In Rea & Rea as trustees of the Waiatarua Trust v Auckland Council^[1] the Court of Appeal has upheld the High Court’s decision striking out a building defects claim, based on an affirmative defence brought under the Limitation Act 2010 (Act). The Court of Appeal agreed with the High Court that the claim could not be saved by late knowledge, and confirmed a “plain and ordinary meaning” approach to interpreting the relevant provisions of the Act.

Background & Impact

The property owners had brought a claim in negligence against the Council and builders relating to weathertightness and structural defects in their standalone dwelling. The Council had issued a Code Compliance Certificate (CCC) in 2013, however the claim was not filed until 2021 (nine years later).

In 2022, the High Court struck out the claim against the Council under section 11 of the Act, finding that the proceeding had been brought both outside the six year primary limitation period, and after the late knowledge period of three years had expired.^[2]

The property owners appealed to the Court of Appeal. They argued that they did not have knowledge of their loss or the Council’s role in creating that loss until after 2018, and that as a result, their claim was brought within the three year late knowledge period.

In a judgment released on 15 July 2024, the Court of Appeal agreed with the High Court and dismissed the appeal. It found that the property owners had sufficient knowledge once they knew the Council had issued the CCC, that there was damage to the property that was more than minor, and that repairs would be required. It rejected the property owners’ argument that, to have late knowledge, they needed to know every fact relevant to establishing negligence.

The Court examined the legislative background to the Act, including Law Commission reports, the Limitation Bill 2009, and other material preceding the introduction of the Act. It then turned to consider the meaning of sections 14(1)(a), 14(1)(b), and 14(1)(c) – the “act or omission on which the proceedings are based”, and “the fact that the claimant had suffered damage or loss”. It concluded that for the purposes of sections 14(1)(a) and (b), the act or omission on which the claim was based was the issuing of the CCC by the Council, and damage for the purposes of section 14(1)(c) would exist if there were defects that were noticeable and not minor.

Notably, for the purposes of section 14(1)(c), the Court found that the property owners did not require knowledge of a causal connection between the act or omission on which the claim is based and their loss or damage, noting no requirement for knowledge of a causal link in the text of the Act.

Having reached those conclusions regarding interpretation, the Court then looked at the knowledge of the property owners at the relevant points in time. It found that the information contained in several building reports was sufficient to show late knowledge by 23 March 2017 at the latest, considering that it was beyond argument that at that point a reasonable person would have begun investigations (including taking legal advice).

This case brings greater certainty to the application of limitation defences, particularly in negligence claims brought against building consent authorities.

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Special thanks to Edward Colenbrander for his assistance in writing this article.