In 2013 thousands of litres of diesel leaked from a faulty storage tank into a nearby stream, contaminating the water supply of the nearby town of Raetihi. Residents were without water for three weeks. The company responsible for the spill was prosecuted by the Regional Council under the Resource Management Act and also legislation relating to hazardous substances. They were fined a total of $300,000, with legal bills totalling $125,000. Another business associated with the leak had to pay more than $50,000 in health & safety fines and Worksafe costs.

In the example above, the fines imposed, along with the legal defence costs, were covered by the company’s statutory liability insurance. This is designed to protect businesses from fines and penalties, and the associated legal costs, for unintentional breaches of most New Zealand legislation (excluding criminal statutes), including:

  • Resource Management Act
  • Hazardous Substances and New Organisms Act
  • Building Act
  • Fair Trading Act
  • Health & Safety At Work Act (although fines under this act cannot be insured)

Risk from construction sites

In 2014 a builder was fined over $10,000 for breaching the Resource Management Act in relation to the renovation of two Auckland properties. Workers had dug an open trench with no support on the boundary and excavations had taken place under the house that left it inadequately supported and at risk of collapse. The judge said the breaches posed significant risks to the environment, the neighbouring property, the people working under the house and its occupants. More than $7,000 of fines under the Building Act were also imposed for other offences.

Construction sites are also a common source of waterway contamination, through uncontained site run off during heavy rain, or when pollutants such as paint, sealants, solvents and glues enter stormwater systems. Dumping of construction waste; land contaminated by seepage; silica dust from concrete cutting alongside other airborne contaminants also have the potential to breach both health & safety and environmental protection law and trigger prosecution.

Under the Resource Management Act, which is New Zealand’s primary law for protecting the environment, the most serious offences can incur fines of up to $600,000 for businesses and up to 2 years imprisonment or $300,000 in fines for individuals. If the offence continues a daily fine of up to $10,000 can be imposed.

Examples of offenses that could be subject to this level of penalty include:

  • Using land in contravention of a rule in a district plan
  • Subdividing land without a resource consent
  • Excavation, reclamation or building without a consent in coastal marine, lake bed or river bed areas
  • Discharging contaminants into the environment without a resource consent

Statutory Liability Insurance

Most builders should already have statutory liability insurance to protect them in case of a health & safety prosecution, where it will pay the builder’s legal bills and any reparations awarded to an injured person by the Court. It also covers fines imposed for breaching the Building Act.

The same cover will protect builders if they’re found liable for activity at a building site that breaches the Resource Management Act. In this case it will pay the fines imposed and any associated legal bills.

Liability (including public, faulty workmanship & statutory liability)

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