individual home owners rather than commercial developers, a point which was noted by Eames, J.A. in HIA Insurance Services. Finally, s.137E provides that a person must not enter into a contract for the sale of land on which a home is being constructed, or is to be constructed, before the completion of the contract unless the building work is or will be constructed under a major domestic building contract. This ensures that the appropriate insurance will be in place as required by the Ministerial Order. The Explanatory Memorandum to the DBC Bill states that the intent of this provision was to ensure that the purchaser will have the protection of minimum contractual provisions and/or implied statutory warranties and the required insurance.

By order published in the Government Gazette on 30 October 1998 the Minister required all builders within the meaning of the DBC Act [40] and owner builders[41] to purchase on behalf of the building owner or purchaser, as the case may be, insurance of the kind specified therein.

It is now appropriate to turn to s.5(1) of the DBC Act. Paragraph (a) concerns the erection or construction of a home and includes associated work and the provision of specific services to the home or the property. Paragraph (b) deals with the renovation, alteration, extension, improvement or repair of a home and para.(c) concerns specific work carried out in conjunction with that. Paragraph (d) concerns the demolition or removal of a home. Paragraph (e) applies to any work associated with the construction or erection of a building on residential land which requires a building permit. Paragraph (f) concerns any site work related to work referred to in the above paragraphs. Paragraph (g) deals with the preparation of plans or specifications for carrying out work referred to in the above paragraphs. Finally, para.(h) incorporates any building work specified under the regulations.

It is apparent, after considering s.5(1), that the focus of each paragraph is on a home or a building and that the specified work in each paragraph is directly connected to, or has a nexus with, the home or building. In my view it is not the intention of s.5(1) that such a nexus or relationship be found between the works carried out by the appellants and the homes that may come to be built on the subdivided land.

In my view the Subdivision Act and the DBC Act are complementary pieces of legislation intended to govern distinct areas of works, with the appellants' work falling within the former. That in my view is the sense of the legislation regarding the provisions overall. Support for this is found in the definitions of "public works" in the Subdivision Act, and "contract price" in the DBC Act. The latter definition includes an amount payable directly from the building owner to any third party for the provision of gas, electricity, telephone, water and sewerage to the building site to be carried out under a domestic building contract. The former concerns the provision of sewerage, drainage, water supply, power, gas or telephone to connect the subdivision to the system serving properties outside it and expressly excludes works to connect any particular property to the system for the subdivision. It seems probable that the definition of "contract price", and the DBC Act, was drafted with the existing scope of the Subdivision Act in mind and with the intent of complementing it.

Furthermore, the Subdivision Act and the DBC Act each provide their own mechanisms for ensuring that the works under the respective Acts are carried out properly. In the case of the Subdivision Act, safeguards exist in the monitoring and certification responsibilities of the council and/or referral authority and the maintenance responsibilities of the works of the applicant. In the case of the DBC Act, safeguards exist in the statutory warranties contained therein and the mandatory insurance for builders carrying out domestic building work.

I also accept the appellants' submission that the DBC Act was enacted to regulate the rights of home owners and builders, as distinct from developers, having regard to the objects of the DBC Act in s.4 and the second reading speech.

During the course of argument, the example of a fencer was posed by the Court in relation to the operation of the DBC Act and compliance with its obligations. This occurred in the course of the respondent's submissions concerning s.5(1)(c) and in particular a submission that possibly absurd results could occur under s.5(1). This was to put in balance, so to speak, the appellants' submission as to absurdity if the DBC Act covered their work. Counsel for Winslow in his reply, illustrated how the DBC Act would operate in relation to work carried out by a fencer. First, if the fencer was a mere subcontractor to a builder, the DBC Act would not apply: see the definition of "domestic building contract". Secondly, the value of the contract would, in all likelihood, not exceed $5000, which means that it would not be a "major domestic building contract", thereby avoiding the obligations of Part 3 of the DBC Act. Thirdly, if the contract was a major domestic building contract, the fencer would be subject to s.31(1)(d) of the DBC Act which provides that a contract must include the specifications and plans for the work containing enough information to enable the obtaining of a building permit. However, item (c) in column 1 of the table in regulation 1.6 of the Building Regulations 1994 excludes the fencer from having to obtain a building permit. To obtain final payment for his work, the fencer would provide a copy of the certificate of final inspection to the building owner pursuant to s.42(b)(ii). The explanation, which was not challenged, demonstrated two things: first that there was no absurdity of result in the example, and secondly the need to carefully assess the respondent's submission that the absurdity contended by the appellants was not the only possible absurdity in the operation of the Act.

In light of the existing scheme concerning the subdivision of land and construction of domestic buildings set out above, I turn now to the paragraphs of s.5(1) relied upon by her Honour in her judgment.

As previously noted, the focus of para.(a) is on the erection or construction of a home and, by sub-para.(ii), the provision of lighting, heating, ventilation, air conditioning, water supply, sewerage or drainage to the home or the property is included within that. Two things may be said in relation to this. First, unlike sub-para.(i) which refers to "associated work" and illustrates by way of specific examples what is included as "associated work", it is quite specific as to what it entails, namely the provision of services to the house or the property. I accept the appellants' submission that the work carried out by them could only be said to be at most work "associated with" the provision of the specified services. Secondly, the sub-para also contemplates that there is or is to be a home on the property. It is in terms of an actual home as distinct from a potential home which may be built on the property at some stage in the future. The language used is in terms of the erection or construction of a home being more than a mere future possibility. In the current circumstances no titles had been issued for the individual lots on the land and even thereafter, it is possible that some lots will remain either unsold or, if sold, will not be built on for several years. In such circumstances, it cannot be said that the works carried out by the appellants constitute the provision of services "to the home or the property on which the home is, or is to be". Furthermore, the work carried out by the appellants must be characterised at the time of its execution. Events which may occur several years later cannot change the nature of the work carried out by the appellants. I am satisfied that their work does not fall within s.5(1)(a)(ii).

Her Honour relied upon s.37 of the Interpretation of Legislation Act to support her conclusion that the appellants' work fell within s.5(1)(a)(ii), (e) and (f) by reading those subsections as using the plural form of "home", "building" and "site". As noted earlier, s.37 provides that unless the contrary intention appears, words in an Act in the singular include the plural. Of the like provision in s.21 of the Interpretation Act 1899 (N.S.W.) the Privy Council in Blue Metal Industries Ltd v Dilley observed that:

"Such a provision is of manifest advantage. It assists the legislature to avoid cumbersome and over-elaborate wording. Prima facie it can be assumed that in the processes which lead to an enactment both draughtsman and legislators have such a provision in mind."[42]

However, as the Privy Council immediately noted in the judgment:

" ... in considering whether a contrary intention appears there need be no confinement of attention to any one particular section of an Act. It must be appropriate to consider the section in its setting in the legislation and furthermore to consider the substance and tenor of the legislation as a whole."[43]

The issue in Blue Metal Industries concerned whether s.185 of the Companies Act 1961 - 1964 (N.S.W.) which enabled the compulsory acquisition of shares following a successful takeover offer, applied in relation to a takeover offer made by two companies jointly or only to an offer made by one company. In concluding that the singular did not include the plural, their Lordships stated:

"It would seem unlikely that the legislature would solely depend upon the provisions of the Interpretation Act if there was an intention to legislate with such important consequences as to give powers of compulsory acquisition not to a single acquiring company but to a group of companies. The Interpretation Act is a drafting convenience. It is not to be expected that it would be used so as to change the character of legislation. Acquisition of shares by two or more companies is not merely the plural of acquisition by one. It is quite a different kind of acquisition with different consequences. It would presuppose a different legislative policy."[44]

The above passage highlights the mistake made by the judge in using the Interpretation of Legislation Act as a statutory interpretation aid. The fundamental mistake was to confine attention to the particular section and not consider the section in the context of the DBC Act as a whole and other relevant legislation. The effect of her Honour's use of the plural and her conclusion that the description of the appellants' work fell within s.5(1)(a)(ii), (e) and (f) when those paragraphs are read in the plural is, having regard to her Honour's conclusion, to change the operation and the effect of the legislation. That is impermissible. To paraphrase the above passage in Blue Metal Industries, building work covering large scale residential subdivision and development is not merely the plural of building work in relation to a home. It was conceded, correctly that building work in relation to more than one home is covered, but building work in relation to a large scale residential subdivision and development is a different kind of work with different consequences and would also presuppose a different legislative policy.

If I am mistaken and her Honour's approach does not change the operation or effect of the DBC Act, then I do not see how such an interpretation progresses the matter any further. The critical question requiring resolution is whether any of the work carried out by the appellants falls within s.5(1).

Paragraph (e) is concerned with any work associated with the construction or erection of a building with certain additional criteria set down in sub-paras.(i) and (ii). The first point to make about this paragraph is the use of "building" instead of "home". Paragraphs (a) to (d) all refer to various activities in relation to a "home". The use of "building" as distinct from "home" in para.(e) appears to have been a deliberate drafting decision and there would thus seem force in the appellants' submission that "building" must exclude homes since otherwise sub-para.(a)(i) would be superfluous. This interpretation is supported by Fletcher Construction Australia. However, it is unnecessary to finally determine this point as, for the reason discussed at [116], the appellants' work was not work in respect of which a building permit was required under the Building Act.

I consider that the word "associated" in paras.(a)(i) and (e) requires a relationship which is beyond a mere nexus. The appellants referred to the dictionary definition of "associated" as being "allied to" or "accompany", both of which require a degree of contemporaneity between the two items said to be "associated". I return to the hypothetical circumstance I posed above in which an individual lot(s) in the plan of subdivision may remain unsold or vacant for several years before any domestic building work occurs. No such contemporaneity exists. In these circumstances it cannot be said that the work carried out by the appellants would be "associated with" the subsequent development.

A further, and fundamental, difficulty of the DBC Act applying to work carried out by the appellants under the Subdivision Act concerns building permits and payment. A person who carries out work under the Subdivision Act does not require a building permit.[45] However, under the DBC Act a builder must not enter into a major domestic building contract unless the contract includes the plans and specifications for the work and contains enough information to enable the obtaining of a building permit.[46] Under the Subdivision Act, the council, if satisfied that all requirements have been met after the works have been carried out, will then issue a statement of compliance.[47] Presumably the person who carried out the works would then, if not before, be able to demand payment for the works from the applicant. However, if the DBC Act were also to apply to such works then s.42 of the DBC Act provides that the builder cannot demand final payment under the major domestic building contract until either an occupancy permit or a certificate of final inspection is given to the building owner. However, neither of these documents will be able to be issued when the appellants' work is complete. Thus they will be prevented from demanding final payment for their work. Such a result cannot have been intended.

Paragraphs (f) and (g) rely on the existence of work referred to in paras.(a) to (e) and paras.(a) to (f) respectively. As the appellants' work does not fall within any of those paragraphs, it is unnecessary to consider paras.(f) and (g).

Having regard to these conclusions, I conclude that the civil engineering and infrastructural work carried out by the appellants does not fall within the scope of the DBC Act. Rather, such works must be carried out in accordance with the requirements contained in the Subdivision Act. Accordingly, I am satisfied that the work carried out by the appellants does not fall within s.5 of the DBC Act and does not constitute "domestic building work" within the meaning of s.3 of that Act. It necessarily follows that the appellants were not each a "builder" within the meaning of s.3 and s.54(1) of the DBC Act and that the dispute between the parties was not a "domestic building dispute" within the meaning of s.54(1) of the DBC Act. Consequently VCAT does not have jurisdiction under the DBC Act to determine the dispute between the parties.

For these reasons in each case I would allow the appeal, set aside paras 4, 5 and 6 of the orders made on 23 February 2004 and in lieu order that:

(a) the appeal against the orders made by VCAT on 1 August 2003 is allowed;

(b) the orders of VCAT are set aside;

(c) the following orders be substituted for the orders of VCAT namely:

(i) the work carried out by the appellant did not fall within s.5 of the Domestic Building Contracts Act 1995 and did not constitute "domestic building work" within the meaning of s.3 of that Act;

(ii) the appellant was not a "builder" within the meaning of ss.3 and 54(1) of the Domestic Building Contracts Act 1995;

(iii) the dispute between the parties was not a "domestic building dispute" within the meaning of s.54(1) of the Domestic Building Contracts Act 1995;

(iv) VCAT does not have jurisdiction under the Domestic Building Contracts Act 1995 to determine the dispute between the parties;

(d) the proceeding be remitted to VCAT for further directions;

(e) the respondent pay the appellant's costs of the application for leave to appeal made to Master Wheeler, the appeal to a judge in the Trial Division, and of this appeal.[48]

---

[2] At 7-8 and 15. True it is that his Honour went on to say that work associated with the erection or construction of a home was covered by s.(5)(1)(a) and that what appeared to be intended was that the Act should apply to work of a non-residential character carried out on land which itself had a residential character. It is unnecessary to pursue the point further to decide this case.

[6] Cooper Brookes (Wollongong) Pty Ltd v. Federal Commissioner of Taxation [1981] HCA 26; (1981) 147 C.L.R. 297 at 305, 320-321; Metropolitan Coal Co of Sydney Ltd v. Australian Coal and Shale Employees Federation [1917] HCA 64; (1917) 24 C.L.R. 85 at 99.

[7] Hansard, Legislative Assembly, 24 October 1995 pp 695-7.

[8] HIA Insurance Services Pty Ltd v. Davy [2003] V.S.C.A. 73 at 38; Fletcher Construction Australia Ltd; LGH Administration Pty Ltd v. Kyranakis (1998) 100 L.G.E.R.A. 339 at 343.

[10] A phrase used in the second reading speech, as noted by her Honour at [64].

[15] Unreported judgment decided on 9 October 1996 p 7.

[21] Hansard, Legislative Assembly, 24 October 1995 pp 695-7.

[24] [1981] HCA 26; (1981) 147 C.L.R. 297 at 304-305, 310-313, and 319-321.

[27] Pearce & Geddes, Statutory Interpretation in Australia, 5th ed, 2001, para 11.31.

[40] "Builder" is defined as "a person who, or a partnership which - (a) carries out domestic building work; or (b) manages or arranges the carrying out of domestic building work; or (c) intends to carry out, or to manage or arrange the carrying out of, domestic building work".

Winslow Constructors Pty Ltd v Mt Holden Estates Pty Ltd; Lanigan Baldwin Pty Ltd v Mt Holden Estates Pty Ltd [2004] VSCA 159

At a glance

Court

Decision date

Before

Source

Judgment (208 paragraphs)

Legislation Cited (2)