Supreme Court decision on contributory claims – what it means for you

A recent Supreme Court ruling is set to have a significant impact on the construction industry. Hannah Bryce, ACE’s General Manager of Engagement and an experienced lawyer, explains.

The Beca Carter Hollings and Ferner vs Wellington City Council case has provided clarity on the long-debated issue of how contributory claims are handled when a defendant wants to rely on the limitation periods set out in the Building Act 2004 and the Limitation Act 2010.

The Supreme Court's decision confirms that the ten-year long-stop provision in the Building Act does not apply to contributory claims. Instead, in the case of contributory claims, the same rules will apply as contributory claims brought under the Limitation Act's rules, allowing a longer window for claims to be brought forward. For our members, this will be of particular concern where third parties seek contributions from consulting engineers.

What happened – how did the dispute come about?

The dispute arose after the BNZ office building in Wellington was damaged by the 2016 Kaikoura earthquake. BNZ sued Wellington City Council for more than NZ$100 million, alleging negligence in the council’s building consent, inspections and code compliance certificates.

The council then sought a contributory claim from Beca, which designed and monitored the building's structural elements. Beca contended that the claim was time-barred under the Building Act's ten-year long-stop provision, as Beca’s work had been completed in 2008 but the claim not brought until 2019.

After a protracted process, the Supreme Court has now ruled that the Building Act's ten-year long-stop limitation did not apply to contributory claims, and Wellington City Council could bring a claim against Beca.

How does this impact the claim risks that consulting engineers need to manage?

• Direct claims from clients: You can continue to rely on the ten-year long-stop period outlined in the Building Act for direct claims related to "building work". This means any direct claims must be filed within ten years of the act or omission in question.
• Contributory claims: However, if you are brought into a claim as a contributing party, you cannot rely on the ten-year limitation under the Building Act. In such cases, the limitation period for “building work” will be treated in the same way as contributory claims under the Limitation Act. This means contributory claims will have their own two-year limitation period which commences once liability to the claimant is quantified by an agreement, award, or judgment. This means that claims for contribution can be made many years after the original act or omission.

What are the implications for consulting engineers?

The ruling means consulting engineers must remain vigilant about potential risks long after a project is completed. While direct claims are subject to the Building Act's limitations, the extended time frame for contributory claims poses new challenges.

Consulting engineers should ensure they manage risks carefully, particularly in projects involving multiple stakeholders, to avoid unexpected legal liabilities in the future.

For ACE New Zealand members, it is crucial to review your contractual liability clauses and insurance policies to ensure your business is protected from such contributory claims.

Stay informed and prepared as this ruling shapes the future of liability in the construction industry.

Join the ACE New Zealand webinar to learn more

Join ACE New Zealand and Vanessa Ma, Special Counsel at Morgan Coakle, for a one-hour Zoom webinar to unpack how the Beca Carter Hollings and Ferner vs Wellington City Council case came about, how it impacts the claim risk that consulting engineers need to manage and what the implications are going forward. 

Webinar: Unpacking the Supreme Court decision on contribution claims

Date: Wednesday 16 October
Time: 12pm-1pm
Register: Register here