News & Insights

Time limitations for property owners in Victoria suing for defective building work can vary depending on whether a certificate of occupancy or a certificate of final inspection has been issued.

Builders and building contractors should review their insurance policies to ensure they are properly covered for the life of a potential claim.

snapshot:

• Since the landmark Victorian Court of Appeal decision in Brirek Industries Pty Ltd v McKenzie Group Consulting (Vic) Pty Ltd, property owners have up to 10 years after an occupancy permit or certificate of final inspection is issued to bring a defective building work claim in Victoria under section 134 of the Building Act 1993 (Vic).
• Following the April 2019 VCAT decision of Gledhill v Scotia Property Maintenance Pty Ltd, if building works do not require a certificate of occupancy or a certificate of final inspection, then section 5 (1) of the Limitation of Actions Act 1958 (Vic) will apply leaving property owners with six years from the date on which the defect arises to take legal action.

recent developments

In April 2019, the Victorian Civil and Administrative Tribunal further refined the interpretation of section 134 of the Building Act in its decision in Gledhill v Scotia Property Maintenance Pty Ltd (Building and Property).

legislation

Section 134 of the Building Act provides that:

“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.”

Section 5 of the Limitation of Actions Act provides that a claimant has six years to bring an action from the date the cause of action accrues. After that the claim is statute barred and out of time.

facts

• Ms Gledhill, the Applicant is the owner of a residential apartment in South Yarra. In 2007, Ms Gledhill engaged Scotia Property Maintenance, who was not the original builder of the residential apartment building, to repair her outside balcony. As a building permit was not obtained for the balcony repair works, Scotia did not issue an occupancy permit or certificate of final inspection on completion. On 24 July 2007, Scotia rendered their final invoice.
• Ms Gledhill found Scotia’s repair works to be defective and issued proceedings on 15 May 2019, more than 10 years later.

In the absence of an occupancy permit or certificate of final inspection, the question before the Tribunal was whether Ms Scotia’s claim for damages was out of time as a result of being statute barred by section 134 of the Building Act.

the decision

Member Sweeney held [at 95]:

“In these circumstances there is no proper basis to read in words enlarging the operation of s 134 to include a provision for where no building permit has issued in respect of building work and no occupancy permit or certificate of final inspection has issued… Where there is no building permit in respect of building work as defined under the Building Act, there can be no issue of an occupancy permit or certificate of final inspection to the effect that s 134 has no operation.”

• The effect of Member Sweeney’s decision followed that the Limitation of Actions Act Accordingly, Ms Gledhill lost her case because under the Limitation of Actions Act she had six years to begin legal action and was therefore out of time.

next steps

Both building contracts and owners should be aware of time limitations for defective building works.

Building contractors should consider their insurance arrangements in the specific context of works that they provide each client to ensure adequate insurance coverage.

For more information please contact the Macpherson Kelley litigation team.