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Life is short - don’t let time (limitation periods) slip away …

Tom Bacon

The Supreme Court of Victoria recently decided in a case involving a large residential building complex on St Kilda Rd to deny the joinder of individual lot owners to a building claim already commenced by the owners’ corporation (OC), on the basis they were out of time to do so.

The Building Act 1993 provides that a claim for defective building work must be filed within 10 years of the date of issue of an occupancy permit for the relevant building work. Where it is defective building work that relates to cladding, an amendment of the legislation extends this time limit to 12 years.

In the case before the Court, the OC filed a claim in VCAT against Lendlease, the builder of the apartment complex. The claim included an allegation that a large metal louvre screen that was bolted to the building was defective and rusting.

Lendlease argued in VCAT that the OC did not own the entirety of the purportedly defective metal louvre system, and therefore the OC could not maintain its claim against Lendlease for full rectification. The OC sought in response to remedy the position they found themselves in, by applying to join all 137 owners affected by the louvre metal screen to cover all bases.

In the joinder application the OCs submitted that they always believed the louvre system was located on common property, and it was not until Lendlease in its defence raised the issue that parts of the louvre system were located on individual lots that the OCs obtained evidence from a licensed surveyor. 

That evidence disclosed that 411 louvres were entirely within private property, 468 were either wholly or partly within common property, and a further 43 were “projected screens” which lay outside the plan of sub-division and were owned neither as common property nor private lot.

VCAT permitted the joinder of the lot owners, but on appeal to the Supreme Court this was challenged. The issue is that with this building there were four occupancy permits issued, because the construction work was staged. This is not uncommon in Victoria.

The Supreme Court correctly confirmed that the “FINAL Occupancy Permit” is the relevant occupancy permit for limitation purposes. Therefore, the proceeding commenced by the OCs was commenced within time, being within the 10-year period from the issue of the occupancy permit that covered the whole of the building.

However, the individual owners that were later joined to the proceedings were said to be joined more than 12 years after the occupancy permit had been issued. Although VCAT permitted the joinder, the Supreme Court reversed that decision because they were out of time to claim against Lendlease.

This decision now means that the OC can only maintain its claim over part of the defective metal louvre screening (the part that is comprised within common property). There is a cautionary tale for OCs less than 10 years old that arise out of this case. Firstly, time limitation periods must be properly analysed and determined because Courts will not rescue you if you let the time period expire.

OCs should make sure they know their dates. Secondly, once the defects report is prepared, the OC should always engage a surveyor to determine whether the defects are comprised wholly within lot property or common property, or mixed. This is critically important because lawyers acting for builders and developers have celebrated this case and it is now well known in construction law circles.

This decision will be used time and again to knock out building claims brought by OCs in Victoria and up and down the country. The industry therefore needs to proceed very carefully and deliberately in response to protect itself •  

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