The Government’s sweeping reform of New Zealand’s building consent system includes plans for a major shift involving scrapping the current joint and several liability regime — under which councils (with deeper pockets) often end up footing the bill in defective building cases when other parties such as builders or developers go insolvent.
The Government plans to introduce proportionate liability, meaning each party pays only for the portion of work they’re responsible for.
Building and Construction Minister Chris Penk stated the move is intended to reduce costs, increase efficiency in consenting, and prevent councils from being unfairly burdened.
The Government is also exploring protections for building owners, such as requiring professional indemnity insurance and home warranties, similar to systems in Australia.
Additionally, reforms propose allowing councils to voluntarily consolidate Building Consent Authority (BCA) functions to smooth out inconsistencies across the country’s 66 consent authorities.
Napier City Council’s campaign
In July, the Napier City Council spearheaded a motion, supported by 93% of councils nationwide, to lobby the government to cap council liability in defective building cases. They cited the “last man standing” rule — which leaves councils exposed when private parties go bust — as unfair and risky for ratepayers.
This lobbying was timed alongside other NZ Building Act reforms, with the view that without liability reform, broader building system changes may fall short.
Broader historical context and precedents
• A 2014 Law Commission report previously recommended that councils should not bear full liability when others can’t pay, and that, instead, available parties should share the shortfall. It also proposed capping liability for single dwellings, although this hasn’t been enacted yet.
• A 2024 legal commentary flagged the court’s shift in a Supreme Court ruling, where the 10-year limitation (“longstop”) under the Building Act does not apply to tort-based “contribution claims.” Instead, those are governed by general limitation law — which may extend liability indefinitely for some parties.
