The crisis surrounding consenting debacle in Christchurch has deepened following a decision by Riskpool to revoke the City’s insurance with regard to liability for consents for new construction issued under the Building Act 2004.

On Friday, Christchurch City Council said it had received advice from Riskpool, its insurer for professional indemnity and public liability, that the organisation will cease cover for council works arising under the Act as of July 1.

In a statement, the council said it receives a number of claims regarding building consents each year and that the maximum excess payout amounts to $50,000 per valid claim.

Councillor and Corporate and Financial Committee chair Helen Broughton expressed disappointment with the decision, saying the council would be speaking with the insurer in a bid to gain further clarity with regard to its decision.

“The Council is concerned that Riskpool has taken this step. We are seeking legal advice, and will be meeting with Riskpool to discuss the position further,” Broughton said, adding that the council would not be able to make further comment until legal advice was received.

The latest move follows a decision announced on July 1 by International Accreditation New Zealand in which it revoked the Council’s authority to issue building consents for new construction – a move which followed an earlier report which showed a number of the consents being issued by the council did not meet standards as prescribed under the Building Act.

Canterbury Earthquake Recovery Minister Gerry Brownlee says Riskpool’s move was not unexpected.

“Today’s move means that if the council is negligent in performing its functions under the Building Act leading to defects in building work, any liability owed by the council will need to be met from its own funds,” he said. “This is a reasonable action on Riskpool’s part, and stems entirely from Christchurch City losing its International Accreditation New Zealand (IANZ) accreditation as a Building Consent Authority.”

Local Government Minister Chris Tremain says the latest developments reinforce the council’s decision to request a Crown Manager be appointed to take over its consent functions.

In a separate development, the New Zealand construction industry downed tools last week to sign a new charter regarding safety principles with respect to the rebuild.

Developed by the Canterbury Rebuilt Senior Leaders Group, the charter sets out 10 key areas of commitment, including hazard awareness and site-specific safety plans.