Supreme Court rules the ten year building longstop does not bar a contribution claim

Sometimes a limitation defence can make all the difference. Today, the Supreme Court issued a decision that showed just how important that defence can be, with a narrow 3:2 majority in Beca v Wellington City Council.

BNZ sued the Wellington City Council in 2019 for $101 million, alleging that the Council was negligent in issuing a building consent for a building that was later damaged in the Kaikoura earthquakes. The Council denied the allegations, but it also joined Beca to the proceeding, saying that if the Council was liable, Beca’s actions in issuing producer statements in 2007 and 2008 contributed to the loss. Beca denied the allegations, but it also relied on the longstop limitation defence for building works.

The longstop limitation defence under the Building Act prevents someone from bringing a claim in relation to building work more than 10 years after the work was undertaken. It was intended to bring certainty and finality to disputes about building work. Beca argued the Council sought a contribution more than 10 years after Beca had issued the producer statements, and so the claim should be struck out on limitation grounds.

Not so fast, said the Council. The Limitation Act allows the Council to bring a contribution claim against Beca up to 2 years after any judgment that BNZ may get against the Council, and BNZ does not yet have any judgment.

So which provision takes priority? The Supreme Court split 3:2, with the majority ruling that the 2 year period in the Limitation Act takes priority, meaning that the Council was not out of time to sue Beca. While the longstop limitation defence in the Building Act was potentially broad enough to override the contribution limitation provisions, it needed to be expressly clear if that was its intention. Because it was not clear, the 2 year period in the Limitation Act prevails.

It’s an important decision for defendants and insurers who may be seeking to rely on the certainty of the 10 year longstop provision in assessing potential liability for building work.