Key Finding
In Centurion Australia Investments Pty Ltd v APM Group (Aust) Pty Ltd [2023] VSCA 324, the Victorian Court of Appeal found that student accommodation construction works are not subject to operate under the Domestic Building Contracts Act 1995 (Vic) (‘DBCA’).
Facts
Centurion Australia Investments Pty Ltd had reached an agreement with RMIT University to develop a student accommodation building called ‘RMIT Village’. According to this agreement, the accommodation would primarily lease rooms to RMIT University students and allow some rooms to be leased to students from other universities or tertiary institutions. Centurion Australia Investments Pty Ltd then engaged APM Group as a contractor to construct this student accommodation building. This building was then constructed on a mixed-use zone under the Melbourne Planning Scheme.
Procedural History
The case first appeared in the Victorian Supreme Court, where Justice Stynes found that student accommodation did not fall under the definition of “domestic building work” for the purposes of the DBCA (APM Group (Aust) Pty Ltd v Centurion Australia Investments Pty Ltd [2022] VSC 637; BC202212967).
Her Honour found that there needed to be some form of possibility for ‘permanent habitation’ [37] to qualify as a domestic building as per Section 5(1)(a). When the planning permit was issued to Centurion, it required them to add a term that would only allow students who are ‘enrolled full-time at a secondary or tertiary level educational institution and to be vacated within three months of completion of full-time studies’ [65]. Hence, student accommodation buildings are not typically suited for permanent habitation, as they can often only be eligible for students during their educational years and require students to leave after they graduate.
Additionally, Stynes J referred to Section 6(2) of the Act and Section 8(b) of the Domestic Building Contract Regulations 2017 (Vic) which highlighted that the DBCA does not apply to premises intended to be used ‘at a school, university or other educational or training institution as accommodation for students or staff’ [26]. Her Honour mentioned the importance of the term ‘at’ instead of ‘in’, as being indicative that the building was not located on university premises did not mean that it failed under this exemption criteria [115].
Victorian Court of Appeal Outcome
The decision was appealed by Centurion Australia Investments PTY LTD on 14 November 2023 and the Court of Appeal, being Ferguson CJ, Niall JJA and Kennedy JJA handed down their decision on 18 December 2023 in the decision Centurion Australia Investments Pty Ltd v APM Group (Aust) Pty Ltd [2023] VSCA 324; BC202318323.
The Court of Appeal upheld Her Honour’s decision. In particular they found that the location of the student accommodation outside of the university premises was not of material significance.
Even if the location of the building was not on the premises of the educational institution, it would not make a difference to its status under the DBCA.
More specifically, the Appeals Bench referred to three key areas when reaching their decision:
- Exemption under Section 8(b) of the Domestic Building Contract Regulations 2017 (Vic) [60] – [64]
Their Honours highlighted that the usage of the term ‘at’ in Section 8(b) was significant and did not limit the classification of the building to be on university premises.
While reiterating that the physical distance was not material in this case (the university was at a distance of approximately one kilometer from the accommodation), the Court of Appeal held that the building met the requirements set out by the exemption under section 8(b) of the Domestic Building Contract Regulations 2017 (Vic) because of its close physical proximity to RMIT University and because the building was intended to be built for RMIT student housing.
- Section 5(1)(a) of the Domestic Building Contracts Act 1995 (Vic): a Home is what the DBCA governs [84-91]
Their Honours referenced examples that are excluded by Section 5(2) such as residential hotels, nursing homes and motels. They noted that these examples are also not considered to be a ‘home’. The court found that student accommodation or boarding schools would likely be found in this same category of exemptions and as such, cannot be categorised as a ‘home’.
The Appeals Bench endorsed Her Honour’s reasons and found that a ‘home’ under Section 5(1)(a) is meant for residential places that allow for ‘permanent habitation’. The definition of the word ‘home’ does not include student housing. The purpose of the DBCA was to regulate ‘domestic building work’ and not just any residential premises.
Given that a key requirement for staying in the RMIT accommodation is being a full-time student and a student is required to leave upon completion of the course, the accommodation system inherently does not allow for permanent habitation (or a “home”).
- Section 5(1)(e) of the Domestic Building Contracts Act 1995 (Vic): The Zoning of the Premises is Important [92-106]
The court held that the land did not fall in the residential zone exemption of 5(1)(e) as the student accommodation was built in a mixed-use planning zone.
Their Honours interpreted section 5(1)(e) as referring to land that is ‘exclusively zoned for residential purposes’.
S 5(1)(e) adds a provision that allows construction 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 1993’ to be covered by the DBCA. The appellants argued that this provision allows for their construction to be admissible under the DBCA as their construction satisfies the criteria set out by this section.
However the Appeals Court held that s5(1)(e) should be considered as an extension to the definition of a home rather than a subclause that validates a residential premise to qualify as a home in the case the premise does not meet the definition as set out by 5(1)(a).
These comments highlighted that Section 5(1)(e) has little practical application because buildings in residential zones can often rely on Section 5(1)(a) of the definition to meet the requirements of qualifying under the DBCA.
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We are proud to have this article featured in the LIJ June 2024, co-authored by Harriet Warlow-Shill and Muskaan Dalmia.
