Building Act’s ten year ‘longstop’ limitation does not apply to contribution claims where one defendant found liable for construction defects later casts around looking for someone else to also pay up. What has been a hot topic in the building industry went down to the wire, with a 3-2 split in the Supreme Court panel of judges; the majority deciding Building Act rules do not undercut the long-established and bespoke right of defendants to claim financial contributions from others.
The practical effect is to force architects, engineers, builders, subcontractors and others in the construction industry to extend run-off insurance cover for longer periods and to maintain a comprehensive archive of critical documentation for previous work.
The litigation centred on Bank of New Zealand’s $101 million claim against Wellington City for alleged negligence in its issue of a compliance certificate for a building subsequently damaged in the 2016 Kaikoura earthquake.
When sued, Wellington City immediately filed contribution claims against consultants Beca Carter and Professor John Mander claiming that if Wellington City were liable, they were also to blame having prepared and reviewed engineering design for the building.
Beca Carter argued this contribution claim was out of time; filed more than ten years after the design work was submitted.
The Building Act puts a ten year time limit on construction claims. Claimants do not even get into court to argue legal liability if the supposed wrongdoing occurred more than ten years previously.
By contrast, contribution claims between defendants are governed by a 1936 Law Reform Act. A two year time limit applies. But this time limit runs from the date any defendant claiming a contribution has been found liable and a court has ruled on the damages payable.
The Supreme Court ruled Beca Carter could be dragged into the BNZ case as a potential contributor to any damages awarded against Wellington City.
Wellington City has a two year period to claim against Beca Carter should it be found liable in BNZ’s separate Building Act claim. In fact, Wellington City filed its claim for contribution against Beca Carter even before any court hearing potentially finding it liable to BNZ.
In contrast, a minority of judges in the Supreme Court agreed with Beca Carter that the Building Act ten year long-stop rule provides an industry-specific code, overriding any further Law Reform right for a defendant to later claim contributions outside the ten year period.
The majority ruling prevails.
Beca Carter Hollings & Ferner Ltd v. Wellington City – Supreme Court (18.09.24)
24.228