Building Defects – Limitation of Actions

When building a property, generally, any defects become apparent prior to or shortly after practical completion has occurred, allowing you to seek rectification of the defective works with the Builder directly (1 year warranty period) or through Queensland Building and Construction Commission (QBCC), if it is within the complaint timeframes:

  1. Structural Defective Work: An owner can submit a complaint within 6 years 6 months from when the work is completed and within 12 months of noticing the defect; or
  2. Non-Structural Defective Work: An owner can also submit complaint no later than 12 months from noticing the defect.

In reality though, it is not uncommon for us to become aware of these defects, however, fail to action them within the complaint timeframes or in the alternative, not to become aware of the defective work until after a significant period has lapsed. A common question that is asked is, can I still make a claim against the Builder for the defective works outside the warranty period or complaint timeframes?

 

Potential Causes of Action

 

In short, yes, subject to the Limitation of Actions Act 1974 (‘the Act’) statue barring any cause of action. Potential causes of action that arise in relation to defective work can include:

  1. A breach of the contract, namely, the statutory warranties contained within the building contract, which can include but is not limited to:

              To the extent required by the Queensland Building and Construction Commission Act 1991 (Qld), the Builder warrants that:

  • All materials supplied by the Builder will be good and, having regard to the relevant criteria, suitable for the purpose for which they are used and that, unless otherwise stated in this contract, those materials will be new;
  • The works will be carried out in accordance with all relevant laws and legal requirements, including, for example, the Building Act 1975 (qld).
  • The works will be carried out in an appropriate and skilful way and with reasonable care;
  • The works will be carried out with reasonable diligence.

 

  1. A breach of the implied warranties for all contracts contained in section 42 – 44 of the Domestic Building Contracts Act 2000 (Qld) (‘DBC Act’), namely, the Builder warrants that:
  • all materials supplied will be good and suitable for the purpose they are used for;
  • that the building work will comply with all relevant laws; and
  • the work will be carried out in an appropriate and skilful way, with reasonable skill and care.

 

  1. A claim for negligence. To be successful in a claim for negligence, the usual elements are applicable:
  • The Builder owed a duty of care. This will generally flow from the duty owed by the Builder under the contract, subject to the time that has lapsed;
  • The duty of care owed by the Builder was breached;
  • As a direct result of the breach, you have suffered damages or harm.

 

Limitations of Action

Prior to commencing any proceedings against a Builder it will need to be determined whether the cause of action has lapsed and whether it will be statue barred by the Act.

 

Accrual of Action for breach of Contract

Section 10 of the Act says:

      The following actions shall not be brought after the expiration of 6 years from the date on which the cause of action arose—

  • subject to section 10AA, an action founded on simple contract or quasi-contract or on tort where the damages claimed by the plaintiff do not consist of or include damages in respect of personal injury to any person;

Gibbs v Guild (1882) 9 QBD 59 stipulates that a cause of action in contract accrues at the time of the breach, not at the time the damage is sustained. This was approved in UGL Rail Pty Ltd v Wilkinson Murray Pty Ltd [2014] NSWSC 1959, where the Court concluded that “A cause of action for breach of contract first accrues when the breach occurs.”

In relation to building works, this will be the time that the Builder performed the work that is defective. However, as it is difficult to ascertain the specific date the Builder breached the contract, a good starting point is the Completion date. It is commonly accepted that you will have six years from the Completion date to bring a claim against a Builder for a breach of contract. If six years has lapsed since the Completion date, any claim for a breach of contract will likely be statue barred.

 

Accrual of Action for Breach of Implied warranties

Section 51 of the DBC Act says:

A proceeding for a breach of warranty under this part for a regulated contract must be started within 6 years and 6 months after-

  • the subject work is finished; or
  • if the subject work is not finished – the stated completion date or period.

A cause of action in relation to the implied warranties under section 42-44 of the DBC Act, accrues at the time the building works were finished. As such, any claim for a breach of the implied warranties must be brought against the Builder within six (6) and six (6) months from the Completion date.

Section 61 of the Queensland Civil and Administrative Tribunal Act 2009 (QLD) says that the Tribunal may extend time to commence proceedings or waive compliance with procedural requirements of another enabling act. However, in Ryan v Cornwall [2010] QCAT 212, the Tribunal held that the s61 of the QCAT Act does not have authority to override the Limitations of Actions Act 1974 (QLD). On this basis, any claim brought against a Builder for a breach of the implied warranties after six (6) years and six (6) months will likely be statue barred.

 

Accrual of Action for Damages in Negligence (Tort)

Similarly, to a breach of contract, a claim for negligence will also need to be brought against a Builder within six (6) years from the date the cause of action accrues (section 10 of the Act). However, the major difference is that a cause of action in negligence accrues at the time when the damage is first suffered. This was discussed in Commonwealth v Cornwell (2007) 229 CLR 519 and supported in Dustar P/L v. Equititour P/L & Ors [2007] QSC 300, where the Supreme Court followed the High Court’s approach and concluded that:

                            “In the case of claims in negligence for economic loss, time does not run until the plaintiff discovers, or could on reasonable inquiry have discovered, 

                              that damage has been sustained.”

If you do not become aware of the defective work for a significant period of time, you may still be able to bring a claim of negligence against a Builder, on the premise it is within six (6) years of discovering the defective work or within six (6) years that the defective work could have been discovered through reasonable enquiry.

 

Summary

It is always prudent to speak with the Builder directly, to determine whether the issue can be resolved without the need for legal proceedings. However, if a resolution cannot be achieved amicably, there is a number of avenues that can be utilised to progress the matter (set out above).

If you wish to speak with one of our experts regarding defective building work and/or building disputes, please contact our office on 07 5444 4750 or email [email protected]