Leaky building claims and limitation periods

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This is a recent case reviewing a decision of a Weathertight Homes Resolution Service adjudicator. Mr Dustin was an architectural designer who undertook design work on a house in Mt Eden in the period March to May 1994. 

In June 2004 the owners of the house commenced a claim against the builder, the Auckland City Council and the previous owners. In October 2005, the adjudicator, on the application of the council, joined Mr Dustin as a further party to this proceeding. 

The council was claiming that if they were found liable to the claimant, then Mr Dustin ought to be contributing to this liability. This is a typical contribution claim. Mr Dustin applied to be struck out of the claim on the basis that the 10 year stop period imposed by s91(2) of the Building Act 1991 meant that he could not be sued by any of the parties to the proceeding. 

The adjudicator declined Mr Dustin’s application and, applying an earlier precedent, ruled that a claim for contribution was not subject to the long stop period imposed by the Act. It was on this issue that Mr Dustin brought his judicial review proceeding. 

His main complaint was that the adjudicator had applied a case of a higher court, which was wrong. The case relied upon by the adjudicator was Cromwell Plumbing Drainage & Services Ltd v De Geest Bros Construction Ltd — a 1995 decision.

It was argued by Dustin that: 

• The WHRS Act is subject to the 10 year stop period in s91(2) Building Act 1991, and Mr Dustin completed all his work relating to the property more than 10 years before the claimants commenced their claim in the WHRS. 

• Since the claimants themselves could not sue Mr Dustin because of the long stop period in the Building Act 1991, on the proper interpretation of s29(2) of the WHRS Act, the adjudicator has no jurisdiction to allocate liability between the ACC and Mr Dustin. 

• Dustin argued that the rationale of Cromwell Plumbing was fl awed, and that on a proper interpretation of s91(2) of the Act, claims for contribution are subject to the long stop period. In response, the council argued that there had been no reviewable error by the adjudicator because: 

• The criteria to be applied under s34 is whether it is fair and appropriate in all the circumstances to strike a party out of the proceeding, and the adjudicator had taken into account all the relevant considerations in reaching his decision. His decision satisfied the criteria and there could be no error of law. 

• The adjudicator was bound to follow Cromwell Plumbing and, therefore, could not have erred by doing so. He submitted further that, in any event, Cromwell Plumbing was correctly decided. 

Although Justice Courtney did not agree with the argument set out by the council, she agreed with the above submissions of the council. She concluded, applying strong judicial precedent, that an inferior court could not ignore precedent of a superior court. 

Accordingly, the adjudicator was correct in applying the decision of Cromwell Plumbing, and in making the determination it made in respect of the limitation period that applies to contribution claims. 

Accordingly, it appears that a respondent within the WHRS forum will be able to rely upon the Cromwell Plumbing decision in a contribution claim, and use it as a way of circumventing limitation problems. 

That is, until such time as a new precedent is set in a court superior to a WHRS adjudication.