Application Of Limitation Periods To The Statutory Duty Of Care Under The Design And Building Practitioners Act

The introduction of the Design and Building Practitioners Act (DBPA) represents a tremendous reform for the construction industry. The duty of care imposed by section 37 has the potential to impact both businesses and individuals significantly. Industry stakeholders should be aware of the limitation periods applying to this duty.

Relevant Provisions

DBPA

Retrospective Application of the Statutory Duty of Care

Section 37 of the DBPA prescribes a duty on a wide variety of people who carry out construction work to exercise reasonable care to avoid economic loss caused by defects to all classes of buildings.

Section 5 of Schedule 1 of the DBPA further imposes a retrospective application of that duty for construction work carried out from 11 June 2010 onwards.

The effect of the above provisions means that:

• contractors performing construction work from 11 June 2010 onwards (despite the DBPA not being in existence at that time) owe a duty to exercise reasonable care to avoid economic loss caused by defects; and
• developers/owners (including subsequent owners) may bring a claim for a breach of such duty for construction work carried out from 11 June 2010 onwards (i.e. a cause of action).

Notwithstanding the above it is important to note that such claims are subject to the limitation periods of the Limitation Act 1969 (NSW) (LA) and the Environmental Planning and Assessment Act 1979 (NSW) (EPA).

Limitation Periods

The statutory duty of care is subject to certain time limits. A civil action in Court under Part 4 of the DBPA is subject to the applicable limitation periods established under the LA and EPA which relates to civil actions relating to certain construction work.¹

Limitation Act

Section 14 of the LA provides that a claim must be brought within 6 years from the date on which the cause of action first accrues:

An action on any of the following causes of action is not maintainable if brought after the expiration of a limitation period of six years running from the date on which the cause of action first accrues to the plaintiff or to a person through whom the plaintiff claims... (b) a cause of action founded on tort, including a cause of action for damages for breach of a statutory duty."

Environmental Planning and Assessment Act

Notwithstanding the 6 year period under the LA a claim is further subject to the application of the 'long stop' provision under Section 6.20 of the EPA which provides:

A civil action for loss or damage arising out of or in connection with defective building work or defective subdivision work cannot be brought more than ten years after the date of completion of the work. Building work is taken to be completed on the date on which an occupation certificate is issued that authorises the occupation of the building or the date a required inspection of the completed building was carried out or the date on which the building is first occupied.

Interpretation

The effect of the LA and EPA on the DBPA means that an action for a breach of the statutory duty of care under the DBPA must be brought:

• within 6 years from the date of a defect discovered (or ought to have been discovered); and
• is subject to the long stop i.e. 10 years after the occupation certificate/inspection/ occupation of the building work.

To illustrate the above:

• if 3 years after the issue of an occupation certificate, a defect manifests, then a claim under Section 37 of the DBPA must be commenced within 6 years under the LA; however
• if 5 years after the issue of an occupation certificate, a defect manifests, then a claim under Section 37 must be commenced within the remaining 5 years due to the long stop under the EPA.

Key Takeaway

A statutory duty of care under Section 37 of the DBPA may be brought for construction work carried out after 11 June 2010 but are subject to the limitation periods under the LA and EPA.

Construction industry stakeholders should be aware of the application of the limitation periods to understand their liability.

Footnote

1. Pt 4 of the DBPA. Note at the end of Pt 4.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.