Building and Construction case note: Supreme Court limits VBA powers after Certificate of Occupancy issued

Jan 30, 2018

In the recent case LU Simon Builders Pty Ltd v Victorian Building Authority [2017] VRC 805 in the Supreme Court of Victoria, the Court determined whether the relevant State authorities have the power under section 37B of the Building Act 1993 to give a ‘direction to fix building work’ to a builder after a certificate inspection or an occupancy permit has been issued for a building.

The facts

The Plaintiff built six apartment buildings allegedly containing flammable cladding in Melbourne, which had been completed at some time or another in the past nine years and occupancy permits had been issued.

The Defendant, Victorian Building Authority (VBA), directed the builder to rectify the issue with the understanding that section 37B of the Building Act 1993 allows either a building surveyor or relevant authority to direct a builder to fix defective building work, regardless of when the work was completed and an occupancy permit or certificate of final inspection issued.

The decision

Justice Cavanagh determined that the VBA acted beyond its powers when it directed the builder to rectify the buildings. The key reason behind the Court’s decision was that “the power [under Section 37B] is unavailable after a certificate of final inspection or an occupancy permit has been issued”.

What you need to know

While ruling against VBA using section 37B to direct rectification of the flammable cladding on the six apartment buildings, Justice Cavanagh’s decision has provided clarity over the powers of the VBA or building surveyor in directing rectification after a certificate of occupancy or certificate of final inspection is issued.

With over 1400 buildings identified by the Victorian Cladding Taskforce to most likely have flammable cladding, building owners need to be aware that the responsibility falls on them to carry out rectification of non-compliant work. While this may be good news for some builders and developers, owners still retain their right to sue any responsible parties for any damages incurred in rectifying non-compliant work.

More information

To discuss how the implications of this decision may impact on your business or property, please contact Darren Cain, Principal Lawyer and Head of Building and Construction, on (03) 8600 8835 or dcain@kcllaw.com.au.

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