Property, Building and Construction 1900-x-500

Where did the time go? Limitation periods in building actions where no occupancy permit is issued

Michael Bragg

The recent VCAT decision of Gledhill v Scotia Property Maintenance Pty Ltd [2019] VCAT 422 (Gledhill) provides timely guidance in relation to the application of the 10 year limitation of action period for claims for defective building work in Victoria. 

Section 134 of the Building Act 1993 (Vic) (Building Act) states:

"Despite any thing 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… of the certificate of final inspection of the building work”

Section 134 was examined in Brirek Industries Pty Ltd v McKenzie Group Consulting (Vic) Pty Ltd [2014] VSCA 165 (Brirek) where it was found that owners have 10 years from the date of issue of the occupancy permit or, if an occupancy permit is not issued, the date of issue of the certificate of final inspection of the building work, to bring a claim for defective building work. 

In Gledhill, no occupancy permit or certificate of final inspection was issued and no permit for building work was obtained (Building Permits). VCAT Member Sweeney was tasked with determining the applicable limitation period to bring a claim for defective building works in those circumstances.

Facts

The owner engaged the builder to perform repairs to the owner’s balcony in South Yarra. The works were completed in June 2007. No Building Permits were obtained and the owner brought a claim for defective building work in VCAT in May 2018, 11 years after the works were completed.

The owner alleged that the builder was in breach of the implied warranties under section 8 of the Domestic Building Contracts Act 1995 (Vic) which require the builder:

  • to act in a proper and workmanlike manner;
  • to use materials that are suitable for the purpose;
  • to ensure that the work is carried out in accordance with, and comply with, all laws and legal requirements; and
  • to carry out the work with reasonable care and skill.

Issues

The question in Gledhill was whether s 134 of the Building Act applies in circumstances where no Building Permits were obtained.

The owner argued that because no Building Permits were obtained, the 10 year limitation period cannot start to run and therefore the owner’s claim was within time.  The owner argued that s 134 of the Building Act covered the limitation period applicable for all building work and the 6 year limitation period provided for in the Limitations of Actions Act 1958 (Vic) (Limitation Act) was not applicable.

Conversely, the builder argued that the proceeding was made outside of the 10 year limitation period and therefore statute barred. The builder also argued that because no Building Permits were obtained, the 10 year limitation period started to run from the date of completion of the building work.

The issues that VCAT considered were:

  • Where no Building Permits are obtained, when does the 10 year limitation period under s 134 of the Building Act start to run, if at all? and
  • If section 134 of the Building Act did not apply then did the Limitation Act apply by default?

VCAT's findings

Member Sweeney held that there was no proper basis to contend that s 134 applied and therefore the owner’s submission that time had not started  to run must fail.  Member Sweeney also rejected the builder’s argument that the 10 year limitation period started to run from the date of the completion of the building work.

Member Sweeney concluded that because s 134 did not apply, the 6 year limitation period in the Limitation Act was the relevant limitation period to apply.  He reasoned that where s 134 applied, that section assumed priority over the Limitation Act.  Where, however, it did not apply then the usual limitation periods prescribed by the Limitation Act would come into operation.

Key takeaways

Owners and principals should be aware of time limits that apply for issuing a claim for defective building works can vary depending on whether a certificate of occupancy or a certificate of final inspection under the Building Act is obtained:

  • If building work is undertaken and a certificate of occupancy or a certificate of final inspection is required the 10 year limitation period to bring a claim for a building action, as set out in Building Act and affirmed by Brirek is applicable;
  • If building work is undertaken and no certificate of occupancy or a certificate of final inspection is required then the usual 6 year limitation period for breach of contract or in negligence set out in the Limitation Act is likely to apply.

In relation to this last takeaway, it is important to note, however, that the Limitation Act provides for a 15 year limitation period where the breach in question is of a contract executed by the parties under seal as a deed.

Please contact Jos Mulcahy or Michael Bragg for more information.

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