The Supreme Court has released its long-awaited decision of Beca v Wellington City Council regarding whether the Building Act’s 10-year longstop applied to third-party contribution claims. In a 3/2 split, the Supreme Court held that it did not.

The dissenting judgment captured what the Court (and those involved in these types of claims) have been trying to grapple with – namely, which policy objective should be given priority: the right of defendants to seek contribution or the need for finality in building-related claims?

The Court provided a 41-page detailed legal analysis of the history surrounding the Building Act and the Limitation Act and their predecessors to answer this question. They considered arguments in support of and in opposition to those policy objectives. Ultimately, the majority said both policy objectives could be achieved if defendants had a further two years to join third parties to building-related proceedings, whereas the dissent said finality was more important.

The Supreme Court is New Zealand’s highest Court and therefore has the final word on this issue – unless there is legislative change.

What this means for those involved in the construction industry is that:

• a building owner has 10 years from the date of the building work to bring a claim against a defendant in respect of that building work;
• the defendant who is the subject of that claim has a further two years to bring a contribution claim against others who are alleged to have caused or contributed to the same damage. The two years runs from either (i) the date of the settlement between the plaintiff and defendant, or (ii) the date of judgment; and
• the absolute 15-year longstop provided by the Limitation Act should prevent third party claims being brought more than 15 years after the building work was carried out. However, the decision does not expressly address this issue.

This decision will no doubt be welcomed by some – particularly those who are regularly joined as defendants to building-related proceedings as this decision enables those parties to attempt to share the load in circumstances where they may have not been able to do so in the past (particularly since New Zealand does not have legislation for proportionate liability).

However, it may also ultimately impact the ways that parties make strategic decisions about their approach to litigation and associated costs. In reality, this may not be very different from how litigation (particularly large-scale litigation) has been run, but it is important that parties consider (more) carefully their strategic approach going forward.