Court of Appeal confirms Building Act longstop won’t preclude contribution claims
While some of us were getting ready for the summer holidays, the Court of Appeal quietly dropped its judgment in Beca Carter Hollings & Ferner Ltd v Wellington City Council [2022] NZCA 624, confirming that contribution claims are not precluded by the 10-year limitation longstop for claims under Building Act 2004. Instead, the 2-year limitation period for contribution claims under the Limitation Act 2010 will apply, even if that falls more than 10-years after the building work is done. This decision provides some much needed breathing room for defendants facing defective building claims brought near the end of the long-stop period.
Beca was an appeal from BNZ Branch Properties Limited v Wellington City Council [2021] NZHC 1058, which we previously wrote about here. In brief, BNZ was an unsuccessful strike-out application by Beca against a contribution claim brought by Wellington City Council against Beca under the Law Reform Act 1936. The claim was brought in 2019 for Beca’s actions related to building work in 2007 and 2008 (i.e. over ten years later) and Beca argued the Council was too late to join it. WCC argued that the relevant limitation period was actually s 34 of the Limitation Act 2010 (rather than s 393 of the Building Act 2004), which allows defendants to 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.
Clark J in the High Court dismissed Beca’s strike-out after carefully considering the legislative history and existing case law. Clark J found that the specific limitation period for contribution claims took precedent over the more general longstop limitation for claims related to building work. Her Honour noted that the exclusion of contribution claims from the 10-year Building Act long-stop was consistent with the way contribution claims are not precluded by the 15-year long-stop period for other civil claims.
While BNZ was a departure from a line of previously established High Court authority, the Court of Appeal in Beca emphasised that this approach to the interplay of the two different limitation periods is in line with a long standing recognition of the bespoke nature of contribution claims. A contribution claim is not based on when the original wrongdoing occurred, but comes into existence on the date that a jointly liable wrongdoer is “enriched” by not bearing their fair share of liability. That date is when liability is quantified through a judgment or settlement.
It is likely that the Beca decision will be appealed. However, in the absence of a Supreme Court decision finding the other way, the Court of Appeal’s decision in Beca provides some relief and certainty for defendants in defective building claims which have been relying on the BNZ to seek contribution from other parties outside of the 10-year limitation period.
