SHANNON MARY PEARCE JUSTIN BRUCE PEARCE AND KATHRYN DEBBIE ATKINSON JANE ANN ATKINSON

[2024] NZHC 2691

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE

CIV-2024-404-786

[2024] NZHC 2691

UNDER

Part 20 of the High Court Rules

IN THE MATTER

of an appeal against a decision of the District Court at Auckland

BETWEEN

SHANNON MARY PEARCE

First Appellant

JUSTIN BRUCE PEARCE
Second Appellant

AND

KATHRYN DEBBIE ATKINSON

First Respondent

JANE ANN ATKINSON

Second Respondent

Hearing:	12 September 2024
Appearances:	P White and IFA Hawkins for the Appellants D Purusram for the Respondents
Judgment:	17 September 2024

JUDGMENT OF BLANCHARD J

This judgment was delivered by me on Tuesday, 17 September 2024 at 4.00 pm pursuant to r 11.5 of the High Court Rules 2016.

Registrar/Deputy Registrar

Solicitors:           GM Legal Ltd (G Muller), Auckland

Victorian Lawyers (D Purusram), Auckland

Counsel:            P White, Auckland

PEARCE v ATKINSON [2024] NZHC 2691 [17 September 2024]

[1]                 This is an appeal against a decision of Judge K G Davenport KC dated       14 March 2024 which found that Shannon and Justin Pearce were liable to pay Kathryn and Jane Atkinson damages of $130,128.62.1

The sale of the property

[2]                 The case relates to the sale of a property in Swanson, Auckland, in 2014. Shannon Pearce and her son Justin sold the property to Kathryn Atkinson and her daughter Jane for $782,000.

[3]                 On 29 July 2014, Mrs Atkinson was interested in purchasing the property. She visited the property and spoke to Ms Pearce. She noticed a strong smell and Ms Pearce told her that she had just painted the rooms. Mrs Atkinson asked if there were any issues with the property that she ought to know about. Ms Pearce pointed out an area of wet ground which she said was where a drain sometimes got blocked. That was all that was disclosed.

[4]                 The contract was signed on  30  July  2014  and  became  unconditional  on 15 August 2014. Settlement was on 11 September 2014.

Discovery of methamphetamine contamination

[5]                 Soon after settlement, the Atkinsons became concerned that a sleepout at the property may be contaminated by methamphetamine. On 12 September 2014 they arranged for testing to be carried out by Anpure Ltd. On 13 September 2014, the Atkinsons received a report from Anpure which returned a high reading for methamphetamine throughout the house and the sleepout.

Issue of proceedings

[6]                 Though the methamphetamine contamination was discovered in 2014, proceedings were not brought until 2020. On 31 August 2020, proceedings were filed in the District Court.

1      Atkinson v Pearce [2024] NZDC 3991.

The claims and defences

[7]                 The statement of claim included three causes of action, breach of warranty, misrepresentation under s 35(1)(a) of the Contract and Commercial Law Act 2017, and negligence.

[8]                 The Pearces denied the property was contaminated by methamphetamine. They said that the claims were barred by s 11 of the Limitation Act 2010. They also denied that there had been a breach of warranty, misrepresentation or negligence.

The District Court decision

[9]                 The claims were the subject of a two-day trial. The Judge subsequently issued a reserved decision concluding that the property had been contaminated by methamphetamine, the claims were not barred by s 11 of the Limitation Act, and, while there had been no breach of warranty, the Pearces were liable for misrepresentation.

[10]Nothing is said in the judgment about the negligence claim.

[11]             The Judge awarded damages of $130,128.62 for remedial work to decontaminate the property.

Grounds of appeal

[12]             There are two grounds of appeal. First, the Judge erred in not accepting the defence under s 11 of the Limitation Act. Second, there was no misrepresentation because Ms Pearce had no knowledge of the methamphetamine contamination when she made the representation.

[13]There is no cross-appeal.

Decision

[14]             I have concluded that the appeal must be allowed because the misrepresentation claim is barred by s 11 of the Limitation Act.

[15]             The representation was made on 29 July 2014. The proceedings were not issued until more than six years later on 31 August 2020.2

[16]             The Judge said in her decision that the proceedings were issued on 31 July 2020.3 However, it is common ground that the correct date is 31 August 2020.

[17]             The three-year period for a late knowledge claim ran out well before the six-year period ended. It began to run on, at the latest, 13 September 2014 and had therefore long since expired when proceedings were issued.4

[18]             Mr Purusram for the Atkinsons suggested that a different approach might apply to the negligence claim that was not dealt with in the judgment. However, s 11 applies in the same way to the negligence claim, so it is also statute barred. A further difficulty is that the negligence claim is barred by s 35(1)(b) of the Contract and Commercial Law Act.

[19]             As the Atkinsons’ claims are clearly statute barred, it is unnecessary for me to consider the Pearces’ argument that there was no misrepresentation.

Result

[20]             The appeal is allowed. The decision of the District Court is quashed. Judgment is entered for the Pearces in relation to the Atkinsons’ claims.

[21]             The issue of costs in the District Court has been reserved pending this appeal. Accordingly, no order is required from this Court in relation to costs in the District Court.

2      Limitation Act 2010, s 11(1).

3      Atkinson v Pearce, above n 1, at [19].

4      Limitation Act, ss 11(2) and (3) and 14.

[22]             This appeal has been conducted by counsel for the Pearces on a pro-bono basis. Consequently, no costs are sought on the appeal except in relation to the initial filing fee for the appeal, which the Pearces have paid. I order the Atkinsons to reimburse the Pearces in relation to that cost.

Blanchard J