The Court found that building defects, particularly inadequate waterproofing and drainage, were within the builder’s contractual obligations and failure to adequately perform those works amounted to a breach of the implied warranties under the Domestic Building Contracts Act 1995 (Vic).
In issue
- In Wang v Moutidis, the County Court of Victoria was asked to consider the scope of a builder’s obligations under a domestic building contract, and whether the implied warranties under the Domestic Building Contracts Act 1995 (Vic) (the Act) had been breached.
The background
Mr Wang purchased a two-storey home in Ringwood in 2019, which had been constructed by Mr Moutidis (the builder) between 2016 to 2018.
The domestic building contract between the builder and the property’s original owner contained eight special conditions, which excluded certain works from the contract. Relevantly, special condition 7 provided that, ‘no external works or decking is included in this contract’ (special condition 7).
After moving into the home, the plaintiff noticed water ingress into a bedroom located in the basement, and into the garage. It became clear that the property contained various building defects, including in relation to the waterproofing of the basement walls and the installation of below ground sewage and drainage around the perimeter of the property.
In the proceeding, the existence of the defects was not in dispute and the builder conceded that the home suffered from serious mould and water ingress issues. Instead, the builder denied liability for the waterproofing and drainage works on the basis that they form ‘external works’ excluded by special condition 7.
The builder, who was self-represented at trial, sought to rely on written closing submissions generated by Artificial Intelligence (AI), which Her Honour Judge Kirton remarked contained ‘obvious errors or irrelevancies’.
The decision at trial
The judgment, delivered by Her Honour on 18 August 2025, found overwhelmingly in favour of the plaintiff.
Notably, Her Honour did not accept the defendant’s interpretation of ‘external works’ and concluded that works providing essential services such as waterproofing, sewage and drainage form part of the home regardless of whether those works lay within or outside of the external face of the home. Conversely, Her Honour determined that ‘external works’ include but are not limited to landscaping, paving, retaining structures, driveways and fencing.
The contract therefore required the builder to carry out the waterproofing and drainage works in accordance with the building permit approved documents, being the engineering drawings and architectural plans. The builder’s failure to adequately perform these works amounted to a breach of the implied warranties in section 8 of the Act, namely that the works would be carried out in accordance with the plans and specifications set out in the contract.
Ultimately, the defendant was ordered to pay $244,323.58 plus the plaintiff’s costs of the proceeding.
Implications for you
The decision serves as a timely reminder that builders will be liable for defective work where it can be established those works formed part of the builder’s scope of work pursuant to a domestic building contract. Attempts to exclude fundamental components of a home (such as sewage, drainage and waterproofing) will be read narrowly and cannot avoid the statutory warranties implied by the Act.
In practice, this means that works forming part of the home’s basic fabric or required for compliance cannot be carved out by general exclusionary wording and remain within the builder’s strict liability under the Act.
As a more general comment, the case highlights the pitfalls of using AI for the preparation of submissions, noting stringent controls and ‘human checks’ must be undertaken where AI is incorporated into legal practice (or indeed, where a party is self-represented in a proceeding).
