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MTECC NEWS 21.08 ||| Staged occupancy permits and the commencement of the 10 year limitation period – Lendlease Engineering Pty Ltd v Owners Corporation No. 1 [2021] VSC 338 (Forbes J)

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The conversion of the Chevron Hotel to apartments and the construction of a nine storey apartment building contiguously were carried out in stages.  Four staged occupancy permits were issued over an eight month period.

The OC issued proceedings in VCAT in respect of defects in the louvre system exterior of the new apartment building.

The builder, Lendlease applied to have the claim dismissed on two bases.  One that the claim was statute barred pursuant to s 134 of the Building Act (1993) because the proceeding was brought more than 10 years after the date on which the staged occupancy permit was issued in respect of the allegedly defective work, not the date of issue of the final occupancy permit.  The second, that the OC had standing only in relation to louvre system defects in the common property, not in the lot owners’ property.  The OC applied to join the 137 lot owners as applicants.

The Tribunal:
(a)        found that the proceeding was commenced within time on the basis that time ran from the date of the issue of the fourth and final of the occupancy permits;
(b)        permitted the joinder of the lot owners. 

In respect of Lendlease’s submission that the lot owners’ claims were statute barred, the Tribunal found that the joinder was a formality and also that the OC claim had been brought on the lot owners’ behalf.

On appeal Forbes J upheld the Tribunal’s decision that the OC’s claim was within time and rejected the Tribunal’s decision that it was competent to join the lot owners.

On the limitation point, the Court found on a proper construction of s 134 that where there are staged occupancy permits, time commences to run from the date of issue of the final occupancy permit, which is issued in respect of the whole of the works.  This promotes certainty, which is particularly important when there is no provision to extend time and it is not dependent on the choices made by the builder (which are outside the control of owners or purchasers) as to how to arrange the works.

As to the joinder, the Court found that the joinder was not a formality and it rejected the OC’s submission that the joinder could be justified on the basis of the Tribunal’s obligation  to act fairly (s 97 of the VCAT Act).  The Court also found that it was not open on the evidence to conclude that the OC was acting on behalf of the lot owners in respect of the OC’s claim.
Graeme Hellyer


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