Why suspecting you did wrong is no longer enough to stop the limitation clock
New Zealand’s top court has narrowed when a defendant’s silence stops the limitation clock, ruling that recklessness alone could not amount to fraudulent concealment.
In Whangarei District Council v Daisley [2026] NZSC 72, a Supreme Court majority allowed the council’s appeal in part, setting aside the finding that the council had fraudulently concealed Malcolm Daisley’s right of action under s 28(b) of the Limitation Act 1950.
The dispute traced back to a 48-hectare Knight Road property near Whangārei that Daisley bought in late 2004, intending to run a commercial quarry. Soon after settlement, the council moved to stop him, issuing an abatement notice on the basis he held neither resource consent nor existing use rights. Enforcement action escalated over the following years. Then, during 2009 Environment Court proceedings, Daisley’s solicitors uncovered a 1988 land use consent sitting in the council’s own archives - a consent that authorised quarrying all along. By then, Daisley’s bank had forced him to sell the property at a roughly 25 percent discount.
Daisley sued in 2015, well outside the six-year window measured from when the council’s negligence first caused loss in September 2006. His claim therefore depended on extending time. The High Court awarded him just over $4.25 million in negligence and misfeasance; the Court of Appeal overturned the misfeasance finding and cut the damages, but agreed the council had fraudulently concealed the claim because its officers acted with subjective recklessness as to whether a consent existed.
Justice Kós, writing for the majority, rejected that reasoning. The majority held that s 28(b) required the defendant either to possess actual knowledge of the essential facts giving rise to the cause of action, or to stay wilfully blind to them. Mere recklessness or negligence as to those facts did not suffice. The defendant also had to know actually, or stay wilfully blind to, the fact that those facts amounted to a wrongful act, and then decide to conceal them.
The majority examined the English authorities Daisley relied on - Beaman v ARTS Ltd, Kitchen v Royal Air Force Assoc and King v Victor Parsons & Co - and concluded each turned on actual knowledge of wrongfulness followed by deliberate concealment, not on subjective recklessness. The court found this approach struck the right balance: it spared a defendant acting in genuine ignorance while still catching those who suspected they had done wrong and stayed silent.
Applying these principles, the majority found the evidence established neither actual knowledge nor wilful blindness about the consent’s likely existence. The council’s officers had treated the LIM as accurate and put Daisley to proof on existing use rights. Their conduct was negligent, perhaps grossly so, but did not meet the standard for equitable fraud. As Kós noted, Daisley had ample time to sue but did not, because of defective legal advice - a matter for his former solicitor, not a reason to distort limitation principles.
The majority also rejected the continuing breach argument, holding the council’s discrete enforcement steps did not form a single continuous breach, and dismissed Daisley’s misfeasance cross-appeal. Only the $90,000 award for the property’s lost value, as distinct damage from the December 2009 forced sale, survived.
Chief Justice Winkelmann dissented on concealment. She would have upheld the Court of Appeal, finding that unconscionable rather than dishonest conduct set the standard, and that the council’s recklessness, given its special relationship with Daisley and its control over the records, was enough.
The respondent had to pay the appellant costs of $45,000 plus disbursements.
