High Court throws out claim against Council because of lawyers’ failure to serve within time
In a timely reminder to lawyers to pay close attention to service requirements under the High Court Rules, or otherwise risk facing a claim in negligence, the High Court in a decision last week declined the plaintiff’s application for an extension of time to serve legal proceedings, after lawyers had failed to serve it within 12 months. The decision was a good result for the Council, which the Court observed had been the innocent party – and meant that the Council has extracted itself from a claim of over $400,000.
Brief background:
The plaintiffs had instructed their solicitors to issue proceedings against the Selwyn District Council and the previous owners of a property, alleging that poor workmanship had led to weathertightness issues and significant remedial work being required.
The plaintiffs’ solicitors filed a statement of claim on 17 October 2022, one day within the 10 year long-stop limitation period provided by the Building Act 2004. Due to an oversight by the plaintiffs’ (now former) solicitors, the statement of claim was not served on the defendants until over a year later, on 25 October 2023. By that date, the 10-year long-stop limitation period had expired. Under rule 5.72 of the High Court Rules, a claim must be served as soon as practicable, and within 12 months of it being filed, or it is deemed as being discontinued. Rule 5.73 of the High Court Rules provides for limited circumstances in which the Court may grant an extension of time to serve a claim.
As a result of the late service, the Council argued that the claim had been deemed as being discontinued. In response, the plaintiffs instructed new lawyers, and applied to the High Court for an extension of time for service of the claim. The Council opposed.
High Court finding – Hobday v Selwyn District Council [2024] NZHC 550
The High Court declined the plaintiff’s application for an extension of time to serve the proceedings.
In summary, the Court held in its decision that:
- The Council was the innocent party in the circumstances – nothing it did contributed to the plaintiffs being out of time. The Council had acted responsibly. It was the Council that first informed the plaintiffs about the 10-year limitation period.
- The plaintiffs had been let down by their former lawyers’ failure to serve the claim within time. It was hard to see how the plaintiffs’ previous lawyers could have any defence to a negligence claim.
- The plaintiffs were therefore not left without a remedy. They would be able to claim against their former lawyers, for the “loss of opportunity” to pursue the claim.
- The Court’s power to extend the time for plaintiffs to serve proceedings is not unlimited. It does not extend to reviving a right to bring proceedings after the 10-year long-stop limitation period has expired.
- There are good reasons for limitation periods, including that it otherwise makes it much harder for defendants to defend historic claims.
- It was not in the interests of justice to extend the time the plaintiff had to serve their claim on the Council.
The effect of the Court’s decision is that the claim against the Council was effectively discontinued. The Court also ordered that the plaintiffs pay the Council its costs.
Key takeaways:
As a result of their former lawyers’ failure to comply with the requirements for service, the Council entirely extracted itself from a claim of over $400,000. This decision is a timely reminder to lawyers involved in litigation to pay close attention to procedural requirements, in particular service requirements under the High Court Rules, failing which, they may face their claim of negligence.
Charlotta Harpur and Nick Ravaji of Rice Speir were pleased to secure this result for the Council.
