1. That the time limit fixed for the start of a proceeding under section 51 of the Domestic Building Contracts Act 2000, be extended pursuant to section 61 of the Queensland Civil and Administrative Tribunal Act 2009 to allow the applicants' until 9 December 2010 to file their claim for breach of statutory warranties;
2. That the time for the filing of the applicants amended statement of claim contained in direction 1 of the directions made on 29 November 2010 be extended to 9 December 2010.

BUILDING DISPUTE - Domestic Building Contracts Act 2000 s 51 - whether time limit for starting a proceeding for a breach of warranty can be extended under _Queensland Civil and Administrative Tribunal Ac_t 2009 s 61 - effect of Limitation of Actions Act 1974 s 43A - relevant factors in the exercise of discretion to extend time

Domestic Building Contracts Act 2000, ss 18, 42, 43, 44, 51, 55

Limitation of Actions Act 1974, ss 7, 43A

Queensland Building Services Authority Act 1991, s 77, Schedule 2

_Queensland Civil and Administrative Tribunal Ac_t 2009, ss 6(2), 6(7), 61

[1962] HCA 13; 108 CLR 471, applied

Brisbane South Regional Health Authority v Taylor [1996] HCA 25; [1996] 186 CLR 541, considered

Reynolds v Aluma-Lite Products Pty Ltd (No 2) [2010] FCA 914 (25 August 2010), applied

R v Roberts, ex parte Jacob [2002] QCA 87, considered

Gallagher v QBSA [2010] QCAT 383, applied

Ryan v Cornwall [2010] QCAT 212, not followed

This application was heard on the papers pursuant to section 32 of the Queensland Civil and Administrative Appeal Tribunal Act 2009, with the benefit of written submissions as follows.

[1] Mr and Mr Aurisch (the applicants) have previously filed an application which sought damages for negligence. The proceedings were commenced against a builder (Millsons Pty Ltd trading as Dixon Homes Rockhampton). Later, other parties were joined as respondents to the proceedings, namely a soil tester (LA and SR Thorne Pty Ltd trading as Bowler Geotechnical Capricornia); and engineers (Tapsell Consulting Engineers Pty Ltd). The respondents were involved in the construction of a house property which the Aurischs' subsequently purchased, and in respect of which the claim in negligence arises. They purchased the house on 5 April 2004 from the original owner, Ravcorp Developments Pty Ltd which was a developer. Construction was completed on 24 March 2004.

[2] The proceedings were commenced on 3 September 2009 in the since abolished Consumer and Commercial Tribunal. QCAT now has responsibility to deal with the proceeding.

[3] The tribunal made directions on 26 October 2010 at the conclusion of a compulsory conference, which included directions for some disclosure of documents by the builder to the applicants within 14 days; and for the applicants to file and serve an amended application which had been foreshadowed at a compulsory conference by 23 November 2010. The time for filing of the amended application was subsequently varied by directions made on 29 November 2010, to 7 December 2010.

[4] In November 2010, Dixon Homes disclosed to the Aurischs' a copy of the contract between them and the developer for the construction of the home. The contract was dated 29 August 2003.

[5] On 9 December 2010, the applicants' filed a second amended statement of claim to include a claim for breach of statutory warranties against the builder under the Domestic Building Contracts Act 2000 (the DBC Act). In response, the builder asserted that the claim is statute barred under section 51(1) of the DBC Act.

[6] Mr and Mrs Aurisch now seek an order, pursuant to section 61 of the Queensland Civil and Administrative Tribunal Act 2009 (the QCAT Act), extending the time limit fixed by section 51 of the DBC Act to commence a proceeding for breach of warranties. The applicants and the builder have provided written submissions to the tribunal about the application for extension of time.

[7] It is common ground that the limitation period under section 51 of the DBC Act expired in September 2010.

[8] There are two issues for consideration. Firstly, whether the time limit under section 51 DBC Act can be extended pursuant to section 61 of the QCAT Act; and if so, whether the tribunal should exercise its discretion to extend the time limit.

[9] Section 61 of the QCAT Act provides that the tribunal may extend procedural time limits as follows:

(a) extend a time limit fixed for the start of a proceeding by this Act or an enabling Act; or

(b) extend or shorten a time limit fixed by this Act, an enabling Act or the rules; or

(c) waive compliance with another procedural requirement under this Act, an enabling Act or the rules.

(2) An extension or waiver may be given under subsection (1) even if the time for complying with the relevant requirement has passed.

(3) The tribunal can not extend or shorten a time limit or waive compliance with another procedural requirement if to do so would cause prejudice or detriment, not able to be remedied by an appropriate order for costs or damages, to a party or potential party to a proceeding.

(4) The tribunal may act under subsection (1) on the application of a party or potential party to the proceeding or on its own initiative.

(5) The tribunal's power to act under subsection (1) is exercisable only by--

(a) the tribunal as constituted for the proceeding; or

(b) if the tribunal has not been constituted for the proceeding--a legally qualified member, an adjudicator or the principal registrar.

[10] An enabling Act is defined in section 6(2) as an Act, other than the QCAT Act, which confers jurisdiction on the tribunal. An enabling Act which confers original jurisdiction, may add to, otherwise vary, or exclude functions stated under the QCAT Act,[1] including, under section 6(7), the period within which an application must be made.[2] If an enabling Act modifies the tribunal's functions in a jurisdiction conferred by it, or a matter mentioned in section 6(7), then the modifying provision in the enabling Act prevails to the extent of any inconsistency.[3]

[11] Part 7 of the Queensland Building Services Authority Act 1991 (the QBSA Act) confers original jurisdiction on the tribunal to decide building disputes.[4] Definitions of 'building dispute,' 'domestic building dispute' and 'reviewable domestic work' are provided in Schedule 2 of the QBSA Act. By virtue of these provisions, the tribunal may decide a building dispute relating to breach of the statutory warranties under the DBC Act subject to some exceptions which are not relevant.

[12] The DBC Act does not give jurisdiction to the tribunal to determine the dispute which is the subject of this application. However, it is an enabling Act for conferring jurisdiction on QCAT for other applications.[5]

[13] Section 51 of the DBC Act specifies that:

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

(b) if the subject work is not finished--the stated completion date or period.

(2) In a proceeding for a breach of a warranty mentioned in this part, it is a defence for the defendant to prove that the deficiencies of which the plaintiff complains arise from instructions given by the building owner contrary to the defendant's written advice.

[14] In Ryan v Cornwall,[6] a differently constituted QCAT tribunal found that the limitation period in section 51 of the DBC Act was unable to be extended under section 61 of the QCAT Act. The tribunal reached this view, having regard to section 43A of the Limitation of Actions Act 1974 (LA Act). Section 43A provides as follows:

limitation law means a law (including, but not limited to, this Act) that provides for the limitation or exclusion of any liability or the barring of a right of action for a claim by reference to the time when a proceeding on, or the arbitration of, the claim is started.

(2) A limitation law of the State is to be regarded as part of the substantive law of the State.

(3) This section applies to a cause of action that arose before the commencement of this section but does not apply to a proceeding started before the commencement.

[15] The tribunal concluded that section 43A of the LA Act makes section 51 of the DBC Act a substantive provision and that as a result, the right was extinguished at the expiration of the limitation period prescribed.[7] Further, it considered that express statutory authority was necessary if the right was to be revived.[8] It did not consider that section 61 of the QCAT Act was sufficient or intended for this purpose.[9]

The threshold question -- whether time may be extended for commencing the proceedings for breach of statutory warranty

[16] The Aurischs' argue that section 43A of the LA Act does not operate to extinguish underlying rights. They rely upon a recent decision of the Federal Court of Australia in Reynolds v Aluma-Lite Products Pty Ltd (No 2).[10] In this decision, Justice Logan considered the operation of section 43A of the LA Act.[11]

[17] The applicants argue that, as Justice Logan identified, section 43A(2) did not operate to bar rights at the end of a limitation period. He drew this conclusion having regard to conventional statutory construction approach which bars remedies not rights;[12] that when Parliament intended a limitation period to have substantive effect, the statutory provision would expressly state this;[13] having regard to the Explanatory Notes, section 43A was intended to characterise a limitation provision for purposes of choice of law determination;[14] and finally, provision in the LA for extension of limitation periods was inconsistent with an interpretation that section 43A had wide substantive effect.[15]

[18] In essence then, the applicants argue that the tribunal erred in the Ryan decision by merging the concept of the limitation period being part of substantive law for a choice of law analysis as provided for in section 43A of the LA, with the separate concept of substantive rights being extinguished.

[19] The builder argues that Ryan was correctly decided and urges the tribunal to adopt a similar approach, although it does not make submissions about how the decision of Justice Logan in Reynolds v Aluma-Lite Products Pty Ltd (No 2) should be reconciled with it. Alternatively, it argues that if the Aurischs' correctly assert that s 43A does not operate as Ryan suggests, then the LA Act cannot be used to determine the character of the limitation provided in s 51 of the DBC Act. In this regard, reliance is placed on section 7 of the LA Act, which provides among other things, that subject to sections 11(2) and 43A, the LA Act does not apply to an action for which a time limitation is fixed by another Act.

[20] The builder argues that the limitation provision in section 51(1) of the DBC Act is 'the essence of the right to bring proceedings,' and that the applicants' rights terminated with its expiry. The builder submits that there is a distinction between limitation statutes and limitation provisions, as discussed in Australian Iron & Steel Ltd v Hoogland.[16] Reliance is placed on the judgment of Justice Windeyer, who said:

It may be that there is a distinction between Statutes of Limitation, properly so called, which operate to prevent the enforcement of rights of action independently existing, and limitation provisions annexed by a statute to a right newly created by it. In the latter case the limitation does not bar an existing cause of action. It imposes a condition which is of the essence of a new right.[17]

[21] The builder also refers to a decision of Supreme Court of Queensland which considered that a limitation provision in a statute which both creates a right and a time limit, may annexe the limitation to the right, and accordingly be 'of the essence of the right:' R v Roberts, ex parte Jacob.'[18] The builder submits that the time limit in section 51 of the DBC Act is annexed to the right to bring proceedings.

[22] In response to these arguments, the Aurischs' submit that further comments of Justice Windeyer in the Australian Iron and Steel case are relevant as follows:

......And, even when a time limit is imposed by the statute that creates a new cause of action or right, it may be so expressed that it is regarded as having a purely procedural character, as a condition of the remedy rather than an element in the right ; and in such cases it can, it seems, be waived, either expressly or in some cases by estoppel ... [19]

[23] In this case, the DBC Act creates statutory warranties,[20] such as having a builder carry out the work with reasonable care and skill,[21] which an owner may enforce. The applicants submit that the time limit is merely a condition of the remedy, namely enforcing those rights by starting a proceeding. The argument is that the limitation period is therefore a 'condition of the remedy' rather than an element of the right. They argue that section 61 of the QCAT Act gives the tribunal power to extend the time limit fixed for starting the proceeding.

[24] The DBC Act does not confer jurisdiction on the tribunal for deciding proceedings for breach of the statutory warranties which it contains. That jurisdiction is conferred by the QBSA Act. However, the DBC is an enabling Act, as it confers jurisdiction for other types of applications. Unless the enabling Act has modified the QCAT Act in some relevant way, then pursuant to section 61 of the QCAT Act, the tribunal may extend the time limit for the start of the proceeding, provided that the time limit fixed is a procedural requirement.

[25] The decision of Justice Logan in Reynolds v Aluma-Lite Products about the effect of s 43A in characterisation of a limitation provision for a choice of law analysis is directly relevant and applicable. Having regard to the Explanatory Notes regarding the insertion of section 43A into the LA, it is clear that it was inserted for the purposes of determining choice of law issues, so that when applied in another jurisdiction as the law governing proceedings, Queensland limitation laws will be applied. It was inserted to discourage forum shopping. Accordingly, I do not construe section 43A to make the time limit in section 51 of the DBC Act a substantive provision.

[26] However, in that decision, Justice Logan was considering limitation periods contained in the LA Act. His broader comments must be understood in that context. Specifically, section 7 of the LA Act provides that subject to s 43A and 11(2), which is not relevant in this case, the LA Act does not apply to an action for which a limitation period is fixed in another Act. In this instance, the relevant time limit is set in the DBC Act.

[27] The observations of Justice Windeyer in Australian Iron and Steel about limitation provisions, and the distinction between a condition which is the essence of a right, as opposed to a time limit which is a condition of a remedy, are relevant in determining the nature and effect of the time limit specified in section 51 of the DBC Act. The issue in this case is whether the time limit in s 51 of the DBC Act is annexed to the right as submitted by the builder, or whether, as the applicants argue, it is a condition of the remedy.

[28] The DBC Act provides for statutory warranties. It separately provides in s 51 for a proceeding for a breach of a warranty to be commenced within the 6 years and 6 months time limit. The statutory warranties provided for in the DBC Act are not extinguished upon the expiration of the time prescribed for commencing proceedings: the warranties themselves remain in place under the legislation. Since the warranties are unaffected by the expiration of the time limit, I am satisfied that the effect of section 51 is to bar resort to a remedy through proceedings, rather than extinguish the right to the warranties. Therefore, the time limit is a condition of the remedy.

[29] However, proceedings can not be commenced after that time, unless there is a mechanism for extending the time for the commencement of the proceeding. I accept, as Justice Logan said, statutory construction rules suggest that if Parliament intended the time limitation to have substantive effect it would expressly state this. It has not done so. Further, enabling Acts may modify the provisions of the QCAT Act in which case the modifying provision would prevail. There is no modifying provision in the DBC Act which prohibits extension of the time limit fixed by section 51 pursuant to section 61 of the QCAT Act.

[30] Accordingly, I am satisfied that I may, if I consider it appropriate to exercise my discretion to do so, extend time for the start of a proceeding for a breach of warranty under the DBC Act.

Should the discretion to extend the time limit be exercised?

[31] Gallagher v QBSA[22] identifies the matters relevant to an application for extension of time. In that case, Member Oliver identified these as whether there is reasonable explanation for the delay; whether there has been any prejudice suffered as a result of the delay in filing the application; whether the proposed claim has some merit; and whether it would be fair and equitable in all of the circumstances.

[32] Section 61(6) of the QCAT Act provides that a time limit can not be extended if this would cause prejudice or detriment not able to be remedied by an order for costs or damages. Prejudice must be considered in the context of the circumstances at the time of the application.[23]

[33] The applicants noticed defects in the home, in about March 2005. In April 2005, they made a claim against the statutory insurance fund under the QBSA Act. The works that were the subject of that claim were completed in February 2009. In September 2009, the Aurischs' filed their original application in these proceedings. Later, amendments were made due to the inclusion of the soil tester and the engineers as parties.

[34] In October 2010, when Counsel was briefed to appear for the applicants at a compulsory conference, he formed the view that they may have a claim for breach of statutory warranty, but that disclosure was required to determine whether that claim should proceed. Directions were made at the conclusion of the compulsory conference on 26 October 2010 for the builder to 'provide to the applicants a copy of any contract between Ravcorp Developments Pty Ltd and the' builder 'in relation to the subdivision which included' the Aurischs' house property within 14 days.

[35] On 8 November, the builders provided a copy of the contract. On 9 December 2010, the amended statement of claim including the claim for breach of statutory warranties was filed.

[36] The applicants submit that they filed the amended claim including the breach of statutory warranty ten weeks from the expiration of the time limit, and that the chronology shows that they have not sat on their rights, rather that they have actively and diligently pursued them.

[37] The builder submits that despite defects having been observed in April 2005, it was not until 2009 that proceedings were commenced. Further, at the time of the compulsory conference, when the possibility of bringing a contractual claim was first raised, the time limit for starting a proceeding for breach of statutory warranty had already expired. Further the builder argues that the applicants had been aware of the existence of the contract since the builder filed its defence in September 2009.

[38] I am satisfied that the Aurischs' have been pursing their rights since April 2005, through the QBSA and since 2009, through these proceedings. There has been some delay in identifying and pursuing the claim for breach of statutory warranties against the builder. But once it was identified it has been promptly pursued. The builder has been aware since 2005 of the claim through the QBSA, and in any event, has been aware of these proceedings against it for damages for negligence since September 2009. The claim for breach of the statutory warranties arises out of the same circumstances and the amended claim including the statutory warranties was filed some ten weeks after the expiry of the time limit.

[39] In my view, a reasonable explanation has been given for the delay.

[40] The applicants submit that prejudice can not mean mere delay, costs of delay, or the possibility of an adverse finding by the tribunal on determination of the application, relying upon Chesterton v Smith.[24] In this instance, they submit that there can be no prejudice since the claim arises from the same facts alleged against the builder since the commencement of the proceeding.

[41] The builder argues that if the time limit is extended, it will suffer prejudice. Reliance is placed on the judgment of Justice McHugh in Brisbane South Regional Health Authority v Taylor,[25] who said that a limitation provision sets out the general rule while an extension of it represents an exception to it.[26] Further, he stated that it will often be unfair to make current shareholders liable for a wrong in the distant past and that it is Parliament's judgment that society is best served by causes of action being litigated within the prescribed period.[27] The builder argues that it will suffer inherent prejudice as a result of the applicants' delay, in the sense described by Justice McHugh.

[42] Further, the builder submits that the character of the claim to be met by it would substantially change if an extension was granted, resulting in undue delay and a lengthy hearing, as it will be necessary to consider whether the contract falls within the DBC Act.

[43] I do not consider that there is material prejudice to the builder if the discretion to extend time is exercised. The builder is well aware of the circumstances giving rise to the claim and will be required to meet the Aurischs' application arising essentially out of the same set of facts for negligence irrespective of whether the claim for breach of statutory warranties also proceeds.

[44] The applicants submit that the new claim has merit. Further, they submit that the builders subsequent assertions that there are other contracts with Ravcorp which could be a single contract for construction of two or more dwellings are unsubstantiated as the contracts relied upon have not been disclosed although the direction of the tribunal of 26 October 2010, required it.

[45] They argue that the tribunal's directions of 26 October 2010, were for the builder to provide a copy of any contract between the original owner and the builder in relation to the subdivision. The builder advised the applicants when providing only one contract relating to the property owned by the applicants, that this was the only contract used for properties constructed by the builder in the development.

[46] The builder argues that the contract is not a domestic building contract under the DBC Act because it entered into two or more separate contracts with Ravcorp which could be the subject of a single contract for the construction of 2 or more detached dwellings.

[47] The builder's arguments that the claim does not have merit turn on the content of documents of which it has not provided in evidence or disclosed in accordance with the direction made by the tribunal. On the basis of the available evidence, I am satisfied that the claim has some merit.

[48] In all of the circumstances, I am satisfied that justice would be served by exercising my discretion to make orders under section 61 of the QCAT Act, extending time for the starting of a proceeding for breach of warranty under section 51 of the DBC Act. As the applicants already had proceedings on foot, the claim for breach of statutory warranties was filed as part of the applicants' second amended statement of claim on 9 December 2010. Accordingly, I will order that time be extended for the filing of the claim to the date on which the applicants filed their second amended statement of claim which included the claim for breach of statutory warranties.

[49] To further give effect to these orders to extend the time limit, I will also formally direct that the time for the filing of the applicants' amended application in accordance with the direction made on 29 November 2010, be extended to 9 December 2010.

[2] QCAT Act section 6(7); Acts Interpretation Act 1954 section 14(3).

[5] For example, see sections 18(6), 55(4).

[6] [2010] QCAT 212 (Member Fitzpatrick).

[7] [2010] QCAT 212 (Member Fitzpatrick) [27-29].

[8] [2010] QCAT 212 (Member Fitzpatrick) [29].

[9] [2010] QCAT 212 (Member Fitzpatrick) [30-31].

[10] [2010] FCA 914 (25 August 2010).

[11] [2010] FCA 914 (25 August 2010), [36-45].

[12] [2010] FCA 914 (25 August 2010) [41].

[13] [2010] FCA 914 (25 August 2010) [42].

[14] [2010] FCA 914 (25 August 2010), [43].

[15] [2010] FCA 914 (25 August 2010) [44].

[16] [1962] HCA 13; (1962) 108 CLR 471.

[17] [1962] HCA 13; (1962) 108 CLR 471 at [488-489] (Windeyer J).

[18] [2002] QCA 87 (Davies J), [13].

[19] [1962] HCA 13; (1962) 108 CLR 471 at [488-489] (Windeyer J).

[22] [2010] QCAT 383, [43].

[23] Brisbane South Regional Health Authority v Taylor [1996] HCA 25; [1996] 186 CLR 541.

[24] [2009] QCCTB 106.

[25] [1996] HCA 25; [1996] 186 CLR 541.

[26] [1996] HCA 25; [1996] 186 CLR 541, 533.

[27] [1996] HCA 25; [1996] 186 CLR 541, 533.