Media Releases

Canterbury construction company charged over building guarantee

3 December 2015

The Commerce Commission has filed charges against construction business Flaxmill Limited (Flaxmill) and its director, Gerard James Thomson, in the Christchurch District Court.

The charges relate to misrepresentations about the existence of Homefirst building guarantees offered in the building contracts of three homeowners in the Canterbury region.

Both defendants face six charges each under the Fair Trading Act 1986.

The Commission alleges that home owners were told they would be provided with a builder’s guarantee, which they never received.

As this matter is now before the Court, the Commission is unable to comment further at this time.

Background

Homefirst Guarantees provide cover where a builder fails to complete the building works or to remedy defects for reasons including the builder’s death, disappearance, insolvency or wrongful refusal to complete the works. In such instances, the insurer pays for the building works to be completed or the defects remedied, up to specified maximum amounts. Homefirst Guarantees provide cover for up to 10 years and may be transferred to subsequent purchasers of a covered property. Applications for Homefirst Guarantees must be submitted prior to building work commencing.