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Earlier this month, the Victorian Court of Appeal delivered its judgment which clarified the approach to determining limitation periods for building actions where multiple occupancy permits are issued.
In the decision of Lendlease Engineering Pty Ltd v Owners Corporation No 1 PS526704E  VSCA 105 (Lendlease), the Court of Appeal overturned an earlier Supreme Court decision which held that where multiple occupancy permits are issued for the same building works, the limitation period under section 134 of the Building Act 1993 (Vic) commences on the date of the final occupancy permit for the works.
Earlier Supreme Court decision
The Building Act 1993 (Vic) (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 carried out.
In late 2004, the applicant was engaged by a builder to carry out the construction of an apartment project (Works) in South Yarra, Victoria. The Works was subsequently carried out in stages to which four occupancy permits were issued.
In the earlier decision, both parties relied on Brirek Industries Pty Ltd v McKenzie Group Consulting (Vic) Pty Ltd(2014) 48 VR 558 (Brirek). Brirek informs us that the application of section 134 of the Act is directed to constrain “widely divergent operations of time limits in building actions depending on how the action might be framed”. Therefore, the time limit of 10 years commences from a “single date: the date of issue of the occupancy permit”.
However, this limitation date becomes less clear when multiple occupancy permits are issued. The applicant disagreed with the Supreme Court’s approach that the commencement date of the limitation period was the date of issue of the last occupancy permit. As such, the applicant sought leave to appeal in relation to this limitation period issue.
Court of Appeal considerations
The applicant made three key submissions against the earlier judge’s decision:
- there might be two occupancy permits operative governing the same work
- the limitation period would effectively start, then stop and restart on the issue of the further permit
- There may be no “final” occupancy permit if the Works are not considered to be cumulative works.
On the other hand, the respondent raised the following points:
- if building works are ongoing, certainty would best be served if the reference to the “date of issue in the occupancy permit” refers to the date of the occupancy permit issued last in time
- if the commencement date is not that of the date of the occupancy permit last issued:
- it will be of substantial disadvantage and injustice to subsequent purchasers who have little or no knowledge to previous occupancy permits used or issued
- it does not take into account the “modern context” of “multi-storey buildings with multiple occupancy permits for different levels”.
- where there are discrete occupancy permits issued, it means the building works do not operate cumulatively
- Therefore, section 134 should operate in respect of the last occupancy permit issued.
Court of Appeal’s decision
The Court of Appeal’s decision centered on the limitation period providing certainty of time limits to all parties. The Court of Appeal provided the following reasons as to why the language of section 134 suggests that time runs from the date an occupancy permit is first issued:
- by way of statutory interpretation, the relevant time period is expressly related to the date of the occupancy permit “in respect of the building work”
- The Court of Appeal agreed with the applicant in construing Parliament intention for “time to run from the date an occupancy permit is first issued”, even if it faces extensions later
- There is nothing in the language of the provision that hints at the occupancy permit being the “final”, “current” or “last” occupancy permit.
- Finally, the Court of Appeal held at :
“Thus, in this case four occupancy permits were issued. Each one was issued on the completion of certain stages but each later permit restated the building work that had been the subject of an earlier occupancy permit … On one view of the language of s 134 each permit might be described as an ‘occupancy permit in respect of the building work’ … However, the language of s 134 requires the identification of the occupancy permit. To choose the later permit as being the relevant permit for the limitation period … would not promote certainty … It would ignore the critical fact that the relevant building work had been completed and was ready for occupation in accordance with the first occupancy permit. “
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