White v McCullough
[2018] NZHC 2806
•30 October 2018
IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY
I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE
CIV-2017-404-2642 [2018] NZHC 2806
BETWEEN CAROLINE RUTH WHITE
Plaintiff
AND
JOHN McCULLOUGH First Defendant
CARDNO (NZ) LIMITED Second Defendant
Hearing: 27 September 2018 Appearances:
L Herzog for the Plaintiff
M R C Wolff and S P Gunatunga for the DefendantsJudgment:
30 October 2018
JUDGMENT OF ASSOCIATE JUDGE SMITH
This judgment was delivered by me on 30 October 2018 at 3.00pm, pursuant to r 11.5 of the High Court Rules
Registrar/Deputy Registrar
Solicitors / Counsel:
L Herzog, Auckland and D Cowan, Auckland
Morrison Kent, Wellington
WHITE v McCULLOUGH [2018] NZHC 2806 [30 October 2018]
[1] The defendants (Mr McCullough and Cardno) apply to strike-out the claims of the plaintiff (Ms White) on limitation grounds.
The parties
[2] Ms White is a trustee of a trust called The Grafton Road Trust (the Trust). She says in her amended statement of claim that the Trust was established to purchase two residential units in a development at 160 Grafton Road, Auckland (the property).
[3] Mr McCullough is a licensed surveyor, and he is a former employee of Cardno. Cardno carries on business as an international consulting practice offering services in land development, surveying, planning and civil engineering.
Background
[4] In her amended statement of claim dated 13 June 2018 (the Claim) and in her supporting affidavit, Ms White makes the following allegations.
[5] In or about 2006, Cardno was engaged to undertake set-out works and prepare plans for the first stage of a unit title subdivision of the property. This included preparing three dimensional cadastral plans for what was then a four-storey commercial building and adjacent car park building on the property.
[6] There had been an earlier consent to subdivide the property, and Cardno based its draft unit title subdivision plans on certain electronic plans for a Building Consent BLD20060593901 (the Building Consent) that had been prepared by Michael Harkner, architect. The Building Consent plans are said to have included a demolition plan for the third floor and a proposed floor plan for a new third floor.
[7] On 20 September 2006, Mr McCullough sent an email to Auckland City Council (the Council) seeking approval of a new staged subdivision, with stage 1 to be configured around the existing building floor plates and the new western office suites shown on the Building Consent. There would be seven units in stage one, while stage two would see the creation of five additional units configured around the middle office suites shown on the Building Consent.
[8] On 28 September 2006 the Council issued a new resource consent and a new building consent to the then-owner of the property.
[9] The Council subsequently inspected and certified the various works, and on
5 December 2006 it certified that every building or part of the building shown on the plans complied with the provisions of the Building Code.
[10] On 18 January 2007, Cardno lodged Digital Survey Plan no. DP379933/A (the Survey Plan) with Land Information New Zealand (LINZ). Mr McCullough provided a surveyor's declaration with the Survey Plan, stating:
(a)The surveys to which this dataset relates are accurate, and were undertaken by me or under my direction in accordance with the Cadastral Survey Act 2002 and the Surveyor-General's Rules for Cadastral Survey 2002/2; and
(b) This dataset is accurate, and has been created with that Act and those
Rules … Declared on 18/01/2007.
[11] The Survey Plan was deposited with LINZ on 20 March 2007. LINZ issued certificates of title for the principal units on the property, on the same date.
[12] On 14 April 2009 a new Building Consent was granted for the property (the
Apartments Building Consent), allowing the owner to convert the existing office space
into 11 apartments, subject to the conditions set out in the Apartments Building Consent. The Apartments Building Consent was later amended to permit minor amendments to the layout of the internal areas of apartments on the third floor.
[13] The Trust entered into separate agreements to purchase units at the property, on 9 November 2011 and 10 November 2011. On 9 November 2011 it agreed to purchase unit 3B1 (and certain accessory units) for $540,180. On 10 November 2011 it agreed to purchase principal unit 3A4 (plus certain accessory units) for $469,820. I will refer to the units purchased by the Trust collectively as "the units". Settlement of both transactions was effected on 11 November 2011.
[14] In entering into the agreements to purchase the units, the Trust relied on the
LINZ search copies of the titles as being correct and accurate, and it relied on the
three-dimensional boundaries of the units, as submitted by Cardno, as being fixed and certain.
[15] Troubles emerged almost immediately after settlement. Four days after settlement, Ms White received an email from her solicitors advising that there was an application to lapse the Apartments Building Consent. The Council then sought a determination under the Building Act 2004 (the Act) from the Ministry of Business Innovation & Employment. The Council had established that the Apartments Building Consent did not correspond with Cardno's first stage unit title subdivision plans, in that the positions of the boundary walls as built differed from the established unit title boundaries as shown on the first stage unit title subdivision plans.
[16] Ms White says that there were a total of eight errors in the Survey Plan (the survey errors), and that as a consequence of the survey errors the Council refused to undertake a final inspection and issue a Code Compliance Certificate for the units. The second stage unit title subdivision plan was placed on hold pending resolution of the survey errors.
[17] On 3 December 2012 the Department of Building and Housing issued decision number 2012/075 (the Decision), in which it declined to reverse the Apartments Building Consent.
[18] On 16 May 2013 Ms White wrote to Cardno stating that the survey errors prevented Code Compliance Certificates being issued for the units, and prevented the second stage unit title subdivision taking place. As a result the apartments could not be sold or rented.
[19] In September 2013, Ms White wrote to the Surveyor General, requesting that the errors in the survey be rectified under s 52 of the Cadastral Survey Act 2002 (the Cadastral Act). Mr McCullough made a submission to the Surveyor General in reply in December of that year. Ms White's application was refused by the Surveyor General on 21 February 2014.
[20] In his letter declining Ms White's request to rectify the errors in the unit title deposited plan, the Surveyor General recorded that Ms White had advised that it was "apparent that the surveyor relied on the proposed floor plan and did not physically survey, measure or check the as-built corridor/Unit Title boundary walls when he prepared the First Stage Unit Title Plan".
[21] The Surveyor General went on to note that Mr McCullough did not accept that no physical survey, measuring or checking was carried out. He said that
Mr McCullough had indicated that:
During and after consent processing and prior to LINZ lodgement check field measurements were undertaken to verify unit positions and the unit plans were amended in certain areas to reflect as-built positions of walls (the south west corner of unit 3A4 being an example of this). Construction works continued through this period.
[22] The Surveyor General considered that it would be more appropriate for the parties to use certain provisions of the Unit Titles Act 2010 to rectify the position; he considered that s 52 of the Cadastral Survey Act 2002 could not be used to require the amendments to the titles which was needed.
[23] On 2 June 2015 ANZ Bank served a notice under the Property Law Act 2007 on the Trust, and it subsequently took possession of the units. The Bank sold the units on 17 August 2015, causing losses to the Trust reckoned at $1,298,357.
The Decision
[24] In the Decision, Mr Gardiner (MBIE's Manager, Determinations and Assurance, who was authorised to make determinations under Part 3 subpart 1 of the Act) noted:
An assessment of the plans submitted to [the Council] of the office fit-out in
2006, [the Apartments Building Consent] and [the amendment to the Apartments Building Consent] all show discrepancies between the locations of the partition walls built under those consents, and the location of boundaries described in the unit title plan.1
1 Ministry of Business Innovation & Employment, Determination 2012/075, at [7.4.4].
[25] Mr Gardiner concluded that the Council did not exercise its powers correctly when it issued the Apartments Building Consent and the amendment to the Apartments Building Consent, but he considered that the non-compliance with the Building Code identified in the Decision did not involve unsafe work or building work that had been undertaken contrary to the Building Code. Rather, the non-compliance was a "technical breach in terms of legal process arising from the disparity between the location of apartment walls and the relevant unit title boundaries".2 Having regard to those and other factors, Mr Gardiner concluded that it would not be appropriate to reverse the Apartments Building Consent.
The Claim
[26] The proceeding was filed on 6 November 2017. In the Claim, Ms White pleads that the defendants breached a duty of care to her to exercise reasonable skill and care in undertaking the cadastral survey works. Specifically, she alleges that the defendants were negligent in failing to physically survey, measure or check the as-built corridor/principal unit title boundary walls when they prepared the first stage unit subdivision plan. The defendants are alleged to have negligently failed to prepare accurate cadastral building plans, and to have negligently submitted a survey plan (the Survey Plan) to the Council that contained the survey errors.
[27] In an alternative cause of action, for negligent misrepresentation, Ms White pleads that the defendants made false statements on the Survey Plan, and in the accompanying surveyor's certificate and undertaking.
The Defence and the strike-out application
[28] In their amended statement of defence (the Defence), the defendants deny making the survey errors, and they deny any liability. In addition, they plead the following affirmative defences that are relevant to the strike-out application:
(a)The Claim was filed more than 6 years after the alleged negligent acts or omissions by the defendants, and is accordingly statute-barred under
2 At [7.8.3].
the Limitation Act 1950. Alternatively, if the time for bringing any claim ran from the date any alleged damage was reasonably discoverable, that date too was more than 6 years before the Claim was filed.
(b)The Claim is barred by the 10 year long stop limitation period provided for at s 393(2) of the Act.
[29] The strike-out application is based on those two defences.
The evidence for the defendants in support of the strike-out application
[30] Mr McCullough confirmed that he was employed by Cardno between
September 2004 and September 2008.
[31] He explained that Cardno was engaged by Citiland Ltd, then the owner of the property, to prepare land transfer plans based on a subdivision approval which had been given in 2005 (the 2005 subdivision approval) on the application of another firm. The property was then a large commercial building occupied by commercial tenants. Cardno was also engaged to prepare a new resource consent application and land transfer plans for the division of the third level into 12 office suites, and for the creation of a large Future Development Unit above the car park.
[32] Cardno surveyed the property in July 2006. It then prepared proposed unit development plans for a first stage development based on the 2005 subdivision approval. For the subdivision of the third level into 12 office suites, Cardno prepared new (substituted) unit development plans, and second stage unit development plans.
Mr McCullough said the survey plans Cardno prepared for the redevelopment of the property were prepared directly in connection to construction work which had been completed or was in progress at the time of survey.
[33] When Cardno carried out its survey work in July 2006 there was already in place a building consent that permitted the fit-out of Level 3 (including the division of the western side of the building into 8 office suites), and the fit-out construction work
had either been completed or was in progress. (The building consent had been issued to the then owner of the property, Citiland Ltd, on 1 June 2006.)
[34] Mr McCullough described Cardno's involvement in applying (on 8 August
2006) for a resource consent for the substituted proposed unit development for level three and the second stage unit development at the property. That consent was granted by the Council on 28 September 2006, and on 1 December 2006 the Council issued a certificate confirming that the building work shown on the first stage unit plan had been erected and all other development work necessary to enable the boundaries of every unit and the common area property to be physically measured had been undertaken.
[35] On 18 January 2007, Cardno lodged the proposed unit development and first stage unit development land transfer plans with LINZ for survey approval. Apart from that, Cardno did not undertake any further work on the development after December
2006.
The plaintiff's opposition to the strike-out application
[36] In her notice of opposition, Ms White denies that the proceeding was filed out of time. She says that her cause of action accrued on the settlement of the purchase of the units (on 11 November 2011). The proceeding was commenced on 6 November
2017, within 6 years of the accrual of the cause of action.
[37] Ms White says that the 10 year longstop limitation period in the Act does not apply, because the work carried out by the defendants was not "building work" as defined in s 7 of the Act.
Applications to strike out — legal principles
[38] Rule 15.1 of the High Court Rules 2016 provides that the Court may strike out all or part of a pleading if it discloses no reasonably arguable cause of action, or case appropriate to the nature of a pleading, or is likely to cause prejudice or delay.
[39] The following principles have been established by the Supreme Court:3
(1)the jurisdiction to strike out a cause of action is one which is exercised rarely and only where the cause of action is clearly untenable (i.e. has no prospect of success);
(2)a strike-out application proceeds on the basis that the facts pleaded against the applicant are true;
(3)the Court should be particularly slow to strike out a claim in any developing area of the law, particularly where a duty of care is alleged in a new situation;
(4)developments in negligence need to be based on proved rather than hypothetical facts; and
(5)if a pleading may be saved by amendment, that amendment should be allowed.4
The issues
[40] The following issues arise:
(1)Was the work performed by the defendants "building work" within the meaning of the Act, to which the 10 year 'longstop' limitation period prescribed by s 393(2) of the Act applies?
(2)If the work performed by the defendants was not "building work" as so defined, are the plaintiff's claims in any event statute-barred by the
6 year limitation period for tort claims in the Limitation Act 1950?
[41] I will address each of these issues in turn.
3 Couch v Attorney-General [2008] NZSC 45, [2008], 3 NZLR 725.
4 Kupenga v Registrar-General of Lands HC Auckland A1523/84, 4 February 1986.
Issue (1) — Was the work performed by the defendants "building work" within the meaning of the Act, to which the 10 year 'longstop' limitation period prescribed by s 393(2) of the Act applies?
Relevant provisions of the Act
[42] Section 393 of the Act materially provides:
393 Limitation defences
…
(2)… no relief may be granted in respect of civil proceedings relating to building work if those proceedings are brought against a person after
10 years or more from the date of the act or omission on which the proceedings are based.
…
[43] "Building work" is defined in s 7 of the Act. The relevant provisions of the section are as follows:
building work—
(a) means work—
(i)for, or in connection with, the construction, alteration, demolition, or removal of a building; and
…
(b) includes sitework; and
(c)includes design work (relating to building work) that is design work of a kind declared by the Governor-General by Order in Council to be restricted building work for the purposes of this Act; and
…
Counsel's submissions
[44] For the defendants, Mr Wolff acknowledged that, for the longstop limitation period to apply, the work carried out by Cardno and Mr McCullough had to be "building work", as that expression is defined in s 7 of the Act.
[45] He relied on the words "work for, or in connection with, the construction, alteration, demolition, or removal of a building" in subparagraph (a)(i) of the
definition (referring to the decision of Associate Judge Doogue in Deeming v EIG-Ansvar,5 and the judgment of Collins J in GPE Holdings Ltd v Tile 'N' Style Ltd6). In the latter case, the Court held that the words "in connection with" have a wide meaning, requiring merely a link or relationship between one thing (A) and another (B).
[46] Mr Wolff submitted that the work in this case (including the alleged negligent misstatements) was undertaken for the specific purpose of enabling development and construction at the property. It included preparation of various plans relating to subdivision works, resource consent and the division of the property into unit titles, and Ms White's own pleading links the work to the development of the building on the property on the basis of the subdivision plans and architect's plans for building consent. The work would not have been undertaken without the development of the property, and therefore is linked to the anticipated construction work at the property. The work was carried out with construction of the building in mind, and it involved activity of the very nature considered to amount to building work.
[47] Mr Wolff submitted that the relevant date for assessing the longstop limitation period is the date 10 years before 6 November 2017, when Ms White filed the proceeding. As Cardno and Mr McCullough undertook all of their work prior to January 2007, the Claim was not filed within the 10 year longstop limitation period.
[48] In his submissions in opposition, Mr Herzog submitted that Ms White's claims relate to land surveying work carried out under the Cadastral Act, not "building work" under the Act. The work undertaken in preparing and lodging the Survey Plan with LINZ was done in connection with the plan to subdivide the property and obtain unit titles, not in connection with construction work. The defendants' work had no connection to the actual design and construction processes for or on the property.
[49] Mr Herzog referred to the decision of the Court of Appeal in Carter Holt Harvey v Minister of Education, where Asher J noted that Parliament has deemed "building work" to be work "connected to actual design and construction processes for
5 Deeming v EIG-Ansvar [2013] NZHC 955.
6 GPE Holdings Ltd v Tile 'N' Style Ltd [2014] NZHC 802.
or on a specific building".7 Mr Herzog also relied on the decision of Associate Judge Doogue in Deeming for the proposition that, to qualify as "building work" under the Act, the work must have been part of the design of a building.
Discussions and conclusions on Issue (1)
[50] The issue to be determined is whether the expression "building work" in the Act extends to surveying work undertaken by Cardno under the Cadastral Act. This included drafting first stage unit tile subdivision plans and preparing three dimensional cadastre plans on the four-storey commercial building and adjacent car park building at the Property.
[51] Under the Cadastral Act, "cadastral survey" means "the determination and description of the spatial extent (including boundaries) of interests under a tenure system".
[52] In GPE,8 Collins J said that in order for work (A) to be connected with the construction, alteration, demolition or removal of a building (B), the person performing (A) must have had (B) in mind. Usually this would involve, at the very least, plans and designs for the construction of (B).9
[53] The context of those remarks was a case involving buildings which had been planned or designed. That may be contrasted with the position in Deeming,10 where the representations sued upon were made long before the buildings in issue were designed or built.
[54] In Deeming, Associate Judge Doogue did not view geotechnical reports relating to the suitability of a piece of land for subdivision which were prepared well before any subdivision took place, as "building work". The results were not contributions to the design or construction of any specific house which might subsequently be a building, or any allotment, but were purely obtained for the purposes
7 Carter Holt Harvey v Minister of Education [2015] NZCA 321 at [156] and [163]-[164].
8 GPE Holdings Ltd v Tile 'N' Style Ltd, above n 6.
9 At [35].
10 Deeming, above n 5.
of the proposed subdivision. The learned Associate Judge noted that because of the broadness of the concept described in the words "in connection with", there is a danger that, being influenced by purely textual considerations, the Court would read the legislation as extending into areas which were outside its intended scope. The concern of the Act is with proceedings arising out of "building works associated with … any building", and the intention was not to extend the ambit of "building works" to any activity no matter how remote it was from the actual construction of the building so long as a causal connection between the two events could be traced. Instead, the question must be posed whether the work in issue was building work that was part of the design and building of the house which is the subject of the claim.11
[55] In his affidavit, Mr McCullough said the survey plans Cardno prepared for the redevelopment of the property were prepared directly in connection with construction work which had been completed or was in progress at the time of the survey. The defendants say that there is a clear link between the work undertaken by Cardno and anticipated building work for the development of the property. But if the fit-out construction work had already been completed, or was in progress, at the time Cardno carried out its survey work in July 2006, that raises the question of whether the walls between what were then the office units (later converted to apartments) had already been erected. It is not entirely clear from the evidence whether or not that was the case, and it appears to me to be a potentially important point. If the walls were already then in place it is not at all clear how anything Cardno did thereafter could have contributed to anything that could be characterised as the construction or design of a building — the relevant construction would have already occurred, and the problem would have arisen not because of any "building work" carried out by Cardno, but because its survey work, applied in respect of building work to which it did not contribute, resulted in unit plans and titles that did not reflect the as-built situation (so that actual unit walls encroached over unit title boundaries in a number of cases).
[56] In my view the Act requires that, to qualify as "building work", the work done must at least have contributed in some way (including in appropriate case by way of design of a specific building) to the actual construction, alteration, demolition or
11 At [41].
removal of a building. It is not at all clear on the evidence that that is what happened in this case. Preparing survey plans for unit title purposes that in no way affect the actual design, position or construction of the units in question would not in my view involve work "for or in connection with" a building; rather, it would be work for or in connection with the definition of the legal boundary of the land on which the building work had (already) taken place.
[57] Similarly, to the extent the work undertaken by the defendants was used in support of its application for a resource consent approving the unit title subdivision plans and, therefore, done in connection with the plan to subdivide the property, that work was not work for or in connection with the construction, alteration, demolition or removal of a particular building — it might have qualified in a broad sense as "design" work, but the "design" work contemplated by subparagraph (c) of the definition is the design of a building.12 The survey, to the extent it was a "design", commented on the boundaries, areas and dimensions of the unit title developments for the subdivision of the property, but it had no connection with the actual design and construction processes for the construction of the building.
[58] Looking at the broad purposes of the Act as set out in s 3, I note that the principal focuses appear to be the safety of buildings, their use in ways that promote sustainable development, and promoting compliance with the Building Code. I see nothing in those broad purposes that would or might require a view that the preparation of cadastral survey plans, unconnected to the design or construction of any particular building (and not intended to contribute to such), should be treated as "building work" within the s 7 definition. Nor does the preparation of such plans appear to touch the issue of buildings with latent defects, which an owner might not discover for many years — the sort of case which the longstop limitation period was designed to address.13 I am of the view that including cadastral survey work of the kind apparently undertaken in this case within the scope of "building work" is neither clearly required
by the wording of the s 7 definition of that expression or by the broader purposes of
12 At [33].
13 By striking a balance between the interest of the building owner, who might not discover a latent defect for a number of years, and the interest of the party responsible for the defect in having some
eventual "cut-off point", after which he or she will be free from exposure to a claim for damages.
the Act. To find for the defendants on Issue (1) would be to run the risk of extending the ambit of the Act into areas that were outside its intended scope.
[59] For all of the above reasons, the defendants here failed to show that it is sufficiently clear (to justify a strike-out order) that the work carried out by them was "building work", to which the longstop limitation period applies. I accordingly decline to strike-out Ms White's claim on this ground.
Issue (2) — If the work performed by the defendants was not "building work" as so defined, are the plaintiff's claims in any event statute-barred by the 6 year limitation period for tort claims in the Limitation Act 1950?
Section 4 of the Limitation Act 1950
[60] Counsel agreed that the Limitation Act 1950 is the relevant statute (not the Limitation Act 2010). Under s 4 of the 1950 Act, the limitation period for a negligence claim is 6 years running from the date on which the cause of action accrued.
Counsel's submissions
[61] For the defendants, Mr Wolff submitted that s 4 of the 1950 Act provides a complete defence to the Claim. He submitted that the cause of action accrued at the time the work was completed, as all of the elements/facts necessary to establish a claim by Ms White were then in existence. That is because, on Ms White's own pleadings, the work was undertaken in respect of construction elements which were in existence at the time and were observable from the date the work was completed.
[62] Mr Wolff referred to the decision of the Court of Appeal in Pullar v R for the proposition that loss in building defects cases is economic loss.14 He then submitted that this is not a latent defect case, where the defects themselves and/or the damage from the defects was hidden to the casual observer. He referred to Murray v Morel & Co Ltd,15 and Stratford v Phillips Shayle-George,16 in support of the proposition that a plaintiff does not need to have had actual knowledge of the defects for the cause of
14 Pullar v R [2007] NZCA 389 at [13].
15 Murray v Morel & Co Ltd [2006] 2 NZLR 366.
16 Stratford v Phillips Shayle-George (2001) 15 PRNZ 573.
action to accrue. The cause of action accrued in this case at the time the work was undertaken, and it is not relevant to the accrual of the cause of action that the plaintiff only discovered the loss much later.17
[63] On the negligent misstatement cause of action, Mr Wolff noted that the elements of the cause of action are:18
(a) a false or misleading statement;
(b) made in circumstances where a duty of care is owed to the plaintiff;
(c) reasonable reliance on the statement by the plaintiff; and
(d) with resulting loss to the plaintiff.
[64] In Westland District Council v York, the Court of Appeal held that a cause of action in negligent misstatement accrues when the material facts necessary to establish all of its elements are present.19 The loss must be material, but it need not be complete, or readily measured.20 Mr Wolff submitted that this is not a case where the cause of action did not accrue until the loss was discovered, or ought reasonably to have been discovered. He submitted that the loss in value of the building was suffered long before Ms White acquired the units, and it was reasonably discoverable in 2011 when the Council issued the developer a stop-work order, and on 26 April 2011 when the Council issued the developer a notice to fix. The Council notices alone triggered the accrual of the cause of action, and economic loss was suffered at the times those notices were issued.
[65] For Ms White, Mr Herzog referred to Thom v Davys Burton21 for the proposition that time does not start running for the purpose of limitation in a negligence claim unless and until the plaintiff has suffered some actual and
17 Referring to the decision of the Supreme Court in Dayvs Burton v Thom [2008] NZSC 65, [2009]
1 NZLR 437.
18 Carter Holt Harvey Ltd v Minister of Education [2015] NZCA 321 at [112].
19 Westland District Council v York [2014] NZCA 59 at [13].
20 At [13], referring to Marlborough District Council v Altimarloch Joint Venture Ltd [2012] NZSC
11, [2012] 2 NZLR 726 at [49].
21 Thom v Davys Burton, above n 17.
quantifiable loss, harm or damage as a result of the breach of duty alleged. In this case, Ms White could not have suffered any loss or damage before she entered into the two agreements to purchase the units on 9 and 10 November 2011. The proceeding was commenced on 6 November 2017, within the period of 6 years following those dates.
[66] On the negligent misstatement cause of action, Mr Herzog referred to Westland District Council v York22 and Marlborough District Council v Altimarloch Joint Venture Ltd,23 submitting that the cause of action only accrues when the material facts necessary to establish all elements are present. Loss attributed to the breach of duty is one of those elements. Again, Ms White could not have suffered loss before
9 November 2011 when the first of the units was purchased.
Discussions and conclusions
[67] The defendants submit that the cause of action accrued on the completion of the work and that the claims are time-barred by s 4(1) of the Limitation Act 1950. That section provides a complete defence to all claims in tort or contract brought more than
6 years after the date on which the cause of action accrued.
[68] The defendants submit that a plaintiff's lack of knowledge of the damage or loss does not mean that a cause of action does not accrue on the completion of the work. They say it is not relevant to the accrual of the cause of action that the plaintiff only discovered the loss much later.
[69] I do not think there is anything in this submission that could justify a strike-out order. In Sunset Terraces,24 the Supreme Court held that a separate duty of care is owed to original and subsequent owners. The Court saw no reason to absolve a negligent council from its liability to a subsequent owner simply because that owner's predecessor was also able to sue the council.25 The duty owed to a first owner is not transferred to the second owner on sale, and nor is the loss. The duty is owed
22 Westland District Council v York, above n 19.
23 Marlborough District Council v Altimarloch Joint Venture Ltd, above n 20.
24 North Shore City Council v Body Corporate 188529 [2011] 2 NZLR 289.
25 At [74].
independently to the second owner, and the second owner independently incurs loss. In principle, that owner should be able to recover loss suffered as a result of a breach of the duty owed to him or her individually, quite independently of the first owner's position.26
[70] That seems to me to be a complete answer to the strike-out application based on s 4(1) of the Limitation Act 1950. Loss is an essential component of both causes of action on which Ms White sues and it cannot be transferred to a subsequent owner. A subsequent owner who has suffered loss as a result of negligence can sue notwithstanding the fact that a previous owner might also have been able to sue.27
[71] It is obvious that Ms White and the Trust could not have suffered any economic loss before they bought the units, so the cause of action could not have accrued before
9 November 2011 at the earliest. Ms White commenced the proceeding on
6 November, so she was within the 6 year limitation period. The Claim is therefore not time-barred under s 4(1) of the Limitation Act 1950.
Result
[72] The application to strike-out the Claim is dismissed. The plaintiff is entitled to costs in the usual way, which I award on a 2B basis, with disbursements to be fixed by the Registrar.
Associate Judge Smith
26 At [72].
27 At [75].
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7
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