The case was brought by the council exercising the summary judgment procedure (available to defendants) on the grounds that Ms Lee’s proceeding was statute barred pursuant to section 4(1)(a) of the Limitation Act 1950.
The facts can be summarised as follows:
• The house concerned was a property in Ruakaka.
• In August 2006 Ms Lee applied for a building consent which was issued on October 26, 2006.
• Building commenced in January 2007. The contractor was Rob Littlejohn working under a labour-only contract.
• In October 2007, Ms Lee observed leaking at the top of the internal staircase which was drawn to the attention of the builder.
• Ms Lee moved into the house in December 2007, despite no CCC having been issued.
• By January 2008, Ms Lee was in dispute with Mr Littlejohn. He wanted payment yet she was unhappy with the quality of the workmanship.
• The council carried out a final inspection on March 26, 2008, which it failed. A long list of defects was identified by council requiring rectification.
• Ms Lee thereafter was involved in a series of dispute proceedings as against the construction parties, some of which she brought (the Arbitration proceeding/WHT proceeding), and others she defended.
• She was only successful in the Arbitration proceeding as against the builder for the sum of $700,000. However, she could not recover on this judgment.
• In March 2011, building surveyor Barry Gill carried out a full report for Ms Lee. Mr Gill was able to identify other weathertighness defects that had previously not been discovered in earlier reports.
The argument the court had to determine was whether, in fact, the claim brought as against council was statute barred by way of section 4(1)(a) of the Limitation Act 1950 which prevents claims in negligence being brought more than six years from the date the cause of action accrues.
For a cause of action in negligence to accrue, the following elements need to be in existence:
• A duty of care to exercise reasonable care is owed.
• The said duty has been breached.
• Loss/damages have been suffered.
Typically with construction defects claim, it is the last element (damage) that takes time to manifest. Many construction defects such as leaky building symptoms can remain latent for a considerable period of time.
The courts (at the highest level) have generally ruled that damage is not considered to have been present until the defects/damage could be discovered, or could with reasonable diligence be discovered.
The key argument presented by Ms Lee to the court was that the new defects only discovered by Mr Gill in 2011 were the trigger for the six-year limitation period running in respect of those defects, rather than the earlier date of May 21, 2008.
Or, put more succinctly by the presiding High Court Judge, can the six-year limitation be deferred because not every defect is identified at the time of discovering damage?
Ms Lee was not suing for defects previously identified in earlier reports but only the failure to seal the plywood ridged backing, and the non-taping of the joints. She claimed these defects had only been discovered for the first time in April 2011.
However, the court found that this was a case of continuous damage rather than a case where sufficiently distinct damage had been suffered by Ms Lee from the newly discovered defect.
The damage suffered, even from the newly discovered defect, was common to the defects/damage already discovered in 2008. The court held for this reason that the limitation period ought not to be deferred.
Overall, the claim brought by Ms Lee was ruled to have been brought out of time.
At paragraph 69, A J Bell states: “It may be that by May 21, 2008, Ms Lee’s knowledge of the cladding defects was not as full as it is now, but she did know enough to realise that the value of the house was adversely affected by the defects in the cladding system.
“What she found out from Mr Gill’s report did not change that damage or point to fresh damage. This is a continuous damage case. Mr Gill’s report did not show a new cause of action.”
Note: This article is not intended to be legal advice (nor a substitute for legal advice). No responsibility or liability is accepted by Legal Vision or Building Today to anyone who relies on the information contained in this article.