July 13, 2022

The recent decision of the Victorian Supreme Court of Appeal in Lendlease Engineering Pty Ltd v Owners Corporation No 1 & Ors [2022] VSCA 105 considered the question of when the limitation period in s 134 of the Building Act 1993 (Vic) (the Act) commenced in the context of a project with staged occupancy certificates.  Relevantly, s 134 of the Act provides that 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. However, the Act does not indicate when time starts to run when multiple occupancy permits have been issued.

In the first instance decision of the Victorian Supreme Court, Forbes J held that the date the final occupancy permit was issued is the relevant date for the purposes of calculating the limitation period (see MolinoCahill update here).

Following the first instance decision, Lendlease sought leave to appeal on several grounds, including that the primary judge erred in the construction of s 134 of the Act.

Lendlease asserted (amongst other things) that:

  •   the purpose of s 134 of the Act was to limit building actions from being brought within 10 years after the issue of the occupancy permit in respect of the building work ‘to which the occupancy permit relates’, that is time must commence to run from the date of issue of the permit relating to the work the subject of the complaint; and
  •   it would be anomalous if subsequent occupancy permits can restart the limitation period when the ‘cancellation or variation’ of a permit did not have such effect.

The Court of Appeal found that the Supreme Court had erred in its decision and the correct interpretation was that time ran from the date an occupancy permit is first issued in respect of the defective building work. In reaching its decision, the Court of Appeal observed that:

  •   the ordinary meaning of the words in s 134 suggest that the relevant time period commences from the date of issue of the occupancy permit ‘in respect of the building work’ which is the subject of the building action;
  •   in this regard, it is significant that Parliament purposely omitted language such as ‘final’, ‘current’, or ‘last’ occupancy permit from the Act, instead preferring to define an occupancy permit by reference to the relevant building work; and
  •   the phrase ‘whether or not the occupancy permit is subsequently cancelled or varied’ contained in s 134(2) of the Act demonstrates Parliament’s intention that time is to run from the date the occupancy permit is first issued, and that limitation period should not restart if any subsequent occupancy permits are issued.

This decision confirms that in determining the time bar for defective building work under the Act, parties must calculate the limitation period from the date of the occupancy permit first issued in relation to the defective work.

The full decision can be found here.

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