Navigating the complexities of time limits in building work contracts is crucial for both homeowners and builders. The recent case of Duncan v Bert Farina Constructions Pty Ltd [2024] SASCA 67 before the South Australian Court of Appeal offers important insights into how these time limitations apply.
Case study – Duncan v Bert Farina Constructions Pty Ltd
In this case, the South Australian Court of Appeal considered competing time limitation provisions in the Building Work Contractors Act 1995 (SA) (BWCA) and the Development Act 1993 (SA) (DA), with the judgment turning on the analysis of the purpose and power given by those provisions.
Case background
In June 2016, Mr Duncan and Ms Roberts purchased a house on which Bert Farina Constructions had been contracted to perform residential building work. The builder asserted that the work reached practical completion in December 2015.
The owners claimed that the building work was defective, and as such, the builder was negligent and breached the statutory warranties in the BWCA.
The owners filed a claim against the builder on 13 July 2022.
The builder took the position that the owners were out of time to access the remedies available in the BWCA, which they said expired in December 2020, and in negligence, which they said expired in December 2021.
The owners argued that provisions in the DA extended the time limits for both aspects of their claim, the result of which was that they were not, in fact, statute-barred.
Legislation and time limits
The statutory warranties in the BWCA:
- are exclusive to and implied in every domestic building work contract in South Australia
- provide minimum standards for building work, including relating to methods, materials and timing of works
- can be enforced by future owners of the property
A remedy available for a breach of the statutory warranties is an order that the builder conduct remedial work. It is crucial to note that any proceedings claiming a breach of the statutory warranties be commenced within five years after completion of the building work, which cannot be extended.
The Limitations of Actions Act 1936 (SA) (LoAA) provides that an action in tort, which encompasses the owners' negligence claim, must be commenced within six years from the date the cause of action arises. A cause of action in negligence arises when damage is suffered, or when a prospective plaintiff becomes reasonably aware of it.
The previous owners' development application was filed pursuant to the Development Act, the relevant legislation in force prior to the commencement of the current Planning, Development and Infrastructure Act 2016 (SA) (PDIA).
Both the DA (section 73) and now the PDIA (section 159) provide time limits of 10 years from the completion of building work for claims for damages for economic loss or rectification costs resulting from defective building work, which apply despite the LoAA or any other Act or law.
The DA and PDIA have a much broader scope than the BWCA, but do not provide an entitlement to claim an order for remedial work to be undertaken as a remedy.
Findings
The primary Judge in the District Court of South Australia found that the owners' claim was commenced too late to access the remedies in the BWCA. The owners appealed the primary Judge's decision.
The Court of Appeal considered the owners' grounds of appeal, and affirmed the decision of the primary Judge, making several key findings:
- the intention, context and purpose of legislation is a primary consideration in its interpretation;
- a specific function of the BWCA is to strike a balance between residential builders and homeowners in South Australia, it is purposefully drafted and explicitly provides that the time limit for claiming a breach of the statutory warranties cannot be extended;
- time limits are not intended to permit a plaintiff to bring an action, they give power to a defendant to bar a plaintiff's right to a remedy;
- if the Court were to accept that the "long stop" ten year time limit applied, it would render the BWCA "incoherent";
- the builder was entitled to rely on the shorter time limit;
- the owners were barred from relying on the statutory warranties in the BWCA; and
- the Court was not required to make a finding as to whether the ten year time limit applied to the negligence aspect of the claim, but suggested in obiter that the six year time limit in the LoAA may also not be extended by the DA or PDIA.
What to look out for
- Claims to enforce the statutory warranties in the BWCA must be commenced by an owner against a residential builder within five years of practical completion.
- When a dispute arises, it is important to conduct an early assessment of the time limits that apply to the prospective causes of action.
- Prior to commencing any action, it is important to consider the functions and purpose of each applicable time limit, and how they may interact.
- This case presents an important reminder that intention, context and purpose are cornerstones of statutory interpretation.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.