If your organisation has exposure to historic claims, this ruling matters. The Supreme Court has handed down its decision in a long-running dispute between Whangarei District Council and Mr Daisley, clarifying that councils cannot be held liable for historic regulatory mistakes beyond the standard six-year limitation period unless they actually knew about the wrongdoing and covered it up. Poor record-keeping alone is not enough to extend time.

In Whangarei District Council v Daisley [2026] NZSC 72 (decision), the Supreme Court has clarified when a defendant’s conduct will amount to fraudulent concealment for the purposes of extending the limitation period under section 28(b) of the Limitation Act 1950.^[1]

The majority of the Supreme Court confirmed that actual knowledge or wilful blindness is required to substantiate fraudulent concealment. The defendant must know (or be wilfully blind to) both the essential facts giving rise to the claim, and that those facts amount to a wrongful act. Even gross negligence, and recklessness falling short of wilful blindness, are not enough under section 28(b) to extend the limitation period of a claim.  

Background

In 2004, Mr Daisley acquired a quarry to meet the demands of his contracting business and of other contractors buying material from him. Mr Daisley was told by the previous owners that a quarry had operated on the land for decades without issue, and the Council knew about it as they had charged commercial mineral rates on the property for years. The predecessor of the Council, the County Council, had used the quarry itself in the past. 

In November 2004, Mr Daisley’s solicitors obtained a Land Information Memorandum (LIM) from the Council. The LIM noted that no information about any consent was found. However, Mr Daisley proceeded on the basis he would have existing use rights to operate the quarry based on discussions with the previous owner and the property’s commercial rating as a quarry. 

However, the Council took enforcement action against Mr Daisley to restrict quarrying on his property between early 2005 and mid-2011, asserting that he did not have a resource consent. In 2009, a 1988 land use consent (LUC) authorising quarrying on the property was found in the Council’s archives. By that time, Mr Daisley had been compelled to sell the property at a significant loss.

Mr Daisley sued the Council in 2015 for negligence and misfeasance in a public office. A central issue through the proceedings was the application of the Limitation Act 1950 as Mr Daisley was out of time to bring his claim, unless the limitation period was extended under section 28(b) of the Act:

• The High Court awarded just over $4.25 million in damages, finding section 28(b) applied.

• The Court of Appeal overturned the misfeasance finding and reduced the damages.

• The case reached the Supreme Court on appeal and cross appeal, with a central issue being whether the limitation period had been extended by fraudulent concealment under section 28(b) of the Act.

The legal issue

The Council accepted it was negligent but challenged the findings of the lower courts on Limitation Act grounds. Mr Daisley cross-appealed the finding that the Council’s failure to promptly withdraw enforcement proceedings once the LUC was discovered did not amount to misfeasance of public office.

Actions in tort must be brought within six years of the cause of action accruing. Section 28(b) of the Limitation Act 1950 creates an exception where the defendant has fraudulently concealed the right of action.^[2]

The key question was whether the Council’s conduct, particularly its failure to identify the 1988 consent earlier, met that threshold. 

Supreme Court Decision

The Supreme Court majority (Glazebrook, Ellen France, Kós and O’Regan JJ) allowed the Council’s appeal in part. The finding that the Council had fraudulently concealed Mr Daisley’s right of action was set aside. Resulting in a reduction of damages to an award of $90,000 (plus interest) for the sale of Mr Daisley’s property at a loss. The Court set aside all other damages previously awarded, as the claims were out of time. The Court unanimously dismissed the cross appeal on misfeasance. 

The Court’s reasoning

The Supreme Court clarified that actual, or imputed knowledge in the form of wilful blindness is required to establish fraudulent concealment under section 28(b). Lesser forms of negligence or recklessness are not sufficient.  

1.    Fraudulent concealment requires knowledge or wilful blindness. 

The majority held that, for section 28(b) of the Limitation Act to apply, the defendant must:

1. have actual knowledge of the essential facts giving rise to the cause of action; or

2. be wilfully blind to those facts.

The defendant must also have known (or been wilfully blind to) the fact that those essential facts amounted to a wrongful act and must have decided to conceal them.

The Council’s breach of duties of care to Mr Daisley, including the issuance of an erroneous LIM, and failure to conduct adequate searches did not amount to fraudulent concealment as neither wilful blindness nor actual knowledge of the existence of an LUC could be imported to the Council. 

2.    Recklessness or negligence are not sufficient for establishing fraudulent concealment.

The Supreme Court majority drew on the policy underlying the Limitation Act to establish that fraudulent concealment required more than carelessness or recklessness. In the Court’s view, the requirement for actual (or imputed) knowledge to constitute fraudulent concealment struck the right balance for justifying an extension under the Limitation Act. 

3.    The Council’s negligent acts were discrete, rather than continuing.

In assessing the reduction of the damages award, the Court was required to consider whether a new cause of action had accrued within the limitation period to support any damages award. The High Court found that the Council’s negligence was properly characterised as a continuous omission. However, the Court of Appeal and Supreme Court took the view that numerous breaches due to a failure to check historic records had occurred. 

The Supreme Court agreed with the Court of Appeal because:

1. It was the positive actions the Council took as a result of a failure to check records that caused damage to Mr Daisley, for example, the issuance of abatement and infringement notices. 

2. The acts of negligence were discrete. 

Damages of $90,000 were awarded as the only breach within the limitation period giving rise to a fresh set of damages was the sale of the property at a loss.  

What this means for local authorities

This decision will be welcomed by local authorities facing historic claims. The decision provides important certainty that, in the absence of conduct meeting the threshold of ‘fraudulent concealment’, historic enforcement or regulatory errors will not expose them to liability beyond the 6-year limitation period.

If you would like advice on how this decision may affect existing claims or risk management practices, please get in touch with one of our experts. 

Special thanks to Greer Collinson and Tanmeet Singh for their help with this article.