Victorian Supreme Court Of Appeal Clarifies Start Date Of Limitation Periods For Building Defects
Lendlease Engineering Pty Ltd v Owners Corporation No 1 [2022] VSCA 105
On 8 June 2022, the Victorian Supreme Court of Appeal (VSCA) confirmed the commencement date of limitation periods under the Building Act 1993 (Vic) (Building Act). Where multiple occupancy permits have been issued for a building project, this decision has significant industry impacts.
Background to Occupancy Permits
An occupancy permit is evidence that a structure is suitable for use. Receiving an occupancy permit guarantees that a property is up to National Construction Code Standards.
Not all construction projects require an occupancy permit. However, if one is required under the Building Act, it is an offence to occupy a new building before receiving a permit.
Multiple occupancy permits are often issued when stages of development are completed at different times. This has led to contention over when the limitation period applied to these permits is meant to begin.
How Limitation Periods are Relevant to Occupancy Permits and Building Warranties
A limitation period refers to the maximum period of time where a legal action can be brought or a right can be enforced. Although the Limitation of Actions Act 1958 (Vic) (Limitations Act) provides a 6-year limitation period for most actions in torts or contract, section 134 of the Building Act provides a ‘Long Stop Period’ of 10 years. This limitation period applies to most building projects.
Prior to the VSCA’s decision, practitioners believed the Long Stop Period began at the date of issue for the occupancy permit or certificate of final inspection.[1]
These periods are relevant to consumers in situations where staged permits are issued. This is because these dates materially affect whether people can claim relief for building defects under warranty. If a building issue arises outside of this period, owners will likely need to pay for rectification costs out-of-pocket.
Lendlease Construction Case
In 2021, Owners Corporation No 1. PS526704E brought an action against Lendlease Engineering Pty Ltd for breach of warranties in respect to alleged defective building work performed at the Chevron Apartments in St Kilda.
A prior decision of the Victorian Supreme Court held the Long Stop Period ran from the date of the last occupancy permit issued for a building project. However, on appeal the VSCA determined this was not the case.
The VSCA discussed the language and intention of Parliament when drafting the Building Act. The following factors were referenced in the court’s decision:
given the Long Stop Period commences when an occupancy permit is first issued, there is no evidence that indicates Parliament intended for subsequent periods to re-start this process;
section 134(1) of the Building Act does not include terms such as ‘final’, ‘last’ or ‘current’; and
an ordinary interpretation of section 134 of the Building Act would suggest this section contemplates the issuing date of the relevant occupancy permit. This would indicate applications are not subject to when the ‘final’ occupancy permit was issued.
Conclusion
When determining whether an action can be brought within the Long Stop Period, practitioners and consumers should establish when the occupancy permit was issued. If the occupancy permit was issued more than 10 years ago, this claim is likely to be outside the action’s limitation period.
[1] This limitation period can be extended to 15 years in situations relevant to: (1) cladding building actions; or (2) if the building action has become or becomes prohibited on or after 16 July 2019 but before 1 December 2023 by this section as in force at any time before the commencement of section 49A of the Building Amendment (Registration and Other Matters) Act 2021 (Vic).
To learn more about how limitation periods may impact your case, or if you require legal assistance, please contact Chris Moshidis, Director and Principal Lawyer on +61 9521 7956 or at chris@urbanlawyers.com.au.