Our German Desk
On 11 October 2024, the Court of Appeal found the issue of producer statements (following or as a result of construction monitoring) in relation to non-compliant building work can give rise to liability under section 40 of the Building Act 2004; read our article on that judgment here.
Background
There has been substantial publicity in recent years about a failed development undertaken by Bella Vista Homes Limited. After the extent of issues became known, one of the actions taken by Tauranga City Council was to lay charges against an engineer, Bruce Cameron, and his company, The Engineer Limited, (collectively “the engineers”). This was because the engineers had issued producer statements in respect of work which did not conform with the New Zealand Building Code.
Section 40 of the Building Act 2004 (Act) makes it an offence for a person to carry out any building work except in accordance with a building consent.
The engineers were convicted in the District Court. In finding liability, the Court relied upon a previous High Court decision where the Court had found in the context of a limitation issue that the completion of producer statements constituted “building work”.
High Court Decision[1]
The engineers successfully appealed to the High Court. Between the District Court decision and the appeal hearing, a separate High Court decision had found the provision of an incorrect producer statement prior to the issue of a building consent does not give rise to an offence under s 40 of the Act.[2] Although that decision did not concern restricted building work, the reasoning in that case was followed and the Court found the issue of a producer statement in relation to non-compliant building work does not give rise to liability under s 40.
The Judge noted:
- Issuers of producer statements are not recognised in the Act and therefore not identified in the Act as being responsible for ensuring the terms of a building consent have been complied with.
- While building consent authorities can take into account information in producer statements when deciding whether to issue building consents or code compliance certificates, the responsibility for making the decision to issue the consent or code compliance certificate remains with the authority and cannot be abdicated.
- Because the building consent in issue did not refer to the issuing of producer statements, such statements could not be issued in breach of the building consent (as required for liability under s 40 of the Act).
- The producer statements concerned building work that had already been undertaken, and there was no basis to suggest the engineers had been engaged in undertaking the non-compliant work.
Finally, the Court observed that while issuers of producer statements may not be liable under s 40, they risk disciplinary proceedings, tort liability or prosecution under s 369 of the Act for making a false or misleading statement, and could have future producer statements scrutinised more closely (or even rejected) by a territorial authority. Consequently, even without criminal liability, serious consequences can still arise.
Court of Appeal to give decision
Following review of this case by Crown Law, the question of whether the issue of a producer statement can give rise to liability under s 40 is currently being considered by the Court of Appeal. This follows the Court of Appeal granting leave for the Solicitor-General to refer a question of law to the Court for determination as follows:
Was the [High] Court correct to find that the [issue] of producer statements in relation to non-compliant building work does not give rise to liability under s 40 Building Act 2004?
We look forward to the Court of Appeal providing clarity in this area. While the decision will not impact the engineers referred to above, it will be an important decision for the issuers of producer statements more generally.
We will provide a further update once the Court of Appeal releases its decision.
If you have any questions about building work and producer statements, please get in touch with our Construction Team or your usual contact at Hesketh Henry.
Disclaimer: The information contained in this article is current at the date of publishing and is of a general nature. It should be used as a guide only and not as a substitute for obtaining legal advice. Specific legal advice should be sought where required.
[1] Cancian v Tauranga City Council [2022] NZHC 556.
[2] Andrew Melvin King-Turner Ltd v Tasman District Council [2021] NZHC 343.
