The legal storage requirement for IRD purposes is 7 years. Generally speaking the Building Act 2004 longstop provision limits legal exposure to 10 years.
It is not unknown for Weathertight Homes claims to be lodged some time ahead of the architect finding that out: if you biffed the files at 10 years it is possible that you might later learn of a claim which was lodged “within time”.
There is also the prospect that the time for exposure might be extended by way of a third party claim: this occurred in the Cromwell Plumbing & De Geest case, which is yet to be overturned but is now generally recognised as being bad law.
There have been instances where the insured had destroyed their file after ten years and was able to successfully argue for a discontinuance. However, it would usually be prudent to hold on to the files for another year or two so that (if required) you can access the information necessary for a stout defence.
Is the 10 year longstop at risk?
From time to time legal cases come up where the 10 year longstop appears to be challenged. The most recent one was in relation to a Weathertight Homes claim Osborne v Auckland Council, with the Supreme Court decision in June 2014.
Eligibility for the WHRS scheme requires building work to be done within 10 years of application, and hence an assessment of the “built date”. This case was about establishing that date in relation to “completion” and/or the issue of a CCC. The outcome aligns WHRS eligibility with s393 of the Building Act (the 10 year longstop provision) and does not change how that applies to liability generally.
The warm fuzzies induced by the 10 year longstop on liability under the Building Act have been under threat from cases brought to Court. So far, so good. But it would be unwise to biff out everything related to a project as soon as the longstop is reached.
Although it has long been the case that joinder of third parties under WHRS cases can stretch that 10 years, there is a possibility of some legal drift towards that situation being extended more generally. If faced with a claim, defence may be dependent on the documents you hold. Consistent with our past articles on this issue, and more particularly for residential observation records, Communique suggests a 12 year holding period is prudent.