Olivia Waiyee Lee v Whangarei District Council

• Jurisdiction: New Zealand
• Judge: Glazebrook J
• Judgment Date: 22 December 2016
• Neutral Citation: [2016] NZSC 173
• Docket Number: SC 68/2016
• Court: Supreme Court
• Date: 22 December 2016

BETWEEN

Olivia Waiyee Lee

Appellant

and

Whangarei District Council

Respondent

[2016] NZSC 173

Court:

William Young, Glazebrook, Arnold, O'Regan and McGrath JJ

SC 68/2016

IN THE SUPREME COURT OF NEWZEALAND

Appeal against a Court of Appeal decision which held that the appellant's claim against the Whangarei District Council was out of time pursuant to s37(1) Weathertight Homes Resolution Services Act 2006 (“WHRSA”) (application of Limitation Act 2010 to applications for assessor's report) — the appellant's house, constructed in 2007 and 2008, was leaky — in August 2008 the appellant applied for an assessor's report under s32(1) WHRSA — in March 2010 the appellant initiated an adjudication in the Weathertight Homes Tribunal which was terminated on the basis of s60(5) WHRSA (right to apply for adjudication of claims — owner of a dwellinghouse may not apply to have an eligible claim adjudicated if it was the subject of an arbitration that had already commenced) as appellant had also commenced arbitration proceedings under the Construction Contracts Act 2002 — whether, pursuant to s37(1) WHRSA, the application for an assessor's report stopped the clock for limitation purposes.

Counsel:

T J Rainey and J Heard for Appellant.

A R Galbraith Qc and F P Divich for Respondent.

• A The appeal is allowed. The order for summary judgment is set aside.

• B Costs of $25,000 plus usual disbursements are awarded to the appellant. We certify for second counsel.

• C If not agreed, costs are to be set in the High Court and the Court of Appeal in the light of this judgment.

JUDGMENT OF THE COURT

REASONS

(Given by Glazebrook J)

	Para
Introduction	[1]
The WHRS Act	[5]
Limitation provisions	[5]
Assessor's reports	[7]
Adjudication	[13]
Transfer of proceedings	[15]
Withdrawal of claims	[16]
Termination of claims	[19]
Other relevant provisions	[23]
Background	[25]
Issues	[35]
The text of s 37(1)	[36]
Scheme and purpose	[41]
Legislative history	[48]
Significance of ss 54 and 141	[53]
Open-ended liability	[57]
Effect on the Council	[63]
Effect of termination	[64]
Conclusion	[67]
Result and costs	[71]

Introduction

1 Section 37(1) of the Weathertight Homes Resolution Services Act 2006 (the WHRS Act) provides that the filing of an application by the owner of a dwelling-house for an assessor's report under's 32(1) of that Act has the same effect for the purposes of the Limitation Act 1950 (the 1950 Act) as filing proceedings in a court. The issue in this appeal is the extent to which s 37(1) “stops the clock” for limitation purposes.

2 Ms Lee applied for an assessor's report on 12 August 2008. Her position is that proceedings she eventually filed in the High Court on 21 May 2014 against the Whangarei District Council are therefore to be treated as having been “brought” on 12 August 2008 for the purposes of s 4(1)(a) of the 1950 Act. This section provides that an action (defined in s 2(1) to mean “any proceeding in a Court of law other than a criminal proceeding”) founded on tort “shall not be brought after the expiration of 6 years from the date on which the cause of action accrued”.

3 The High Court rejected Ms Lee's argument on the application of s 37(1). 1 This meant that the court proceedings had to have been filed within six years of the cause of action accruing. The Court held that Ms Lee's cause of action accrued before 21 May 2008, referring to reports obtained by Ms Lee in February and April 2008 and letters to the builder and the cladding manufacturers in May 2008 showing

Ms Lee understood the nature of the problem with the dwelling. 2 It followed that her High Court proceedings were brought out of time and summary judgment was given in favour of the Council. 3 The Court of Appeal upheld the High Court decision. 4 Leave to appeal on the effect of s 37(1) was granted by this Court on 3 August 2016. 5

4 In this judgment we discuss the relevant parts of the legislation and the background to these proceedings, before identifying and dealing with the issues in the appeal.

The WHRS Act

Limitation provisions

5 At the relevant time s 37(1) of the WHRS Act provided: 6

37 Application of Limitation Act 1950 to applications for assessor's report, etc

(1) For the purposes of the Limitation Act 1950 (and any other enactment that imposes a limitation period), the making of an application under section 32(1) has effect as if it were the filing of proceedings in a court.

6 This Court referred to s 37(1) in Osborne v Auckland Council but did not need to determine its scope in that case. It did recognise that it could be construed as

meaning that the stopping of time is not confined to claims which proceed under the WHRS Act. 7

Assessor's reports

7 Section 32(1)(a) provides that “an owner of a dwellinghouse who wishes to bring a claim in respect of it” may apply for an assessor's report. Claim and claimant are defined in s 8:

claim means a claim by the owner of a dwellinghouse that the owner believes–

• (a) has been penetrated by water because of some aspect of its design, construction, or alteration, or of materials used in its construction or alteration; and

• (b) has suffered damage as a consequence of its penetration by water

claimant–

• (a) means a person–

  • (i) who applies to the chief executive to have an assessor's report prepared in respect of a building; or

  • (ii) whose claim is transferred to adjudication under section 120 or 121; and

• (b) includes a claimant's successor by operation of law

8 Section 14 deals with the requirements for an eligible claim with regard to a single dwellinghouse:

14 Dwellinghouse claim

The criteria are that the claimant owns the dwellinghouse to which the claim relates; and–

• (a) it was built (or alterations giving rise to the claim were made to it) before 1 January 2012 and within the period of 10 years immediately before the day on which the claim is brought; and

• (b) it is not part of a multi-unit complex; and

• (c) water has penetrated it because of some aspect of its design, construction, or alteration, or of materials used in its construction or alteration; and

• (d) the penetration of water has caused damage to it.

9 The procedure and eligibility criteria for bringing a claim in a multi-unit complex differ from those for a single dwellinghouse. The provisions (set out in ss 15 to 18) are designed to ensure that, where there is damage to more than a single unit, any claim covers all the affected units and/or common areas. There are provisions setting out procedures for representative claims with regard to multi-unit complexes under ss 19 to 21.

10 When faced with an application for an assessor's report, the chief executive 8 must make an initial assessment as to whether the claim meets or is capable of meeting the eligibility criteria 9 and, if so, must arrange for a report to be prepared. 10 An assessor's report can be a report on eligibility or a full assessor's report. 11 This is at the option of the owner. 12 Ms Lee in this case applied for a full assessor's report.

11 An eligibility assessor's report only states whether the claim meets the eligibility requirements. 13 A full assessor's report covers the eligibility criteria and, if these are met, it must also, under's 42(2), state the assessor's view on: 14

• (a) why water penetrated the dwellinghouse concerned; and

• (b) the nature and extent of the damage caused by the water penetrating the dwellinghouse; and

• (c) the work needed to repair the damage; and

• (d) the work needed to make the dwellinghouse weathertight (both in relation to the deficiencies that enabled the damage to occur and in

  relation to any deficiencies that are likely in future to enable damage to be caused to the dwellinghouse by water penetrating it); and

• (e) the estimated cost of the work referred to in paragraphs (c) and (d); and

• (f) the persons who should be parties to the claim.

12 A copy of the assessor's report, once completed, must be given to the claimant. 15 The chief executive then evaluates the report and decides whether it meets the eligibility criteria and gives notice in writing to the claimant of his or her decision. 16

Adjudication

13 If a claim meets the eligibility criteria, there is then the right to apply to the Weathertight Homes Tribunal (the Tribunal) to have the claim adjudicated. Sections 60 and 62 provide (in their relevant parts):

60 Right to apply for adjudication of claims

• (1) The owner of a dwellinghouse has the right to apply to the tribunal to have the claim adjudicated if it is an eligible claim.

• (2) Subsection (1) has effect despite any provision of any existing agreement or contract that requires or provides for–

  • (a) the submission to arbitration of any matter; or

  • (b) the making of an arbitral award as a condition precedent to the pursuit of any other proceedings or remedy.

• (3) Existing agreement or contract, in subsection (2), means one entered into before 27 November 2002.

• (4) However, the right referred to in subsection (1), and its exercise, are restricted by subsections (5), (7), and (8).

• (5) An owner of a dwellinghouse may not, however, apply to have an eligible claim adjudicated, or continue adjudication proceedings, if, and to the extent that, the subject matter of the claim is the subject of–

  • (a) an arbitration that has already commenced; or

  • (b) proceedings initiated by the claimant (including by way of counterclaim) by way of–

    • (i) proceedings in a court or a Disputes Tribunal; or

    • (ii) proceedings under section 177 of the Building Act 2004.

• (6) Subsection (5) does not limit the power of any party to apply for proceedings to be transferred to adjudication under section 120 or agree that they be transferred under...