Clarity regarding calculating the statutory limitation period under the Victorian Building Act

The Victorian Supreme Court (VSC) in Lendlease Engineering Pty Ltd v Owners Corporation No.1 & Ors [2021] VSC 338 considered the proper construction of s 134 of the Building Act 1993 (Vic) (the Act) in determining the commencement date for the statutory limitation period applicable to bringing a building action when multiple occupancy permits have been issued. Relevantly, s 134 provides that a building action cannot be brought more than 10 years after the date of issue of the occupancy permit, but is silent on when time starts to run when multiple occupancy permits have been issued.

A dispute arose between the builder (Lendlease) and the Owners Corporations of an apartment complex over alleged defective work. Lendlease had completed the building work in separable portions, resulting in multiple occupancy permits being issued throughout the project, with a final permit issued to certify the entirety of the work.

The Owners Corporations commenced proceedings against Lendlease in the Victorian Civil and Administrative Tribunal (VCAT) seeking, amongst other things, rectification orders for defective building work. Lendlease sought summary dismissal of the proceedings on various grounds, including that the limitation period had lapsed for some of the Owners Corporations’ claims.

Lendlease argued that the statutory limitation period expired 10 years after issue of the first occupancy permit. The Owners Corporations submitted that the commencement date of the limitation period was the date when the last occupancy permit was issued. VCAT preferred the Owners Corporations’ construction, and held that the limitation period should be calculated from the date of the final occupancy permit in relation to the relevant building work, meaning the proceeding was not statute-barred.

Lendlease appealed the decision to the VSC. In dismissing the appeal, the VSC held that VCAT was correct to conclude that the final occupancy permit was the relevant occupancy permit for the purposes of calculating the limitation period.

In reaching its decision, the VSC noted that:

•    The purpose of s 134 of the Act is to promote certainty with respect to the period during which parties may bring building actions in connection with building work.
•    Occupancy permits required by the Act may attach to the whole or part of a building, or to separable portions of the works, and the existence of a link between the occupancy permit and the building work should not alone be determinative of the commencement date for the statutory limitation period.
•    Business arrangements as to the progression of building works, including whether the builder seeks one or multiple occupancy permits, are “entirely within the control of the builder, and outside the control of purchasers and owners”. In order to promote fairness and certainty, the proper construction of s 134 should not accommodate variable time limits dependent upon the builder’s business choices.

The full decision can be found here.