The ACT Supreme Court has now determined that limitation periods under the Building Act 2004 (ACT) do not apply to claims about design work undertaken prior to the issue of a building approval.
The effect of the decision in Helkeast Pty Ltd & Anor v Ruckschloss is that engineers’ (and other consultants such as architects’) liability for negligent work is potentially much longer than the builder’s liability.
The case centred on the construction of a five storey residential apartment complex, completed in 2006.
Some 8 years later (in 2014) the Construction Occupations Registrar issued an emergency rectification order against the builder in respect of defects at the apartment complex. In 2015 a further rectification order was made against the builder.
In 2016 the builder commenced proceedings against the engineer seeking to recover some of the builder’s losses. The builder accused the engineer of being the source of the problem, including having negligently prepared design and documentation, negligently issuing a certificate of structural sufficiency.
The 10 year limitation on ‘building actions’
The engineer filed an application to strike out the claim. He argued that the proceedings commenced by the developer were barred by the limitation periods set out in sections 140 and 142 of the Building Act 2004 (ACT). Those sections state that a ‘building action’ cannot be brought more than 10 years after a certificate of completion has been issued. ‘Building action’ is defined in the Act as an action for damages in relation to defective building work or defective construction work OR the negligent exercise by a licensed construction practitioner of a function as a certifier.
The engineer’s position was that the design and construction are not mutually exclusive concepts, and the work of an engineer is clearly work in relation to building work.
The builder, on the other hand, argued that the Act is not concerned with regulating work such as engineering drawings created before any application for a building permit was lodged.
The court agreed with the builder, stating that the Act ‘was not intended to and does not regulate engineering designs created before building consent is applied for’ and that the Act does not regulate the creation of a certificate of structural sufficiency. The court found:
The [Building] Act’s concern is with the physical or hands on aspects of the construction of a building, at a time after approval for it has been granted.
Consequently, ‘building work’ does not include the preparation of engineering plans and the 10 year limitation period on bringing ‘building actions’ did not apply.
So what is the limitation period for consultants?
Engineers and other consultants (including architects) should be aware that their exposure to claims is not limited to 10 years from completion of the building. Whilst claims for breach of contract are generally limited to 6 years from the date of the breach (which is generally the date the work is done, e.g. the plans handed over), claims in negligence can have a much longer shelf-life because the cause of action does not accrue until the loss is suffered, and the limitation period runs for 6 years from that date.
This does not mean it is open slather to bring defect claims against consultants decades after the building is complete. A number of decisions culminating in the High Court’s decision in Brookfield (see our previous eBrief) have made it very difficult to bring claims in negligence for building defects – whether against engineers, architects or builders.
If you are concerned or if you would like to discuss your exposure (including your existing contracts and risk of liability), you should contact the team at Meyer Vandenberg on the details below.
For more information contact the Building and Construction Dispute Resolution Team: