Court assesses scope of architectural services and novel limitation argument

The recent High Court decision of Body Corporate 360683 v Auckland Council [2017] NZHC 1785 examines the scope of ‘architectural services’ and the importance of acting swiftly to ensure potential remedies are not time barred.

The Body Corporate, owners of the residential apartment building the Orewa Grand (the building), claimed against 8 parties for the alleged faulty design and construction of the building. The architects’ role, as pleaded in the original statement of claim, was to prepare plans and specifications of the building for the purpose of obtaining necessary building consents for the construction of the building, and to act as agent for the developer in making consent applications. These tasks were defined together in the pleadings as ‘the architectural services’. An amended statement of claim was filed that added an additional item to the architectural services, to “provide onsite observation during the course of the construction of the building…”

The Court was required to determine whether alleging negligence for the onsite observations amounted to introducing a new cause of action against the architects, or whether the observations were always included within the broad heading of architectural services and therefore merely further particulars in relation to that cause of action. Following from this issue, if it was found that introducing the observations into the pleadings amounted to a new cause of action, was the new cause of action time barred.

The Court found that the expression “architectural services” was simply a convenient label for two fundamentally different activities carried out by the architects, and the addition of a new pleading was another fundamentally different activity. The new pleading introduced a new area of factual enquiry that was different to that previously plead. The Judge therefore found that the observation claim was a new cause of action.

The last of the observations occurred in August 2006. It was therefore out of time under the 10 year long stop under s 393(2) of the Building Act by the time the amended statement of claim was filed in October 2016. Counsel for the owners put forward a novel argument that the phrase “proceedings are brought” refers to “the date when a proceeding is commenced initially and not when amendments to the claim may be brought” the idea being that time is stopped in respect of amending the original proceedings. The Judge found this argument to be misconceived as the limitation period are expressly directed to the date on which the claim is brought, not when the proceeding is first filed in Court.

The architects were successful in having the new cause of action struck out.

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