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Kim Lovegrove’s presentation to the Society of Construction Law New Zealand explores the differing methods of handling joint tortfeasor liability apportionment between Australia and New Zealand. This examination reveals how each country’s legal framework impacts construction law, particularly regarding proportionate liability, limitation periods, and insurance requirements. Understanding these differences is crucial for legal professionals and policymakers aiming to create fair and efficient liability systems that protect both industry stakeholders and consumers.

Key Differences: Proportionate Liability vs. Joint and Several Liability

Proportionate Liability (Australia)

• Definition: Each party is only responsible for their share of the fault.
• Implementation: This approach was introduced by the National Model Building Act and is currently reflected in the Victorian Wrongs Act 1958 (Section 24AI).
• Benefits: Fair distribution of responsibility encourages accountability among all involved parties.

Joint and Several Liability

• Definition: Any one party can be held responsible for the entire damage.
• Implementation: Under this system, one defendant can be made to pay all the damages, even if others are also at fault.
• Drawbacks: Often leads to an unfair burden on individual parties, especially if they are financially stronger, while others escape without paying their share.

Differences in Limitation Periods

Victoria

• Approach: A clear and defined limitation period, 10 years, are prescribed under the Victorian Building Act 1993.
• Effect: Easier for parties to understand their rights and obligations within a specified timeframe.

New Zealand

• Approach: The limitation period is often cryptic and confusing, outlined in the New Zealand Building Act 2004.
• Effect: Leads to uncertainty and potential legal disputes about whether a claim is within the allowable period.

Ten-Year Liability Cap

Victoria

• Legislation: The Victorian Building Act 1993 establishes a 10-year liability cap for construction defects, starting from the date of the issue of the occupancy permit (say for cladding exclusion)
• Details: This limitation period ensures that claims must be made within a decade of the building’s completion, providing a clear end date for liability.
• Impact: Provides certainty and reduces long-term liability risks for builders and other professionals.

New Zealand

• Legislation: The New Zealand Building Act 2004 also sets a 10-year cap, but the application and understanding can be more complex.
• Details: The cap starts from the date of the act or omission that caused the damage, which is leading to much confusion and extended liability periods.
• Impact: Creates uncertainty and potential prolonged liability for parties involved in construction.

Strain on New Zealand Local Government

Joint and Several Liability

• Issue: Places a heavy financial burden on local governments, which can be held responsible for entire damages if other parties are insolvent or unavailable.
• Consequence: Leads to increased rates and taxes to cover potential liabilities, straining local resources and budgets.

Importance of Compulsory Insurance

Victoria

• Integration: Insurance is closely linked with proportionate liability to ensure coverage.
• Benefit: Protects consumers by ensuring that there is always a source of compensation for negligent work.

New Zealand

• Current State: Lacks a compulsory insurance framework tightly integrated with the liability system.
• Need: Compulsory insurance would provide a safety net for consumers and reduce the financial burden on local governments.

Recommendations for New Zealand

Lovegrove suggests that New Zealand could benefit from adopting a proportionate liability system similar to Victoria’s. This would involve significant legal reform and the introduction of supporting policies, such as mandatory insurance and clearer limitation periods.

Key Points:

• Proportionate Liability Adoption: Could lead to fairer apportionment of responsibility and is likely to be more sustainable long-term as the risk is shared appropriately by responsible actors rather than placing a disproportionate burden on agencies that neither built nor designed the work.
• Supporting Policies: Necessary to ensure the system’s effectiveness.
• Legal Reform: Required to transition from joint and several liability.
• Compulsory Insurance: Proportionate liability should not be introduced without compulsory insurance to ensure that all responsible parties are able to cover their share of liability.
• Fair Distribution of Liability: The fair distribution of liability by territorial authority building officials operates as a hand brake on the timely delivery of building approvals.

Conclusion

Reflecting on his extensive career and contributions to building law, Lovegrove advocates for a balanced approach to regulation that integrates best practices from around the world. Effective regulation should protect public safety without stifling innovation or efficiency. By implementing clear, centralized building legislation and maintaining strong oversight, jurisdictions can ensure high standards in construction while protecting consumers from the risks of poor-quality work. Engaging international experts and learning from global experiences can further enhance the effectiveness of building control systems. Law reformers should also have regard to the guidelines of the International Building Quality Centre (IBQC), the international thought leader hub on best practice approaches to the design of building regulation.

By following these guidelines, jurisdictions can create robust building control systems that balance consumer protection with market flexibility, ensuring high standards and safety in the construction industry.

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About Adjunct Professor Kim Lovegrove

Adjunct Professor Kim Lovegrove has a long history in building regulatory reform. He has served as a senior law reform consultant to the World Bank, and has contributed to international thought leadership in building regulation. He was the principal legal adviser of the development of the Australian National Model Building Act and has advised on law reform initiatives in Japan, India, and China. Lovegrove is also the inaugural Chair of the International Building Quality Centre and a past President of the Australian Institute of Building (Victoria) and NZIOB (Northern Chapter).

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Disclaimer

These views are those of Adjunct Professor Kim Lovegrove only and do not represent the views of any body that he works for or represents. This document is not legal advice and is fashioned to contribute to the conversation about liability reform.