The Supreme Court challenge to a decision by the VMIA to cancel eligibility to Domestic Building Insurance (DBI)

25 July 2023

Acting for an up-and-coming residential and commercial builder whose business was put at risk by a decision of the Victorian Managed Insurance Authority (VMIA) to restrict his eligibility to DBI insurance, we used upfront assessment, innovative legal arguments, and expert knowledge to commence Supreme Court proceedings and deliver an outcome allowing our client to resume his successful business.


  • Client: registered builder with a track-record of high-end, sustainable residential and commercial projects.
  • Location: Melbourne, Victoria.
  • Situation: the builder’s eligibility to hold mandatory domestic building insurance (DBI) was first suspended and then cancelled by the VMIA preventing the builder from continuing existing residential projects or starting new ones, threatening the viability of his business.
  • Outcome: A Supreme Court case was launched challenging the VMIA’s decision to cancel eligibility. After a short but intense dispute, a sensible resolution was reached. Our client’s eligibility to hold DBI was fully restored and a multi-million-dollar personal indemnity was not called upon.
  • Key elements of success: upfront assessment of factual and legal issues; innovative thinking; expert skills; experience with regulatory disputes; strategy; compilation of an expert team; effective advocacy.

In 2019, a valued existing builder client contacted us to ask if we could help with a letter he had received from the VMIA suspending his (and his company’s) eligibility to hold DBI. It is a mandatory requirement for a builder to hold DBI for any residential building project worth more than $16,000 in Victoria. DBI provides coverage where contracted building work is incomplete or defective and can compensate homeowners when a builder becomes insolvent. The DBI policy is required to be indemnified personally by a director of the business, and our client had provided those indemnities.  

Without DBI, a builder’s domestic building registration with the VBA cannot be maintained. The effect of the suspension was therefore catastrophic for our client’s business as it restricted him from commencing new residential builds and even continuing existing ones. Moreover, the personal liability risk for the indemnities provided by our client were potentially in excess of $2 million.

VMIA’s concerns arose from, firstly, our client’s role as a director of a large residential development company – some 3 years prior – that had gone insolvent over a year after our client had resigned, and secondly, a building company our client had established in 2012 and resigned as a director in 2019 following disagreements with his business partner.

After our client left the second business, a significant number of complaints were made by homeowners, leading to several claims being made under the DBI policy when the second company went into administration. Our client’s position was that the issues in both companies had arisen after he had left, and he had no authority or control over what had happened since then.

We conducted a detailed upfront assessment of the VMIA’s claims and reviewed the legal bases underlying the VMIA’s asserted suspension and cancellation of our client’s eligibility to hold DBI.

Our factual review unearthed evidence that strongly supported our client’s position, whilst our legal review identified serious concerns and anomalies in relation to the actions being taken by VMIA against our client. We put together an expert team, including solicitors and counsel experienced in regulatory and administrative disputes and subject matter experts in DBI insurance, to advise and act. After attempts to resolve the matter pre-litigation were unsuccessful, our client filed judicial review proceedings in the Supreme Court of Victoria challenging the basis of the VMIA’s decision to revoke eligibility for DBI.

In the context of an escalating Supreme Court dispute, a sensible resolution was reached.

Our client’s DBI eligibility was fully restored and his indemnities under the previous DBI policies were not called upon.


The contents of this article do not constitute legal advice and it is not intended to be a substitute for legal advice and should not be relied upon as such.  It is designed and intended as general information in summary form, current at the time of publication, for general informational purposes only.  You should seek legal advice or other professional advice in relation to any particular legal matters you or your organisation may have.


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