Beca Carter Hollings & Ferner Ltd v Wellington City Council [2024] NZSC 117
The majority of the Supreme Court accepted the Council's argument that the longstop provision in the Building Act 2004 was not intended to affect the right of defendants to claim contribution from joint tortfeasors.
Background
This case considered the relationship between the longstop provision in the Building Act 2004, which prevents claims relating to building work being brought more than 10 years after the act or omission, and the contribution regime.
The contribution regime addresses the situation where responsibility for the same loss is shared between a number of parties. For example, in the construction context, typically each of the developer, the designer, the builder, and the consenting authority could be responsible, to a different extent, for the same loss. The contribution regime is intended to ensure that whoever of those parties the claimant sues, that party is able to seek contribution from the other parties within two years of the claim being determined or settled.
The position over the years as to whether the longstop in the Building Act applies to the contribution regime has been unsettled. The Court of Appeal considered the question last year, but leave was granted to appeal to the Supreme Court given the importance of the issue.
Facts
CentrePort agreed to develop and lease to BNZ a building on land owned by CentrePort on Waterloo Quay.
Beca was engaged to design the building and its final action in relation to that design was to issue a producer statement in March 2008. The producer statement was provided to Council as part of the building consent process.
When the building was completed in 2011, it was leased to BNZ.
During the Kaikoura earthquake of November 2016, the building suffered irreparable damage. BNZ was never able to return to the building, which was determined uneconomical to repair and demolished.
Court proceedings
BNZ filed proceedings against Wellington City Council in August 2019, alleging negligence in relation to the design and consenting of the building. Damages of around $101m were sought, including for business interruption and property damage. The substantive claim has not been heard yet.
In September 2019, the Council filed third party proceedings against Beca for contribution, in the event it was found liable to BNZ.
Beca applied for strike out and summary judgment on the basis that the claim by Council was a "civil proceeding relating to building work" brought outside of the 10-year longstop in s 393(2) of the Building Act, as Beca had issued its producer statement in March 2008. Beca argued that the ordinary wording of that section, introduced to address the issues arising from the leaky home phenomenon, imposes a comprehensive industry-specific approach to liability which overrides the generic limitation regime for contribution claims.
Both the High Court and Court of Appeal found in favour of the Council and dismissed Beca's applications for strike out and summary judgment.
Decision
The Supreme Court acknowledged that the longstop provision was intended to provide both certainty and finality.
On the other hand, the majority (Ellen France, Williams and Kós JJ) considered that allowing the longstop provision to prevail would perpetuate the injustice the contribution regime was intended to prevent.
The majority considered that it was possible to give effect to both regimes, and concluded that reading the provisions together, the longstop provision did not require the contribution regime to be disapplied to disputes relating to building work.
Glazebrook and O'Regan JJ came to the opposite conclusion.
Observations
The implications from the majority decision are that:
- The longstop provision of the Building Act does not apply to contribution claims.
- The cause of action for a contribution claim accrues on the finding of liability; that is, the date upon which the person claiming contribution has been found liable to (or has settled that liability with) the original plaintiff. From this date, a two-year limitation period will apply.
- Contractors and consultants who are involved in the design of buildings may want to consider whether they ought to obtain professional indemnity insurance beyond a 10-year period and developers may want to require their consultants to hold that insurance for a longer period also.
- As this potentially extends the liability period for all participants in the construction industry, but particularly for consultants, there may be an impact on the cost of obtaining professional indemnity insurance.