In litigation, time can be everything. Limitation periods set strict deadlines for bringing claims – if a plaintiff is out of time, the claim may be thrown out, even if the claim is strong.

For this reason, limitation periods are a cornerstone of civil litigation, designed to ensure fairness by requiring claims to be brought within a reasonable timeframe.

We set out below three recent cases that have considered limitation. Pearce v Toka Tū Ake considered what constitutes an ‘act or omission’ under the Limitation Act 2010. The Court of Appeal in Rea v Auckland Council looked at the concept of ‘late knowledge’, and when this late knowledge period begins. Finally, in Beca v Wellington City Council, the Supreme Court ruled on the position regarding contribution claims.

Pearce v Toka Tū Ake Natural Hazards Commission [1]

1. The Earthquake Commission Act 1993 provided for a national insurance scheme under which residential property insured for fire was also insured against damage caused by natural disasters. The home insurers then provided “top-up” cover which applied once the EQC Act cover reached “cap”, being the maximum amount. The scheme continues under the Natural Hazards Insurance Act 2023 that is now in force.

2. Mr and Mrs Pearce held insurance with Medical Insurance Society Ltd (MIS). The policy was a “top-up” policy cover repair costs beyond those covered by EQC. Following the 2010 and 2011 Christchurch earthquakes, the Pearces made claims with EQC and MIS.

3. Between 2011 and 2022, both EQC and MIS conducted multiple assessments and made partial payments. However, in February 2022, MIS informed EQC that the limitation period for the homeowners' private insurance claim had expired. Subsequently, in November 2022, EQC confirmed that the damage exceeded its liability cap.

4. Section 11(1) provides an affirmative defence to a defendant if it can show that six or more years has passed since the act or omission on which the claim is based. This six-year period is known as the ‘primary period’. The Act does not define ‘act or omission’.

5. This timeline raised the following question: If an insurance policy provides “top-up” cover for damage which exceeds the statutory cap, does the primary period under s 11 of the Limitation Act 2010 begin on:

a) The occurrence of the insured peril (in this case in 2011)?

b) The date the claim has been assessed and confirmed as exceeding the statutory cap (in this case in 2022)?

c) The date on which the insurer allegedly breaches its obligations under the policy?

6. MIS’ position was that the relevant limitation date was the date of the insured peril – being the earthquake in 2011. On that basis the claim pursued in 2022 was out of time.

7. The Court disagreed and found the claim was still in time. The Court held that MIS’ liability was contingent on EQC’s payment being finalised. As such, the limitation period only began in November 2022, when EQC completed its payment – not the date of the insured peril. The Court rejected the argument for MIS that insurance contracts hold the insured person harmless against loss and so time starts running when the insured peril occurs. [2]

8. In coming to its conclusion, the Court emphasised the well-known principle that the provisions of a contract are to be read in the context of the whole contract.[3] In this case, the contract also has to be understood in the context of the operation of the EQC Act. The policy provided ‘top-up’ cover “to the extent that the loss or damage exceeds the liability of the Commission under the [EQC] Act”.[4] The policy’s trigger for payment was when the EQC had made the full extent of its payment, not when the peril occurred.

9. The New Zealand approach is demonstrated in New Zealand Insurance Co Ltd v Harris[5] where the Court held an insurer breaches its obligation when it fails to pay the amount due ‘at the proper time’.[6] While the peril that causes the damage or loss will likely be relevant in determining the proper time, the peril itself is not the “act or omission” referred to in s 11 of the Limitation Act.

10. The Court concluded the primary period under s11 of the Limitation Act started only once a reasonable time had elapsed for MIS to process and pay the claim following EQC’s advice that the claim was over the EQC cap and had been paid.[7]

11. As those involved in residential earthquake claims are aware, the position of EQC/NHC as to whether a claim is under or over cap is frequently subject to change. How the private insurer can be certain of the start date for the limitation period applicable to the claim under the policy is a question left unanswered by the High Court’s decision.

Rea and Rea as Trustees of the Waiatarua Trust v Auckland Council [8]

12. Property owners brought a claim against Auckland Council, and other parties, in negligence in relation to weathertightness and structural defects. The property owners claimed that the Council had negligently issued a Code Compliance Certificate in 2013. However, they did not file their claim until 2021. They relied on the “late knowledge” period under ss11 and 14 of the Limitation Act 2010.

13. In the intervening years, the property owners had identified that the house had been constructed with defects. They sought expert advice and had obtained a number of building surveyor and structural engineering reports for the period between 2016 and 2019.

14. The Council argued that the claim was out of time. The property owners claimed that they only learned all the required aspects of their claim against the Council on receipt of the last expert report in March 2019. As such, they were within time under the late knowledge provisions of the Act.

15. The High Court struck out the property owners’ claim under s11 of the Act. Not only did the Court find that the primary six-year limitation period had expired, but the late knowledge period of three years had also expired.

16. The property owners appealed and the Court of Appeal made findings as to the kind of knowledge the claimant is required to have for the late knowledge period to begin running.

17. In respect of defective building claims against Councils, the Court found that the plaintiff need only know that a CCC had been issued by the Council, that there is damage to the building, and that repairs will be required. The Court did not accept that the property owners needed to know every fact relevant to establishing negligence.

18. In coming to its conclusion, the Court held that the plain meaning of the s14(1)(a) and (b) should be used and therefore, the only knowledge of an act or omission that was required was that the CCC had been issued[9] and that the CCC was attributable to the Council.[10]

19. For the purposes of s14(1)(c), “the fact that the claimant had suffered damage or loss” meant only that there were defects that were noticeable and not minor. The words do not go so far as to require specific knowledge by the claimant of a causal link between the loss and the defendant.[11]

20. The Court went on to state:[12]

For the purposes of s 14(1), a claimant will have constructive knowledge of the requisite facts if they have information that would lead a reasonable person to begin investigating whether a right to claim exists. They cannot close their eyes to the obvious. They cannot postpone acting if a reasonable person in their circumstances would take action.

21. The Court accepted that, at the latest, the homeowners had actual or constructive knowledge of all the relevant facts by March 2017 after receiving one of the expert reports.[13] At that point, a reasonable person would have begun investigations and sought legal advice.

Beca Carter Hollings & Ferner Ltd v Wellington City Council [14]

22. In this case, the majority decision of the Supreme Court has potentially extended the liability period for construction professionals.

23. BNZ leased a building in Wellington which suffered irreparable damage in the Kaikoura earthquake in November 2016. In August 2019, BNZ brought a claim against Wellington City Council for negligence in respect of the design and consenting of the building. The Council, in turn, filed a third-party claim against Beca Carter Hollings & Ferner Ltd for contribution.

24. Beca brought a strike out application on the basis that the claim for contribution was brought outside the 10-year longstop period in the Building Act. Beca had issued its producer statement in March 2008.

25. Beca argued that the Building Act overrode limitation regime for contribution claims, and that the 10-year longstop period had expired. This was in line with a number of previous High Court judgments. Notwithstanding the established line of authority, both the High Court and Court of Appeal dismissed the strike out application. Beca subsequently appealed to the Supreme Court.

26. The majority in the Supreme Court considered that when read together, the longstop provision in the Building Act did not invalidate the contribution regime in respect of disputes relating to building work. In particular, they considered that if the longstop provision prevailed then it may create injustices by a party being unable to bring a contribution claim against another party who was also liable.[15]

27. The two-year period for contribution claims against a third party will begin to run at the point at which the defendant’s liability to the plaintiff is quantified by an agreement, award, or judgment and is not cut short under the Building Act’s longstop period.

Comment

The above cases have provided helpful clarification of the legal position in respect of limitation defences, not least the Supreme Court’s confirmation of the position in relation to contribution claims. They have also highlighted some pitfalls for parties to proceedings which need to be carefully considered when taking any steps to bring (or defend) proceedings.

Pearce v Toka Tū Ake demonstrates that, notwithstanding the clear provisions of the Act, the contingent nature of the insurer’s liability means that insurers need to be prepared for potential liability long after the insured peril has occurred.

Rea v Auckland Council brings certainty to the late knowledge period and emphasises the importance of limitation periods. It makes it clear that plaintiffs need to act when they possess actual or constructive information that would lead a reasonable person to investigate their claim. Further, they will not be able to use a late knowledge period to bring a claim which rightfully should have been brought within the primary limitation period.

The decision in Beca v Wellington City Council affirms that contribution claims have their own distinct regime, with time beginning when the primary liability is quantified, and is not subject to the longstop in the Building Act. Previous authority provided construction professionals with certainty. However, the Supreme Court decision means that a professional may still be liable long after the 10-year limitation period expires. For this reason, contractors and consultants may wish to consider holding insurance for a longer period to account for unknown contribution claims.

cecily brick is a partner at fee langstone

SAM WALKER IS A SOLICITOR AT FEE LANGSTONE

rachel anderson is a special counsel at fee langstone

[1] [2025] NZHC 623.

[2] A principle adopted by Courts in the United Kingdom and in some states of Australia, providing that in a contract for insurance, the insurer agrees to prevent a peril from happening, thus the act or omission on which a claim is based will always be the date of peril.

[3] Above n 1, at [33].

[4] Above n 1, at [34].

[5] [1990] 1 NZLR 10 (CA).

[6] Above n 1, at [70].

[7] Above n 1, at [73].

[8] [2024] NZCA 313.

[9] Above, n 8 at [56].

[10] Above, n 8 at [57].

[11] Above, n 8 at [62].

[12] Above, n 8 at [67].

[13] Above, n 8 at [69].

[14] [2024] NZSC 117.