Is the Council once again the last party standing? Maybe not, says the High Court

The High Court has allowed more time for parties involved with defective buildings to be joined into claims – even after the expiry of the 10 year limit. It is a helpful decision for councils, which often find themselves to be the “last party standing” in defective building claims.

Background

The BNZ building in Wellington CBD was damaged in the Kaikoura earthquake. BNZ brought a claim against Wellington City Council in 2019 for its losses associated with the property damage, and the council joined the structural engineer, Beca, to the claim. Beca applied to have  the council’s claim against it struck out. The company said  more than 10 years had passed between its inspections and the council’s claim for contribution and therefore the council’s claim for contribution was time barred because of the s 393 Building Act 2004 10-year limitation longstop.

The Court’s decision

In the recent case of BNZ Branch Properties Limited v Wellington City Council [2021] NZHC 1058, Justice Clark in the High Court has found that claims by defendant parties for contribution under s 17 of the Law Reform Act 1936 (if I’m liable, you are too, and you should contribute to any sum I have to pay to the plaintiff) are not captured by the 10-year longstop in the Building Act 2004, even where the contribution claim relates to building work. In line with this decision, defendants can seek contribution from other liable parties up to two years after the claim against them is quantified, whether by judgment against them or through settlement, regardless of how much time has passed from the relevant negligent acts or omissions.

As a result, parties who are sued in respect of building work such as councils can bring other potentially liable parties into the claim under s 17 of the Law Reform Act regardless of whether or not the 10-year Building Act longstop has passed in the interim.

Brief observations

This is a positive decision for councils and other parties who find themselves as the last party standing in building defect litigation. It means that defendants who are sued just within the 10 year limitation longstop, or even served after the expiry of that longstop, aren’t stuck covering the plaintiff’s claim alone.  They have time to figure out who else might be liable, and bring them into the claim as third parties. They can even bring a separate claim following judgment for contribution to any sums they paid to the plaintiff.

Its effect is likely to be that more defendant parties are brought into claims to contribute.  However, it may mean that plaintiffs initially join fewer parties, particularly if they are running up against a limitation period. They could potentially join only one or two key parties and leave those parties to identify and join any other potentially liable parties through claims for contribution, without having to worry about expiry of the 10 year limit.

This is only a decision declining strike out/summary judgment and runs contrary to another line of decisions.  However, it is well reasoned and, in the absence of an appeal or commentary from a higher Court, is likely to be followed.

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