Can an interim occupation certificate be used for the purpose of determining the completion date of building works?

This was one of the issues before the Court in the recent case of Dyldam Developments Pty Ltd v The Owners – Strata Plan 85305 [2020] NSWCA 327.

Completion of building work occurs on the date of issue of an occupation certificate that authorises the occupation and use of the whole of the building. Section 109H(1) Environmental Planning and Assessment Act 1979 (NSW) (EPA), sets out the definitions of a final and interim occupation certificate. The significance of the completion date is that the limitation period for statutory warranties starts to run from this date.

In this case, development consent was granted to Dyldam in respect of the building which stated that certain conditions were to be complied with “prior to the issue of an interim/final occupation certificate”. Dyldam carried out building works for the three-storey residential building between 2010 to 2011.

Three occupation certificates were issued for this building:

1. On 5 September 2011, an interim occupation certificate was issued which excluded certain conditions in the development consent.
2. On 9 September 2011, an amended interim occupation certificate was issued which excluded some only of the conditions specified in the first interim occupation certificate.
3. On or about 12 October 2011 a final occupation certificate was issued which did not contain any excluded development conditions.

Note that both interim occupation certificates permitted the occupation of the ‘whole’ of the building.

Proceedings were commenced on 4 October 2018 which was within seven years of the issue of the final occupation certificate (which was the applicable limitation period for statutory warranties in this case), but more than seven years after the issue of the interim occupation certificates. Dyldam wanted to rely on the interim occupation certificates and alleged that the proceedings were commenced out of time.

The issue before the Court was whether either of the interim occupation certificates, which were issued in contravention of the EPA, authorised the occupation and use of the whole of the building for the purpose of determining when the statutory warranties limitation period started to run.

The Court held that that interim occupation certificates could not be relied on for the following reasons:

1. section 109H(1)(a) of the EPA provided that an interim occupation certificate authorised the use of a “partially completed new building” or the new use of a part of a building resulting from a change of building use;
2. the building in question was neither a partially completed building nor undergoing a change of building use at the time the interim occupation certificates were issued. The interim occupation certificates did not satisfy the definition in section 109H(1)(a) of the EPA and therefore did not authorise the use and occupation of the whole of the building for the purpose of the running of the statutory warranty limitation period;
3. the interim occupation certificates were also issued in contravention of section 109H(2) of the EPA which provides, among others, that an occupation certificate must not be issued unless any preconditions to the issue of the certificate that are specified in a development consent, have been met. The conditions referred to in the interim occupation certificates which were excluded were preconditions to the issue of any interim or final occupation certificate. However since the certificates did not meet the definition of an interim occupation certificate under section 109H(1)(a) of the EPA, the Court did not need to resolve the question of whether the issuing of an occupation certificate in breach of s 109H(2) resulted in the invalidity of the certificate.

In this case, the interim occupation certificates could not be relied on because it did not satisfy the definition in section 109H(1)(a) of the EPA and arguably because it was also in contravention of section 109H(2) the EPA. This goes to show that an interim occupation certificate could be relied upon for the purpose of determining when the statutory warranties limitation period started to run if it complies with the provisions of the EPA. As such, it would be prudent for Owners Corporation to commence proceedings having regard to the dates of both the interim and final occupation certificates.

Authors: Jasmin H. Singh and Allison Benson