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There are many that hold the view nowadays on account of the varying responses to the Covid-19 pandemic that Australia comprises not of 8 States and Territories, but 8 Countries with very few instances uniform legislation. For those in the building industry, this was always known to be the case.

In New South Wales, the core piece of legislation for building and construction is the Environmental Planning and Assessment Act 1979 (NSW), a statute that lumps planning and environmental provisions together with building approvals and compliance assessment. In South Australia, a perhaps better-titled but similar scheme to that in NSW is the Planning, Development and Infrastructure Act 2016 (SA). In Victoria, the key legislative instrument for building regulation is the aptly titled Building Act 1993 (Vic), and the other five States and Territories refer to their separate and distinct building legislation similarly.[1] The point to be taken is: building and construction in Australia is puzzling array of State and Territory-based regulation, each with differences and peculiarities – some that are patent and others that require delving into the minutiae of the legislation.

Time-Bars on “Building Action”

This is certainly the case when it comes to how long one has to sue in relation to a building, and by the same token how long a respondent remains in the “firing line” for suits arising in connection with a building.

Standard limitations for civil action being claims under contract are generally 6 years “from date on which the cause of action accrued”[2], the same is largely true for pure economic and property-based negligence claims. They are shorter for personal injury, defamation and other torts where very different circumstances result in the cause of action accruing.

Building-related civil actions have always been notoriously difficult to deal with under the standard limitation scheme for civil action referred to above. This is because ordinarily building disputes involve building defects and when a building defect gives rise to a cause of action is so incredibly complicated to determine, wasting huge resources and expertise should a defence be mounted under limitation where the time the plaintiff commenced proceedings was, say, 7.5 years on from the date of completion.

The question in such cases is: did the cause of action arise when the defect was built into the building, if so, when – i.e. when the builder breached the contract by failing to appropriately reinforce concrete in accordance with structural engineering specifications, or where a designer negligently failed to specify sufficiently strong basement columns – or was it when the plaintiff realised that the building was defective, or at least ought to have reasonably known there were building defects – i.e. when cracks appeared in the basement slab and columns? The answer depended on the nature of the cause of action. Depending on the answer to that question, the time one has to initiate proceedings may vary greatly.

The question was largely avoided in the early 1990s via the introduction of decennial liability and a 10 year long-stop limitation period that ran from the date of “issue of occupancy permit or final certificate”, “completion” or “certificate of completion”, or whatever be the provincial derivative under the relevant State or Territory legislation. Decennial liability has been introduced in some form or another in every State and Territory apart from Western Australia and Queensland.

Differences between 10-year liability provisions – “long stop” or total substitute?

There are varying approaches to the 10-year liability period wording in the various jurisdictions that have building industry-specific 10-year limitation periods for building action.

The most emphatic of these are Victoria, the Northern Territory and South Australia. By way of example, Section 134 of the Building Act 1993 (Vic) provides that:

“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 (whether or not the occupancy permit is subsequently cancelled or varied) 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.” (Emphasis added).

The main difference that one can point out, compared with jurisdictions like NSW and the ACT, is the first line or so of the Section: “Despite anything to the contrary in the [general limitations legislation] or in any other Act or law”. Section 159 of the Planning, Development and Infrastructure Act 2016 (SA), and Sections 160 and 161 of the Building Act 1993 (NT) also contain this kind of wording. In Victoria, this has led the Victorian Court of Appeal to state in obiter that the limitation period for all building actions in Victoria is 10 years from the date of the issue of an occupancy permit or certificate of final inspection, and is not simply “long-stop” to the “infinity plus six” scheme.[3]

In Section 142 of the Building Act 2004 (ACT), Section 6.20 of the Environmental Planning and Assessment Act 1979 (NSW), and Section 327 of the Building Act 2016 (TAS), these words do not appear. Though the Tasmanian legislation seems to more clearly be worded as a substitute to the 6-year liability period in its Limitation Act 1974 (TAS) by specifically setting the deemed accrual events for building or plumbing “causes of action” and then prescribing either a 10 year limitation period or 6 year limitation period depending on whether the works are low risk or not low risk.

In fact, in NSW, Section 6.20(4) specifically provides that the 10-year liability period does not derogate from the standard limitations of actions in the Limitations of Actions Act 1969 (NSW). On the basis of this provision in NSW, the 10-year liability period can only be seen as an absolute “long stop” provision acting in tandem with the general limitation in Section 14 of the Limitations of Actions Act 1969 (NSW).

This means whilst the 10-year liability period in Victoria, the Northern Territory, South Australia and Tasmania likely wholly substitutes their respective general limitations of actions statutes and their 6 year limitation periods, the same cannot be said for New South Wales and the Australian Capital Territory.

Price v Spoor – opting out of a limitations defence

In Queensland, it has been found that the 6-year limitation period can be contracted out of by a defendant. The reason for this was that the 6-year limitation period was considered a conferral by statute of a personal right, being the ability to avail oneself of a defence. So, consumers are arguably entitled to negotiate with their contractors to waive their right to a statute-bar defence. It is doubtful that a contractor would accept this, but nonetheless the High Court has considered that it is permissible at law.

However, it is highly doubtful the High Court’s reasoning applies to the 10 year limitation periods, whether whole substitutes for the general limitation period or whether a long-stop provision. The purpose of the inclusion of 10-year liability periods for building action was to a) address uncertainty regarding the accrual of the right to sue, and b) avoid the prospects of an “infinity plus 6” time limit to sue for claims other than contract. These are different policy objectives to those found in Price v Spoor to form the foundation of the 6 year limitation of actions defence – being the conferring of a personal right to defendants.

When, then, do I need to sue?

In Queensland and Western Australia there is no separate building specific limitation period, so you need to sue within 6 years from when the cause of action accrued.

In New South Wales and, in all likelihood, the Australian Capital Territory, you need to sue within 6 years from when the cause of action accrued, as the general limitations of actions legislation continue to have effect, and the building-specific limitations serve only as a “long-stop”. This means that for contractual claims, consumers may struggle to claim damages for latent defects against builders where the latent defects appeared after 6 years. In NSW a consumer might instead opt for the statutory duty of care (discussed extensively in this article) where the cause of action arises when the damage is incurred. That statutory pathway will be unavailable in Queensland, Western Australia and the Australian Capital Territory, where the principles in Brookfield Multiplex v Owners Corporation Strata Plan 61288 & Anor apply.

In Victoria, the Northern Territory, South Australia and Tasmania, however, the limitation period for contractual claims at least may be more generous, as there will be a full substitute 10-year period from the date of the issue of the occupancy permit or certificate of final inspection. The 10-year liability period will still deny any “infinity plus six” situation for tortious claims, but in any event provides consumers and contractors with greater certainty than the regimes in the other Australian jurisdictions.

It is the respectful submission of this paper that the schemes in Victoria, the Norther Territory, South Australia and Tasmania better balance the need for certainty amongst industry participants and the rights of consumers to redress. The decision for a total substitute limitation period was one of the suggestions made during the early 90s AUBRCC reforms, which our firm’s own Professor Kim Lovegrove was instrumental in.

What do you do if you are out of time?

When clients come to our firm and are time-barred, that is the time to consider other causes of action that may not yet be time-barred. What should be fleshed out are other causes of action that accrue at a different time to conventional building action (whether that action was to be contractual or tortious).

In numerous instances, building cases involve varying actors and potential wrongdoers. In some instances, water flow or other interference may be caused from an adjoining property causing you loss. In the case of properties affected by a strata scheme, ordinarily an Owners Corporation or Body Corporate will owe clear obligations to rectify the common property that may be causing damage to property. In other instances, vendors in sales of property may have failed to disclose matters and breached their obligations under certain property or transfer of land legislation.

In the case of water flow or other interference, arguably each incident of interference amounts to a separate accrual of action where damage is caused or rights are breached. Under certain pieces of legislation, there are ongoing duties of certain actors and a breach of those duties causing loss may sound in damages. These examples may lead to a different accrual of a cause of action and may not be subject to the building-industry-specific 10-year limitation periods.

In any of these cases specific regard must be had to the facts and any applicable legislation must be carefully considered.

Conclusion

The various intricacies of the varying State and Territory schemes for limitation periods for building action highlights how complicated the building and construction field can be. Disputes involving time bars for building action arise before any of the substantive aspects of a building dispute are canvassed. Complex schemes that confuse claimants, respondents and industry participants generally serve only to increase the costs and inaccessibility of construction dispute resolution.

States and Territories should consider the purity and simplicity of the model proposed back in the early 90s during the AUBRCC reforms and which was adopted by Victoria, the NT and South Australia, and reflect on whether their own particular renditions of the 10-year liability period, or total lack thereof, as is the case in Queensland, serve to afford any particular benefit over the simple 10 year “one and only” substitute approach.

In any event, for claimants and respondents alike, the complexities of this area serve to prove that construction dispute resolution is unlike other fields of legal dispute resolution, and properly experienced and qualified construction lawyers should be consulted prior to the initiation of ‘building action’.

This article is not legal advice and discusses its topic in only general terms. Should you be in need of legal advice, it is essential that you seek specific legal advice from a qualified legal professional.

 Jordan Davies,  is Law Graduate at Lovegrove & Cotton. He has worked at the firm and has been involved with construction law matters for over 5 years as a senior paralegal. During his coursework at Melbourne Law School, Jordan received high distinctions in the Juris Doctor’s Construction Law course and in the Melbourne Law Masters’ Construction Dispute Resolution course. He intends to publish two of his research papers focusing on new consumer protections in New South Wales under the Design and Building Practitioners Act 2020, and on expert evidence impartiality and civil procedure for construction disputes in Australia.

[1] See this footnote instead: Building Act 1993 (NT); Building Act 1975 (QLD); Building Act 2004 (ACT); Building Act 2016 (TAS); and Building Act 2011 (WA).

[2] The Victorian language is referred to here, namely s 5 of the Limitation of Actions Act 1958 (Vic) – equivalents can be found across the states and territories.

[3] Brirek Industries Pty Ltd v McKenzie Group Consulting (Vic) Pty Ltd [2014] VSCA 165.