Forced to vacate its Wellington head office after the 2016 Kaikoura earthquake, BNZ claims $101 million damages from Wellington City alleging council negligence when issuing a compliance certificate. First round, in the High Court, saw Wellington City drag engineering consultants Beca Carter into the litigation as a third party, potentially liable. Beca Carter challenges new rules governing time limits on negligence claims against third parties which can see claims surfacing decades after the event.
The massive number of ‘leaky building’ claims filed against local councils in the last two decades has seen council insurers in court arguing the boundaries for potential shared liability between councils, builders, sub-contractors, suppliers, engineers and architects. Commonly, it is local councils sued as primary defendant; they have the ‘deepest pockets’ and are best placed to pay damages. Councils, in turn, take parallel legal action against those in the construction industry allegedly to blame, forcing them into the litigation as third parties being called to contribute. Complications subsequently led to law changes setting out time limits within which claims could be filed in court.
Construction law has a ten-year ‘longstop’ rule, blocking claims more than a decade after damage leading to a claim. Beca Carter says any claims demanding contributions from third parties also fall within this ten-year rule, with the ten years calculated on the same time line as that applying to the primary defendant. Not so, ruled Justice Clark. The Limitation Act sets a different start date and a different time period for claims against third parties; claims against third parties are barred two years after liability of the primary defendant is quantified by ‘agreement or court judgment.’ With the slow pace of complex cases, this can have the effect of leaving third parties on the hook to pay damages decades after damage first arose.
Completed in late 2010, Bank of New Zealand’s Wellington head office on Waterloo Quay was designed to the Bank’s specific requirements. It is now being demolished; damaged beyond economic repair by the 2016 Kaikoura earthquake. BNZ alleges Wellington City was negligent in granting a building consent and also negligent in its inspection and granting of a code compliance certificate. Beca Carter drew up the engineering design and monitored construction carried out by Fletcher Construction.
Beca Carter failed in its attempts to have Wellington City’s third party claim thrown out. Wellington City has two years from the time BNZ’s claim is finalised to file a third party claim against Beca Carter. Its Beca Carter third party claim was filed well before this time; it is yet to join battle against BNZ.
Further court hearings are necessary to establish if either of Wellington City or Beca Carter were negligent.
BNZ Branch Properties Ltd v. Wellington City – High Court (12.05.21)
21.079