Law Commission: Retain leaky homes law

Last updated 16:52 24/06/2014

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The Law Commission has recommended that the Government retain its leaky building liability laws.

The Government had asked the commission to consider alternatives to the "joint and several liability rule" because of concerns arising from the leaky homes crisis.

The rule means that when two or more people are liable to a person they have harmed, they are each individually liable for all the damages.

The leaky homes crisis produced many cases where some liable defendants were unable to pay, so other defendants had to pay more or even foot the entire bill, regardless of levels of responsibility.

In its final report tabled in the House today, the commission recommended that the rule remain as it was the most effective way to ensure parties who were wronged were fairly compensated.

Some modifications should be made to allow some flexibility where the rule resulted in a harsh or unfair result, the commission said.

This included that courts should grant relief to minor defendants who had little responsibility for the harm done.

The commission also recommended that councils acting as building consent authorities should have their future liabilities capped so they could not be seen as "deep pockets" for building negligence claims.

Auditors that carried out the largest and most complex audits should also have their maximum liability capped, the commission said.

Local Government New Zealand said while it was pleased to see the suggested changes, it was disappointed its preferred option of proportionate liability was not recommended by the commission.

Under proportionate liability, the courts determine each defendant's share of fault and are liable to pay damages proportionately.

Justice Minister Judith Collins welcomed the report, and said the Government would carefully consider the recommendations and formally respond early next year.

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