Stop the Clock!

In July 2020 the High Court delivered a fresh perspective on an age old question in building defect cases: does an application to the WHRS ‘stop the clock’ for limitation purposes in relation to all building defects, even those unknown about at the time?
The answer, at least for now, is no. The Court has determined that an application to the Weathertight Homes Resolution Service (WHRS) does not ‘stop the clock’ for limitation purposes in relation non-leaky defects.

It is widely accepted in building defect claims that the making of an application under the WHRS Act for an assessor’s report has the same effect as filing a claim in the High Court for limitation purposes. More recently however, the Court has looked at whether it does so for issues relating to weathertightness only, or, if it ‘stops the clock’ so to speak in relation to all issues with a building, even those not identified at the time of the application to the WHRS, and not related to water ingress, for example, fire and structural issues.

Last month Associate Judge Smith emphasised that the WHRS was developed specifically to deal with issues arising out of the widespread leaky homes crisis in New Zealand between 1994 and the early 2000’s. His Honour’s recent decision in the Washington Apartments1 case has, in our view, correctly determined that the WHRS Act was never intended to alter the Building Act limitation periods in respect of homeowners’ claims that have nothing to do with water ingress. The WHRS was instead designed to provide a ‘speedy, flexible and cost effective’ process for the assessment and resolution of leaky homes. Building defects such as structural and fire defects which do not give rise to issues with water ingress simply cannot be intended to come within the ambit of the WHRS.

Ultimately the decision determines that there is no proper basis for rescinding the limitation rights of those whose negligence may have caused non-weathertightness defects i.e. fire and structural issues/defects.

The finding in this case has significant implications for councils (and others in the industry) who are regularly joined to claims by homeowners following an application to the WHRS. It is now increasingly common for claims to be amended very late in the piece with the addition of substantial and costly non-leaky defects. Washington Apartments will assist in ensuring that the limitation rights provided by the Building Act 10 year longstop are upheld.

1 Body Corporate 378351 & Ors v Auckland Council & Ors [2020] NZHC 1701.

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