Time Permitting: limitation periods for ‘building actions’ under the Building Act
On 10 June 2021, Justice Forbes handed down a decision which provides clarity on how a limitation period is to be determined under section 134 of the Building Act 1993 (Vic), where more than one occupancy permit has been issued in respect of alleged defective building work.
The Owners Corporations of Chevron Apartments in St Kilda Road (Owners Corporations) commenced a proceeding in VCAT against Lendlease Engineering Pty Ltd (Lendlease) for breaches of statutory warranties given by Lendlease under the Domestic Building Contracts Act 1995 (Vic). The Owners Corporations made claims in relation to alleged defective building work relating to the louvre system on the building.
On this project, multiple occupancy permits had been issued by the Building Surveyor. Two were relevant to the alleged defective works – Permit 3 issued on 6 December 2006 (in relation to most apartments and common property) and Permit 4 issued on 16 February 2007 (in relation to all apartments and common property).
The VCAT proceeding commenced on 13 February 2017. Lendlease sought summary dismissal of the proceeding (Dismissal Application) on two bases – first in relation to the standing of the Owners Corporations to bring claims in relation to louvre systems installed on both individual apartments and common property and, second, on the basis that some of the claims brought by the Owners Corporations in the Proceeding were brought more than 10 years after Permit 3 was issued and were, therefore, statute barred pursuant to section 134 of the Building Act 1993 (Vic) (Building Act).
In an attempt to circumvent the issue concerning its standing to bring the proceeding in relation to parts of the louvre system affecting individual lot owners, the Owners Corporations made an application for joinder of the 137 individual owners of the private lots (Private Owners) affected by the defective louvre system (Joinder Application). The Joinder Application was made more than 10 years after all of the staged permits had been issued.
The Tribunal dismissed the Dismissal Application on the basis that it was satisfied the proceeding was commenced within time. Notwithstanding that the time for the Private Owners to make their claims were statute barred from about 16 February 2017, the Tribunal permitted the Joinder Application on the basis that the Proceeding was commenced by the Owners Corporations not only on its behalf but on behalf of the Private Owners. As a consequence, the issue of standing was not determined.
Lendlease sought leave to appeal the Tribunal’s decision in the Supreme Court. Three questions of law arose for the Court’s determination:
- Whether by proper construction of section 134 of the Building Act, in cases where multiple occupancy permits are issued in respect of a particular building project, a building action cannot be brought more than 10 years after the date of issue of:
a) the occupancy permit issued in respect of the allegedly defective building work in respect of which the claim for damages is based; or
b) the last occupancy permit issued in respect of the entire building project?
- Whether the Joinder Application ought to have been dismissed as, pursuant to section 134 of the Building Act, the owners’ claims were out of time and statute-barred and thus doomed to fail?
- Whether there was evidence to support the Tribunal’s finding that the Owners Corporations were acting on behalf of the Private Owners with respect to the claims the owners then sought to bring. Alternatively, whether that finding of the Tribunal was unreasonable or perverse?
The Occupancy Permits (Question 1)
The Owners Corporations submitted that section 134 of the Building Act, which provides that 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’, should be construed to mean that commencement of the 10 year limitation period is the date when the last occupancy permit for the building project was issued, being 16 February 2007. The Tribunal accepted this construction.
Lendlease argued that section 134 limits building actions being instituted more than 10 years after issue of an occupancy permit in respect of the particular building work to which that occupancy permit relates. The Act contemplates more than one occupancy permit in respect of a building, and an interpretation that maintains the connection between an occupancy permit and the building work to which it refers for limitation purposes is to be preferred. Each party argued that their respective constructions of section 134 promoted certainty for parties ascertaining the relevant limitation period.
In determining the proper construction, Forbes J turned to the structure and language of the Building Act. Her Honour’s attention was focused on the regime in the Act which requires building permits to record where occupancy permits are required. Her Honour concludes (at [57)] that the Building Act requires that, irrespective of whether occupancy permits were issued in respect of stages:
at a certain stage close to completion of the building work, either an occupancy permit or a certificate of final inspection will be required over the whole of the building in which the works are undertaken. This favours a construction that the occupancy permit that best reflects the whole of the work in the building covered by either occupancy permit or by the certificate of final inspection identifies the relevant permit and so the date for the purpose of starting time.
Her Honour goes on to note that, by linking the limitation period to occupancy permits issued for stages of work, it puts the control of the limitation periods in the hands of the contractor, who chooses how the building work is to be conducted. Her Honour concludes that the objective of certainty of limitation periods would be undermined by making the time limit ‘dependent upon the business choices of those conducting the building work’.
Her Honour also considered the legislative choice of occupancy permits as the basis of determining the commencement of the limitation period. The purpose of an occupancy permit is to make it an offence for a person to occupy any part of a building where a permit is required, but has not been issued. Parliament’s intention, in choosing the occupancy permit as the trigger for commencement of the limitation period was to fix an identifiable date and time ‘sufficiently proximate with the conclusion of the building work in that building’.
Her Honour concluded that the Tribunal was correct in determining that the proceeding commenced by the Owners Corporations was within 10 years of the issue of Permit 4 (the occupancy permit which covered the whole of the building), and therefore within time.
Joinder (Questions 2 & 3)
In relation to the Joinder Application, her Honour allowed Lendlease’s appeal. Her Honour concluded that:
- The provisions of the Victorian Civil and Administrative Tribunal Act 1998 (Vic) which provide that it must act fairly, and that it is not bound by rules of evidence or practices and procedures applicable to courts of record, do not empower it to join a new party after the expiry of the relevant time limit.
- The Tribunal erred in concluding that joinder of a party after expiry of the relevant time limit is permissible ‘in some circumstances’.
- On the weight of the evidence available to it, it was not open to the Tribunal to determine that the Owners Corporations were acting on behalf of the relevant Private Owners.
The consequence of allowing the appeal on this issue is one that was described during the course of the hearing as ‘peculiar’ because, notwithstanding that the entire louvre system needed to be replaced, the effect of the decision is to permit the Owners Corporations to proceed against Lendlease in relation to those parts of the louvre systems affecting common property, whilst precluding individual lot owners from proceeding in relation to parts of the louvre system affecting their individual lots.
A mandatory vaccination regime is now in place for construction sites across Victoria
By Dale McQualter & Sarah Tucker
Operators of construction sites are required to collect, record & hold information on the vaccination status of workers
Materials shortages in the construction sector – Implications and mitigation tools for developers
Contractors and developers across Australia are grappling with issues of supply shortages.
Seabay’s back: Liquidated damages excluded under Victorian SOP Act
By Ben McLeod
The recent Victorian Supreme Court decision of Goldwind Australia Pty Ltd v Ale Heavylift (Australia) Pty Ltd.
Section 9AC of the Sale of Land Act – Lessons for developers from a new case
By Mark Kemp
Restrictions resulting from COVID-19 and absent foreign buyers, has caused banks to impose limits.