The Building Act and contribution claims
In a recent decision the New Zealand Supreme Court confirmed a significant change to the law of limitations as it applies to building claims. The Court rejected the argument advanced by the appellant – Beca Carter, a consulting engineer – that a claim by one defendant against another or a third party is statute barred if brought more than 10 years after the alleged acts or omissions. The Court accepted that such claims – called contribution claims, as the defendant seeks a contribution or off-setting payment – are subject to their own, specific 2-year limitation period.
Background
A claim was brought by BNZ against Wellington City Council (WCC) seeking damages in negligence for breach of duty of care in relation to building consents and code compliance certificates (CCC) issued for a building that later sustained significant earthquake damage.
WCC sought to join Beca Carter Hollings & Ferner Limited (Beca) to claim contribution regarding defective design work and inadequate construction supervision. However, Beca applied to the Court to strike the contribution claim out, arguing the claim was brought more than 10 years after the acts or omissions on which it was based and was therefore statute barred.
The Building Act 2004 (s 393) includes a 10-year “long-stop” limitation period, which provides that relief may not be granted for civil proceedings relating to building work which are brought more than 10 years after the acts or omissions on which it is based).
Beca’s argument was rejected by both the High Court and the Court of Appeal.[1]
Both the High Court and Court of Appeal focused on s 34(4) of the Limitation Act 2010, which provides that claims for contribution must be brought within two years of the date the liability is quantified by agreement, award or judgment.
WCC had sued Beca within the time period allowed for contribution claims but outside the 10-tear longstop period of limitation. The issue was whether the 10 year longstop trumped the more specific 2-year period for contribution claims. The Court of Appeal held that it did not, so that WCC’s claim was in time. It said that “Beca is here enriched by the Council being liable to discharge more than its own proper share of the losses incurred by BNZ as caused by the tortious acts of them both.”[2]
Supreme Court Judgment
The Supreme Court dismissed Beca’s appeal (3:2).
The majority dismissed the appeal, finding that the long-stop provision of the Building Act 2004 did not expressly override the Limitation Act’s special rules about claims for contribution. The view of the majority was that had Parliament intended this to be the case, then it needed to be clear in the statute, and it was not.[3]
The majority considered that outcome was supported by policy considerations, given the unfairness that would arise for defendants sued just in time, that were not able to make claims for contribution against their joint tortfeasors before the long-stop date.[4]
The majority considered that this outcome gave effect to the purpose of both the contribution and the long-stop regimes.[5]
Dissenting, the minority argued that the Building Act was clear enough to override the contribution provisions of the Limitation Act 2010. They noted that the long-stop provision was clear enough to override the special rules for late-knowledge in the Limitation Act 2010, so considered the contribution provisions should be treated the same.[6]
As to potential unfairness, the minority said that he majority “appears to attribute to Parliament a position that unfairness to plaintiffs was an acceptable price to pay for the certainty provided by the long-stop provision, but unfairness to defendants (primary tortfeasors) was not.” They saw nothing in the legislative history to support that.[7]
Comment
There are two observations worth making.
The first is that the tail on building claims just grew a little longer.
Presumably defendants in building claims (especially Councils) found liable for money claims in the last 2 years will be promptly reviewing whether there are other wrongdoers against whom a right to claim contribution arises. If so, such claims can be brought regardless of whether the underlying acts or omissions took place more than 10 years ago.
The second is that such claims will be assessed in light of a 2016 Supreme Court decision, Hotchin v NZ Guardian Trust[8]. In Hotchin, the Court adopted a new approach to contribution claims which essentially did away with any requirement that the defendant and third party be jointly and severally liable for the plaintiff’s loss, it being sufficient if there was some overlap in or “discharge” of liability.
In Hotchin the then Chief Justice, Elias CJ, said “it is unjust for the burden of meeting a loss for which others share responsibility to be borne by one party, to the benefit of those who escape liability.”[9] She indicated her support for the test for contribution to be met where each obligor is wholly or partially liable for the claimant’s loss.
By Partner Stuart Dalzell and Solicitor Emily McLean.
[1] BNZ Branch Properties Limited v Wellington City Council [2021] NZHC 1058 (Clark J) and Beca Carter Hollings & Ferner Limited v Wellington City Council [2022] NZCA 624 (Miller, Clifford and Katz JJ) [Beca CA].
[2] Beca CAat [46].
[3] Beca SC at [78].
[4] At [79].
[5] At [83].
[6] At [96].
[7] At [128].
[8] [2016] NZSC 24, [2016] 1 NZLR 906
[9] At [152].