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The 10-year long-stop limitation period IS absolute after all...

Insurance Law & Litigation

Bandelle Pty Ltd v Sydney Capitol Hotels Pty Ltd [2020] NSWCA 303

The Court of Appeal has overturned a controversial Supreme Court decision which found that the 10-year long-stop limitation period on building actions would not always apply to a claim alleging defective building work.

The matter concerned a fire in a Sydney building in 2017, which was alleged to have been caused by defective building work on the exhaust duct system performed by the builder. The relevant building work had been completed in 1997, 20 years prior to the fire.

Supreme Court decision

At first instance, the Supreme Court found that the plaintiff (the occupier of the building) was not time-barred by the 10-year long stop period imposed by section 6.20 of the Environmental Planning and Assessment Act 1979 (NSW) (EPA). Having regard to the the parliamentary intention of the EPA, Hammerschlag J was of the view that the relevant section was not to be concerned with cases where claimants have no interest in the building work or the building itself.

Decision on appeal

The Court of Appeal disagreed, ruling that the intention of section 6.20 of the EPA was to create a long-stop limitation period which expired 10 years from the date of completion of building work, irrespective of the nature of the relationship between the claimant and the defendant or the date on which the damage initially occurred/the loss was first suffered.

Although the Court was divided on the issue, the majority also found that section 6.20 of the EPA extends to all building work, regardless of when the development consent was issued. This means that there is no "gap" in time when the long-stop period might not apply, as had been suggested to be the case due to issues with the timing of the repeal of section 6.20's predecessor provision (section 109ZK of the EPA).

Takeaway

The decision marks a restoration of the firm nature of the "absolute" long-stop limitation period provided by section 6.20 of the EPA, applicable to all claims for damages arising from defective building work. It provides certainty for builders, building consultants (and their insurers) that any claims brought after 10 years from completion (usually the date of grant of the occupation certificate) will be time-barred.

This certainty is particularly welcomed with the introduction of the statutory duty of care under the Design and Building Practitioners Act 2020. Despite its retroactive application, this new statutory duty of care is subject to any applicable limitation periods, including section 6.20 of the EPA, meaning the potential period of liability for this new cause of action is still subject to an absolute time bar.

Authors: Charles Thornley, Partner; Elizabeth Berwick, Lawyer; Lucinda Hill, paralegal

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Elizabeth Berwick

Elizabeth Berwick

Lawyer