An Industry in Crisis on Every Level

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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