The Court of Appeal decision in Beca Carter Hollings & Ferner Ltd v Wellington City Council [1] clarifies the application of the 10 year longstop.

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The law of limitation is not for the faint hearted. Determining the cut off date after which it is too late to bring a civil claim is a challenge litigators confront regularly. But the challenge is particularly acute for those practising in the building defects liability space where you have to grapple with not only the Limitation Acts of 1950 and 2010, but the 10 year longstop provisions in the 1991 and 2004 Building Acts.

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A judgment released by the Court of Appeal just before Christmas last year addresses the question of whether a defendant who has been sued in time will be thwarted by the 10 year longstop under the Building Act if it attempts to claim contribution from another party after the 10 year longstop date has expired [2]. To put the question succinctly: do the Building Act longstop provisions apply to claim for contribution?

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The answer, according to the Court of Appeal, is “no”. In upholding Clark J’s first instance decision declining Beca’s application to strike out the Council’s claim for contribution, the Court reached the conclusion that, properly interpreted, section 393 was not a bar to the Council’s contribution claim because time had not yet started to run on that contribution claim as the Council’s liability to the plaintiff had not been quantified. 

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Key dates

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As with all limitation cases, understanding the milestone dates is critical. In August 2019, the BNZ issued proceedings against the Wellington City Council for damage caused to the office building it occupied on Waterloo Quay that had been built for the BNZ by CentrePort between 2006-2011. 

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The building had been irreparably damaged by the 2016 Kaikoura earthquake. The claim for just over $100 million against the Council was for negligent performance of its building control functions. The Council had issued several consents, inspected construction, and issued successive CCCs. The CCCs that were relevant to the BNZ claim were issued on 27 March 2009 (superstructure) and 12 March 2010 (substructure).

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On 26 September 2019, the Council joined Beca as a third party to the proceedings. Beca had been engaged by CentrePort to design and monitor the construction of structural elements of the building. The Council issued the third party notice and statement of claim against Beca on the basis that it was a joint tortfeasor.

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Beca then applied to strike out the third party claim or, in the alternative, enter summary judgment against the Council. Beca argued that the Council’s claim was out of time because it was brought more than 10 years after Beca had carried out the allegedly negligent engineering design and construction monitoring. Beca said its last relevant work was on 12 March 2008. In those circumstances Beca argued that section 393(2) of the Building Act 2004 (the longstop) prohibited the Council pursuing a third party claim issued in September 2019.

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A decision against the run of play

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The application was one which Beca no doubt made with a degree of confidence as its argument had effectively been accepted in a number of other High Court judgments [3]. Unfortunately for Beca, Clark J concluded that those cases had proceeded on a wrong assumption as to Parliament’s intention to exclude claims for contribution from longstop. The Court of Appeal shared Clark J’s view on these earlier authorities, with Clifford J observing at [146]:

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“In our view, however, that analysis took insufficient account of the longstanding approach to the date of commencement of limitation periods applying to claims for contribution and the Law Commission’s endorsement of that approach at all times and, therefore, the inapplicability of s393(2) of the BA 2004 to claims for contribution between tortfeasors.”

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The Court reached that conclusion after a lengthy analysis of the limitation legislation together with  reports by the Law Commission on limitation law reform spanning a period of over 30 years. The key statutory provision which was held to trump the Building Act longstop was section 34(4) of the Limitation Act 2010. That section, which specifically addresses the time frame within which claims for contribution must be bought, effectively sets up a two year period after liability has been quantified within which a liable defendant must claim against another party.

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The Court concluded that the Wellington Council’s claim for contribution from Beca would be based on a finding of liability against Council in favour of the BNZ and that only once that liability had been quantified  did the cause of action for contribution accrue, i.e. that the two years started to run only once Wellington Council was held liable to the BNZ for an amount in damages.

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What is the significance of the judgment?

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Clarifying the question of whether the Building Act longstops apply to contribution claims provides some welcome certainty, particularly to local authorities who consistently find themselves usually named as the first defendant, and sometimes the only defendant, in defective building cases. 

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It will go some way towards removing the scramble by defendants sued on the eve of expiry of the 10 year longstop that  they have historically faced to join potentially liable third parties. This is an issue which has a significant impact on all of those involved in litigation which is in any way connected to “building work”. 

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Almost certainly the Court of Appeal’s judgment will be appealed.  

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References

[1] Beca Carter Hollings & Ferner v Wellington City Council [2022] NZCA 624.

[2] Both the 1991 Building Act and the 2004 Building Act have longstop provisions. The Beca case deals with section 393(2) of the 2003 Act which provides: “...no relief may be granted in respect of civil proceedings relating to building work if those proceedings are brought against a person after 10 years or more from the date of the act or omission on which the proceedings are based.”

[3] Ministry of Education v James Hardie New Zealand [2018] NZHC 22, Dustin v Weathertight HRS,Auckland CIV-2006-404-276, 25 May 2006, Klinac v Lehman (2002) 4 NZ ConvC 193,547.