With less than a month left to submit proposals for changes to the Building Act, Auckland Council has called for joint and several liability in the building and construction sector to be replaced with a mandatory insurance and guarantee scheme and a liability cap of 20%.
Under the current joint and several liability system, liability for damages during the construction or renovation of buildings can be held by two or more parties. However, claimants may choose to go after only one party for damages for the entirety of the loss. It then becomes the responsibility of that party to pursue other parties for a contribution to their share of the liability.
Read more: Calls made for mandatory building insurance
During the leaky buildings crisis, homeowners often sought and received damages from city councils as the only party they could take legal action against – leaving councils to chase after builders and developers for their end of the cost.
Auckland Council had the crisis in mind in a draft submission on proposed changes to the Building Act. According to Interest.co.nz, the council called for an end to joint and several liability to avoid shouldering the financial burden of another leaky buildings-type crisis.
“The leaky building crisis imposed significant cost on local authorities under the current liability settings because councils are often the ‘last man standing’,” Auckland Council wrote in its submission. Instead, the council said that the Government should make a proposed insurance and guarantee scheme mandatory for all residential and commercial constructions and renovations.
Under the scheme, builders and developers would have to offer homeowners’ insurance that would provide cover for a 10-year period before any kind of work can take place. Payment for the insurance can be made separately or be included in the total price of construction.
The public has until June 16 to make submissions on proposed changes to the Building Act.
