The Building Act and contribution claims: don’t rely on your longstop
The Court of Appeal’s recent word on the Building Act “longstop” and contribution claims
Beca Carter Hollings and Ferner Ltd v Wellington City Council [2022] NZCA 624
Issues of time will often be front and centre in the minds of parties and potential parties to construction disputes, as construction problems often will not make themselves known until many years have passed. The recent decision of the Court of Appeal in Beca will no doubt heighten the concern of potential parties who may face a claim for contribution many years after the building work was undertaken.
The Building Act 2004 (s 393) includes a 10 year “long-stop” limitation period, which provides that relief may not be granted in respect of “civil proceedings relating to building work” if those proceedings are brought 10 years or more from the ‘”date of the act or omission on which the proceedings are based”. Previously, “civil proceedings” was interpreted to also capture claims for contribution brought by defendants against third parties - the practical effect of which was that sometimes defendants could not bring claims against third parties even if the underlying claim against that defendant was within the 10 year limit. However, the certainty of a 10-year limit trumped any perceived unfairness to defendants who may have found themselves unable to join potentially contributing parties.
In May 2021 the High Court departed from this position in Beca Carter Hollings and Ferner Limited v Wellington City Council. The WCC was a defendant in a claim brought by BNZ in relation to a building badly damaged in the Kaikoura earthquakes, which subsequently had to be demolished. The WCC joined Beca, the structural engineers involved more than 10 years earlier. Beca applied for the claim against them to be struck out on the basis that any claim for contribution against them was time-barred as a result of s 393.
The High Court dismissed Beca’s application, deciding that contribution claims were subject to their own timeframes in the Limitation Act 2010, and were not so clearly time-barred by s 393 as to warrant being struck out.
Beca appealed, and last week, the Court of Appeal released their decision dismissing the appeal. Despite the argument that “civil proceedings” must plainly include claims for contribution – and therefore the intention of parliament in s 393 was clear - the Court of Appeal agreed with the High Court that the s 393 long-stop does not apply to contribution claims, and instead, such claims are governed by the Limitation Act/s alone.
The Court did not seem overly troubled by the removal of this protection for would-be defendants in otherwise stale “building work” claims. A defendant has two years from judgment or a finding of liability to bring its contribution claim – which could be many years after proceedings were issued and many years after the building work was undertaken.
If you think there is any prospect that you might be involved in a dispute about building work, contact us to discuss the implications of the judgment for you.
