In a recent decision, the High Court declined an application for an extension of time to serve a statement of claim under r 5.73 of the High Court Rules 2016 (Hobday v Selwyn District Council [2024] NZHC 550).
The case illustrates the importance for lawyers to comply with procedural rules and the Court’s reluctance to allow plaintiffs to circumvent limitation periods without good reason.

Background

The plaintiffs brought proceedings against the Selwyn District Council arising from poor workmanship on a property they purchased. Their claim was filed one day before the 10-year long stop limitation in s 393 of the Building Act 2004. However, it was not served within 12 months of being filed, as required by r 5.72(2) of the High Court Rules.

The plaintiffs applied for an extension of time under r 5.73, which the Court may grant if satisfied that “reasonable efforts have been made to effect service on that defendant or person, or for other good reason”. If the plaintiffs were not granted an extension, the claim would be statute barred.

Decision

The Court noted that the Council has an accrued right of limitation under the Building Act 2004, and that the plaintiffs' application was asking the Court to deprive the Council of that right. In practical terms, the plaintiffs sought to lengthen the long stop limitation to over 11 years. The Court said:

"Part of the reasoning for the long stop is that conducting litigation 10 years after the events in issue involves self-evident difficulties in respect of inter alia the availability of witnesses, the dimming of memories and the availability of records."

The responsibility for the failure to serve the claim within time appeared to lie with the plaintiffs’ former solicitors, not the Council. When first approached by the plaintiffs, the Council raised the 10-year limitation and suggested they promptly seek legal advice.

In assessing the plaintiffs’ argument that they had a meritorious claim, the Court reasoned that the stronger the plaintiffs’ claim, the greater prejudice resulted to the Council in being deprived of its limitation defence. While the plaintiffs stood to lose their cause of action against the Council, they were in the same position as any applicant for an extension of time for service following expiry of a limitation period. The possibility that the plaintiffs could not pursue a claim they consider has merit was not in itself a good reason to grant the extension.

Further, if the application was granted, it would relieve the plaintiffs’ former solicitors of their apparent negligence. The plaintiffs may otherwise need to bring a claim against the solicitors for a loss of opportunity to sue the Council, and it was “hard to see how the solicitors concerned could have any defence to any negligence claim.” Accordingly, assuming the claim against the Council had merit, the plaintiffs were not left without a remedy.

The plaintiffs argued that if they brought a claim against their former solicitors, the defendants would almost certainly join the Council as a third party and would not be time barred from doing so. The Court considered the plaintiffs’ application should be determined on the present circumstances, and that how any claim against the former solicitors would be dealt with, including whether the Council would be joined to the proceedings, involved speculation. The possibility of the Council’s involvement in that process was not sufficient to deprive it of a valid defence to the present claim.

In the circumstances the Court was unable to conclude there was good reason to extend the time for service under r 5.73. The plaintiffs’ application was declined.

Our view

The decision highlights the importance for lawyers acting in litigation to closely follow procedural requirements, particularly the dates for filing and serving documents. It also demonstrates the Court’s reluctance to allow plaintiffs to circumvent limitation periods where the plaintiffs have, without good reason, not complied with prescribed dates for service and the defendant is not at fault.

This article was co-authored by William Turner a Solicitor in our Construction and Infrastructure team.