2 The facts giving rise to this appeal are agreed. The hearing below was the trial, on the basis of those agreed facts, of two preliminary questions arising out of faults in the footings (or, as the appellants would have it, the site preparation) of the appellants' unit (unit no 14) at 31 Scarborough Drive, Patterson Lakes.

3 The appellants contend that a failure by the respondents properly to prepare the site resulted in catastrophic damage to their unit. It now has to be demolished and rebuilt, at a cost of $1,232,880. For the purposes of resolving the preliminary questions, the respondents accept that they, as (respectively) builder and individual responsible for the work of the builder, have breached a duty of care owed by them to the appellants. Their defence is that this proceeding is statute-barred as being brought outside the relevant period of limitation. They rely on s 134 of the Building Act 1993. It provides, in effect, that - notwithstanding any other period of limitation - a 'building action' cannot be brought more than ten years after the issue of the relevant occupancy permit. In this case, that permit was issued on 25 February 1997. This litigation commenced in May 2007.

4 The appellants demur to this defence. According to them, time began to run when the defects were first noticed; and that occurred (as they allege in their statement of claim, an allegation not forming part of the agreed facts) in or about January 2000, when they observed cracks in the unit's walls, and movement in the floor on its western side. Be that as it may, their argument continues that the acknowledged flaw in the unit was not the result of any fault in the respondents' building work. That work, properly so called, was relevantly faultless. The problem had its sole source (or so the appellants contend) in the preparation of the site; and for this (as, for present purposes, the respondents acknowledge) the respondents are

responsible. But (the appellants' argument continues) site preparation is not building work. This proceeding is for that reason not a building action. Section 134 is therefore irrelevant.

5 The relevant facts, as agreed, were that the first respondent is a builder and developer of land, and in 1996 successfully tendered for the construction of units 7-14 Scarborough Drive, including responsibility for the proper preparation of the land on which the units were to be built. The second respondent is a director of the first respondent and was responsible for overseeing and supervising building works carried out by the first respondent.

6 According to the agreed statement of facts, it was a term of the contractual arrangements pursuant to which the works were effected that they be carried out in a proper and workmanlike manner and with reasonable care and skill. It is relevant in this context that the tender documents for the Scarborough Drive site included a drawing which showed that pre-cast concrete piles had been installed on the property. The respondents, therefore, knew of their existence. Any construction works would have to take their presence into account. To that end, the respondents procured an engineering design which prescribed that the footing of the units would be a raft slab which must have at least 300mm below its base and above the piles. The design further specified that 'if piles need to be cut down under footings then 300 [mm] compacted sand should be placed between them and footings above'.

7 Under the second respondent's supervision, the dwelling was completed in or about February 1997.[1] But reasonable care and skill was not exercised because, knowing that the piles were on site, the respondents (according to the agreed statement of facts) 'failed to ensure that the piles were cut down to achieve 300mm clearance between the top of the piles and the underside of the footing beams as prescribed by the drawing to leave allowance for the settlement of the slab'. They also 'failed to ensure that 300mm depth of compacted sand was placed between the top of the piles and the underside of the footing beams of the slab'. In short, they 'failed to ensure that the drawings were complied with'. As a result, two piles are present under the slab and are providing unwanted support to the building; as a further consequence, those portions of the slab thus supported cannot adjust to movements in the subsoil; and this has contributed to damage to the slab which is so significant as to require demolition and re-construction of the entire unit.

8 It is against this background that the two questions posed for resolution in the preliminary hearing were formulated. They were, first, whether the proceeding against the respondents is wholly or partly a 'building action' within the meaning of s 134; and, secondly, whether the proceeding is by operation of that section wholly or partly statute barred. The learned trial judge answered by holding that the proceeding was 'wholly a building action', and that it was therefore 'wholly statute barred by operation of s 134 of the Building Act 1993'. It is from these answers that the appellants appeal.

9 Their submissions commence, as they must, with references to the applicable provisions of the Building Act. Section 134 must be read in the light of s 129, which defines a 'building action' as including an action 'for damages for loss or damage arising out of or concerning defective building work'. This in turn brings in s 3(1), which defines 'building work' as 'work for or in connection with the construction ... of a building'. The combined effect of these provisions is that actions for damages for loss or damage arising out of defective work for or in connection with the construction of a building must be commenced within ten years after the issue of the certificate of occupancy. Since the present proceeding was not issued within that period, it follows that the appellants must fail unless as a matter of law the breach of duty about which they complain did not involve work for or in connection with the construction of their unit.

10 The appellants seek to get around this difficulty by linking the relevant breach with site preparation works, by avoiding any link between that breach and the laying of the concrete slab (the footing), and by submitting that site preparation work is not - at least in this case - 'building work' because it is not and was not work in connection with the construction of the unit. That is so, the appellants submit, because it was not work for which a building permit was required. In other words, 'building work' 'for the purposes of the [Building] Act is only work that requires a building permit' and '[i]n this case there was no evidence that the work in question required a building permit.'

11 This submission gains what strength it has from s 16 of the Act. That section forbids the carrying out of building work unless a building permit in respect of the work has been issued and is in force and the work is carried out in accordance with the Act, the building regulations and the permit. On this basis, the appellants argued that, if site preparation work does not require a building permit, then it cannot be building work. It is a necessary element of this argument that it remains valid no matter that the work might otherwise be sensibly thought to be 'work for or in connection with the construction ... of a building'.

12 The trial judge dealt with these submissions at paragraphs [35]-[38] of his reasons. His Honour there said:

It is convenient to begin by referring to the misconception which lay at the heart of the [appellants'] submission. Counsel asserted on numerous occasions that the Act drew a distinction between site preparation works and building work. He submitted that a building permit was required for the latter but not for the former. It followed, he submitted, that the meaning of 'building action' in the Act was limited to those works which required a building permit. It is true that, as s 16 provides, building work must not be carried out without a building permit. But it does not follow as a matter of logic that 'site preparation works' are not 'building work'. Rather, counsel asserted, without reference to the particular nature of the works described in the assumed facts, that 'site preparation works' can be carried out without a building permit, and then reasoned from that assertion that 'site preparation works' (and, by extension, the works in the present case) must not be building work, because they did not require the issue of a building permit. The flaw in that reasoning is that the question whether 'site preparation works' require a building permit cannot be answered in the abstract, but rather requires an analysis of the nature of the particular works in question to determine whether or not they are 'building work', the answer to which will determine whether a building permit will be required. In effect, the [appellants'] submission rests on the erroneous assumption that the works in the present case can be characterised in advance as 'site preparation works' (in respect of which it is asserted that no building permit is required), and from which it then follows that the works are not building work. There is nothing in the Act which requires or permits such an approach. Rather, the relevant provisions of the Act, referred to above, focus attention on whether any particular work is 'for or in connection with' the construction of a building. If it is, then the work is 'building work', regardless of whether the work is carried out before the actual construction of a building otherwise commences, and irrespective of the fact that the work may be referred to as 'site preparation works'.

Approaching the present case in this way, I consider that on the assumed facts, it is clear that the site preparation works were 'building work' for the purposes of the Act. As counsel for the builders asked rhetorically, if the site preparation works here were not 'work for the construction of a building' then what were they? I agree with counsel that the preparation of land in accordance with foundation plans is not work performed for any purpose other than the construction of those foundations, which form part of the building.

In this regard I do not overlook the submission by counsel for the plaintiffs that it was important not to confuse the notion of footings (which are part of the building) and site works (which are not part of the building). In my view, however, on the assumed facts, it is artificial to distinguish the 'site preparation works' from the construction of the footings themselves. First, the slab plan (the plan for the footings) states on its face the very requirements of site preparation which were not followed by the builders. Secondly, the building permit identifies the slab plan as one of the 'approved documents', and further states that the first mandatory notification stage is 'prior to placing a footing'. Thirdly, this is not a case where 'site preparation works' were done in the abstract, that is to say without any reference to any actual building which was to be constructed on the site, as might be the case where land is cleared for future building but at the time of clearing there are no actual plans to build. Nor is it a case where one party did site preparation works, and then a different party came in to construct the building on the prepared site. Rather, according to counsel, the building contract not being in evidence, the builders were engaged under a single contract to perform both the site preparation works and the work of constructing the building.

In these circumstances, the construction of the building, and in particular the construction of the footings, followed on from, and was directly connected to, the site preparation works. In my view, it is clear that the 'site preparation works' was work for or in connection with the construction of a building or, at the very least, for or in connection with the construction of the footings, which was a part of the building. It follows that the relevant work was building work, and the [appellants'] claim against the builders is a 'building action'.[2]

13 The appellants now submit that the trial judge erred in deciding that, because the work was to be performed under one contract, and by one party, and because the works were referred to on one of the approved plans, the work in question was therefore building work. His Honour should, the appellants submit, have decided the question by reference to the nature of the works themselves. He should have found that 'building work' for the purposes of the Act is only work that requires a permit; and that is determined by the nature of the work, and not by reference to whether the work is to be performed under one contract, or by one party, or included in a drawing. His Honour, the appellants further submit, should have found that site works do not form part of the buildings or the footings. The site itself is not any part of a building or structure, and the negligence of the respondents in the inadequate preparation of the site was negligence which related to the future construction of the footing but not its actual construction. The definition of the expression 'connected with' in s 3 of the Act should therefore be confined to activities undertaken after the commencement of the construction of the building. It should not extend to preparatory site works.

14 The respondents, by contrast, submit that the definition of 'building work' is extremely broad. This necessarily follows from the inclusion, in the definition, of the words 'work for or in connection with'. This will necessarily include work that is not part of the construction of a building. Thus, the slab plan identified the nature and purpose of the work by including the instruction that 'all footings must have at least 300 mm below their bases and above any existing piles or ground anchors' and if 'piles need to be cut down under footings then 300 mm compacted sand should be placed between them and footings above'. These instructions were necessarily directed at 'work for or in connection with the construction ... of a building'.

15 The appellants are of course correct in submitting that his Honour 'should have decided the question by reference to the nature of the works themselves'.[3] The definition of 'building work' demands as much. The appellants' error, as it seems to me, is in their further submission that he failed to so decide. As his Honour said, it is artificial to distinguish the 'site preparation works' from the construction of the footings themselves. In particular, as Emerton AJA pointed out in argument, it is artificial to distinguish the site preparation works from the construction of the footings, and to then allocate the (acknowledged) breach of duty solely to site preparation. To adopt the words of s 16, a provision upon which the appellants rely, the respondents were in breach of their duty to construct the footings - the slab - 'in accordance with this Act, the building regulations and the permit' because they failed to obey the instructions included on the slab plan, and so failed to construct the slab as it should have been constructed.

16 This, then, is in my opinion the fatal flaw in the argument upon which the appellants rely. It all depends upon the accuracy of the propositions, first, that the breach involved only the preparation of the site and, secondly, that the preparation of the site did not constitute building work. But, far from being accurate, these propositions are, to adopt the word used by his Honour, artificial. The laying of the concrete slab was an essential part of the construction of the building. A building permit was required, and issued, for it. That permit mandated the protection of the footings (the slab) by the provision of at least 300 mm below its base and above the piles; and if that meant that the piles 'need to be cut down under footings, [and] 300 [mm] compacted sand placed between them and the footings above', then that is what had to be done. It was the failure to obey this directive, all of which related to the construction of the slab and was therefore a failure in 'work for or in connection with the construction ... of a building' that constituted the breach.

17 The agreed facts included the fact that the respondents 'failed to ensure that the drawings were complied with'. The statement of claim alleges that in breach of its duty of care the respondents failed to place 'the underside of the footing beams as prescribed by the drawing'.[4] The drawing itself, according to the agreed facts, was included as part of the building permit. In this way, the parties to this litigation, including the appellants, implicitly recognised the artificiality in the appellants' argument that the respondents' breach was in the site preparation alone, that a building permit was not required for that preparation, and that therefore the work

during which the breach occurred was not building work.

18 For these reasons, the appeal must be dismissed.

[1] Further amended statement of claim, [30]. This is not an agreed fact, but is not contested in the respondents' defence. They there assert that it is not an allegation made against them.

[3] Although they may attach a different meaning than do I to the expression 'the nature of the works'.

[4] Particular (ii) under [67] of the further amended statement of claim.