ARTICLE
26 February 2021

NSW Court of Appeal clarifies 10-year limitation for defective building works in NSW

CG
Coleman Greig Lawyers

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The provision aims to stop parties bringing actions for allegedly defective works well after the works were completed.
Australia Real Estate and Construction
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On 25 November 2020, the New South Wales Court of Appeal delivered judgment in Bandelle Pty Ltd v Sydney Capitol Hotels Pty Ltd [2020] NSWCA 303 where the Court of Appeal clarified the limitation periods relating to building works in NSW. The Court examined the operation of s 6.20 of the Environmental Planning and Assessment Act 1979 (NSW) (EPA Act).

EPA Act

Before looking at the Bandelle decision, s 6.20 of the EPA Act provides a 'long-stop' limitation period of 10 years for any loss arising from defective building works, irrespective of when defects become apparent. Essentially, s 6.20 prevents any person from bringing civil proceedings for loss or damage arising from defective work if the works were completed more than 10 years prior.

The intent of this provision is stop parties bringing actions for allegedly defective works well after those works were completed.

Background

On 2 January 2017, the Respondent, Sydney Capitol Hotels occupied level 5 of a building located on George St, Sydney (Building), and had occupied this space since 1997. A fire broke out on the ground floor of the Building, which activated the fire sprinkler system on level 5, which caused both material damage and consequential loss to the Respondent.

The fire was alleged to have been caused by defective work completed by the Applicant on the exhaust duct system in the Building. The exhaust duct travelled through the building, which resulted in the flow on effects from the fire on the ground level. These works were completed in 1997.

Decision at first instance

In November 2019, the Respondent successfully obtained judgment in the Supreme Court of New South Wales seeking to strike out a portion of the defence of the appellant (Supreme Court Proceedings). Bandelle contended in the Supreme Court Proceedings that the claim brought by Sydney Capitol Hotels was statute barred by the operation of s 6.20 of the EPA Act.

Justice Hammerschlag considered that the nature of the claim brought by Sydney Capitol Hotels did not fall within the scope of s 6.20 of the EPA Act and thus Bandelle's defence had no real basis. The Supreme Court found in favour of Sydney Capitol Hotels, and thus the portion of Bandelle's defence relating to the EPA Act was struck out.

Court of Appeal Proceedings

The decision in the Supreme Court Proceedings was overturned on appeal. The Court of Appeal, following a detailed historical review of the EPA Act determined s 6.20 of the EPA Act applied to any claim for loss arising for defective building work.

Furthermore, the Court of Appeal provided confirmation that s 6.20 of the EPA provides a 'long-stop' limitation which applies for the time that the works were completed, notwithstanding the time at which the defects materialise.

Key Lessons

The decision confirms the limitation periods that apply to building works particularly given that s 6.20 of the EPA Act is often relied upon by plaintiff's where they are outside the ordinary statutory warranties provided by the Home Building Act 1989 (NSW). Furthermore, it is important to remember that this limitation will also apply to any claim that may arise out of the Design and Building Practitioners Act 2020 (NSW).

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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