New bill may let one leaky building villain off hook

By ANNE BESTON

The organisation cast as one of the villains of the leaky buildings problem could escape liability because it is due to be scrapped under a new law, says building expert Phillip O'Sullivan.

Mr O'Sullivan said that under the Building Bill being considered by Parliament's Government administration select committee, legal proceedings against the Building Industry Authority (BIA) might not be possible because the authority would cease to exist from the date the bill was passed.

He said it appeared the clause allowed for legal action against the BIA only if a case had already been lodged. Under the new bill, the BIA is to be replaced by a new organisation and that organisation would not be liable.

"I'm no lawyer but it seems to me to be a clear-cut attempt to close off liability."

He would be making an urgent submission on the bill today, the last day for submissions.

The bill is scheduled to be passed by July 1 next year and replaces the Building Act 1991, which established the authority.

"Like a company that's been wound up, no claims will be able to be brought against the BIA and there is no one to claim against if you haven't got a claim by that date," said Mr O'Sullivan.

The Government would also be immune from liability because the body that caused the loss would no longer exist.

The Government and the Ministry for Economic Development had been looking at developers and the so-called "phoenix" companies - those that went out of business and therefore escaped legal action - yet "they seem to have set up the largest phoenix of all", said Mr O'Sullivan.

He was aware of court action being taken against the BIA but said he could not go into details.

BIA chief executive Barry Brown said he would be surprised if there was any attempt to dodge liability but he was not familiar with that particular clause in the new bill.

National Party spokesman Wayne Mapp, a former commercial law associate professor who expects to be on the select committee after public submissions close, said it would be "extraordinary" if Mr O'Sullivan's reading of the clause was correct.

"The Crown must be liable for its defaults, whether it's through the BIA, the Ministry for Economic Development or whoever," he said.

One top Auckland lawyer, who did not want to be named, said he thought new claims against the BIA would not be possible once the law was changed.

An independent inquiry has found that leaky home repair bills could reach $240 million but estimates from independent building inspectors said the cost could top $1 billion.

Poor design and construction and the use of untreated timber in house framing have been blamed for some of the problems. Too little monitoring of building standards has also been blamed.