The Government has introduced the Building Amendment Bill, which proposes a shift from joint and several liability to a proportionate liability regime for defective building work.
The proposed regime would limit each defendant’s liability to their proportionate share of the loss, having regard to their contribution to the damage.
In the low-rise residential sector, contracting out of liability would be prohibited. In the high-rise residential and commercial sectors, freedom of contract would generally be preserved, although it remains unclear whether insurance exclusions for contractually assumed liability may limit this in practice.
Design consultants, constructors and subcontractors will need to factor these changes into their risk assessments, contracts and pricing going forward. Insurance implications will also require careful consideration.
For more detail, read our series on the proposed shift to proportionate liability:
- Upcoming change from joint and several liability to proportionate liability – start date, who / what is in and out, responsibility for joinder, contracting out
- Proportionate liability and homeowner protection: will the safeguards be enough?
- Upcoming change from joint and several liability to proportionate liability
If you have any questions about the proposed proportionate liability legislation, please get in touch with Helen Macfarlane or your usual contact at Hesketh Henry.
