Late knowledge date: when can you get an extra three years to file a claim?

By Stuart Robertson, partner and Victoria Bortsova, solicitor

The right to sue someone must be utilised within the appropriate limitation period. Under the Limitation Act 2010 (Act) this has been standardised to no more than six years from the act or omission, being the breach. If the claimant was not initially aware of the act or omission, they may file a claim up to three years after the date on which they gained knowledge, even if this is outside the usual six-year timeframe.

Overlaying this ‘late knowledge’ period is an absolute long-stop of 15 years from the act or omission (there is also the Building Act 2004 long-stop of 10 years, but was not relevant for this case). The High Court decision in REA v 360 Degrees Ltd [2022] NZHC 916 provides useful guidance into how the courts determine whether to allow the extra three years to file a claim.

Mr and Mrs Rea (plaintiffs) owned a residential house in Te Atatu, Auckland. They brought a claim against four defendants in relation to a number of building defects. The plaintiffs’ claim against the Auckland Council (Council) was for negligent processing of the building consent and issuing of the Code Compliance Certificate (CCC), which was issued on October 18, 2013. A number of expert reports were prepared for the plaintiffs, in March 2016, May 2016 and a third in 2019.  

The plaintiffs filed a claim on September 9, 2021. Under the Act, this was outside the usual 6-year timeframe as the CCC was issued in October 2013 (being almost 8 years). The plaintiffs argued that the late knowledge period started when they received the March 2019 report. This is because that report outlined defects that had not (arguably) been identified in the earlier two reports. If so, their claim was filed in time.

The Council argued the plaintiffs became aware of the defects via the 2016 reports. Because of this, the plaintiffs claim was statute barred as their September 9, 2021 proceedings were more than six years since the CCC was issued (in October 2013) and more than three years since the May 2016 report (when they gained the late knowledge).

The decision

The High Court agreed with the Council and found that the late knowledge period began on receipt of the May 2016 report. Although the 2019 report did alert the plaintiffs to the magnitude of the defects, the defects and the loss they caused was already known after receipt of the earlier (2016) reports. 

Therefore, the plaintiff’s claim against the Council was struck out.

Key takeaway

The first question a claimant, expert or legal advisor should ask is when did this occur? Always take a conservative approach when checking the six-year initial limitation period.  If you suspect you could be outside this period, ensure that you file as soon as possible and within the three-year period after you became aware of the relevant facts. 

Disclaimer: This article is not a substitute for specific professional advice on any matter. No warrant or guarantee whatsoever is given as to the accuracy of any information contained in the article, nor is any liability accepted for any actions taken based on this information.