We present a novel Monte Carlo simulation of the phase separation dynamics of a model fluid membrane. Such a phase segregation induces shape changes of the membrane and results in local ’budding’ under favourable conditions. We present a preliminary investigation of the nucleation regime and compute a variety of growth laws. Our study indicates that membranes with high viscosity, buckle on account of phase segregation. We discuss the relation between this dynamical buckling and the phenomenon of ’capping’ seen in biological membranes.