Construction and Infrastructure case note: VCAT sheds light on the proper time to commence building actions

Jul 31, 2019

In April this year, VCAT handed down its decision in Gledhill v Scotia Property Maintenance Pty Ltd (Building and Property) [2019] VCAT 422 concerning the proper time by which building actions must be commenced in Victoria.

VCAT analysed how the Limitation of Actions Act 1958 (Vic) (LoA Act) and the Building Act 1993 (Vic) (Building Act) are to be interpreted where building work has been carried out without a building permit and where no occupancy certificate or certificate of final inspection has been issued. 

The key facts

The owner of a residential apartment in South Yarra (the Applicant) engaged a builder (the Respondent) to perform repairs to her outside balcony in or about June 2007. Subsequently, the builder rendered a final invoice on or about 24 July 2007.

The owner alleged that the builder’s works were defective and brought her building action at VCAT against the builder on 15 May 2018. 

In its defence, the builder pleaded that the owner’s application had been made beyond the 10 year limitation period prescribed by the Building Act and as a consequence, the owner’s claims are statute barred.

Relevantly, no building permit, occupancy permit or certificate of final inspection was obtained in respect of the balcony repair works.

The legislative landscape

Section 5 of the LoA Act provides that a party has six years to bring an action in contract or tort from the date the cause of action accrued. However, a building action can be brought up to 10 years from date of issue of the occupancy permit or, if no occupancy permit is issued, from the date of the certificate of final inspection.

This interpretation of the Building Act was upheld in the case of Brirek Industries Pty Ltd v McKenzie Group Consulting (Vic) Pty Ltd [2014] VSCA 165.

VCAT’s decision

As there was no building permit, occupancy permit or certificate of final inspection obtained in respect of the building work, VCAT was tasked with determining whether the owner’s claim was brought within time.

The owner submitted that under section 134 of the Building Act, time starts to run only from the issue of an occupancy permit or the certificate of final inspection and where neither has been issued, time has never started to run. On that basis, the owner submitted that she was not out of time to commence proceedings.

However, if the owner’s submissions were held to be correct, the practical implication is that a building action could be brought decades after the works were completed so long as there was no building permit, occupancy permit or certificate of final inspection issued.

Adopting a logical approach, VCAT found that on plain reading there is no proper basis to construe that section 134 of the Building Act applies where no building permit, occupancy permit or certificate of final inspection has been issued and as such, the owner’s submissions must fail. On this basis, VCAT determined that where there is no other period of limitation prescribed by any other enactment in respect of the subject building work, section 5 of the LoA Act must apply (i.e. a six year limitation period).

In conclusion

As a result of this case, builders and owners alike should now more than ever carefully consider the date by which building actions must be brought.

More information

To learn more about the decision, or for advice, please contact Darren Cain, Principal Lawyer and Head of Construction and Infrastructure, on (03) 8600 8835 or dcain@kcllaw.com.au, or Dominic Brown, Lawyer, on (03) 8600 8851 or djbrown@kcllaw.com.au.

Author

More information on the author, Dominic Brown.

Note: This update is a guide only and is not intended to constitute legal advice.

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