Duncan v Bert Farina Constructions Pty Ltd

Case [2024] SASCA 67

SUPREME COURT OF SOUTH AUSTRALIA

(Court of Appeal: Civil)

DUNCAN v BERT FARINA CONSTRUCTIONS PTY LTD

[2024] SASCA 67

Judgment of the Court of Appeal  

(The Honourable Justice Doyle, the Honourable Justice Bleby and the Honourable Justice Blue)

30 May 2024

STATUTES - ACTS OF PARLIAMENT - INTERPRETATION

LIMITATION OF ACTIONS - LIMITATION OF PARTICULAR ACTIONS

This is an appeal from the primary judge’s determination of a preliminary question of law.

The appellants (owners) issued proceedings against the respondent (builder), claiming damages for defective building work in the construction of their house. The owners alleged breaches of statutory warranties under s 32(2) of the Building Work Contractors Act 1995 (SA) (‘BWCA’) and common law negligence.

Section 32(5) of the BWCA establishes a five year limitation period for claims made under s 32(2) of the BWCA. Section 73 of the Development Act 1993 (SA) (‘DA’) (and its successor, s 159 of the Planning, Development and Infrastructure Act 2016 (SA) (‘PDIA’)) contain a 10 year limitation period for actions for damages for economic loss or rectification costs resulting from defective building work.

At first instance, the owners pleaded that the time limit for commencing proceedings for breach of statutory warranties under s 32(2) of the BWCA is 10 years from the date of completion of the building work by reason of s 73 of the DA. The builder pleaded in its defence that the limitation period applicable under s 32(2) of the BWCA is five years, pursuant to s 32(5) of the BWCA. The primary judge generally accepted the builder’s contention and held that, in proceedings for damages for defective building work relying on breach of a statutory warranty under s 32(2) of the BWCA, a respondent is able to elect to plead the expiry of the five year warranty under s 32(5) BWCA as a defence, and, properly read, s 73 of the DA, and its successor s 159 of the PDIA, do not displace the shorter five year limitation period in s 32(5) of the BWCA. The owners appeal the primary judge’s determination.

Held, (per the Court), dismissing the appeal:

1.The relevant textual, contextual and purposive considerations support the construction of s 73 of the Development Act 1993 (SA) and s 159 of the Planning, Development and Infrastructure Act 2016 (SA) as imposing a 10 year long stop limitation period in respect of claims for economic loss or rectification costs arising out of defective building work which does not operate so as to displace the five year time limit for claims based on the statutory warranties in respect of domestic building work under s 32 of the Building Work Contractors Act 1995 (SA).

Builders Licensing Act Amendment Act 1983 (SA); Builders Licensing Act 1967 (SA); Builders Licensing Act 1986 (SA) pt 5; Building Act 1992 (NT) ss 160-161; Building Act 1993 (Vic) s 134; Building Act 2004 (ACT) s 142(3); Building Act 2016 (Tas) s 327; Building Work Contractors Act 1995 (SA) ss 3, 32(1), 32(2), 32(3), 32(5), 32(6), 37(2),…

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Duncan v Bert Farina Constructions Pty Ltd [2024] SASCA 67
Case
[2024] SASCA 67
Decision Date

CaseChat Overview and Summary

The appellants, referred to as the Owners, commenced proceedings against the respondent, the Builder, on 13 July 2022, seeking damages for defective building work. The dispute concerned a house constructed by the Builder under a contract with the South Australian Housing Trust, with the Owners subsequently acquiring the property. The Owners alleged breaches of statutory warranties under section 32(2) of the Building Work Contracts Act (BWCA) and common law negligence. The Builder contended that the claims were statute-barred due to the expiry of applicable limitation periods. The matter came before the Full Court of the Supreme Court of South Australia, comprising Doyle, Bleby, and Blue JJ.

The central legal issue before the court was the interplay between the limitation period for claims concerning defective building work under the Development Act (DA) and the Planning, Development and Infrastructure Act (PDIA), and the limitation period for breaches of statutory warranties under the BWCA. Specifically, the court had to determine whether section 73 of the DA and section 159 of the PDIA, which provide a 10-year limitation period for certain building actions, operated to displace the shorter five-year limitation period prescribed by section 32(5) of the BWCA for domestic building work. The Owners argued that the longer 10-year period applied, rendering their claim within time, while the Builder contended that the five-year period under the BWCA was the applicable limit, meaning the claim was out of time.

The court reasoned that while sections 73 of the DA and 159 of the PDIA create a 10-year "long stop" limitation period for actions for damages for economic loss or rectification costs resulting from defective building work, they do not operate to displace the specific five-year limitation period for claims based on statutory warranties for domestic building work under section 32 of the BWCA. The court examined the textual considerations of section 73, noting its application to actions for damages for economic loss or rectification costs and its provision that "no action... can be commenced" after the 10-year period, despite other Acts. However, the court concluded that these provisions were intended to operate concurrently with, and as a long stop to, other applicable limitation periods, rather than to exclude shorter, more specific periods like that found in section 32(5) of the BWCA.

The court's conclusion was that the Builders' construction of sections 73 of the DA and 159 of the PDIA, as operating as a 10-year long stop but not displacing the five-year limit under the BWCA, was correct. Consequently, the Owners' claim for breach of statutory warranties under section 32 of the BWCA was found to be statute-barred. The court did not need to determine whether these sections might displace the six-year limitation period for tortious and contractual claims under the Limitation of Actions Act.

Orders

Orders of the court

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Background

Background to the litigation

Claims in building disputes may, of course, be brought other than in contract and tort. They may include, for example, claims for misleading and deceptive conduct contrary to s 18(1) of the Australian Consumer Law.[6] Claims of this nature are subject to a limitation period of three years; and as damages is the gist of the cause of action, time does not begin to run until loss or damage has been suffered or becomes reasonably ascertainable.[7][6] Competition and Consumer Act 2010 (Cth), Schedule 2.[7] Wardley Australia Ltd v Western Australia (1992) 175 CLR 514.Background The following background to the issue arising on appeal was agreed by the parties, or is otherwise uncontentious because it reflects admissions in the pleadings. The appellants (the Owners) issued the proceeding against the respondent (the Builder) on 13 July 2022, claiming damages for defective building work in the construction of their house in Morphettville (the Morphettville property). They allege breaches of statutory warranties under s 32(2) of the BWCA and common law negligence. The Builder carried out the building work (the Works) on the Morphettville property under a written contract (the Contract) with the original owner (the South Australian Housing Trust (the SAHT)) dated 13 August 2014. The Works the subject of dispute in these proceedings comprised “domestic building work”, the Contract was a “domestic building work contract”, and the Builder was a “building work contractor”, all within the meaning of the BWCA. It follows that the statutory warranties in s 32(2) of the BWCA were implied in the Contract. The Works also comprised “building work” within the meaning of s 73 of the DA and s 159 of the PDIA. The Owners acquired the Morphettville property from its original owner, the SAHT, on about 29 June 2016. By operation of s 32(3) of the BWCA, the Owners are the successors to the rights of the SAHT in respect of the statutory warranties under s 32(2) of that Act. The parties are not agreed as to the date when the Works were completed. The Builder contends that the Works reached practical completion under the Contract on 10 December 2015, and that the defects liability period therefore ended on 10 March 2016. The bank guarantee provided on behalf of the SAHT was released on 27 June 2016. The Owners plead that they do not know the precise particulars of the Contract or the completion date. In any event, they say further that the time limit for commencing proceedings for breach of the statutory warranties under s 32(2) of the BWCA is 10 years from the date of completion by reason of s 73 of the DA (now s 159 of the PDIA), with the result that the claim in respect of those warranties is within time. The Builder pleads in its defence that the limitation period applicable to the claims under s 32(2) of the BWCA is five years, and that because the Works were completed by 27 June 2016 at the latest, the Owners’ claim had to be commenced by 27 June 2021. As the five year limitation period is not able to be extended under s 32(6) of the BWCA, the claim under that Act is statute-barred.

Evidence

Evidence Before The Court

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Decision

Reasons for decision

In Walford, Judge O’Sullivan construed s 73 of the DA as introducing a single 10 year limitation period for building actions to which it applied, thereby displacing the limitation period under s 35 of the Limitation of Actions Act that would otherwise have been applicable. In holding that this construction of s 73 flowed from the introductory words of s 73,[79] his Honour relied upon the decision of the Victorian Court of Appeal in Brirek. However, his Honour also did so without any consideration of either the distinctions between the statutory contexts in which the issue arises in the two different jurisdictions, or the textual considerations we have set out earlier in these reasons. Whilst his Honour suggested that the mischief and purpose underpinning the legislation supported his construction, it is unclear how his Honour discerned this mischief or purpose. The only extrinsic material his Honour referred to was the excerpts from the second reading speech set out earlier in these reasons,[80] which the parties accept do not assist in construing s 73. While his Honour made some reference to the difficulties arising in relation to time limits in building actions, his Honour did not identify any contextual or purposive support for construing s 73 as a single extended limitation period, as opposed to a limitation period that operated concurrently with, but as a long stop to, other applicable limitation periods.[79] Walford at [162]-[164], [170]-[174].[80] Including the planning review report referred to therein.Conclusion In summary, the combined force of the various textual, contextual and purposive considerations addressed above supports the construction of s 73 of the DA and s 159 of the PDIA contended for by the Builder and accepted by the primary judge. They support the conclusion that they operate as a 10 year long stop limitation period in respect of claims for economic loss or rectification costs arising out of defective building work, but do not operate so as to displace the five year time limit for claims based upon the statutory warranties in respect of domestic building work under s 32 of the BWCA. It is not necessary for the disposition of this appeal to determine whether ss 73 and 159 might nevertheless operate to displace the six year time limit for tortious and contractual claims under ss 35(a) and (c) of the Limitation of Actions Act. In theory at least, they might do so despite the conclusion we have reached in relation to the five year time limit under s 32 of the BWCA. They might do so bearing in mind the general nature of s 35 of the Limitation of Actions Act (relative to the detailed and specific nature of s 32 of the BWCA), and the specific reference to the Limitation of Actions Act in the opening words of ss 73 and 159. On the other hand, most of the considerations to which we have had regard in construing ss 73 and 159 would apply equally to the overlap between their operation and the operation of s 35 of the Limitation of Actions Act. It also seems unlikely that Parliament would have intended that ss 73 and 159 operate so as to displace some overlapping limitation provisions but not others without making that clear.

Ratio Decidendi

Legal Principle Established

In the present case, there is a constructional choice to be made between the Builder’s construction of s 73 of the DA and s 159 of the PDIA (which has them operating concurrently with s 32(5) of the BWCA, and as mere long stop limitation provisions where they apply), and the Owners’ construction (which has them operating to the exclusion of the shorter limitation periods such as the one appearing in s 32(5) of the BWCA). In considering the Owners’ challenges on appeal to the primary judge’s preference for the Builder’s construction, it is convenient to commence by addressing the various textual considerations, before then turning to the broader contextual and purposive considerations relied upon by the parties.Textual considerations It is appropriate to commence with the text of s 73 of the DA, which has been set out earlier in these reasons, and is in identical form to s 159 of the PDIA. This is not, however, to overlook the relevance of broader contextual and purposive considerations throughout the construction process. These reasons should not be understood as reflecting an entirely sequential process of reasoning. In general terms, s 73 creates a non-extendable 10 year time limit in respect of certain types of actions for damages for defective building work. However, when considering the potential application of this section in the context of the present case, and in particular its impact upon the operation of the shorter five year limitation period in s 32(5) of the BWCA, several aspects of the text of s 73(1) warrant close attention. These include that it:·applies to actions for “damages for economic loss or rectification costs resulting from defective building work (including an action for damages for breach of statutory duty)”;·is expressed in terms that “no action … can be commenced” after the 10 year period; and·is expressed to apply “[d]espite” the Limitation of Actions Act or any other Act or law. As to the first of these textual considerations, the Owners’ claim under s 32 of the BWCA is an action of the type contemplated by s 73 of the DA. The claim alleges breaches of the s 32(2) statutory warranties based upon defective building work. The Works, as well as being “domestic building work” for the purposes of the BWCA, are also “building work” for the purposes of the DA. The claim seeks monetary relief. While the monetary relief available for the breach of a s 32(2) statutory warranty is described as “compensation” (s 37(6)(b)), this is encompassed within an action for “damages” for the purposes of s 73 of the DA. Further, the compensation sought is compensation for “economic loss or rectification costs”. It follows from the matters set out in the preceding paragraph that s 73 of the DA is capable of applying to claims, such as the one brought by the Owners in the underlying proceedings, for compensation for breach of a statutory warranty under s 32(2) of the BWCA. However, determining the practical significance of this conclusion requires consideration of the second and third textual considerations identified above.