1 August 2011

Limitation period for Victorian building actions

Discussion of Brirek Industries Case, where County Court of Victoria adopted a more limited reading of s 134 of the Building Act 1993.
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Brirek Industries Pty Limited v McKenzie Group Consulting (Vic) Pty Limited [2011] VCC 294


In this case, the County Court of Victoria has adopted a more limited reading of the scope of s134 of the Building Act 1993 (Vic) ('the Building Act'), concerning the limitation period for building actions, than earlier decisions of the Victorian Civil and Administrative Tribunal ('VCAT'). It is the first court (as opposed to VCAT) decision, of which we are aware, dealing with the scope of the section.

The issues

Section 134 of the Building Act provides as follows:

'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 V of the Certificate of Final Inspection for the building work'.

'Building action' is defined (in s129) as an action for damages for loss or damage arising out of or concerning defective building work. 'Building work' is defined to include the design, inspection and issuing of a permit in respect of building work.

There has been controversy, however, as to whether s134 creates a new 10 year limitation period for Victorian building actions or merely creates a 'long stop' beyond which the six year limitation periods for tort and / or breach of contract (under the Limitations of Actions Act 1958 (Vic) ('Limitations of Actions Act')) cannot extend, for example, in the case of latent defects. The 'long stop' interpretation has been favoured by certain commentators but in two decisions of VCAT, Thurston v Campbell [2007] VCAT 340 and Hardiman v Gory [2008] VCAT 267, it was held that s134 created a 10 year limitation period for Victorian building actions which replaced the limitation periods imposed by the Limitations of Actions Act.

The decision

In this case, Shelton J rejected the above VCAT decisions and favoured the 'long stop' interpretation of s134. He also held that the section only applied to claims in negligence.

His Honour stated as follows:

'My reading of section 134 is that it does not enable a building action to be brought when it might not otherwise have been brought . Rather, it prevents a building action from being brought, in negligence, outside the 10 year period referred to the section. Its purpose is to limit the common law position where the limitation period only runs in negligence from when defects in the building work were first known or manifest (see Pullen v Gutteridge [1993] 1 VR 27 at 71). ... ... I have concluded that section 134 of the Building Act only applies to claims in negligence with respect to defective work and does not extend the six year contractual limitation period.'

Whilst this clarification of the meaning of s134 is to be welcomed, it appears that it may create greater uncertainty in relation to limitation periods for building actions than the broader approach of the VCAT decisions.

We understand that the decision is being appealed to the Victorian Supreme Court where it is expected to be heard late this year.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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