Lee v Whangarei District Council

JurisdictionNew Zealand
CourtCourt of Appeal
JudgeWinkelmann J
Judgment Date15 June 2016
Neutral Citation[2016] NZCA 258
Date15 June 2016
Docket NumberCA656/2015

[2016] NZCA 258

IN THE COURT OF APPEAL OF NEW ZEALAND

Court:

Winkelmann, Simon France and Woolford JJ

CA656/2015

Between
Olivia Waiyee Lee
Appellant
and
Whangarei District Council
Respondent
Counsel:

Appellant in person and T Connor (McKenzie Friend)

F P Divich and H E Waldron for Respondent

Appeal against a finding that the appellant's proceeding in negligence in respect of her leaky house was time barred under s4(1)(a) Limitation Act 1950 (LA) (actions shall not be brought after the expiration of 6 years … actions founded on … on tort) — appellant's house was built in 2007 and early 2008 — in January 2008 she commissioned a report into what she described as the standard of workmanship on the building — a follow-up report shortly thereafter noted more deficiencies — the Council refused to issue a Code Compliance Certificate in March 2008 — in April 2008, a significant amount of water came into the house but the appellant did not apply for a assessor's report under s32 Weathertight Homes Resolution Services Act 2006 until August 2008 — the appellant filed her claim in May 2014 saying her claim was in respect of defects that had been discovered in a report in 2011 when the building wrap was pulled back — she said the earlier reports had been commissioned in the context of a payment dispute — whether the applicable limitation period was under s4(1)(a) LA or s393 Building Act 2004 (Limitation defences) — whether the appellant had been sufficiently aware before May 2008 of defects for time to start running for limitation purposes — whether the reports by building consent consultants were hearsay and should not had been admitted into evidence — whether the application for an assessor's report stopped the clock for limitation purposes for all proceedings related to the weathertightness of the house, including the High Court proceedings.

Held: For the Council to show the claim was time barred, it had to prove that before 22 May 2008, L knew, or could with reasonable diligence had discovered, that the house had construction defects which resulted in the house not being weathertight. That followed from the fact that a cause of action accrued when each fact which it would be necessary for a plaintiff to prove had occurred ( Invercargill City Council v Hamlin). Where the claim was based on negligence, damage was an essential part of the cause of action. Until the damage had occurred, the cause of action was not complete. In Hamlin, the Privy Council said that the plaintiff's loss was not the physical damage to the structure, but the economic loss which arose only when defects were discovered. Time did not begin to run against L as the owner of the defective building until those defects were discovered, or could with reasonable diligence had been discovered.

L's interpretation of s393 CA was untenable. Section 393(1) BA provided that the LA applied to civil proceedings arising from (a) building work associated with the design, construction, alteration, demolition, or removal of any building; or(b) the performance of a function under the BA or a previous enactment relating to the construction, alteration, demolition, or removal of the building. Section 393(2) provided a long stop provision which prevented relief being granted outside the 10-year time period, even if the proceeding would otherwise be within the six-year limitation period. It was not an alternative limitation period. This was the clear meaning of the provisions.

In Pullar v Secretary for Education it was said that it was not necessary, in order for time to start running, to be able to pinpoint with precision the exact cause of every defect. What was to be ascertained was when economic loss occurred: when was the market value of the building affected? The principle enunciated in Pullar applied with equal force to this case. Even if L had not established the precise cause of the weathertight issues, she knew the house had significant weathertightness defects.

It was possible that prior to receiving the first report from B that L believed there were only minor cosmetic defects which required correction. But an argument in that regard was not available to L once she received B's report because in it he identified not only that the house did not meet the requirements of the Building Code, but that it did not do so in terms of durability, weather-tightness or alignment. B particularly referred to the external cladding in this regard.

Time for the purposes of the LA began to run at the point at which L received B's report. The market value of L's property was clearly affected as at that date by the very thing L now complained of: weather-tightness issues. In addition, B highlighted the need for further investigation to assess the extent of the remediation required. The issue L now pointed to, the defect in the plywood cladding, was also at that point reasonably discoverable.

The evidence established that before 21 May 2008 L knew that her house had construction defects, that it had not been built in accordance with the Building Code, that the house leaked, that she had taken legal advice about these problems, and that she had obtained advice from an expert in relation to the construction of her building. Whether or not her initial focus was on weathertightness issues, in February 2008 she received a report that raised those issues and recommended further investigation; she had seen water coming into her house, and against that background her own lawyer recommended that a claim be filed with WHRS.

The Associate Judge was correct to admit the reports under the business records exception to the hearsay rule, and for the reasons he gave. L did not claim that there was anything inaccurate in the documents, or that they were not true copies of the reports and communications in question.

It was an untenable construction of the statutory provision to argue that applying for the assessor's report stopped the clock ( Bunting v Auckland City Council) on all proceedings. Section 37(1) only stopped the clock for LA purposes for the particular claim commenced by the application for an assessor's report. The relevant provision had to be construed against the background of the general law in relation to limitation, which was that the LA operated on a proceeding-by-proceeding basis. The commencement of a proceeding stopped the limitation clock running for that particular proceeding, and not for all proceedings even if they related to the same damage. Here, when a claimant applied for an assessor's report, the LA clock was stopped for that particular proceeding. L's interpretation was also inconsistent with other provisions in the WHRSA which provided for particular circumstances in which the benefit of the limitation position of a claim could be preserved for subsequent or related claims. If s 37 had the effect L contended for, those provisions would be unnecessary.

Appeal dismissed.

JUDGMENT OF THE COURT
  • A The application for leave to adduce fresh evidence is declined.

  • B The appeal is dismissed.

  • C The appellant must pay the respondent costs for a standard appeal on a band A basis and usual disbursements.

REASONS OF THE COURT

(Given by Winkelmann J)

1

Ms Lee had a house built for her in 2007 and early 2008. Because of significant defects in its construction, the exterior was not weathertight. On 21 May 2014, Ms Lee issued proceedings against the Whangarei District Council, alleging the Council had been negligent when undertaking inspections during construction. The Council applied for summary judgment against Ms Lee on the ground that her proceeding had no prospect of success as it was time barred under s 4(1)(a) of the Limitation Act 1950. That section provides that actions founded on tort “shall not be brought after the expiration of 6 years from the date on which the cause of action accrued”.

2

Associate Judge Bell entered judgment in the Council's favour. 1 He was satisfied that Ms Lee discovered the damage to her house at least by 21 May 2008. Accordingly, when she commenced proceedings on 21 May 2014, she was outside the statutory time limit for commencing proceedings in negligence. Ms Lee now appeals his decision.

Some background principles
3

The issue for the Associate Judge on the Council's application for summary judgment was whether the Council could establish on the balance of probabilities that Ms Lee's claim against it could not succeed. It was not enough that the claim was merely weak. 2

4

For the Council to show the claim was time barred, it had to prove that before 22 May 2008 Ms Lee knew, or could with reasonable diligence have discovered, that the house had construction defects which resulted in the house not being weathertight. That follows from the fact that a cause of action accrues when each fact which it will be necessary for a plaintiff to prove has occurred. 3 Where the claim is based on negligence, damage is an essential part of the cause of action. Until the damage has occurred, the cause of action is not complete.

5

In Invercargill City Council v Hamlin, the Privy Council described how this rule applied within the context of a claim against a council for negligent inspection when the foundations of a house were found to be defective. 4 The Privy Council said that the plaintiff's loss was not the physical damage to the structure, but the economic loss which arose only when defects were discovered:

Once it is appreciated that the loss in respect of which the plaintiff in the present case is suing is loss to his pocket, and not for physical damage to the house or foundations, then most, if not all the difficulties surrounding the limitation question fall away. The plaintiff's loss occurs when the market value of the house is depreciated by reason of the defective foundations, and not before. If he resells the house at full value before the defect is discovered, he...

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2 cases
  • Olivia Waiyee Lee v Whangarei District Council
    • New Zealand
    • Supreme Court
    • 22 December 2016
    ...73 If they are not agreed, costs are to be set in the High Court and the Court of Appeal in the light of this judgment. 69 1Lee v Whangarei District Council [2015] NZHC 2777 (Associate Judge Bell) [Lee (HC)] at [50]–[55]; following Bunting v Auckland City Council HC Auckland CIV-2007-404-23......
  • Olivia Waiyee Lee v Whangarei District Council
    • New Zealand
    • Supreme Court
    • 3 August 2016
    ...JUDGMENT OF THE COURT A The application for leave to appeal is granted in part ( Olivia Waiyee Lee v Whangarei District Council [2016] NZCA 258). B The approved question is whether, in terms of s 37 of the Weathertight Homes Resolution Services Act 2006, the application for an assessor's re......

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