According to the recent judgement of the Court of Appeal in Bandelle Pty Ltd v Sydney Capitol Hotels Pty Ltd [2020] NSWCA 303, the 10 year long-stop limitation period in the Environmental Planning and Assessment Act 1979 applies to all defective building work regardless of when the defect manifests or who the claimant is.
Background
On 2 January 2017, a fire broke out on the ground floor of the Capitol Square Building. The fire activated the building’s fire sprinklers and caused loss and damage to Sydney Capitol Hotels, who was a tenant in the building. The fire was alleged to have been caused by defective work to the building’s exhaust duct system. That work had been carried out in 1997 by Bandelle. Bandelle argued that the claim was statured barred by the long-stop provisions in section 6.20 of the Act which provides at subsection (1):
‘A civil action for loss or damage arising out of or in connection with defective building work or defective subdivision work cannot be brought more than 10 years after the date of completion of the work.’
Supreme Court decision
The key question for the Court was whether, on the proper construction of section 6.20 of the Act, the loss or damage suffered by Sydney Capitol Hotels was loss or damage ‘arising out of or in connection with defective building work’. The Supreme Court found the claim was not statute barred by section 6.20 of the Act because Sydney Capitol Hotels was merely an occupier of part of the building, and not the party who contracted with Bandelle to carry out the building work. As such, the loss and damage was caused by the defective building work in an ‘accidental, incidental or indirect sense’ and as such, section 6.20 of the Act did not apply.
Court of Appeal decision
The Supreme Court’s decision was overturned on appeal. The Court of Appeal held that section 6.20 of the Act and former section 109ZK apply to all claims for economic loss caused by defective building work. The Court of Appeal stated that the purpose of these sections is to provide a long-stop limitation period, independently of when the damage first manifested and regardless of whether there was a contractual relationship between the builder and the claimant.
The Court of Appeal stated ‘The clear object of s 109ZK when enacted was to afford a limitation protection to those engaged in the building industry, irrespective of the nature of the claim, so long as the claim can be shown to be for loss “arising out of or in connection with” or “arising out of or concerning” defective building work. Clearly, the claim being made in the List Proceedings is one for loss arising out of or in connection with or concerning defective building work, namely, constructing or designing the Shaft defectively. There is no reason to construe the provision restrictively in the manner contended for by Capitol.’
What does this mean for you?
The effect of this decision is that if you suffer loss or damage arising out of defective building work, you must commence proceedings within 10 years of the date of completion of the building work. Note that the 10 year limitation period under the Act is different to the limitation periods under the Home Building Act 1989 which are two years for non-major defects and six years for major defects. We expect the limitations under the Design and Building Practitioners Act 2020 to be clarified in due course.
We strongly recommend that you seek legal advice as to the time limitations in your specific circumstances.
Authors: Jasmin H.Singh and Allison Benson