Body Corporate 449665 v CMP Construction Limited & Auckland Council – Late Knowledge Period

This month, we look at how the Court construed the late knowledge period of the Limitation Act 2010 (“the Act”), in respect of a construction defects claim. This decision centered on an application made by CMP Construction Limited (“CMP”) to obtain summary judgment, or, to strike out, the Body Corporate’s negligence claim against them. This firm successfully acted for the Body Corporate in this instance.

Facts

  • The Plaintiff comprised the Body Corporate for the Victoria Park Market (VPM) complex and the registered proprietor of one of the principal units within the complex.

  • The Defendant, CMP, was the head contractor for the substantive renovation of the VPM complex, which included the construction of new buildings and the renovation of old buildings.

  • The Body Corporate brought a negligence claim against CMP. The Body Corporate claimed the roof terrace of the complex was defective as the waterproof membrane was installed incorrectly. This has resulted in the degradation of the roof terrace, thus requiring substantial repairs.

  • The Body Corporate claim the negligence arose from CMP failing as head contractor to ensure the performance of its subcontractor, Aquastop Limited, adhered to the requisite level. It bore the risk of loss resulting in Aquastop’s failure to exercise reasonable skill and care when completing the membrane work. CMP denied the claim and stated the Body Corporate were contributorily negligent.

  • They also asserted the Plaintiffs brought their claim out of time.

Subject-matter of the Case

  • CMP sought orders from the court to enter summary judgment in favour of CMP in respect of all causes of action pertaining to the claim, or, alternatively, for the Body Corporate’s claims to be struck out.

  • The basis for this application being, that once the Plaintiff was aware of the defects of the building to the point in which it brought proceedings against CMP, it surpassed the six year primary knowledge date and the three-year late knowledge date, and therefore the claim was statute barred under the Act.

Key Provisions

  • Under section 11(1) of the Act, it is a defence to a money claim if the defendant proves that the date on which the claim is filed is at least 6 years after the date of the act or omission on which the claim is based (the claim’s primary period).

  • However, this primary period can be extended by 3 years if late knowledge is established. Under section 11(3) of the Act, it is a defence to a money claim if the defendant, in this case CMP, proves that the date on which the claim is at least 3 years after the late knowledge date (the claim’s late knowledge period).

  • Section 14(1) of the Act defines the late knowledge period as the date on which the claimant, in this case the Body Corporate, gained knowledge or ought reasonably to have gained knowledge of all of the following facts:
    (a) the fact that the act or omission on which the claim is based had occurred:
    (b) the fact that the act or omission on which the claim is based was attributable (wholly or in part) to, or involved, the defendant:
    (c) if the defendant’s liability or alleged liability is dependent on the claimant suffering damage or loss, the fact that the claimant had suffered damage or loss.

Late Knowledge Issue in this Case

  • The key contention in the application brought by CMP was that by the time the proceeding commenced on 6 December 2021, it was outside the late knowledge period.

  • Counsel for CMP argued that by 20 August 2018 (or earlier), the Plaintiffs had late knowledge of the claim. Therefore, the claim was statute barred.

  • There was an email of 20 August 2018 in evidence for scrutiny by the Court, where an agent of the Body Corporate had sought from CMP the name of the waterproof membrane applicator.

  • CMP argued that at this point the requisite elements of late knowledge in section 14 above, were present such as the fact the omission had occurred, the fact the omission was attributable to CMP, and that loss occurred.

  • However, Counsel for the Body Corporate argued the 20 August 2018 email was more accurately construed as an “information gathering” communication to determine who supplied and installed the membrane. Counsel stated that while the Plaintiffs were aware of the leak, it could not be conflated with the knowledge of an act or omission that would form the basis of a legal claim against CMP.

    Outcome  

  • Ultimately, the Judge decided in favour of the plaintiff, noting that the late knowledge date arose when a third-party investigation revealed a systemic problem with the membrane, to which the facilities manager knew enough information to obtain expert advice.

Cautionary Tale

  • While the Plaintiff came within the late knowledge period in this instance (on a summary judgment basis), this case is an important reminder for those with leaky building issues that the clock starts running, and to act promptly to bring these matters to Court.

Note: This article is not intended to be legal advice (nor a substitute for legal advice). No responsibility or liability is accepted by TM Bates & Co. or Building Today to anyone who relies on the information in this article.