Walford Anglican School for Girls Incorporated v Romaldi Constructions Pty Ltd
[2020] SADC 146
•26 October 2020
DISTRICT COURT OF SOUTH AUSTRALIA
(Civil)
WALFORD ANGLICAN SCHOOL FOR GIRLS INCORPORATED v ROMALDI CONSTRUCTIONS PTY LTD & ANOR
[2020] SADC 146
Judgment of His Honour Judge O'Sullivan
26 October 2020
PROFESSIONS AND TRADES - ARCHITECTS - DUTIES AND LIABILITIES
CONTRACTS - BUILDING, ENGINEERING AND RELATED CONTRACTS - PERFORMANCE OF WORK
PROCEDURE - CIVIL PROCEEDINGS IN STATE AND TERRITORY COURTS - SEPARATE DECISION OR DETERMINATION OF QUESTIONS AND CONSOLIDATION OF PROCEEDINGS - SEPARATE DECISION OR DETERMINATION - OF LIABILITY AND DAMAGES
In 2004 the applicant (Walford) engaged the second respondent (DesignInc) to carry out architectural services in relation to student accommodation and music facilities ('Works').
Walford designed the Works. The first respondent (Romaldi) was the contractor engaged by Walford to carry out the Works. DesignInc administered the building contract between Walford and Romaldi.
Walford commenced proceedings against Romaldi in 2018 in relation to alleged defects in the Works and joined DesignInc to the Proceedings in 2019.
A trial of a separate issue was held pursuant to Rules 117 and 211 of the District Court Rules 2006 concerning two questions of law directed at the operation of s 73 of the Development Act 1993.
Walford and DesignInc agreed facts and documents for the trial of the separate issue. The two questions concerning section 73 of the Development Act, are:
1. Does section 73 of the Development Act 1993 preclude the applicant (Walford) from bringing the claim it has advanced against DesignInc and/or from obtaining the relief it has sought against DesignInc? and
2. As a matter of law, can the Court extend the time period imposed by section 73(1) of the Development Act pursuant to section 48 of the Limitation of Actions Act 1936 (SA) (LoA Act)?
Held:
1. Section 73 of the Development Act 1993 applies to DesignInc as a designer and/or contract administrator however, on the agreed facts and documents put before the Court, the Court is unable to determine if and/ or when the building work is complete. Therefore the Court cannot determine whether s 73 of the Development Act precludes Walford from bringing the claim it has advanced against DesignInc and/or from obtaining the relief it has sought against DesignInc. The issue will need to await trial.
2. As a matter of law, the Court cannot extend the time period imposed by section 73(1) of the Development Act pursuant to section 48 of the Limitations Act 1936 (SA).
3. The parties to be heard on the question of costs.
District Court Civil Rules 2006 (SA); Development Act 1993 (SA) s 72, 73; Limitation of Actions Act 1936 (SA); Development Regulations 2008 (SA); Building Act 2004 (ACT), referred to.
Alcan (NT) Alumina Pty Ltd v Commissioner of Territory Revenue (Northern Territory) (2009) 239 CLR 27; Project Blue Sky Inc and Others v Australian Broadcasting Authority (1998) 194 CLR 355; Military Rehabilitation and Compensation Commission v May (2016) 257 CLR 468; SZTAL v Minister for Immigration and Border Protection and Another (2017) 262 CLR 362; Martin v Electoral Districts Boundaries Commission and Another 127 SASR 362; Bryan v Maloney (1995) 182 CLR 609; Brookfield Multiplex Ltd v Owners Corporation Strata Plan 61288 and Another (2014) 254 CLR 185; Inter-Continental Travels Pty Ltd v Hueppauff & Ors [2000] SASC 7; Hueppauff & Ors v Inter-Continental Travels Pty Ltd [2001] SASC 119; Hudson Yards Pty Ltd v Minister for Planning [2018] VSC 277; Glenmont Investments Pty Ltd v O’Loughlin (No 2) (2000) 79 SASR 185; Walker v Corporation of the City of Adelaide (2004) 88 SASR 225; SJ Weir Ltd v Bijok and Another (2011) 112 SASR 127; Parletta Constructions Pty Ltd v Prince, Prince, Hartect Pty Ltd and Egis Consulting Australia Pty Ltd (No 2) [2000] SADC 101; Helkeast Pty Ltd v Ruckschloss [2017] ACTSC 65; CIC Insurance Limited v Bankstown Football Club Limited (1997) 187 CLR 384; Newcastle City Council v GIO General Limited (1997) 191 CLR 85; Brirek Industries Pty Ltd v McKenzie Group Consulting (Vic) Pty Ltd (2014) 48 VR 558; Aussie Blinds and Canvas Products Pty Ltd v Smith & Another [2015] SADC 154, considered.
WALFORD ANGLICAN SCHOOL FOR GIRLS INCORPORATED v ROMALDI CONSTRUCTIONS PTY LTD & ANOR
[2020] SADC 146Introduction
These proceedings concern work done at or in relation to Walford Anglican School for Girls Incorporated (‘Walford’) during the period, on one view, spanning 2004 – 2017.
The second respondent (‘DesignInc’) applied by interlocutory application for an order[1] pursuant to Rules 117 and 211 of the District Court Civil Rules 2006 that there be a trial of a separate issue concerning two questions of law directed at the operation of s 73 of the Development Act 1993 (the ‘Act’). It proposed that the questions be answered on a set of agreed facts and documents and submitted that the answer(s) have the potential to resolve the proceedings, at least as between Walford and DesignInc.
[1] FDN 24.
The applicant consented to that order.
Whether there should be trial of a separate issue or issues is a matter which calls for the exercise of a discretion. Given the parties had agreed facts and documents for the purpose of the trial of the separate issue and the potential savings of time, cost and resources,[2] on 31 July 2020 I granted the application.
[2] See FAI General Insurance Co Ltd (In Liq) v Sherry & Ors [2002] SASC 431 [38].
The two questions formulated by DesignInc and Walford for determination are:
1Does section 73 of the Development Act 1993 preclude the applicant (Walford) from bringing the claim it has advanced against DesignInc and/or from obtaining the relief it has sought against DesignInc (Question 1)?;
2As a matter of law, can the Court extend the time period imposed by section 73(1) of the Development Act pursuant to section 48 of the Limitation of Actions Act 1936 (SA) (LoA Act) (Question 2)?.
A joint tender book was received into evidence which contained both the agreed facts and documents.[3]
[3] Exhibit R1.
The first respondent (Romaldi) elected not to participate in the trial of the separate issue.
Agreed Facts
The agreed facts are as follows:[4]
[4] The reference to document numbers in the agreed facts is a reference to the document number in the joint tender book, Exhibit R1.
1.Walford Anglican School for Girls Incorporated (Walford) was at all material times:
(a) an incorporated association pursuant to the Associations and Corporations Act 1985;
(b) an independent Anglican day and boarding school for girls;
(c) the Registered Proprietor of Land located at Hyde Park, bound by the following streets and comprised in the following Certificates of Title (the Premises).
Fashoda Street
5492/596
5575/469
5574/956
5574/955
5421/404
5510/360
5476/190
5510/358
5510/359
Unley Road
5702/50
5841/48
5575/465
5575/466
Corner Commercial Road and Woodlyn Place
5557/23
Commercial Road
5841/43
Woodlyn Avenue
5841/42
5421/406
5421/407
2. Romaldi Constructions Pty Ltd (Romaldi) was at all material times:
(a) a company incorporated in SA;
(b) a Building Work Contractor as defined by the Building Work Contractors Act 1995;
(c) the holder of Builders License Number GL 57597.
3. DesignInc Adelaide Pty Ltd (DesignInc) was at all material times;
(a) a company incorporated in South Australia;
(b) carrying on business as an Architect.
4.In or around 2004 Walford entered into a contract with DesignInc (the Architectural Contract) pursuant to which DesignInc agreed to design student accommodation and music facilities at the Premises and then administer the contract for the construction of the facilities in four Stages namely:
4.1 Stage 1: Schematic Design for erection of a two storey student residence, with basement car park and music centre, and associated site works (the Project);
4.2 Stage 2: Detailed Design for the Project;
4.3 Stage 3: Design Documentation for the Project;
4.4 Stage 4: Contract Administration for the Project;
(the Services) Document 1
5.DesignInc began work on the initial design during October and November 2004 and its first invoice was issued in late November 2004. Document 2
6.Design work continued in the first half of 2005, with a Planning Application lodged on the 22nd June and Planning Approval was granted on 10 October 2005.
7.An early works (groundworks) package of drawings received Private Certification on 3 November 2005. Document 3
8.DesignInc's design was issued 'for tender' on 10 February 2006 and then issued 'for construction' on 21 March 2006.
9.On 27 March 2006 Walford and Romaldi entered into an "ABIC MW Major Works, Building Industry Contract" (the Building Contract) for the construction of a building to be used for the purpose of student accommodation and music facilities (the Works). Document 4
10. DesignInc's design was privately certified on 7 April 2006. Document 3
11.DesignInc's design received final council development approval on 3 May 2006. Document 3
12.From around 27 March 2006 until 8 June 2007 Romaldi performed the Works. Document 5 and 6
13.On 7 April 2006, Romaldi provided to Walford two Commonwealth Bank of Australia bank guarantees each in the sum of $199,875. Document 7
14. Testing of the fire facilities took place on or around 7 June 2007. Document 8
15.On 8 June 2007 DesignInc certified the Works as Practically Complete (the Practical Completion Certificate) pursuant to the Building Contract. Document 9
16.Walford took back possession of the student accommodation and music facilities at the premises on or around 8 June 2007. Document 8
17.On 16 August 2007, DesignInc issued to Romaldi a Defects List (the Defects List). Document 10
18.On 28 August 2007, DesignInc issued an updated Defects List (the Updated Defects List). Document 11
19.There is a factual dispute between Romaldi and DesignInc on the one hand and Walford on the other as to whether all of the defects identified during the Defects Liability Period under the Building Contract were completed by Romaldi to the satisfaction of DesignInc.
20.On 5 September 2007 an email exchange occurred between Romaldi and DesignInc (the 5 September 2007 Email). Document 12
21.On 9 January 2008, DesignInc issued Architect's Instruction 129 (Architect’s Instruction 129). Document 13
22. On 28 January 2008 Romaldi emailed DesignInc. Document 14
23. On 31 January 2008 DesignInc emailed Walford. Document 15
24.On 10 April 2008, DesignInc emailed Romaldi and Walford titled Walford. Document 16
25. On 11 April 2008, Romaldi emailed its workers. Document 17
26. On 11 April 2008, DesignInc emailed its Romaldi. Document 18
27.On or around 14 April 2008, Romaldi undertook its last building works to rectify defects in accordance with Architect's Instruction 129 issued by DesignInc and removed and re-laid discrete areas of the first floor terrace tiling and Romaldi left the Premises shortly thereafter. There is a dispute as to whether some of the rectification works were defects.
28.On 17 April 2008, DesignInc issued Architect's Instruction 131 (Architect's Instruction 131). Document 19
29.On 16, 17 and 18 April 2008 Romaldi and DesignInc exchanged emails. Document 20
30. On 22 April 2008 Romaldi sent an email to DesignInc. Document 21
31. On 22 April 2008 DesignInc sent an email to Romaldi. Document 22
32.On 19 May 2008 Romaldi issued a Tax Invoice dated 19 May 2008 in the sum of $15,650.75 (the Tax Invoice). Document 23
33. On 20 May 2008 DesignInc sent an email to Romaldi. Document 24
34. On 20 May 2008, DesignInc sent a second email to Romaldi. Document 25
35. On 23 June 2008 DesignInc emailed Walford. Document 26
36.On 23 June 2008 Walford emailed DesignInc again emailed Walford. Document 27
37. On 22 August 2008 DesignInc emailed Walford. Document 28
38.There were no communications between DesignInc and Walford between 22 August 2008 and July 2016 in connection with the alleged defects the subject of this proceedings, being District Court of South Australia matter number 801 of 2017 (the Proceedings). There were no communications between Romaldi and Walford in connection with the alleged defects the subject of the Proceedings between May 2008 and December 2016.
39. On 18 February 2009 Walford emailed DesignInc. Document 29
40. On 26 February 2009 Walford emailed DesignInc. Document 30
41.As at July 2020, no Final Certificate has been located by any party. There is a factual dispute as to whether one was ever issued.
42.Walford asserts that neither of the unconditional guarantees have been released and that either it, or DesignInc holds both unconditional guarantees as security. There is a factual dispute as to that assertion.
43.On 7 July 2016 a site investigation was undertaken by the Architect, in respect of the external tiling (the 7 July 2016 Inspection). Document 31
44. Walford asserts that the 7 July 2016 Inspection revealed the following namely:
44.1 water was ponding in certain locations;
44.2 water had penetrated through the tiles and concrete slab and was entering the ceiling space;
44.3 the tiles were lifting;
44.4 there were visible moisture and dampness issues;
44.5 there were signs of mould;
44.6 there was a risk of water penetrating onto server racks;
44.7 when it rained water ponded at the entrance to the music room and with large downpours it runs through the doorway into the room;
44.8 there was insufficient fall in the concrete slab in this area;
44.9 the waterspouts which allow water to drain off the BBQ Terrace are too small and are easily blocked;
44.10 there are visible signs of rust at the base of the steel balustrades and veranda (sic) columns.
(the Alleged Damage).
45.Walford engaged Kennett Pty Ltd to provide a remedial scope of work and a budget estimate to remedy the Alleged Damage.
46. Walford contracted Kennett to remedy the Alleged Damage.
47. By letter dated 1 December 2016, Walford gave Romaldi notice that it intended to:
47.1 engage Kennett to remedy the Alleged Damage at the cost of Romaldi;
47.2 subsequently make a claim to adjust the contract;
47.3 require DesignInc to assess the claim to adjust the contract and issue a certificate under clause N4;
47.4 upon receiving a certificate from DesignInc pursuant to clause N4, Walford would prepare (if applicable) a tax invoice equal to the value of the certificate and present both documents to Romaldi for payment (clause N5.1);
47.5 if the amount stated as owing in the certificate and the tax invoice (if applicable) were not paid within the time period shown in item 4 of schedule 1, then Walford would reserve its right to draw upon the security pursuant to clause C5.1.
(Document 32 is a copy of the letter dated 1 December 2016)
48.In or about the period from 12 December 2016 to March 2017, Kennett undertook building work to repair the Alleged Damage.
49.On 15 March 2017, Kennett issued to Walford Tax Invoice Number 7742 in the sum of $213,328.80 inclusive of GST for the cost to remedy the Alleged Damage (the Kennett Invoice). Document 33
50.On 27 March 2017 Walford purported to issue a Claim to Adjust the Contract Price (the Walford Claim to Adjust the Contract Price). Document 34. There is a dispute about whether the Walford Claim to Adjust the Contract Price is valid or enforceable.
51.DesignInc purported to assess the Walford Claim to Adjust the Contract Price. There is a dispute about whether DesignInc had authority assess the Walford Claim to Adjust the Contract Price.
52.On 2 June 2017 DesignInc issued to Walford and Romaldi a Certificate Number 7404/17 (the Certificate) purporting to adjust the Contract Price in favour of Walford in the sum of $184,188.03 exclusive of GST. Document 35. There is a dispute about whether the Certificate is valid or enforceable.
53.On 5 June 2017, Walford issued to Romaldi a Tax invoice equal in value to the Certificate (the Walford Tax Invoice) and presented both the Walford Tax Invoice and the Certificate to Romaldi for payment. Document 36. There is a dispute about whether the Certificate and the Walford Tax Invoice are valid or enforceable.
54.On 5 June 2017 Walford issued the Proceedings against Romaldi but did not serve the Proceedings on Romaldi.
55. On about 18 June 2018 Walford served the Proceedings on Romaldi.
56.On 21 January 2019 DesignInc was joined to the Proceedings by way of Court Orders, when Master Norman ordered that DesignInc be joined as a party with that joinder to take effect from 21 January 2019.
Walford’s pleaded case
DesignInc was joined to the proceedings as a second respondent on 21 January 2019.
The claim Walford has advanced against DesignInc is found in Walford’s Third Statement of Claim[5] filed 4 June 2019. It is brought into these proceedings because in its defence to the Third Statement of Claim, Romaldi alleges:
1It rectified the defects to the satisfaction of DesignInc;
2It carried out and completed the works as directed and instructed by DesignInc;
3The original documented falls from one end of the ground floor verandah to the other could not be achieved;
4After Romaldi undertook remedial work to the F16 terrace, DesignInc advised Romaldi that the work to this area was no longer considered to be a defect.[6]
[5] FDN 20.
[6] Third Statement of Claim [81].
Walford claims against DesignInc for both breach of contract and breach of duty of care. The summary which I set out below is drawn in the main from the Third Statement of Claim and accordingly reflects allegations rather than findings of fact. In some cases I refer to agreed facts:
1Walford relies upon a contract between itself and DesignInc referred to in the pleadings as the ‘Architectural Contract’, pursuant to which DesignInc was to provide Services for the Project in four stages.[7] Between October 2004 to March 2006, DesignInc performed that part of the Services comprising Stages 1, 2 and 3;[8]
[7] Exhibit R1, Agreed Facts [4].
[8] Third Statement of Claim [49]; Statement of Agreed Facts [4]-[8].
2During the period March 2006 to June 2017, DesignInc performed that part of the Services comprising contract administration for the Project (the fourth stage);[9]
[9] Third Statement of Claim [50].
3Walford alleges the following facts in support of its causes of action against DesignInc:
i.On 16 August 2007, DesignInc issued a defects list to Romaldi which included as a defect, ponding in three areas described as G85 (North) Terrace, G86 (East) Terrace and F16 Terrace. That defects list was updated on 28 August 2007. The updated defects list included ponding on all external tiled services. Walford allege each defects lists constituted a direction to Romaldi to perform the work the subject of the defects lists. The defects list is defined as the ‘Direction’ and the undated defects list is defined as the ‘Further Direction’;[10]
[10] Third Statement of Claim [57]-[60].
ii.On 5 September 2007, an email exchange occurred between Romaldi and DesignInc in relation to water ponding in three areas - G86, F16 and the Barbeque area;[11]
[11] Third Statement of Claim [61]-[62].
iii.On 9 January 2008, DesignInc issued architect’s instruction 129 directing Romaldi to remove approximately seven tiles to either side of a drain to what is known as G86 (East) Terrace and relay the tiles with a greater fall to the drain to ensure ponding will not occur in that area;[12]
[12] Third Statement of Claim [63]; Note that the Agreed Facts [20] and [21] refer only to the instructions being issued.
iv.Further emails were sent from DesignInc to Walford on 10 April 2008 and on 11 April 2008 from Walford to Romaldi. The emails were followed by architect’s instruction 131 issued on 17 April 2008[13] in which DesignInc directed Romaldi to carry out some rectification work to tiling which, Walford allege, Romaldi failed to perform. That non-performance is alleged to be a failure to comply with the defects list (Direction), the updated defects list (Further Direction), the 5 September 2007 email and architect’s instructions numbered 129 and 131;
[13] Third Statement of Claim [65]-[66].
v.In a further email from DesignInc to Romaldi sent 20 May 2008, DesignInc directed Romaldi to perform the work the subject of the email which related to tiling on both the ground and first floors and consequent ponding of water. The pleading continues that Romaldi did not perform the work as required by the 20 May 2008 direction, or at all;[14]
[14] Third Statement of Claim [70]-[73].
vi.On 7 July 2016, a site investigation was undertaken by DesignInc in respect of the external tiling which revealed damage[15] as set out in the pleading, i.e:
[15] Third Statement of Claim [74]-[75].
75.1 water was ponding in certain locations;
75.2 water had penetrated through the tiles and concrete slab and was entering the ceiling space;
75.3 the tiles were lifting;
75.4 there were visible moisture and dampness issues;
75.5 there were signs of mould;
75.6 there was a risk of water penetrating onto server racks;
75.7 when it rained water ponded at the entrance to the music room and with large downpours it runs through the doorway into the room;
75.8 there was insufficient fall in the concrete slab in this area;
75.9 the waterspouts which allow water to drain off the BBQ Terrace are too small and are easily blocked;
75.10 there are visible signs of rust at the base of the steel balustrades and veranda columns;
(the ‘Damage’);
vii.The Damage is alleged to have been caused by:
a) Water in the Barbeque area not draining away (G85 (North) Terrace defect);
b) Ponding at the G86 (East) Terrace ground floor defect; and
c) Ponding at the North entry at F16 Terrace.
(together, the ‘defects’);[16]
viii.The Damage was caused by Romaldi’s breach of contract in that it failed to comply with the defects list (Direction), updated defects list (Further Direction), architect’s instructions number 129 and 131 and the 29 May 2008 (sic 20 May 2008) direction such that the Works exhibited the defects.[17]
Causes of Action – Contract
[16] Third Statement of Claim [76].
[17] Third Statement of Claim [77].
Walford pleads an express term of the Architectural Contract that DesignInc was obliged to exercise the care and skill of a reasonably competent, registered architect in providing the Services.[18]
[18] Third Statement of Claim [47].
It alleges that DesignInc failed to exercise that degree of skill and care in providing the Services and was thereby in breach of its contract, specifically clauses A1 and B1. The alleged contractual breaches are that DesignInc:
1Failed to ensure that defects were actually remedied by Romaldi;
2Should not have issued a certificate of practical completion unless and until the defects were in fact remedied;
3Failed to amend the design to the ground floor in circumstances where the documented design could not be achieved;
4Should only have been satisfied with remedial work to the F16 terrace in circumstances where there was no longer a defect in that area; and
5Failed to ensure that Romaldi complied with the direction, the further direction, the architect’s instructions numbered 129 and 131 and the 29 May 2008 direction.[19]
[19] Third Statement of Claim [82], [83], [85].
As a further breach of clause B1 of the Contract, Walford allege that the ground floor documented design could not be constructed so that DesignInc failed to:
i.Ensure that the Works as designed and documented were capable of being performed by Romaldi so as to meet the various applicable codes; and
ii.Identify any defects in workmanship and performance on the part of Romaldi, to direct Romaldi to rectify those defects, to ensure that the defects were rectified and to only issue a notice of Practical Completion when the Works[20] met the contractual definition of Practical Completion.[21]
Causes of Action - Duty of Care
[20] ‘Works’ is defined in Exhibit R1, Agreed Facts [9].
[21] Third Statement of Claim [85].
Walford also pleads a common law a duty of care on the part of DesignInc to exercise the care and skill of a reasonably competent, registered architect in providing the Services.[22]
[22] Third Statement of Claim [48].
Walford allege DesignInc breached that duty of care, by failing to perform the Services with the requisite degree of care and skill. Walford relies on the same matters as it does for its breach of contract claim.[23]
Loss
[23] Third Statement of Claim [84], [85].
The consequence alleged by Walford is that it has suffered loss and damage in the sum of $202,606.83 (including GST) such sum being the cost of rectifying the defects and the Damage.[24]
[24] Third Statement of Claim [86].
DesignInc’s Defence
DesignInc’s defence is relatively brief and admits many of the factual allegations levelled against DesignInc. Where documents are pleaded against it, DesignInc pleads by referring to those documents for their meaning.
At paragraph 40 of its defence DesignInc pleads Walford’s claim is barred pursuant to s 73 of the Development Act 1993 because it claims damage for economic loss and/or rectification costs resulting from alleged defective building work and the action was commenced against DesignInc more than 10 years after completion of the building work.
Principles
Both questions raise the issue of the proper construction of s 73 of the Act.
The principles applicable to the construction of statutory provisions are well known.
In CIC Insurance Limited v Bankstown Football Club Limited, Brennan CJ, Dawson, Toohey and Gummow JJ said:[25]
Moreover, the modern approach to statutory interpretation (a) insists that the context be considered in the first instance, not merely at some later stage when ambiguity might be thought to arise, and (b) uses "context" in its widest sense to include such things as the existing state of the law and the mischief which, by legitimate means such as those just mentioned, one may discern the statute was intended to remedy. Instances of general words in a statute being so constrained by their context are numerous. In particular, as McHugh JA pointed out in Isherwood v Butler Pollnow Pty Ltd, if the apparently plain words of a provision are read in the light of the mischief which the statute was designed to overcome and of the objects of the legislation, they may wear a very different appearance. Further, inconvenience or improbability of result may assist the court in preferring to the literal meaning an alternative construction which, by the steps identified above, is reasonably open and more closely conforms to the legislative intent. (citations omitted)
[25] (1997) 187 CLR 384, 408.
In Alcan (NT) Alumina Pty Ltd v Commissioner of Territory Revenue (Northern Territory) the High Court said:[26]
This Court has stated on many occasions that the task of statutory construction must begin with a consideration of the text itself. Historical considerations and extrinsic materials cannot be relied on to displace the clear meaning of the text. The language which has actually been employed in the text of legislation is the surest guide to legislative intention. The meaning of the text may require consideration of the context, which includes the general purpose and policy of a provision, in particular the mischief it is seeking to remedy. (citations omitted)
[26] (2009) 239 CLR 27 [47].
In Project Blue Sky Inc and Others v Australian Broadcasting Authority, the High Court discussed the approach to statutory construction, and said:[27]
The primary object of statutory construction is to construe the relevant provision so that it is consistent with the language and purpose of all the provisions of the statute. The meaning of the provision must be determined "by reference to the language of the instrument viewed as a whole". In Commissioner for Railways (NSW) v Agalianos, Dixon CJ pointed out that "the context, the general purpose and policy of a provision and its consistency and fairness are surer guides to its meaning than the logic with which it is constructed". Thus, the process of construction must always begin by examining the context of the provision that is being construed.
A legislative instrument must be construed on the prima facie basis that its provisions are intended to give effect to harmonious goals. Where conflict appears to arise from the language of particular provisions, the conflict must be alleviated, so far as possible, by adjusting the meaning of the competing provisions to achieve that result which will best give effect to the purpose and language of those provisions while maintaining the unity of all the statutory provisions. Reconciling conflicting provisions will often require the court "to determine which is the leading provision and which the subordinate provision, and which must give way to the other". Only by determining the hierarchy of the provisions will it be possible in many cases to give each provision the meaning which best gives effect to its purpose and language while maintaining the unity of the statutory scheme.
Furthermore, a court construing a statutory provision must strive to give meaning to every word of the provision. In The Commonwealth v Baume Griffith CJ cited R v Berchet to support the proposition that it was "a known rule in the interpretation of Statutes that such a sense is to be made upon the whole as that no clause, sentence, or word shall prove superfluous, void, or insignificant, if by any other construction they may all be made useful and pertinent". (citations omitted)
[27] (1998) 194 CLR 355 [69]-[71], per McHugh, Gummow, Kirby and Hayne JJ.
In Military Rehabilitation and Compensation Commission v May, French CJ[28] described the approach to dealing with the question of the construction of a statutory provision as being determined by reference to the text, context and purpose of the Act. In SZTAL v Minister for Immigration and Border Protection and Another,[29] Kiefel CJ, Nettle and Gordon JJ said:[30]
The starting point for the ascertainment of the meaning of a statutory provision is the text of the statute whilst, at the same time, regard is had to its context and purpose. Context should be regarded at this first stage and not at some later stage and it should be regarded in its widest sense. This is not to deny the importance of the natural and ordinary meaning of a word, namely how it is ordinarily understood in discourse, to the process of construction. Considerations of context and purpose simply recognise that, understood in its statutory, historical or other context, some other meaning of a word may be suggested, and so too, if its ordinary meaning is not consistent with the statutory purpose, that meaning must be rejected.
Question 1 – Does s 73 of the Development Act preclude Walford from bringing the claim it has advanced against DesignInc and/ bar Walford from obtaining the relief it has sought against DesignInc?
[28] (2016) 257 CLR 468 [10].
[29] Reported as SZTAL v Minister for Immigration and Border Protection and Another, SZTGM v Minister for Immigration and Border Protection and Another (2017) 262 CLR 362.
[30] See also Martin v Electoral Districts Boundaries Commission and Another (2017) 127 SASR 362 [187], per Kelly, Blue, Bampton and Hinton JJ who described these principles as well settled.
Section 73 of the Act provides:
73—Limitation on time when action may be taken
(1)Despite the Limitation of Actions Act 1936, or any other Act or law, no action for damages for economic loss or rectification costs resulting from defective building work (including an action for damages for breach of statutory duty) can be commenced more than 10 years after completion of the building work.
(2)This section does not affect an action to recover damages for death or personal injury resulting from defective building work.
(3) The period prescribed by subsection (1) cannot be extended.
DesignInc Submissions
DesignInc submits the work done by it in the four stages identified in the Architectural Contract and which have been defined in the agreed facts as the ‘Services’,[31] comes within the definition of ‘building work’ in the Act.
Text
[31] Exhibit R1, Agreed Facts [4].
DesignInc refers to the definition of ‘building work’ in s 4 of the Act.
building work means work or activity in the nature of—
(a)the construction, demolition or removal of a building (including any incidental excavation or filling of land); or
(c) any other prescribed work or activity,
but does not include any work or activity that is excluded by regulation from the ambit of this definition;
The Development Regulations 2008 do not contain a definition of ‘building work’.
‘Building’ is defined in s 4 of the Act as:
building means a building or structure or a portion of a building or structure (including any fixtures or fittings which are subject to the provisions of the Building Code of Australia), whether temporary or permanent, moveable or immovable, and includes a boat or pontoon permanently moored or fixed to land, or a caravan permanently fixed to land;
DesignInc submits that the words ‘work or activity in the nature of’ in the definition of ‘building work’ is of wide application. It relies upon Hudson Yards Pty Ltd v Minister for Planning[32] as authority for the proposition that the expression means ‘having the character or essence of’. It submits that there is no reason to read the words ‘work or activity in the nature of’ narrowly and that the expression extends to work beyond physical work. It submits further that the expression covers the activity of designing a building as well as administering a contract for building work including certifying the work as being complete along with the identification of defects.
[32] [2018] VSC 277 [41]-[45].
DesignInc refers to both Glenmont Investments Pty Ltd v O’Loughlin (No 2)[33] as well as Walker v Corporation of the City of Adelaide[34] where the Full Court considered the question of what was meant by ‘defective building work’ in s 72 of the Act.
[33] (2000) 79 SASR 185.
[34] (2004) 88 SASR 225 [385].
Section 72 provides:
72—Negation of joint and several liability in certain cases
(1) If—
(a) building work is defective; and
(b) the defect or defects arise from the wrongful acts or defaults of two or more persons; and
(c) those persons would, apart from this section, be jointly and severally liable for damage or loss resulting from the defective work; and
(d) an action is brought against any one or more of those persons to recover damages for that damage or loss,
the court may only give judgment against a defendant, or each defendant, for such amount as may be just and equitable having regard to the extent to which the act or default of that defendant contributed to the damage or loss.
(2)An act or default for which a person is vicariously liable will be taken to be an act or default of that person for the purposes of this section.
In Glenmont, the Full Court considered the liability of a contractor who contracted to dismantle an enclosure at the Royal Adelaide show in which a large mechanical dinosaur was exhibited. During the course of dismantling the enclosure, oxy-acetylene cutting equipment was used, the dinosaur caught fire and was destroyed.
The Court considered whether the act of dismantling the enclosure came within the definition of building work in s 4 of the Act and the apportionment of liability provision in s 72 of the Act.
The Court said:[35]
The Act defines “building work” in broad terms. It includes the “demolition or removal of a building:” s 4(1). A “building” includes a building or structure and one that is temporary or permanent: s 4(1). We agree that the dismantling of the enclosure is building work for the purposes of s 72. We are also prepared to accept that s 72(1)(a) applies to carelessness in the course of dismantling the enclosure that is tortious or a breach of contract. We accept the submission notwithstanding the awkwardness of describing such carelessness as defective building work. We consider that s 72 must have been intended to embrace what might be called casual acts of negligence and casual breaches of contract, and that the section is not limited only to what might be called inherent defects in a building…
[35] (2000) 79 SASR 185 [68].
In Walker v Corporation of the City of Adelaide,[36] Perry J referred to the passage from the judgment of the Full Court in Glenmont Investments Pty Ltd v O’Loughlin (No 2) set out above, observing that s 72(1)(a) applies to acts of negligence occurring during the course of construction of a building.
[36] (2004) 88 SASR 225 [373].
DesignInc also relies upon SJ Weir Ltd v Bijok and Another[37] in support of its submissions that design work and contract administration comes within s 73 of the Act and in particular, that design work comes within the definition of ‘building work’. That decision also deals with s 72 of the Act and in particular whether the damages award should be apportioned pursuant to s 72 as a result of an alleged negligent design by an engineer.
[37] (2011) 112 SASR 127.
The Full Court dismissed that aspect of the appeal on the basis that on the findings of the trial judge, the engineer in question had not been negligent such that s 72 had no application.[38]
[38] Per Gray and Sulan JJ [30], Blue J [93]-[99].
DesignInc also refers to Parletta Constructions Pty Ltd v Prince, Prince, Hartect Pty Ltd and Egis Consulting Australia Pty Ltd (No 2)[39] in which Sulan DCJ (as his Honour then was) considered the application of s 72 to a case where an architect designed the Works and a builder carried out those Works. An issue arose as to the cause of defects in amongst other things, tiling. His Honour said:[40]
I consider that in respect of the alleged defective work and the consequential damage, there is concurrence in the act or acts of the architect and builder. Of course, they have different functions to perform, but those functions are carried out to achieve a satisfactory result for the proprietors. In respect of the subject work, there is concurrence in that the architect has designed and specified the work to be carried out, the builder is required to undertake the work and the architect is required to certify the satisfactory completion of the work. In that regard, they are, in my view, jointly and severally liable for any work negligently carried out, if negligence against them is established. (see Carosella and Carosella v Ginos & Gilbert Pty Ltd and Others (1981) 27 SASR 515) The question is whether both can be said to have breached their duty of care and if so, whether liability ought to be apportioned between them.
[39] [2000] SADC 101.
[40] Ibid [19].
In this passage of the judgment his Honour was considering s 72(1)(c) which refers to joint and several liability.
DesignInc refers to and seeks to distinguish Inter-Continental Travels Pty Ltd v Hueppauff & Ors[41] and Hueppauff & Ors v Inter-Continental Travels Pty Ltd[42] and the judgments of Perry J and Martin J respectively. Both those authorities involved appeals from the Magistrates Court and raised s 73 of the Act.
[41] [2000] SASC 7.
[42] [2001] SASC 119.
The facts of that matter were that in October 1993, the parties entered into a contract for the sale of and purchase of a house and land. The Vendors (defendants) warranted that to their knowledge, no building work had been carried out on the land without all necessary consents and approvals having been obtained, except as disclosed in a schedule to the contract. Nothing was disclosed.
The defendants had installed a septic tank in July 1986 which was not in accordance with the Local Council’s approval for that work. The plaintiffs incurred cost in carrying out rectification to the septic system and issued proceedings against the defendants.
The defendants pleaded s 73 of the Act as a bar to the proceedings on the basis the building work had been done more than 10 years prior to proceedings being instituted and that the claim was a claim for rectification costs resulting from defective building work.
In Inter-Continental Travels Pty Ltd v Hueppauff, a Magistrate summarily dismissed the claim, holding that the claim was a claim for economic loss or rectification costs resulting from ‘defective building work’ within the meaning of s 73.
The plaintiff appealed.
Perry J, allowing the appeal, held that it was reasonably arguable that notwithstanding the defective building work had been performed more than 10 years previously, the section did not apply. His Honour said:[43]
If a warranty had been given which expressly referred to the soundness of a building, in my opinion the section is hardly likely to apply so as to put a plaintiff out of court, even if the alleged breach of warranty is as a result of defective building work which had been completed more than ten years before the action was brought.
To give the section such a construction would result in quite bizarre consequences. It would mean on… that if an express warranty was given as to the soundness of a building as part of a contract of sale, the warranty could not be relied upon as a basis for the award of damages, if the unsoundness was as a result of building work which was more than ten years old. In my opinion, much clearer words in the section would be necessary before it could have such a strange result.
[43] [2000] SASC 7 [20]-[23].
The matter went to trial, the Magistrate entered judgment for the plaintiffs and the defendants appealed.[44] Martin J dismissed the appeal[45] on the basis that s 73 has no application to a claim for damages resulting from a breach of a contractual warranty as to approvals and consents nor to a claim for damages for misrepresentation as to approvals and consents.
[44] Huepauff v Inter-Continental Travels Pty Ltd [2001] SASC 119.
[45] [22]-[23].
DesignInc submits that because in Inter-continental Travels Pty Ltd v Hueppauff & Ors, Perry J was considering an appeal against summary dismissal, his Honour’s observations were obiter. Further, his Honour made it clear in his judgment that he was not expressing a final opinion as to the application of s 73.[46]
[46] [2000] SASC 7 [36].
As to the decision of Martin J, DesignInc submits that his Honour observed that s 73 did not apply to defective building work carried out before the commencement of the Act. On that basis, Martin J’s observations as to the application of s 73 to a claim for damages resulting from a breach of a contractual warranty as to approval and consents or a misrepresentation as to approvals and consents were obiter.
On these bases, DesignInc submits that the two authorities can be distinguished.
As to the claims against it, DesignInc’s submissions focussed on a construction of s 73 which was directed not at what the nature of the cause of action is but ‘…whether the action is properly characterised as one where damages for economic loss or rectification costs are sought and it is alleged that this loss or those costs were caused by ‘defective building work’.[47]
[47] DesignInc’s Written Submissions [44].
It submits that the claim advanced by Walford against DesignInc are claims ‘resulting from defective building work’ where the expression ‘resulting from’ provides the causal link between the claimed loss and the ‘defective building work’.[48]
Context, Purpose and Mischief
[48] DesignInc’s Written Submissions [44], [52], [53].
DesignInc submits that it is apparent from the context in which s 73 appears that Parliament intended that section to extend to parties other than builders. It observes the section is in that part of the Act headed ‘Division 7 – Liability’.
It refers to the Second Reading Speech[49] and relies on the authorities involving s 72 to which I have referred as part of the context in which s 73 is to be construed.
[49] South Australia, Parliamentary Debates, Housing of Assembly 10 March 1993 p 2435, 2441, GJ Crafter, Minister of Housing, Urban Development and Local Government Relations, 1993, p 1851, Development Bill Second Reading Speech.
Relying on these authorities, the definition of ‘building work’ in s 4 of the Act and the context, purpose and mischief to which the section is directed, DesignInc submits that the design and contract administration work undertaken by it comes within the expression ‘building work’ in s 73.
Walford’s Submissions
Walford submits that s 73 has no application to the claim by Walford against DesignInc on five grounds:[50]
1The claim against DesignInc is based upon the architect’s failure to discharge/ provide its Services with the requisite skill and care. The performance of its Services is not ‘building work’;
2Any loss and damage Walford sustained has been occasioned by DesignInc failing to fulfil its contractual obligations which is not the performance of building work;
3DesignInc was not engaged in building work but rather administered or supervised Romaldi to undertake building work;
4S 73 does not encompass activities which are incidental or ancillary to the performance of building work; and
5Parliament could have chosen to use broader language to pick up activities which are not directly building work but rather incidental to it had it wished to do so.
[50] Applicant’s Written Submissions [7].
Each of the five grounds set out above concentrate on the text of s 73 and in particular the meaning of ‘building work’.
Walford submits that s 73 addresses a damages claim for defective building work and does not provide for loss arising from defective design (or contract administration) work.
It refers to Helkeast Pty Ltd v Ruckschloss[51] which concerned a definition of ‘building work’ and whether the preparation of engineering plans is ‘building work’ for the purpose of s 142 of the Building Act 2004 (ACT).
[51] [2017] ACTSC 65.
‘Building work’ is defined in s 6 of that Act as:
(1) In this Act:
building work means—
(a)work in relation to the erection, alteration or demolition of a building, and includes disposal of waste materials generated—
(i)by the alteration of a building other than a building excluded under the regulations; or
(ii)by the demolition of a building (but not part of the building); or
(b)work in relation to repairs of a structural nature to a building.
Note Building work, for pt 6 (Residential buildings—statutory warranties, standard conditions, insurance and fidelity certificates) does not include work in relation to the demolition of a whole building (see s 84)
(2) The regulations may—
(a)exempt a kind of work from the definition of building work; or
(b)include a kind of work in the definition of building work.
Section 142 provides:
142 Limitation of liability for building actions
(1) A building action may not be brought more than 10 years after—
(a) if a certificate of completion of the relevant building work has been given under this Act—the day the certifier gives the certificate; or
(b) if paragraph (a) does not apply, but the certifier has, in the course or on completion of the building work, inspected it—the day when the last inspection took place; or
(c) if neither paragraph (a) nor paragraph (b) applies—the day the relevant building was 1st occupied or used.
(2)Also, a building action in relation to building work may not be brought more than 10 years after—
(a) if an entity has given a notice under section 24 (2) that the entity’s appointment as certifier for the building work has ended—the day the entity gave the notice; or
(b) if an entity’s appointment as certifier for the building work has ended under section 19D and the entity need not give notice under section 24 (2)—the day the entity’s appointment ended.
(3)Subsections (1) and (2) do not apply to a building action if a shorter limitation period applies to the building action under another Territory law.
(4) In this section:
building, in relation to building work that consists of, or includes, the alteration of a building, means the building as altered.
The expression ‘building action’ in s 142 is defined in s 140:
building action
(a) means an action (including a counterclaim) for damages for loss or damage in relation to—
(i)defective building work; or
(ii)defective construction work other than building work; or
(iii)the negligent exercise by a licensed construction practitioner of a function as a certifier, or the negligent failure to exercise such a function; but
(b) does not include an action for damages for death or personal injury.
After considering the agreed facts, Walmsley AJ held that the preparation of engineering plans was not ‘building work’ and that the definition of ‘building work’ in s 6 of the Building Act 2006 (ACT) when taken in the context of other provisions in that Act, suggested that the Act has, as its focus, the physical aspects of the creation of a building.[52]
[52] Ibid [63]-[67], [92], [113].
Walford submits that the definition of ‘building work’ in s 6 of the Building Act 2004 (ACT) is similar to that in s 4 of the Development Act. I accept there is some similarity between the two definitions but it is minor. I consider that Helkeast Pty Ltd v Ruckschloss is of little assistance and is restricted to the specific legislation it considers.
Walford refers to and relies upon AFA Airconditioning v Mendrecki[53] where the Full Court considered a claim for damages for personal injury suffered during the course of building work. The question of apportionment of liability arose and at first instance, Rice DCJ held that s 72 had no application to personal injury claims.
[53] (2008) 101 SASR 381 [176], [177].
As to s 73, his Honour said:[54]
Fifthly, there is no consistent language used by Parliament to describe the various types of loss or damage in ss 72 and 73. Section 72(1)(c) refers to “damage or loss”, s 73(1) refers to “damages for economic loss or rectification costs” and s 73(2) refers to “damages for death or personal injury”. The precise ambit of the sections is uncertain.
However, ss 72 and 73 need to be read quite separately, having quite different areas of operation. As discussed, s 72 is concerned with negating joint and several liability in certain cases, that is, a form of proportionate responsibility.
Section 73, on the other hand, is concerned with providing a limitation as to time where damage is sought for economic loss or rectification costs. It does not affect an action to recover damages for death or personal injury resulting from defective building work (s 73(2)). Indeed, the express reference in s 73(2) to death or personal injury, but is absent from s 72(1), suggests that it was not intended to be covered by s 72. There is also absent the word “injury” as appears in, for example s 17C(1) of the Wrongs Act.
[54] Mendrecki v Doan & Pham & Ors [2006] SADC 140 [174]-[176], per Layton J.
The defendants appealed. The Full Court allowed the appeal on other grounds, but in relation to s 72 and s 73 Layton J (with whom Duggan and Bleby JJ agreed) said:
I also agree with the judge that s 73 of the Development Act does not directly assist with the interpretation of s 72 of the Act. Section 73 relevantly provides:
Limitation on time when action may be taken
(1) Despite the Limitation of Actions Act 1936, or any other Act or law, no action for damages for economic loss or rectification costs resulting from defective building work (including an action for damages for breach of statutory duty) can be commenced more than 10 years after completion of the building work.
(2) This section does not affect an action to recover damages for death or personal injury resulting from defective building work.
(3) The period prescribed by subsection (1) cannot be extended.
I agree with the judge that the two sections have different spheres of operation. Section 73 provides a limitation as to time within which damages may be claimed for “economic loss or rectification costs”, and does not apply to damages for personal injury. Further, the express reference in s 73(2) to personal injury, which is absent in s 72, reinforces that the latter section was not intending to cover loss or damage resulting from personal injury. I would reject that ground of appeal.
On the basis of these matters, Walford submits that the work performed by DesignInc in providing the Services under the Architectural Contract does not come within the ambit of s 73 and the section does not apply to the claim against DesignInc.
Consideration
The main issues in considering the first question are whether s 73 applies to the design and contract administration work done by DesignInc pursuant to its Architectural Contract with Walford, whether the building work has been completed and if so, when.
Text
Section 73(1) has a number of components to it.
The first is ‘Despite the Limitation of Actions Act 1936, or any other Act or law’.
On its face, the clear text of this part of the section excludes the operation of either the Limitations of Actions Act or any other Act or law in relation to the matters set out in the section.
The second, is that part of the section which reads ‘no action for damages for economic loss or rectification costs’.
This part of the provision identifies the relief sought.
The Act came into operation on 15 January 1994 at a time when there was some doubt as to whether the cost of rectifying defective building work was properly regarded as pure economic loss.
At least since Bryan v Maloney,[55] which was decided in 1995, a claim for rectification costs in the absence of injury to persons or property is a claim for pure economic loss.[56]
[55] (1995) 182 CLR 609, 617 per Mason CJ, Deane and Gaudron JJ.
[56] Brookfield Multiplex Ltd v Owners Corporation Strata Plan 61288 and Another (2014) 254 CLR 185, 208 per Hayne and Kiefel JJ.
In any event, in this matter there is no dispute that the action brought by Walford against DesignInc claims damages for rectification costs.
The third component is whether the economic loss or rectification costs claimed results from defective building work (including an action for breach of statutory duty)’.
There are three aspects to this part of the section. First, the concept of ‘building work’ and specifically whether the use of that expression should be afforded the same meaning as in s 4 of the Act; second, the qualification of ‘building work’ by the use of the word ‘defective’; and third, the concept of loss ‘resulting’ from that defective building work.
A. Does the expression ‘building work’ in s 73 have the same meaning as in s 4 of the Act?
There is no South Australian authority directly on point and Helkeast to which I was referred by Walford, is a decision on different legislation with different text.
The work done by DesignInc is found in the agreed facts at paragraphs 4-8 and 15, 17, 18, 20-24, 26, 28-31, 33-37, 39, 40, 43, 51 and 52.[57]
[57] Exhibit R1, Agreed Facts.
As I have noted, s 4 of the Act defines ‘building work’ as:
building work means work or activity in the nature of—
(a)the construction, demolition or removal of a building (including any incidental excavation or filling of land); or
(c) any other prescribed work or activity,
but does not include any work or activity that is excluded by regulation from the ambit of this definition;
There is no other prescribed work or activity.
In Glenmont¸ in the passage I have set out above,[58] the Full Court observed that the Act defined ‘building work’ in broad terms and held that the dismantling of the enclosure in question was building work for the purposes of s 72 of the Act. It accepted that the reference to building work being defective in s 72(1)(a) of the Act applied to carelessness in the course of dismantling the enclosure that is tortious or in breach of contract and continued that it formed that view:
…notwithstanding the awkwardness of describing such carelessness as defective building work. We consider that s 72 must have been intended to embrace what might be called casual acts of negligence and casual breaches of contract, and that the section is not limited only to what might be called inherent defects in a building…
[58] At [37].
I accept DesignInc’s submission the expression ‘in the nature of’ is of wide import but by the same token it is not limitless. I also accept Walford’s submissions that had Parliament intended to include design and/or contract administration as part of the definition of ‘building work’ in s 4 of the Act it would have been easy to do so.
In my view, the text of the definition of building work in s 4 of the Act is directed at the physical activities described in sub-paragraph (a) of the definition and does not encompass design or contract administration. The use of the words ‘in the nature of’ expands the scope of the subject of that physical activity.
I consider the question of whether the expression ‘building work’ in s 73 has the same meaning as in s 4 of the Act, below.
B. Defective Building Work
There is no definition of ‘defective building work’. As wide as the text of the definition of ‘building work’ is, it is qualified by the word ‘defective’. Defective is defined in the Oxford English Dictionary (2nd ed) as:
Having a defect or defects, wanting some essential part of proper quality, faulty, imperfect, incomplete, wanting or deficient in, lacking.
To that extent, the ordinary meaning of the text ‘defective building work’ is very wide.
C. ‘Resulting’
‘Resulting’ is defined in the Oxford English Dictionary (2nd ed) as:
Arising, produced or obtained as a result, resultant, consequent.
In my view, the text of s 73(1) uses the term ‘resulting’ as a link between the loss suffered and the factual basis for that loss.
The Fourth Component of s 73(i) is that part of the section prohibiting the commencement of an action claiming economic loss or rectification costs resulting from defective building work more than 10 years ‘after completion of the building work’.
I deal with the 10-year limitation period as part of Question 2. The issue on Question 1 is whether the building work has been completed. I also deal with that issue below.
Context
Authorities such as Alcan (NT) Alumina Pty Ltd v Commissioner of Territory Revenue (Northern Territory),[59] Project Blue Sky Inc and Others v Australian Broadcasting Authority[60] and Military Rehabilitation and Compensation Commission v May[61] to which I have referred, make it clear that the text of a statute as well as its context and purpose are all to be considered in ascertaining the meaning of a statutory provision.
[59] (2009) 239 CLR 27 [47].
[60] (1998) 194 CLR 355 [69]-[71].
[61] (2016) 257 CLR 468 [10].
As part of context, DesignInc calls into aid the long title to the Act which includes the words:
An Act to provide for planning and regulate development in the State; to regulate the use and management of land and buildings, and the design and construction of buildings; to make provision for the maintenance and conservation of land and buildings where appropriate; and for other purposes.
However, the Act does not deal simply with liability. Amongst other things, it deals with development plans, development assessment and the procedure for obtaining approval to proceed with building. I do not accept therefore that the long title assists DesignInc. That is particularly so when the objects of the Act are considered which includes in s 3(g) as being:
(g) to facilitate—
(i) the adoption and efficient application of national uniform building standards; and
(ii) national uniform accreditation of buildings products, construction methods, building designs, building components and building systems.
Although I accept DesignInc’s submission that the Act was intended to regulate, in part, the design of buildings, that has to be seen in the context of an Act which regulates development in the State as well as the design and construction of buildings.
Section 72
Both sections 72 and 73 deal with liability, albeit different aspects of it.
Section 72 of the Act is predicated on a building work which is defective. It is an apportionment section and the text of the section makes it clear that the section is directed at any parties who would, but for s 72, be jointly and severally liable for damages or loss resulting from the defective building work. It was in the context of an alleged defective design that Sulan DCJ made the observations in Parletta to which I have referred.[62]
[62] Supra at [41].
In my view there is no doubt that s 72 is wide enough to include those engaged in design and contract administration. In Glenmont, in the passage to which I have referred,[63] the Full Court considered that section extended beyond what might be described as inherent defects in a building and included casual acts of negligence and breach of contract.
[63] Supra at [37].
I note that at the end of s 72(1)(c) the word ‘building’ has been omitted but I do not consider that changes the meaning of the text.
Section 73
Section 73 does not deal with apportionment but is directed at an action for damages for economic loss or rectification costs which results from defective building work. In that sense, it is not directed at any particular cause of action.
Both sections appear in the same Division which is headed ‘Liability’. That has some, albeit limited, significance in that when viewed in context, both sections 72 and 73 are concerned with liability for defective building work. Although Layton J said in AFA Airconditioning v Mendrecki, that the two sections have different spheres of operation, that does not prevent a consideration of s 72 as part of the context in which s 73 operates.
Consistency
Consistency is also an important consideration. In Project Blue Sky Inc and Others v Australian Broadcasting Authority[64] the High Court said that ‘The primary object of statutory construction is to construe the relevant provision so that it is consistent with the language and purpose of all the provisions of the statute’ that the meaning of the provision must be determined ‘by reference to the language of the instrument viewed as a whole’[65] and that ‘legislative instrument must be construed on the prima facie basis that its provisions are intended to give effect to harmonious goals’.[66]
[64] (1998) 194 CLR 355 [69]-[71], per McHugh, Gummow, Kirby and Hayne JJ.
[65] Citing Cooper Brookes (Wollongong) Pty Ltd v Federal Commissioner of Taxation (1981) 147 CLR 297, 320 per Mason and Wilson JJ.
[66] Ross v The Queen (1979) 141 CLR 432, 440 per Gibbs J.
A construction that allows effect to be given to both sections 72 and 73 so as to achieve harmonious goals is an important consideration.
Purpose and Mischief
I am assisted in determining the proper construction of s 73 by a consideration of both the purpose and mischief to which s 73 is directed.
In the course of argument, I was referred to the Second Reading Speech on 10 March 1993.[67] During that second Reading Speech it was identified that the legislation represented:
…the culmination of a process of study, review and consultation over a period of almost three years.
The establishment of the Planning Review, the publication of the 2020 Vision, and the comprehensive process of consultation which underpinned the work of the Review team, are reflected in the Bill we are now considering.
[67] South Australia, Parliamentary Debates, Housing of Assembly 10 March 1993 p 2435, 2441, GJ Crafter, Minister of Housing, Urban Development and Local Government Relations, 1993, p 1851, Development Bill Second Reading Speech.
The Planning Review to which reference was made is the ‘2020 Vision’ Report dated June 1992 (the ‘Review’). The Review refers to the ‘Primary Decision Maker’ which is the ‘council for the area’ in question. It was said that the council ‘…will generally retain the role of assessing development against the Building Code’.[68]
[68] 2020 Vision Final Report, p 27.
At page 30 of the Review, on the question of liability for building work, the Review states:
The proposed legislation has new provisions aimed at limiting the liability of the decision makers for structural defects, to the extent of any negligence on the part of the decision maker, and provides a limitation of time for such liability. (emphasis provided)
That indicates that the provisions limiting liability and providing for a limitation of time are directed at councils. Further, in the course of the Second Reading Speech, it was said in relation to what was described as other major provisions of the Bill that:
In the event of defective building work, changes to the liability provisions will lift some of the heavy burden which has fallen on councils previously and re-distribute it more equitably on other parties, including the designer, builder and owner.[69]
[69] South Australia, Parliamentary Debates, Housing of Assembly 10 March 1993 p 2435, 2441, GJ Crafter, Minister of Housing, Urban Development and Local Government Relations, 1993, p 1851, Development Bill Second Reading Speech.
That passage clearly refers to apportionment under s 72.
Later, in relation to s 72 it was said:
This clause provides that responsibility for defective building work will be apportioned between the parties in default according to the extent to which that default contributes to any damage or loss.[70]
[70] Ibid, p 2441.
And in relation to s 73:
This clause restricts the time within which an action for damages for economic loss or rectification costs arising from defective building work to the period of 10 years.[71]
[71] Ibid.
The use of the word ‘arising’ in the speech is consistent with identifying the economic loss or rectification costs as a consequence of the physical state or condition of the building work.
These parts of the Second Reading Speech and that part of the ‘2020 Vision’ to which reference is made make it clear that the limitation of time and the apportionment provision i.e. s 72 and s 73 are directed towards local councils, however local councils are not mentioned in either section. Had Parliament intended to limit the operation of sections 72 and 73 to local councils it would have been easy to do so.
Further, s 22 of the Acts Interpretation Act 1915 provides:
22—Construction that would promote purpose or object of an Act to be preferred
(1)Subject to subsection (2), where a provision of an Act is reasonably open to more than one construction, a construction that would promote the purpose or object of the Act (whether or not that purpose or object is expressly stated in the Act) must be preferred to a construction that would not promote that purpose or object.
(2) This section does not operate to create or extend any criminal liability.
Question 1 - Discussion
Inter-Continental Travels Pty Ltd v Hueppauff & Ors and Hueppauff v Inter-Continental Travels Pty Ltd, are not binding on me. In the first Hueppauff decision, Perry J made it clear he was not expressing a final opinion on the operation of s 73.
In the second Hueppauff decision, Martin J decided the appeal on the basis the claim was for a breach of a contractual warranty as to approvals and consents or misrepresentations as to approvals and consents. His Honour held that s 73 has no application to claims for damages resulting from either of these causes of action but noted that s 73 was enacted after the building work in question had been completed such that s 73 did not apply retrospectively. On those bases, his Honour held that s 73 did not apply to the particular circumstances.
In the matter before Martin J, the subject matter of the contract was not building work but the sale and purchase of a house and land with no building work required.
For these reasons, I accept DesignInc’s submission that the two decisions are able to be distinguished.
I am conscious that I have found that the expression ‘building work’ as defined in s 4 of the Act does not apply to either design or contract administration work however, if s 73 did not apply to design and/or contract administration in circumstances where defective building work resulted from that design and/or contract administration then there is the potential not just for absurdity but also a lack of consistency such as to frustrate the achievement of harmonious goals.
Specifically, that potential absurdity and lack of harmony arises if the use of the expression ‘defective building work’ in s 73 is limited to definition in s 4 of the Act.
Under these circumstances the designer may have proceedings issued against it claiming the resulting economic loss but not the builder. It seems to me it would be a perverse result if s 73 operated to bar an action against a builder for building work that is defective, but not the designer if the causes of the defective building work are alleged to be both the physical building work and defective design.
In my view, for s 73 to apply, there must be a nexus or link between the defective building work which is said to exist and the economic loss or rectification costs sustained. It is clear to me that Walford’s claim is for economic loss or rectification costs resulting from defective building work. Accordingly, I do not accept Walford’s second ground[72] which is to the effect that one has regard to the cause of action and not the consequence of the conduct said to comprise the cause of action.
[72] See [67] above.
Further, the expression ‘building work’ in s 73 identifies the broad subject and the word ‘defective’ qualifies that subject such that the expression depicts the physical state or condition of the building work that exists. The use of the word ‘resulting’ identifies the consequence of that physical state. It does not, unlike s 72, identify the causes of action, rather it is directed at the nature of the loss claimed and links that loss to the defective building work.
In Newcastle City Council v GIO General Limited[73] McHugh J said that:
If the legislature uses language which covers only one state of affairs, a court cannot legitimately construe the words of the section in a tortured and unrealistic manner to cover another set of circumstances.
[73] (1997) 191 CLR 85, 113.
I consider that when construing s 73, if the definition of ‘building work’ in s 4 of the Act is used, qualified as it is by the word ‘defective’, the consequence is that the operation of s 73 is unduly constrained and results in a tortured use of the defined term.
Further, given the context of the section in that part of the Act and in view of the purpose and mischief to which sections 72 and 73 are directed, to use the definition of ‘building work’ set out in s 4 of the Act would give s 73 an operation which was not intended.
In my view, the text of s 73 when considered with the context, purpose and mischief to which both sections 72 and 73 are directed, reveals that on a proper construction of both sections, s 72 is directed to apportionment in certain limited circumstances in the event there is a claim. Section 73 is directed at claims which have economic loss or rectification costs as the consequence said to arise from the physical state of defective building work irrespective of why that building work is defective.
Accordingly, I do not accept Walford’s submissions that for the purposes of s 73, the performance by DesignInc of its Services under the Architectural contract is not ‘building work’. I am satisfied that the text and context in which s 73 appears when taken with the purpose and mischief to which the section is directed, is such that it is intended to apply to, amongst others, designers and specifically in the context of this matter, DesignInc, either in its role as designer or Contract Administrator.
The construction of s 73 that I have found is also consistent with the observations of McHugh J in Woolcock Street Investments Pty Ltd v CDG Pty Ltd & Another[74] in relation to policy considerations. I accept that the decision was some 10 years after the Act came into operation but with respect his Honour’s observations (albeit directed to a limitation period) are apposite:[75]
[74] (2004) 216 CLR 515, 555.
[75] Ibid [103]-[105].
The now accepted doctrine is that, in the case of defective premises, damage does not occur until the defect manifests itself. No cause of action arises in tort until the plaintiff suffers damage. Consequently, those concerned with the design and construction of a building may be required to defend themselves against an action in tort many years after completing the task that now gives rise to the claims against them. On the other hand, a cause of action in contract arises when the contract is breached. Time runs from the breach, not the sustaining of damage. This creates the paradox that those involved in the design or construction of a building may be sued in tort years after the time has expired for suing on the contract that gave rise to the duty. Of course, since Donoghue v Stevenson, a similar anomaly arises in the case of goods and chattels. But in that area, the time lag between breach of contract and sustaining damage will ordinarily not be as long as in the case of defective buildings. Goods and chattels are usually consumed or used before the expiration of the contractual limitation period.
Moreover, imposing duties in respect of pure economic loss in building cases creates other problems. As I pointed out in Brisbane South Regional Health Authority v Taylor, the policy of the law for nearly 400 years has been to fix definite time limits (usually six but often three years) for prosecuting civil claims. These time limitations have been driven by the general perception that ‘‘[w]here there is delay the whole quality of justice deteriorates’’. In Taylor, I went on to say:
“The effect of delay on the quality of justice is no doubt one of the most important influences motivating a legislature to enact limitation periods for commencing actions. But it is not the only one. Courts and commentators have perceived four broad rationales for the enactment of limitation periods. First, as time goes by, relevant evidence is likely to be lost. Secondly, it is oppressive, even ‘cruel’, to a defendant to allow an action to be brought long after the circumstances which gave rise to it have passed. Thirdly, people should be able to arrange their affairs and utilise their resources on the basis that claims can no longer be made against them. Insurers, public institutions and businesses, particularly limited liability companies, have a significant interest in knowing that they have no liabilities beyond a definite period. As the New South Wales Law Reform Commission has pointed out:
‘The potential defendant is thus able to make the most productive use of his or her resources and the disruptive effect of unsettled claims on commercial intercourse is thereby avoided. To that extent the public interest is also served.’
Even where the cause of action relates to personal injuries, it will be often just as unfair to make the shareholders, ratepayers or taxpayers of today ultimately liable for a wrong of the distant past, as it is to refuse a plaintiff the right to reinstate a spent action arising from that wrong. The final rationale for limitation periods is that the public interest requires that disputes be settled as quickly as possible.
In enacting limitation periods, legislatures have regard to all these rationales. A limitation period should not be seen therefore as an arbitrary cut off point unrelated to the demands of justice or the general welfare of society. It represents the legislature’s judgment that the welfare of society is best served by causes of action being litigated within the limitation period, notwithstanding that the enactment of that period may often result in a good cause of action being defeated.’’
To allow an action in tort to be brought more than six or even twelve years after the negligent act has occurred when it could not have been brought in contract flies in the face of these rationales of the statutes of limitation. (citations omitted)
I do not rely on his Honour’s observations as a basis to construe s 73 but merely note that those observations are consistent with what I perceive to be the purpose and mischief identified in the Second Reading Speech.
Accordingly, I consider that both design work and contract administration comes within the ambit of s 73 of the Act.
As to the fourth component of s 73(1), the question of whether the building work has been completed is ultimately a question of fact.
Although relevant in the overall consideration, I do not consider that generally speaking, the issue of a Certificate of Practical Completion or even a Final Certificate is, by itself, determinative of whether building work has been completed. Each case will call for its own consideration.
As to whether the building work in this matter was complete, Clause A2 of the building contract, between Walford and Romaldi obliged Romaldi to bring the Works to Practical Completion in accordance with clause M1 of that contract.
The definition of Practical Completion in clause M1.1 reads:
M1 Practical completion
1. The contractor must bring the *works to *practical completion by the date for *practical completion shown in item 20 of schedule 1 as adjusted in accordance with this contract. The *works are at *practical completion when, in the reasonable opinion of the architect:
athey are substantially complete and any incomplete work or *defects remaining in the *works are of a minor nature and number, the completion or rectification of which is not practicable at the time and will not unreasonably affect occupation and use
ball commissioning tests in relation to the plant and equipment shown in item 21 of schedule 1 have been carried out successfully and
cany approvals required for occupation have been obtained from the relevant authorities and copies of documents evidencing the approvals have been provided to the architect.
Clause M1 identifies by reference to Schedule 1 to the building contract the Date for Practical Completion as 23 March 2007.[76]
[76] Contract, Schedule 1, Item 20.
It is an agreed fact that on 8 June 2007, DesignInc certified the Works as Practically Complete.[77]
[77] See also Document 9.
The defects liability period was for a term of 12 months[78] and commenced on the Date of Practical Completion.
[78] Contract, Schedule 1, Item 24.
Pursuant to clause M13, Romaldi was obliged to correct any defects or finalise any incomplete work, whether before or after the Date of Practical Completion, within the time instructed or if no time is stated within 10 days after receiving a written instruction from the architect to do so.
Clause M14 provides that if the contractor fails to correct a defect or finalise any incomplete work then the owner may use another person to correct the problem at the cost of the contractor.
It is apparent from the email correspondence between DesignInc and Romaldi[79] during the period September 2007 to April 2008 that Romaldi did not consider the tiling issues to be a defect.[80]
[79] Exhibit R1, Document 20.
[80] Exhibit R1, Documents 12, 14, 15, 19, 20 and 21.
On 5 September 2007, Romaldi sent an email to DesignInc concerning a number of items that needed to be resolved, including Variations and design issues.
In particular, on 10 April 2008, Mr Cockshell of DesignInc sent an email to Mr Turnbull of Romaldi, copied to Mr Flett of Walford, listing rectification items, including the tiling which is the subject of these proceedings.
Architect’s instruction 131 from DesignInc to Romaldi[81] addresses the issue of tiles in Terrace F16 and advises that it considers the ponding occurring at that location to be a defect with work not being carried out in accordance with the drawings.
[81] Exhibit R1, Document 19.
Romaldi’s obligations during and after the defects liability period are set out in clause M16 of the building contract which is in the following terms:
M16 Contractor’s obligations during and after defects liability period
1. If there is any remaining *defect or incomplete work, or the contractor becomes aware by instruction from the architect or from its own observations of any *defect or incomplete work during the defects liability period, it must *promptly return to the *site and correct the *defect or finalise the incomplete work. This obligation continues until the *defect is rectified or the incomplete work is finalised, and does not come to an end when the defects liability period is over. (emphasis provided)
2. The architect cannot give the first instruction to correct an outstanding *defect or to finalise any incomplete work after the end of the defects liability period, unless it is for the rectification of a latent *defect and the final certificate has not been issued.
It is apparent from clause M16, that the obligation to correct defective work during the defects liability period continues after the expiry of the defects liability period. There is a question as to whether that obligation applies to the work the subject of these proceedings and if so, whether it continues. That question feeds into the issue of whether the building work was completed.
Clause N14 deals with the effect of a Final Certificate. It is an agreed fact that as of July 2020, no Final Certificate has been located by any party. There is a factual dispute as to whether one was issued.[82]
In any event, clause N14 reads:
N14 Effect of final certificate
1. The final certificate must state the architect’s assessment of all outstanding entitlements under this contract. The final certificate is evidence of the parties’ entitlements under this contract and that the contractor has performed its obligations under this contract.
[82] Exhibit R1, Agreed Facts [41].
Security was provided under the Contract[83] as two unconditional bank guarantees in the sum of 2.5%.[84]
[83] Clause C3.1.
[84] See Contract, Schedule 1, Item 3.
Since the Contract price is $8,772,500 (incl GST) then each guarantee was in the sum of $199,875 (incl GST).
The unconditional bank guarantees were to be released upon the issue of the Notice of Practical Completion and the remainder upon the issue of the Final Certificate.[85]
[85] Contract, clauses C7, C9.
There is a factual dispute as to whether either of the bank guarantees have been released.[86]
[86] Exhibit R1, Agreed Facts [42].
Question 1 – Conclusion
In this matter, the agreed facts and the agreed documents comprising the joint tender book, Exhibit R1 are such that I am unable to determine on that material whether the building work in question was completed or when. Accordingly, I consider that to be a matter which should be addressed at trial and on that basis, I answer Question 1 in the following terms:
Does section 73 of the Development Act 1993 preclude the applicant (Walford) from bringing the claim it has advanced against DesignInc and/or from obtaining the relief it has sought against DesignInc?
Section 73 applies to DesignInc in its role as a designer and/or contract administrator however, on the agreed facts and documents put before the Court, the Court is unable to determine if, and/or when the building work is complete. Therefore the Court cannot determine whether s 73 of the Development Act precludes Walford from bringing the claim it has advanced against DesignInc and/or from obtaining the relief it has sought against DesignInc. The issue will need to await trial.
Question 2 - As a matter of law, can the Court extend the time period imposed by section 73(1) of the Development Act pursuant to section 48 of the Limitation of Actions Act 1936 (SA) (LoA Act)?;
DesignInc’s Submissions
DesignInc submits s 73 does not permit the Court to extend the 10-year time limit provided by s 73(1). It submits there are two potential constructions.
The first is that the opening words of 73(1): ‘Despite the Limitation of Actions Act 1936, or any other Act or law…’ has the effect of replacing any time limit in the Limitation of Actions Act, or any other Act or law and imposes its own 10-year time limit. To that extent s 73(1) excludes the operation of s 35 of the Limitation of Actions Act which provides for a 6-year time limit for both contact and tort claims. It submits that on that basis, no extension of time would be required for actions in contract claiming economic loss or rectification costs resulting from defective building work commenced after 6 years from the date of breach of contract but before the expiration of 10 years after completion of the building work in question. In the case of tort, no extension of time would be required for actions commenced after 6 years from the date the applicant suffers damage but subject to an outer limit of 10 years after completion of the building work in question.
In support of this construction, DesignInc refers to Dinov v Allianz Australia Insurance Ltd.[87]In that matter the New South Wales Court of Appeal considered s 109ZK of the Environmental Planning and Assessment Act 1979 (NSW). That section, along with the definition of ‘building action’ and ‘building work’ in s 109ZI, provides:
[87] (2017) 96 NSWLR 98 [110]-[112], per McDougall J.
109ZI Definitions
In this Part:
building action means an action (including a counter-claim) for loss or damage arising out of or concerning defective building work.
building work includes the design, inspection and issuing of a Part 4A certificate or complying development certificate in respect of building work.
…
109ZK Limitation on time when building action or subdivision action may be brought
(1) Despite any Act or law to the contrary:
(a)a building action may not be brought in relation to any building work more than 10 years after the date on which the relevant final occupation certificate is issued, …
(2) This section does not operate to extend any period of limitation under the Limitation Act 1969.
McDougall J (with whom Beazley P and Meagher JA agreed) considered the question of the opening words of s 109ZK(1), i.e. that ‘Despite any Act or law to the contrary’ holding that those words were pre-eminent or paramount such that despite the various periods of limitation, the section is paramount.
His Honour referred also to the Victorian Court of Appeal decision in Brirek Industries Pty Ltd v McKenzie Group Consulting (Vic) Pty Ltd.[88]
[88] (2014) 48 VR 558 [112]-[115].
In Brirek, s 134 of the Building Act 1993 (Vic) provided:
134 Limitation on time when building action may be brought
Despite any thing to the contrary in the Limitation of Actions Act 1958 or in any other Act or law, a building action cannot be brought more than 10 years after the date of issue of the occupancy permit in respect of the building work (whether or not the occupancy permit is subsequently cancelled or varied) or, if an occupancy permit is not issued, the date of issue under Part 4 of the certificate of final inspection of the building work. (emphasis in original)
The Victorian Court of Appeal considered that the opening words of s 134 meant:
The words ‘[d]espite any thing to the contrary in the Limitation of Actions Act 1958 or in any other Act or law’ have work to do in s 134. The Limitation of Actions Act and other Acts provide for different periods of limitation. The period provided for in s 134 operates despite those different periods.[89]
[89] Ibid.
In Aussie Blinds and Canvas Products Pty Ltd v Smith & Another[90] Barrett DCJ considered the operation of s 73 in the context of a Minor Civil Review. His Honour was reviewing a decision of a Magistrate who had decided that a claim in negligence against a contractor commenced 8 years after sail cloth had been erected at a residence and 4 years after damage was caused to the sail cloth by high winds was not statute barred. In so finding, the learned Magistrate had determined that the matter was governed by s 73 of the Act and that the applicable limitation period was 10 years. His Honour referred to Brirek, saying:[91]
[90] [2015] SADC 154.
[91] At [28]-[31].
There is a third possible time limit. If the respondents’ action was construed as an action for damages for defective building work within the Development Act, s 73 of the Act provides and unextendible time limit of 10 years. Section 73 provides:
(1)Despite the Limitation of Actions Act 1936, or any other Act or law, no action for damages for economic loss or rectification costs resulting from defective building work (including an action for damages for breach of statutory duty) can be commenced more than 10 years after completion of the building work.
(2)This section does not affect an action to recover damages for death or personal injury resulting from defective building work.
(3) The period prescribed by subsection (1) cannot be extended.
That section is to be compared with s 134 of the Victorian Building Act which provides:
Despite anything to the contrary in the Limitation of Actions Act 1958 or in any other Act or law, a building action cannot be brought more than 10 years after the date of issue of the occupancy permit in respect of the building work (whether or not the occupancy permit is subsequently cancelled or varied) or, if an occupancy permit is not issued, the date of issue under Part 4 of the certificate of final inspection of the building work.
In my view the two sections are materially the same, at least for the purposes of this case. The Full Court of Victoria explained the reason why the new provision had been made in its Building Act. It also referred to comparable legislation in other states and territories including s 73 of the South Australia Development Act. The Full Court said the following:
[103] The background to the introduction of s 134 of the Building Act is well known and not controversial.
[104] Under the Limitation of Actions Act, causes of action are barred at a given time after they accrue. Claims arising from breach of contract accrue at the time of the breach. Proof of damage is not an element of a claim for breach of contract. Negligence is only actionable on proof of damage. Claims arising from breach of a duty of care accrue when damage caused by the breach is sustained.
[105] In building actions it can be unclear when the damage is sustained. For many years there was controversy as to when time ran for claims arising out of the negligent design and construction of buildings. Concealed or latent defects may not be discovered for some time. Further, the loss and damage sustained may not be physical so much as “pure economic loss”. Those involved in designing, surveying and building found that their ability to get insurance was affected by the spectre of long-tail claims. In Woolcock Street Investments Pty Ltd v CDG Pty Ltd (Woolcock), McHugh J said:
The now accepted doctrine is that, in the case of defective premises, damage does not occur until the defect manifests itself. No cause of action arises in tort until the plaintiff suffers damage. Consequently, those concerned with the design and construction of a building may be required to defend themselves against an action in tort many years after completing the task that now gives rise to the claims against them. On the other hand, a cause of action in contract arises when the contract is breached. Time runs from the breach, not the sustaining of damage. This creates the paradox that those involved in the design or construction of a building may be sued in tort years after the time has expired for suing on the contract that gave rise to the duty. Of course, since Donoghue v Stevenson, a similar anomaly arises in the case of goods and chattels. But in that area, the time lag between breach of contract and sustaining damage will ordinarily not be as long as in the case of defective buildings. Goods and chattels are usually consumed or used before the expiration of the contractual limitation period.
[106] Legislation has since been enacted in various jurisdictions to provide some relief from the problem. - 32 The terms of the legislation varies between jurisdictions.
In my view the reasoning of the Full Court of Victoria in Brirek was applicable to the case before the Learned Special Magistrate. His Honour was correct to interpret the South Australian s 73 in the way that he did. Accordingly on that basis, and on the alternative basis, the respondents did not commence their proceedings out of time. (citations omitted)
The second potential construction of s 73 submitted by DesignInc is that the time periods in s 35 of the Limitation of Actions Act or any other Act or law are not displaced such that s 73(1) creates a long stop or outer limit to which those time limits might be extended. On that basis, there remains a 6-year limitation period for both contract and tort claims but the maximum period of any extension of time within which to bring the proceedings after the expiry of the relevant limitation period is 4 years if that claim falls within the description of a claim covered by s 73(1).
Walford Submissions
Walford submits that s 73 of the Act has no application to the claim by Walford because the claim is based upon the Architect’s failure to discharge or provide its services with the requisite degree of skill and care. It submits those obligations are not building work and therefore it does not come within s 73.
It submits further that in the alternative the 10-year period under s 73 only commences to run from the date of the issue of the Final Certificate, which has not been issued and therefore time has not begun to run. It notes that the concept of ‘completion’ which is referred to in s 73 of the Act is not defined and there is a question about whether ‘completion’ has been achieved. I have accepted that submission in relation to the question of whether completion had been achieved when addressing Question 1.
Walford submit further that on the face of it, s 73 is intended to prevail over the Limitation of Actions Act such that the 10-year limitation period after completion of the building work is an outer limit beyond which time cannot be extended notwithstanding the provisions of the Limitations of Actions Act. In that sense, it agrees with DesignInc’s second potential construction.
Consideration
The opening words of s 73 are clear and in my view give the section paramountcy over the provisions of the Limitation of Actions Act and any other Act or law.
The period of 6 years in contract runs from the date of breach, in tort it runs from the time at which the damage manifests itself. The time limit for which a claim in tort may be brought, may commence to run many years after the work in question was performed.
On that basis, it seems to me that the provisions of s 73(1) exclude the operation of s 35 of the Limitation of Actions Act by imposing different time limitation periods for actions for economic loss or rectification costs (including an action for damages for breach of statutory duty) resulting from defective building work and by setting a point in time from which the relevant limitation period starts to run.
The prohibition in s 73(3) that ‘the period prescribed by subsection (1) cannot be extended’ adds force to this conclusion.
Further, the policy and mischief of the legislation to which I have referred to earlier in these reasons clearly supports a single, extended limitation period.
Question 2 – Conclusion
I answer Question 2 in the following terms:
As a matter of law, can the Court extend the time period imposed by section 73(1) of the Development Act 1993 pursuant to section 48 of the Limitation of Actions Act 1936 (SA)?
No.
Answers to the two Questions
1I answer Question 1 as follows:
Does section 73 of the Development Act 1993 preclude Walford from bringing the claim it has advanced against DesignInc and/or from obtaining the relief it has sought against DesignInc?
Section 73 applies to DesignInc as a designer and/or contract administrator however, on the agreed facts and documents put before the Court, the Court is unable to determine if and/or when the building work is complete. Therefore the Court cannot determine whether s 73 of the Development Act precludes Walford from bringing the claim it has advanced against DesignInc and/or from obtaining the relief it has sought against DesignInc. The issue will need to await trial.
2I answer Question 2 as follows:
As a matter of law, can the Court extend the time period imposed by section 73(1) of the Development Act pursuant to section 48 of the Limitation of Actions Act 1936 (SA)?
No.
I will hear the parties on the question of costs.
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