Beware time limits or pay

Introduction
On 18 October 2019, the Victorian Civil and Administrative Tribunal (VCAT) handed down its decision in Owners Corporation 1 Plan No PS543073S v Eastrise Constructions Proprietary Limited (Building and Property) [2019] VCAT 1639(Eastrise Constructions).

This decision emphasises that:

• Pursuant to section 134 of the Building Act 1993 (Vic)(Act) the time limit for bringing a building action is generally 10 years after the date of issue of the occupancy permit; and
• An application to Domestic Building Dispute Resolution Victoria (DBDRV) is not a ‘building action’ for the purposes of the Act, and consequently, the making of such an application (even within the 10 year limitation) does not allow the making of an application to VCAT outside of the10 year time frame.

Background

1.  Eastrise Constructions Proprietary Limited (Builder)constructed an apartment building in Caulfield North. On 3June 2008, the occupancy permits for the works were issued.
2. On 29 May 2018, an application was made to DBDRV, followed by further applications by each individual lot owner(Owners) on 22 August 2018.
3. On 27 August 2018, DBDRV issued certificates of conciliation stating that the matter was not suitable for conciliation and on 27 March 2019, the Owners commenced proceedings in VCAT seeking damages against the Builder for defective works.
4. The Builder applied to have the action struck out on the basis that the claim was statute barred under section 134 of the Act.

VCAT decision

1. The Owners argued that their application(s) to DBDRV constituted a building action under section 129 of the Act and therefore the Owners had ‘commenced’ a ‘building action’ within the 10 year limitation period. This argument was rejected by Deputy President Aird.
2. Deputy President Aird addressed the question ‘as to whether the application to DBDRV constituted the commencement of a building action within the 10 year limitation period’. In summary, she stated that a building action means an action(including a counter-claim) for damages for loss or damage arising out of or concerning defective building work. In that context she held:…it is difficult to conceive how an application to DBDRV for dispute resolution could be conceived as a claim for loss or damage…
3. Importantly, the Deputy President observed that the ‘prudent approach by the Owners would have been to have made an application to the Tribunal within the limitation period and to have [then] sought a stay pending the lodging of certificates of conciliation issued by DBDRV.’

Key takeaways

This case demonstrates why you should seek advice on building defects as soon as possible after the defects become apparent. It is better to ask the question and be told ‘it’s not presently a problem’- rather than later discovering there is a problem, only to be told ‘sorry, you’re out of time to commence recovery proceedings’ (which essentially means you are stuck with the bill).
Seeking advice early is particularly important when you are a member of a body corporate or owners corporation because, as a result of statutory processes these bodies must follow, they often find it difficult to make quick decisions. While DBDRV may resolve some matters before you commence a proceeding, do not assume this will occur in all cases. Consequently, you must leave sufficient time after the process has been concluded to make an informed decision about whether litigation is a viable option.
Cornwalls’ Building & Construction team can provide you with legal advice on your rights and options, and can advise on the best way to protect

Disclaimer

This article is general commentary on a topical issue and does not constitute legal advice. If you are concerned about any topics covered in this article, we recommend that you seek legal advice.