Limitation Period for Statutory Warranty Claims - Duncan v Bert Farina Constructions Pty Ltd [2024] SASCA 67
Posted on October 10, 2024
In the recent case of Duncan v Bert Farina Constructions Pty Ltd,[1] the South Australian Supreme Court of Appeal confirmed that the limitation period for statutory warranty claims under the Building Work Contractors Act 1995 (SA) (BWCA) was 5 years from completion of the building work, and not the 10-year period referred to in section 159 of the Planning Development and Infrastructure Act 2016 (SA) (PDIA).
Section 32(5) of BWCA states that proceedings for a breach of a statutory warranty must be commenced within 5 years of the completion of the building work. That legislation expressly states that the 5-year period cannot be extended.
On the other hand, section 159 of the PDIA, formerly section 73 of the Development Act 1993 (SA) (DA), establishes a 10-year time limit for actions seeking damages for economic loss or rectification costs resulting from defective building work.
The issue in this appeal was whether the 10-year period under the DA displaced the 5-year period under the BWCA.
Applying textual, contextual and purposive statutory construction, the Court held that the 10-year period under the DA and PDIA operates only as a long-stop limitation provision for defect claims generally (where economic loss and/or rectification costs are claimed), rather than displacing the 5-year period for statutory warranty claims.
What that means is that for statutory warranty claims, the claim must be commenced within 5 years of the completion of the building work. Also, for other defect claims generally (where economic loss and/or rectification costs are claimed), such claims must be commenced within time under the Limitation of Actions Act 1936 (SA) (LOAA), but once it is 10 years from the completion of such works, the claim is time barred regardless as to what may otherwise be argued under the LOAA.
Background Facts
The appellants (Owners) initiated proceedings against the respondent (Builder) on 13 July 2022, claiming damages for defective building work in the construction of their house in Morphettville (Property). Specifically, the owners asserted that the builder was liable for breaching the statutory warranties under the BWCA and in common law negligence.
The Owners were not the party that engaged the Builder. The Owners purchased the property after the dwelling was already built. Therefore, the Owners did not have a claim in contract, other than by reference to statutory warranties. Statutory warranty claims run with the land, so they transfer to a new owner.
The Owners also claim in negligence, based on an argument that the builder owed a subsequent owner a duty of care.
The Builder asserted that the works reached practical completion by 10 December 2015, meaning that the claim was made outside the 5-year limitation period for statutory warranty claims. The Owners argued that the 5-year limitation was displaced by the 10-year period under the DA
At first instance, the District Court of South Australia held that section 73 of the DA does not displace the shorter 5-year period under the BWCA. The owners appealed this decision.
Decision
The Court stated that resolving the preliminary issue required the proper construction of section 73 of the DA. Referencing SZTAL v Minister for Immigration and Border Protection (2017) 262 CLR 362, the Court conducted its statutory construction through textual, contextual and purposive considerations.[2]
Textual Considerations
In construing section 73 of the DA, the Court expressed that it:
- applies to actions for “damages for economic loss or rectification costs resulting from defective building work (including actions for damages for breach of statutory duty)”;
- is expressed in terms that “no action can be commenced“ after the 10-year period; and
- is expressed to apply “despite the Limitation of Actions Act or any other Act or law”.[3]
The Court found that the provision confers a right on the respondent to rely upon the expiration of the time limit as a defence, barring the applicant’s right to a remedy.[4] The words are negative and restrictive in nature and do not confer any permission or authority on an applicant to commence an action at any time up to the expiry of the period.
Furthermore, the Court stipulated that the use of the word “despite” does not mean that section 73 operates to displace the shorter time period provided under the BWCA.[5] It merely indicates an intention that section 73 will override any inconsistent provision. While the limitation periods prescribed under the DA and the BWCA overlap in operation, the Court held that they are not inconsistent and can exist harmoniously, with the longer limitation period continuing as a long-stop (absolute) limitation.[6]
Contextual and Purposive Considerations
The BWCA regulates “domestic building work”, which the Court explained was a class of building work that has, for a long time, been more highly regulated by comparison with other building work.[7] The Court refers to such regulations as representing “a careful balance struck between the interests of house owners and builders”.[8]
The Court found that applying a 5-year limitation to statutory warranty claims represented “an aspect of the balance struck”.[9] The Court expressed that replacing the non-extendable 5-year time limit under section 32(5) of the BWCA with a 10-year time limit under section 73 under the DA would materially disrupt this balance.[10] Accordingly, the Court noted at [78] that it would be “somewhat incongruous for the legislature to have intended such a fundamental change in policy without clearly expressing such an intent.”[11]
Further, a situation where the 10-year period displaced the 5-year period would go beyond addressing the “mischief” that section 73 of the DA was legislated to address, which was to create some certainty for builders as to how long they might be liable for works.[12]
Additionally, the Court identified that construing section 73 of the DA as replacing the 5-year time limit in section 32(5) would create an incoherence with respect to the way in which section 32 of the BWCA operates.[13] The Court explained that interpreting section 73 of the DA as displacing the 5-year period would only replace the 5-year limit with respect to claims for damages for economic loss or rectification costs arising from defective building work. It could displace with respect to claims arising for a breach of the statutory warranty to perform rectification works.
Conclusion
In short, the law regarding this issue is now settled:
- For statutory warranty claims, there is an unextendible limitation period of 5-years from when the building work is completed.
- For other defect claims generally (where economic loss and / or rectification costs are claimed), such claims must be commenced within time under the LOAA, but once it is 10 years from the completion of such works, the claim is time barred regardless as to what may otherwise be argued under the LOAA.
[1] Duncan v Bert Farina Constructions Pty Ltd [2024] SASCA 67, [2] Ibid [40], [3] Ibid [48], [4] Ibid, [5] Ibid [62], [6] Ibid, [7] Ibid [73], [8] Ibid [74], [9] Ibid [77], [10] Ibid [84], [11] Ibid [78], [12] Ibid [91], [13] Ibid [93].
Written by Charles Moran, Partner
