Key Takeaways

For building projects where multiple or staged occupancy permits are issued, the VSCA has handed down a decision in Lendlease Engineering Pty Ltd v Owners Corporation No 1¹ that provides clarity on determining the commencement of the 10-year limitation period in s134 of the Building Act 1993 (Vic) (the Act).

The Court was required to determine whether the occupancy permit from which the limitation period commences is:

1. the first occupancy permit issued for the building work in respect of which a claim for damages is based; or
2. the last occupancy permit issued in respect of the entire building project.

The decision of the Court displaces the previously generally held view that the operative date is the date of issue of the last occupancy permit.

Brief Facts

In 2007, Lendlease Engineering Pty Ltd completed the build for Chevron Apartments in St Kilda, Melbourne (the Property). The staged build comprised two apartment buildings (Building 1 and Building 2), the first of which was pre-existing (the Chevron Hotel).

Four occupancy permits were issued between 23 June 2006 and 16 February 2007. These four permits operated cumulatively in that 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 13 February 2017, the Property’s Owners Corporation brought a defective building works claim against Lendlease in the VCAT.

The defective building works related to a system of louvres around Building 2. These works came within the scope of both the third occupancy permit (OP3), and the fourth and final occupancy permit (OP4).

OP3 was issued on 6 December 2006 and provided that all apartments (and associated common property) were suitable for occupation excluding:

1. apartment levels 7, 8 and 9 and apartments G10, 210, 410 and 610 of Building 2; and
2. apartments G04 and G05 of Building 1.

OP4 was issued on 16 February 2007 and provided that all apartments (and associated common property) in the Property were suitable for occupation. Hence the excluded areas specified in OP3 only became certified for occupancy by this final permit.

The Owners Corporation argued successfully in the VCAT proceedings that the date of OP4 should be taken as the commencement of the 10-year limitation period for all building works, given the cumulative nature of the permits, such that no part of its claim was time barred by s134 of the Act.

Judgment

The VSCA analysed the following issues to determine that ‘Parliament clearly intended to fix a single ‘clear trigger date’ with some ‘certainty’, consistent with the second reading speech’ ²:

1. the ordinary and grammatical meaning of the words used;
2. the legislative context and purpose; and
3. the problem that the legislation was designed to solve.

It was recognised that the construction of s134 put forward by the Owners Corporation would cause uncertainty, in that multiple occupancy permits relevant to the same building works would create scenarios where there may be an initial commencement date and then a ‘reset’ would need to occur on the date of a subsequent occupancy permit.³ 

This approach did not provide certainty of a single fixed trigger date and therefore the Court dismissed all of the claims except for those specified as the excluded areas in OP3, which became certified upon the issue of OP4 on 16 February 2007.

Implications

The decision in this matter provides certainty for the myriad of stakeholders involved in multi-stage development projects, including large construction tower developments where staged completion is necessary. This decision has displaced the previous generally held view that the final composite occupancy permit was the permit from which time ran for all building works.

It follows that great care must be taken with multi-stage development projects to ensure that the correct occupancy certificate is identified for the purpose of identifying the commencement of the 10-year limitation period in s134 of the Act.

1 [2022] VSCA 105
2 Ibid [74]
3 Ibid [71]