Few things strike more fear into litigation lawyers than limitation dates, says Frana Divich, Partner at Heaney & Partners.
If a litigation lawyer misses a limitation date, they risk their client being prevented from bringing a claim and that is likely to mean a negligence claim brought against the litigation lawyer.
Limitation periods are prescribed by statute to prevent stale claims from being brought. They attempt to balance the rights of the plaintiff to be compensated for their loss against the difficulties of defending claims many years later when memories have faded, documents have been destroyed and run-off insurance cancelled.
Limitation is particularly tricky for those practicing in the construction space because of the friction between the Limitation Act and the 10 year long stop provision in the Building Act. It is this friction that the Supreme Court considered in a case called Beca Carter Hollings & Ferner Ltd v Wellington City Council [2024] NZSC 117.
Demonstrating the finally balanced nature of the argument, on 18 September 2024, the court delivered a 3:2 split decision.
This is a case about the Harbour Quays building in Wellington. It was badly damaged in the 2016 Kaikoura earthquake and stood empty for years before finally being demolished. The BNZ had Harbour Quays built for it by CentrePort between 2006 and 2011. The code compliance certificates that were relevant to the claim were issued in March 2009 (superstructure) and March 2010 (substructure).
BNZ sued Wellington City Council (the Council) in 2019 alleging negligence in consenting, inspecting and certifying the Harbour Quays building. The claim is for more than $100 million.
The Council brought a third-party claim for contribution against Beca on 26 September 2019. Beca had been engaged by CentrePort to design and monitor the construction of the structural parts of the building. Beca tried to have the claim against it struck out arguing that its last relevant work was in March 2008, more than 10 years before it was sued and accordingly the long stop in the Building Act prevented the Council from bringing a claim against it. The Council argued that its claim for contribution had a different limitation period, namely that in section 34(4) of the Limitation Act 2010, which provided a two-year period to bring a claim against Beca once liability had been quantified against the council.
The Supreme Court was asked to decide whether the Building Act long stop applied to a claim for contribution and the majority said “no”.
The majority emphasised the apparent lack of intention by parliament to change the separate limitation period for contribution claims when it passed the Building Act 2004 and its predecessor in 1991. The majority also highlighted the potential unfairness arising if the long stop is applied in circumstance where plaintiffs sue only one of several potential parties just as the 10-year period is expiring, leaving the sole defendant unable to pursue claims against the other construction parties.
The minority acknowledged that the arguments were finely balanced, but they thought that one of the objectives of the Building Act was to deliver certainty in relation to timeframes and protection from stale claims and that objectives would not be met if contribution claims were treated as an exception.
This decision has provided some welcome clarity for litigation lawyers working in the defective buildings space, particularly for those of us acting for councils.
For many years there have been two divergent lines of authority in the High Court on this issue, and more recently the High Court decisions favoured the long stop prevailing.
Councils frequently find themselves named as the sole defendant because they are usually the last party in time to do something i.e., to issue a code compliance certificate.
Before the law was clarified, this situation has, at times, caused some fevered activity at our firm when new instructions to act for a council have come in close to the expiry of the 10 year long stop, and we have had to drop everything to join the other construction parties.
It is reassuring to know that, thanks to the Supreme Court, as far as claims for contribution are concerned, time can be taken to make sure all potentially liable parties are before the court.