Last month, the Supreme Court of Victoria Court of Appeal (Court of Appeal) handed down its decision in the case of Lendlease Engineering Pty Ltd v Owners Corporation No 1 PS526704E & Ors  VSCA 105, granting Lendlease Engineering Pty Ltd (Lendlease) leave to appeal from the decision of the Supreme Court of Victoria in Lendlease Engineering Pty Ltd v Owners Corporation No 1 PS526704E & Ors  VSC 338.
Lendlease was engaged by a developer to carry out the design and construction of a project known and described as ‘Chevron Apartments’, on land situated at and known as 519-539 St Kilda Road and 1-19 Commercial Road, Melbourne Victoria.
The construction works involved:
(a) the refurbishment of the existing Chevron Hotel into 67 apartments over three levels; and
(b) the construction of a new nine-storey apartment building comprising a further 232 apartments including three levels of below-ground car parking.
The construction works were completed in separable portions pursuant to six building permits, with four occupancy permits issued over an approximately 8-month period in respect of various components of the works.
The two subject owners corporations commenced proceedings against Lendlease in VCAT by points of claim filed on 13 February 2017, seeking relief in relation to an allegedly defective sunshade louvre system installed by Lendlease.
Lendlease subsequently sought to strike out some of the claims made by the owners corporations on the basis that those claims were brought more than 10 years after the date the relevant the occupancy permits were issued in respect of that building work.
The Victorian Civil and Administrative Tribunal (VCAT) did not agree with Lendlease, determining (in Owners Corporation No 1 PS526704E & Ors  VCAT 1909) that the time period contained in 134 of the Building Act 1993 (Section 134) runs from the date of the final occupancy permit, not the date of the relevant occupancy permit that was issued in respect of that building work.
Lendlease sought leave to appeal the VCAT’s decision to the Supreme Court of Victoria. The Supreme Court of Victoria dismissed the part of the appeal relating to this issue (in Lendlease Engineering Pty Ltd v Owners Corporation No 1 PS526704E & Ors  VSC 338), and Lendlease subsequently appealed to the Court of Appeal.
In the proceeding before the Court of Appeal, the Court was tasked with determining when the relevant 10-year limitation period commenced on a proper construction of Section 134. The Court was also tasked with determining whether private lot owners could be joined to the proceeding as claimants in circumstances where the time for private lot owners to commence a proceeding in their own right had expired. However, this case note does not focus on that part of the Court’s determination.
Section 134 of the Building Act
Section 134, being the section at the heart of the Court of Appeal proceeding, relevantly provides:
(1) 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.
Lendlease contended that the time stated in Section 134 commenced to run from the time an occupancy permit was first issued in respect of the relevant defective building work from which the claim arose.
The owners corporations disagreed, contending that the limitation period only ran from the date of the last occupancy permit in respect of the entire building project. This was also the position taken by the VCAT in the decision at first instance.
Court of Appeal’s Decision
The Court of Appeal ultimately agreed with the contention submitted by Lendlease, determining (at -):
- That the relevant time period is expressly said to commence from the date of issue of the occupancy permit ‘in respect of the building work’;
- Parliament clearly intended time to run from the date an occupancy permit is first issued, even if it is ‘subsequently cancelled or varied’. It would be anomalous if subsequent occupancy permits issued in respect of the same work were construed to restart the limitation period when ‘cancellation or variation’ does not have such an effect;
- There is nothing in the language to suggest that Parliament intended the starting point to be some ‘final’, ‘current’, or ‘last’ occupancy permit; and
- The ordinary meaning of the words suggests that the occupancy permit ‘in respect of the building work’ is intended to apply to the occupancy permit that is first issued in relation to the defective building work the subject of the building action – not any ‘final’ occupancy permit.
When making its decision, the Court also critically observed (at ) that the object of ‘certainty’ or alleged ‘unfairness’ does not otherwise justify ‘bending the words of the statute’ to accommodate some more desirable solution.
Take home points
In order to determine whether a building action is within or is out of time, parties will need to determine the date of the relevant occupancy permit which relates to that building work.
This decision is important to bear in mind when parties are considering whether to commence litigation, but may also have an impact on existing litigation currently in progress involving multiple occupancy permits.
For information about this case or for advice, please contact:
This Construction and Infrastructure case note was authored by Dominic Brown, Senior Associate.
Note: This update is a guide only and is not intended to constitute legal advice.