In a recent case the Court of Appeal found that builders who assume responsibility for construction are, like Councils and developers, generally subject to a legal duty to ensure compliance with the Building Code, even if they have delegated the work to subcontractors.

The Building Act already makes this clear for residential building work and builders can't contract out of it. However, for commercial work the parties can negotiate these responsibilities in contract.

The case

This dispute concerned a two-tower complex with 157 units in Auckland, built with substantial defective waterproofing to the cantilevered balconies.

The Court of Appeal confirmed that builders who assume responsibility for construction are, like Councils and developers, generally responsible to ensure Building Code compliance. Importantly, this is a duty which cannot be met simply by delegating it to a subcontractor. This is significant because the head contractor had argued it should not be liable for the negligent waterproofing work carried out by its tiling subcontractor. The Court rejected that argument.

The key aspects of the Court's finding were that the head contractor had assumed full contractual responsibility for the construction, including responsibility for the acts and omissions of subcontractors. They also exercised direct control and supervision over the building works.

However, the Court acknowledged that the precise scope of a builder's duty may vary depending on the terms of the particular contract. For example, if the contract specifically excluded responsibility for an inspection, there would be no duty of care to inspect or to carry out any work that the inspection might have identified.

Practical takeaway for builders

Where a head contractor assumes broad contractual responsibility for a construction project, it will likely owe a non-delegable duty of care to building owners (including subsequent purchasers) to ensure Building Code compliance across all aspects of the work, regardless of whether particular tasks were performed by subcontractors.

Note: While residential builders may be tempted to include limitations of their liability in contract, the implied warranties section of the Building Act makes it clear that, in relation to residential building work, builders can't contract out of their duty of care for the work of their subbies.