Law change to cut off builders' escape route

By GEOFF CUMMING

A law change will shut an escape route for builders and developers who escape liability for shonky work by folding their companies.

The Government plans changes to the Companies Act to deal with "phoenix" construction companies set up for individual building projects and then deregistered.

Thousands of leaky home owners have found they cannot get damages or repair costs because the firms that built their homes no longer exist and their owners cannot be held personally liable.

In some cases, companies have folded after being ordered to pay up.

Associate Commerce Minister John Tamihere says he will seek retrospective legislation to "hunt down" dodgy developers responsible for problem-plagued apartments and townhouses.

"They are recidivists," he says. "They keep popping up [as new companies]."

The law change follows reforms to the Building Act giving homebuyers better protection, says Mr Tamihere, who will be responsible for the new Department of Building and Housing.

But the reforms place the onus on councils and building certifiers to make builders and tradesmen raise standards through tougher policing.

And as reviews of Manukau City Council's handling of building applications have shown, councils are ill-equipped for the task.

Mr Tamihere said this week's deregistration of the private building inspection company Approved Building Certifiers showed the industry "that we will no longer tolerate substandard".