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The Government's “joint and several liability rule” should remain according to the Law Commission. After considering alternatives to the leaky building liability law, the commission has recommended that the rule remains in place as it is the most effective way to ensure parties who were wronged were fairly compensated.

The "joint and several liability rule", is where two or more people are liable to a person they have harmed, they are each individually liable for all the damages.

There have been several cases in the leaky homes saga where some liable defendants were unable to pay. This meant that other defendants had to pay more and in some cases foot the entire bill, regardless of levels of responsibility.

In its report presented today, the commission said that some changes should be made to allow for flexibility where the rule resulted in a harsh or unfair result.

The modifications include:

  • Allowing the courts to grant discretionary relief to minor defendants who had little responsibility for the harm done.

  • Capping liabilities of councils acting as building consent authorities; 300 thousand for houses; 150 thousand for apartments; three million for apartment buildings.

  • Capping maximum liabilities for auditors that carry out the largest and most complex audits

While Local Government New Zealand said it was pleased with the suggested changes, it says the proposed liability caps won't go far enough, in protecting them from the cost of leaky buildings.

In many cases, building companies are no longer in business leaving councils to pick up a disproportionate cost, according to Local Government New Zealand president Lawrence Yule.

Mr Yule says councils would prefer a system that made liability proportionate and so they are disappointed that this 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.

The Commission argued proportionate liability was unfair to claimants.

Home owner advocates say the proposed capping of liability of councils for leaky homes isn't the best way of protecting ratepayers' money.

According to Home Owners and Buyers Association president John Gray, stronger relationship between councils, builders and contractors is the answer.

The auditing process of local authorities should include a mandatory insurance-backed warranty, so it never reaches court, says Mr Gray.

Justice Minister Judith Collins says that the Government would consider the recommendations and formally respond early next year.


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