Govt to consider capping Building Consent Authority liability

The Government is to consider capping Building Consent Authority liability in negligence cases for building failure following the Law Commission’s review into how liability is distributed among multiple defendants who are found to have caused the same damage.

“The Government agrees with the Commission’s main recommendation to retain the current rule of joint and several liability, which allocates liability in cases where there are multiple defendants. There are, however, some issues around fairness between defendants that warrant further consideration, particularly in the building sector,” Dr Smith says.

“The question of which liability rule should be used to allocate liability among multiple defendants arose from the leaky homes problem. Joint and several liability provides the best assurance that the plaintiff will be compensated for their loss, but Building Consent Authorities feel they are viewed as the defendants with the ‘deepest pockets,’ and are therefore shouldering an unfair financial burden for damages costs if other liable defendants are absent or insolvent.”

The Commission has recommended adjusting the way in which the principle of joint and several liability is applied in some cases, including introducing liability caps for Building Consent Authorities and exploring the potential for a residential building guarantee scheme to reduce the risk to homeowners of unrecoverable losses.

“I welcome the Commission’s recommendations to address sector-specific concerns around fairness between defendants, particularly for Building Consent Authorities, and the Government will now seek a careful analysis of these recommendations,” Dr Smith says.

The Government has directed the Ministry of Justice and the Ministry of Business, Innovation and Employment to further analyse the value and potential impact of the Law Commission’s recommended changes, and to report back to Ministers by the end of 2015.

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