What is the time limit on suing your builder?

Generally, a claim for negligence must be made within 6 years of the plaintiff suffering loss. Sometimes, negligent building work does not cause loss until many years after the building was completed. Accordingly, to give builders some finality, New South Wales law bars a claim made more than 10 years after the building was completed. That rule was recently tested in court.

In Bandelle Pty Ltd v Sydney Capitol Hotels Pty Ltd [2020] NSWCA 303, the plaintiff occupied a building in Sydney where a fire broke out, activating a sprinkler system, which caused loss and damage to the plaintiff. He sued the builder, claiming that the fire was caused by defective building work completed 20 years previously.

Supreme Court decision

The builder’s defence relied on section 6.20 of the EPA, which provides that:

a civil action for loss or damage arising out of or in connection with defective building work… cannot be brought more than 10 years after the date of completion of the work.

The Supreme Court ruled on that defence as a preliminary issue. The Court found that the plaintiff was merely an occupier of part of the building, rather than the party who engaged the builder to do the work. Accordingly, the Court held that section 6.20 of the EPA did not operate, so the plaintiff could go ahead and sue the builder for defective work carried out 20 years previously.

Court of Appeal decision

The builder then appealed to the Court of Appeal. That Court held that section 6.20 applies to “all claims for economic loss caused by defective building work”, not just the party who engaged the builder. The Court of Appeal overruled the Supreme Court decision and held that the plaintiff’s claim was barred by section 6.20.

What this means for you?

If you suffer loss as a result of defective building work, it is important that you commence proceedings within 10 years from the date of completion of the building work. This means that subsequent owners, including strata lot owners and owners corporations will be caught by section 6.20 of the EPA.

The Design and Building Practitioners Act 2020 (“DBPA”) operates retrospectively, allowing plaintiffs to retrospectivity sue builders and others involved in the design and construction buildings for defective work, even if the DBPA was not in force when the work was carried out. This case shows that owners corporations making claims under the DBPA are still subject to the limitation period under section 6.20 of the EPA, even though they did not engage the builder to do the work

For more information contact Tim Somerville (02) 9923 2321 tsomerville@somervillelegal.com.au