Is the Time Limit to Sue a Victorian Building Practitioner 6 Years, or is it 10 Years?
By Justin Cotton, Partner, Construction and Practitioner Advocacy, Lovegrove Smith & Cotton, Construction and Commercial Lawyers
A few years ago now, a case decision of the County Court was good news for builders (and other building practitioners) insofar as it stated that the time limit to bring a building action for defective building work was 6 years from the breach, if the “building action” was based on a breach of contract.
In other words, it was only if the owner or other party could bring the claim on the grounds of a breach of a duty of care owed by the building practitioner (eg a claim in negligence) that the 10 year limitation period within which to sue would apply.
The 10 year limitation period is on the face of it more generous to potential complainants because it is a longer period of time than 6 years. It is found in section 134 of the Building Act 1993 which reads:
“Despite anything to the contrary in the Limitation of Actions Act 1958 or in any other Act or law, a building action cannot be brought more than 10 years after the date of issue of the occupancy permit in respect of the building work ….or, if an occupancy permit is not issued, the date of issue under Part 4 of the certificate of final inspection of the building work.”
Building industry associations and practitioners alike have welcomed the decision of the County Court in around 2011, as it operates to restrict the period of time within which, for example, a domestic building owner could sue a builder for defective work to a period of 6 years from when the breach of contract occurred. For claims based on breach of contract the 10 year period post completion would not apply.
It should be noted that the 6 years would start to run from when the breach of contract occurred, for example when a defective item of work was first constructed, and not when it was actually discovered. Whereas any claim in negligence would have a limitation period that starts to run when the occupancy permit is approved. Under the old regime before the Building Act, it would have start to run when the defect became reasonably discoverable or apparent.
This decision ran contrary to a line of VCAT cases that have decided previously that the 10 year period in section 134 of the Building Act 1993 is a stand-alone provision that replaces the 6 year rule in the Limitation of Actions Act and that applies regardless of whether the claim is brought as a breach of contract or as a claim in negligence.
Arguably of course, the County Court’s more recent interpretation is only partially helpful to building practitioners, because a building action based on a breach of duty of care, for example negligence, could still be brought for a period of 10 years after the occupancy certificate or final inspection certificate.
As it turns out, the long awaited Supreme Court appeal in the case of Brirek Industries Pty Ltd v McKenzie Group Consulting (Vic) Pty Ltd has now overturned this decision in regard to the limitation period to bring a building action. The judgment was finally received on 6 August 2014, and it has removed any perceived advantage that building practitioners may have thought they had gained from the earlier County Court judgment.
On appeal, the Supreme Court concluded that the Judge should have held that the applicable limitation period is that provided for in section 134 of the Building Act 1993, so that the time limit for bringing a building action both in contract and in “tort” for negligence is 10 years from the issue of the occupancy permit (or certificate of final inspection).
This contrasted with the trial judge’s “long stop” interpretation which had meant that:
- All contract claims founded on the issuing of building permits by the relevant building surveyor were time barred for being brought outside 6 years; and
- While a claim in negligence against the RBS could be made any time up to 10 years after completion (and approval of an occupancy permit), the Judge found that the RBS did not owe a duty of care
The Supreme Court looked at an earlier 2006 decision of Moorabool Shire Council v Taitapanui as support for their interpretation that section 134 was in fact ‘all-encompassing’ for building actions of any hue. In that case the Judges had referred to section 134 as governing claims both in contract and in negligence and they did not appear to see the provision as a ‘long stop’ rule.
In the end the Supreme Court justices stated: “In our opinion, the interpretation of the provision adopted by the trial judge places an artificial constraint on the plain meaning of the words in section 134 of the Building Act.”
Noting that the words of section 134 do not contain any express limitation that confines their application to cases in contract versus other claims in tort/negligence, the Court said in the decision:
“The construction given to section 134 by the trial Judge imposes unwarranted limitations on the scope and applicability of the section.”
Whilst the result may not be welcomed by building practitioners generally, given this appeal decision has been pending for the last couple of years, it has at least afforded some certainty to the question of “how long does a complainant have?”, and in our view seems to accord with the intention of those who drafted the Building Act.
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© Lovegrove Smith & Cotton 2014
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