House Contracts Guarantee Act 1987

VersionNo. 054

House Contracts Guarantee Act 1987

No. 44 of 1987

Version incorporating amendments as at
1 July 2013

table of provisions

SectionPage

1

SectionPage

Part 1—Preliminary

1Purpose

2Commencement

3Definitions

3AHouse and land packages

4Application of Act

Part 2—Guarantees

5Guarantee required in relation to certain contracts

6Guarantees

7Nature of guarantees

8Builder liable on sale of house constructed by builder

9Owner builders

10Extension of guarantee in certain circumstances

10ADiscretion to issue guarantee

11Builder to have liability for movement of the foundations

11AState to become liable for guarantees

11BVMIA to be responsible for the Housing Guarantee Claims Fundand claims

12Liability in legal proceedings

13Procedure for resolving claims

14Claims

15Costs

16Appeals

17Discretionary payments

17AApplication of payments

Part 2A—Housing Guarantee Claims Fund

17BHousing Guarantee Claims Fund

17CWhat comprises the Housing Guarantee Claims Fund?

17DPayments out of the Housing Guarantee Claims Fund

17EPowers of VMIA in relation to the Housing Guarantee Claims Fund

17FReport to Minister

17GAuditor-General to audit financial statements of Housing Guarantee Claims Fund

17HAnnual report

17IRemaining funds to be paid into Domestic Builders Fund

Part 3—Domestic Building Work Contracts

18Requirements in relation to domestic building work contracts

19Variation of domestic building work contract

20Limit on amount of deposit

21Limit on progress payments

21AArbitration provisions

Part 4—The Register

25Registers to be kept by VMIA

Part 5—Miscellaneous

26Supervision contracts

27False representations

29Offences by corporation

30Time limit for proceedings

31Act not to limit liability of builder

32Agreement to exclude etc. operation of Act void

32APerson cannot sign away right to take advantage of a
guarantee

33Regulations

34Transitional provisions

34ASavings provisions

34BNotice to approved guarantor

34CNo offence for certain acts or failures to act under this Act in April 1996

Part 6—Domestic Building (HIH) Indemnity
Scheme

Division 1—Introductory

35Interpretation

36This Part only applies in respect of work carried out or to be carried out in Victoria

36AExisting proceedings to be affected by amendments

Division 2—Indemnity

37Indemnity

38What is not covered by the indemnity?

39What are the functions and powers of VMIA in relation to the indemnity scheme?

40Who can make a claim under the scheme?

41Procedure for claims

42When is a claim paid?

43Assignment of rights

44VMIA may require builder to make payments or rectify work

45Other rights not affected

Division 3—Domestic Building (HIH) Indemnity Fund

46Domestic Building (HIH) Indemnity Fund

47Payments to Consolidated Fund

48How can the Fund be invested?

49Remaining funds to be paid into Consolidated Fund

50Report to Minister

51Auditor-General to audit financial statements of Fund

52Annual report

Division 4—General

53Can VMIA enter into arrangements and agreements with liquidator of HIH?

54Effect of Corporations Law

55Offence to make false statements

56Regulation-making powers

Part 7—Transitional

Division 1—Transfer of property, rights and liabilities of HGFL

57Definitions

58State to take over responsibility for guarantees

59VMIA to be substituted as party to proceedings

60Construction of instruments

61Taxes

62Transfer of staff

63Evidence

64Validity of things done under this Division

65Operation of provisions not subject to review

Division 2—Role of VMIA in relation to guarantees

66Actions of continuing nature in relation to guarantees

Division 3—Role of VMIA in relation to indemnities

67Actions of continuing nature in relation to indemnities

68References to HGFL in any arrangement or agreement under section 53

Division 4—Reporting by HGFL

69Final annual report by HGFL

______

SCHEDULE—Saving of Claims

═══════════════

endnotes

1. General Information

2. Table of Amendments

3. Explanatory Details

1

VersionNo. 054

House Contracts Guarantee Act 1987

No. 44 of 1987

Version incorporating amendments as at
1 July 2013

1

Part 6—Domestic Building (HIH) Indemnity Scheme

House Contracts Guarantee Act 1987
No. 44 of 1987

The Parliament of Victoria enacts as follows:

Part 1—Preliminary

1Purpose

The purposes of this Act are—

(a)to reform the law relating to house builders' liability; and

(b)to provide for guarantees to be given in relation to house improvement work; and

S. 1(c) amended by No. 26/2001 s.3.

(c)to specify requirements to be complied with in relation to domestic building work contracts; and

S. 1(d) inserted by No. 26/2001 s.3.

(d)to establish an indemnity scheme in respect of losses arising in respect of certain classes of domestic building work affected by the collapse of the HIH Insurance Group.

2Commencement

This Act comes into operation on a day or days to be proclaimed.

3Definitions

(1)In this Act[1]—

S. 3(1) def. of appointed day insertedby No. 52/2005 s.4(1).

appointed day means the date of commencement of the House Contracts Guarantee (Amendment) Act 2005;

approved builder means a builder approved by the approved guarantor under its rules;

S. 3(1) def. of approved guarantor substitutedby No. 52/2005 s.4(2).

approved guarantor means HGFL;

S. 3(1) def. of approved supervisor inserted by No. 39/1990
s. 4(a).

approved supervisor means a supervisor approved by the approved guarantor under its rules;

builder means a person who performs, or two or more persons who together perform, domestic building work;

s. 3

S. 3(1) def. of building approval substituted by No. 126/1993
s. 264(Sch. 5 item 10.1(a)).

building approval means building permit within the meaning of the Building Act 1993;

S. 3(1) def. of building owner substituted by No. 39/1990
s. 4(b).

building owner—

(i)in relation to a domestic building work contract, means the person for whom domestic building work is, or is to be, performed under the contract; and

(ii)in relation to a supervision contract, means the person for whom the managing or supervision of domestic building work is, or is to be, performed under a supervision contract;

S. 3(1) def. of building surveyor substituted by No. 126/1993
s. 264(Sch. 5 item 10.1(b)).

building surveyor means relevant building surveyor within the meaning of the Building Act 1993;

S. 3(1) def. of chief administrator substituted by No. 46/1998
s. 7(Sch. 1), amendedby No.108/2004 s.117(1) (Sch.3 item99.1).

chief administrator means the Department Head within the meaning of the Public Administration Act 2004of the Department;

S. 3(1) def. of claimant substitutedby No. 52/2005 s.4(3).

claimant means—

(a)except in Part 6, a person who has made a claim to HGFL or VMIA under this Act; and

(b)in Part 6, a person who has lodged a claim with HGFL or VMIA under that Part;

S. 3(1) def. of construct amended by No. 39/1990
s. 4(c)(i)(ii).

construct, in relation to a dwelling-house, includes—

(a)to build, re-build, erect or re-erect thedwelling-house up to or beyond lock-up stage (within the meaning of section 21) whether or not any part of the work had been carried out by another builder; and

(b)in the case of a dwelling-house that has never been occupied, to place the dwelling-house on land; and

(c)to convert an existing building into a dwelling-house;

s. 3

S. 3(1) def. of contract price substituted by No. 39/1990
s. 4(d ).

contract price, in relation to a domestic building work contract or a supervision contract, means the total amount payable to the builder or supervisor under the terms of the contract;

cost plus contract means a domestic building work contract under which the total amount payable to the builder (exclusive of prime cost items and provisional sums) cannot be determined at the time the contract is entered into;

S. 3(1) def. of Department substituted by No. 46/1998
s. 7(Sch. 1).

Department means the Department of Justice;

S. 3(1) def. of domestic building work amended by No. 39/1990
s. 4(e)(i)-(iii).

domestic building work means—

s. 3

(a)the work of constructing a dwelling-house; or

(b)the work of improving a dwelling-house; or

(c)the work of improving a residence that is excluded from the definition of dwelling-house in this subsection by paragraph (a) or (c) of that definition if the work is carried out wholly or substantially within the space bounded by the floor, external walls and roof of the residence; or

(d)in connection with the moving from one site to another of a building that has been occupied and that is not a dwelling-house by reason only of the operation of paragraph (b) of the definition of that term in this subsection, the work of—

(i)preparing the site and laying the foundations and placing the building on the site; and

*****

(iii)carrying out any other work required to be carried out to thebuilding in consequence of any work referred to in subparagraph (i); or

(e)work of a prescribed class;

domestic building work contract means a contract between a builder and another person for the performance by the builder of domestic building work (including any variation of such a contract) but does not include—

s. 3

(a)a contract for the performance of domestic building work for a builder who is in turn obliged to perform the work under another contract; or

(b)a contract for the performance of domestic building work of the class referred to in paragraph (b) or (c) of the definition of domestic building work in this subsection unless the amount payable under the contract in respect of that work (or, in the case of a cost plus contract, the amount set out in the contract as a fair and reasonable estimate of the amount payable under the contract in respect of that work) is more than $3000 or any larger amount that is prescribed for the purposes of this paragraph;

S. 3(1) def. of dwelling-house amended by Nos 97/1987
s. 181(7), 39/1990 s. 4(f).

dwelling-house means a building (whether temporary or permanent) that is used, or is intended, adapted or designed for use, as a separate residence for an occupier who has a right to the exclusive use of it but does not include—

(a)a separate residence that is a portion of a building containing two or more separate residences if any part of a separate residence is above or below any part of the first-mentioned residence; or

(b)a building that has been moved from one site to another; or

(c)a building that is attached to a shop, office, warehouse or factory and is used, or is intended, adapted or designed for use, as a residence for an occupier or caretaker of the shop, office, warehouse or factory; or

(d)a building that is used, or is intended, adapted or designed for use, as—

(i)a building in which there is or are available, upon payment of rent, any room or rooms for residential use by an occupier or occupiers (other than members of the family or employees of the owner of the building) who has or have a right to—

(A)use of that room or rooms; and

(B)in common with others, use of any kitchen, lounge, bathroom, laundry, garden, toilet, car parking area, storage area and other like facilities in the building—

s. 3

if the total number of people who may use the room or rooms is not less than four; or

*****

(iii)a motel, residential club, residential hotel or residential part of licensed premises under the Liquor Control Act 1987; or

(iv)a prescribed class of building;

S. 3(1) def. of guarantee period amended by No. 39/1990
s. 4(g).

guarantee period, in relation to domestic building work, means the period of 7 years from the time when the contract for the performance or the management or supervision of the performance of that work was entered into or building approval was granted for that work, whichever occurred first;

S. 3(1) def. of HGFL insertedby No. 52/2005 s.4(1).

HGFL means Housing Guarantee Fund Limited A.C.N. 006 258 233;

improve, in relation to a building, means—

(a)to make additions to the floor area of the building; or

(b)to make alterations to the structural design of the building; or

(c)to replace load-bearing fixtures that are part of the structural design of the building and are integral to its functioning; or

(d)to replace or install attached or fixed mechanical components that are integral to the functioning of the building; or

s. 3

(e)to replace or install non-load-bearing rigid fixtures (other than machinery) that are integral to the functioning of the building; or

(f)to replace or install structures that are attached to the exterior of the building and are integral to its functioning; or

(g)to perform any other work required to be performed in consequence of any work referred to in paragraphs (a) to(f);

industry association means Housing Industry Association or The Master Builders' Association of Victoria;

S. 3(1)def. of officer amended by No. 44/2001 s.3(Sch. item62.1).

officer, in relation to a corporation, has the same meaning as in section 9 of the Corporations Act but does not include an employee of the corporation;

S. 3(1) def. of owner builder inserted by No. 39/1990
s. 4(h).

owner builder means a person who otherwise than in the course of carrying on a business of constructing dwelling-houses—

(a)constructs a dwelling-house that is intended to be used as a residence (whether or not as a principal place of residence) by—

(i)that person; or

(ii)in the case of a corporation, one or more directors of that corporation; or

(b)constructs two dwelling-houses on a two lot subdivision if—

s. 3

(i)that person resides or intends; or

(ii)in the case of a corporation, one or more directors of that corporation resides or reside or intends or intend—

to reside in one of the dwelling-houses;

S. 3(1) def. of recognised person substituted by No. 91/1995
s. 157(a), amended by No. 2/1996 s.6.

recognised person means[2]—

(a)a person or body recognised by the Minister by order made under section28 as in force immediately before the commencement of section 166 of the Domestic Building Contracts and Tribunal Act 1995; or

(b)an architect registered under the Architects Act 1991; or

(c)a building surveyor, building inspector or engineer registered under Part 11 of the Building Act 1993;

S. 3(1) def. of supervision contract inserted by No. 39/1990
s. 4(i).

supervision contract means a contract between two persons under which one of those persons is to manage or supervise the performance of domestic building work for another person who is not an approved builder if—

(a)the total cost of the work managed or supervised is more than $3000 or any larger amount that is prescribed for the purposes of this definition; and

(b)the supervisor substantially controls—

(i)the whole of the undertaking of which the work managed or supervised forms a part; and

(ii)the engagement of tradespersons to perform the work managed or supervised;

s. 3

S. 3(1) def. of supervisor inserted by No. 39/1990
s. 4(i).

supervisor in relation to a supervision contract, means the person who is to manage or supervise the performance of domestic building work;

S. 3(1) def. of Tribunal inserted by No. 91/1995
s. 157(b), substituted by No. 52/1998
s. 311(Sch. 1 item 40.1).

Tribunal means Victorian Civil and Administrative Tribunal established by the Victorian Civil and Administrative Tribunal Act 1998;

S. 3(1) def. of VMIA insertedby No. 52/2005 s.4(1).

VMIA means the Victorian Managed Insurance Authority established by the Victorian Managed Insurance Authority Act 1996.

S. 3(2) amended by Nos 46/1998
s. 7(Sch. 1), 108/2004 s.117(1) (Sch.3 item99.2).

(2)If under the Public Administration Act 2004thename of the Department is changed, the reference in the definition of Department in subsection (1) to the "Department of Justice" is from the date when the name is changed to be taken to be a reference to the Department by its new name.

(3)A reference in this Act to obligations under a domestic building work contract, or to workmanship in relation to domestic building work, includes a reference to obligations or workmanship in relation to—

(a)outbuildings; and

(b)retaining walls the construction of which is required by or under any Act or enactment; and

s. 3

(c)provision for lighting, heating, water supply, drainage, sewerage and other like services in respect of the building.

(4)A reference in this Act to a successor in title of a building owner or purchaser includes—

(a)a reference to an owner for the time being of the building; and

(b)if there is in force a licence granted under section 138 of the Land Act 1958 to occupy for residence purposes the land on which the building is constructed—a reference to a person who is for the time being the holder of the licence or of a lien by way of security on the improvements on the land; and

(c)if the land on which the building is constructed is a residence area within the meaning of Division 11 of Part I of the Land Act 1958—a reference to a person who is for the time being the holder of a right to occupy the residence area or of an encumbrance by way of security of the right to occupy the residence area.

S. 3(5) insertedby No. 52/2005 s.4(4).

(5)A reference in this Act to a guarantee given under this Act does not include a reference to an indemnity given under Part 6.

S. 3A
inserted by No. 39/1990 s.5.

3AHouse and land packages

s. 3A

(1)This section applies where a contract is entered into for the sale of land on which a dwelling-house is being constructed or is to be constructed before completion of the contract.

(2)If the builder is the same person as the vendor, a domestic building work contract is, for the purposes of this Act, deemed to have been entered into between the purchaser and the builder on the date on which the contract for the sale of the land is entered into.

(3)If the builder is not the same person as the vendor, the approved guarantor is liable for loss or damage suffered by the purchaser before the completion of the contract for sale where—

(a)the builder knew or ought reasonably to have known at the time when the domestic building work contract was entered into between the builder and the vendor that the vendor had entered into or was likely to enter into, before completion of the domestic building work contract, a contract for the sale of the land; and

(b)the loss or damage suffered arose out of the builder's failure to fulfil the builder's obligations under the domestic building work contract or the builder's bad workmanship, as the case requires.

(4)The rights and liabilities conferred by or arising under this section are additional to, and do not take away from, those conferred by or arising under any other provision of this Act.

S. 4
amended by No. 91/1995
s. 158(a).

4Application of Act

s. 4

S. 4(1) amended by No. 26/2001 s.4.

(1)This Act (except sections 22 and 22A and Part 6) does not apply in relation to domestic building work performed or to be performed by[3]—

(a)the Director of Housing incorporated under the Housing Act 1983; or

(b)a prescribed person; or

(c)any person if the function of performing that work is vested in that person by or under any Act of the Parliament of Victoria or of the Parliament of the Commonwealth.

S. 4(2) inserted by No. 91/1995
s. 158(b), amended by No. 26/2001 s.4.

(2)This Act (except sections 22 and 22A and Part 6) does not apply to[4]—

(a)work performed under a domestic building work contract that was entered into on or after the commencement of section 158 of the Domestic Building Contracts and Tribunal Act 1995; or

(b)a domestic building work contract that was entered into on or after that commencement; or

(c)work performed under a supervision contract that was entered into on or after that commencement; or

(d)a supervision contract that was entered into on or after that commencement.

S. 4(3) inserted by No. 91/1995
s. 158(b).

(3)Part 2 does not apply to the work of constructing a dwelling-house if that dwelling-house was first sold under a contract that was entered into on or after the commencement of section 158 of the Domestic Building Contracts and Tribunal Act 1995 unless—

(a)a guarantee had been given under that Part; or

(b)a conditional certificate of guarantee had been issued under section 6(3); or

(c)a certificate had been issued under section 25(3)(d)—

in respect of that dwelling-house before that commencement.

s. 4

______

Part 2—Guarantees

5Guarantee required in relation to certain contracts

s. 5

S. 5(1) amended by No. 39/1990
s. 6(1)(b)(c).

(1)A person must not—

(a)enter into a contract to perform domestic building work; or

S. 5(1)(b) substituted by No. 39/1990
s. 6(1)(a).

(b)enter into a contract to manage or supervise the performance of domestic building work—

unless a guarantee given under this Act by the approved guarantor is in force in relation to the domestic building work or the supervision contract, as the case requires.