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In Solicitor-General’s Reference (No 1 of 2022) from CRI-2021-463-55 ([2022] NZHC 556) [2024] NZCA 514 the Court of Appeal was asked to consider the following question:
Was the Court correct to find that the issue of producer statements (following or as a result of construction monitoring) in relation to non-compliant building work does not give rise to liability under s 40 of the Building Act 2004?
The Court of Appeal said no, confirming that the issue of a producer statement in relation to non-compliant building work can give rise to liability under s 40 of the Building Act 2004. The clarification on this question of law will have significant implications for actors in the building industry.
Factual Background
The answer to the question before the court turned on the interpretation of “building work”.
In Cancian v Tauranga City Council [2022] NZHC 556, (the case from which the question arose), Tauranga City Council alleged five defendants had carried out non-compliant work, including The Engineer Ltd (TEL) and its sole director, Mr Cameron. They were convicted in the District Court. On appeal to the High Court, Lang J quashed Mr Cameron’s and TEL’s convictions. We discussed the High Court decision in our earlier article.
Mr Cameron was an engineer who issued producer statements for a residential subdivision in Tauranga known as “The Lakes”. The developer of The Lakes was Bella Vista Homes Ltd (Bella Vista). Bella Vista had obtained resource consents for The Lakes. However, following the identification of issues about the quality of the work being undertaken, including the potential of the construction of dangerous buildings, the Council and Worksafe New Zealand intervened. Charges were laid against TEL, Mr Cameron and Bella Vista (among others) under s 40 of the Building Act, alleging they had carried out non-compliant building work. The Council alleged that TEL and Mr Cameron provided producer statements which did not reflect the work completed.
Liability Under the Building Act 2004
The Building Act does not explicitly provide for producer statements. Instead, they are industry practice, issued by qualified persons, and intended to mitigate time and costs to building consent authorities. Councils may accept them as a representation by a competent professional, based on reasonable grounds, that the work that has been carried out and complies with the applicable consent and the building code.
Section 40(1) of the Building Act requires that “[a] person must not carry out any building work except in accordance with a building consent”, and it is an offence to breach this provision (with potentially significant fines). An analysis of competing case law and the plain definition of “building work” (s 7(1)) and “site work” led the Court of Appeal to conclude the definition of “building work” is broad and captures any work for or in connection with a building. It held that work performed on site to assess compliance (to issue the PS4) will amount to building work as it is site work – work on a building site associated with the construction of a building.
The Court considered that PS4 producer statements clearly fall within the broad definition of building work notwithstanding the lack of explicit recognition in the Building Act or the lack of reference to them in building consent documentation. The content and purpose of the producer statement is clear, and it is intended to contain a reasonable statement of a professional opinion that the building works do in fact comply with the consent and code. The professional nature of a producer statement was reinforced by the forms bearing the logo of the required professional engineering and architectural institutions.
Ultimately, the Court said “a statement by a qualified professional that there has been compliance when that is not the case will itself be building work that is not in accordance with the building consent”. The Court did note that a PS4 producer statement is not design work, provided that it related to work being done on site to implement the design.
Additionally, the absence of explicit mention of standards or information in the building consent is not decisive. The standard form of the producer statement creates a degree of expectation as to the form and content. As the statement is produced by a qualified professional, accuracy is to be expected, particularly given that it is intended the Council will rely on it as reasonable assurance that the work has been carried out in compliance with the consent and building code.
By imposing liability on the issuing of producer statements following or as a result of construction monitoring, the Court considered that the purposes and principles of the Building Act are being facilitated by promoting accountability, public safety, and wellbeing.
Our Comment
An argument was advanced by counsel that by adopting the position that it did, the Court was potentially criminalising an opinion. However, the Court held that PS4 producer statements are more than an opinion, rather they are intended to reflect that the author has carried out the work to express the opinion and that it is based on reasonable grounds. Further, that the same standard of proof is required as with any criminal charges; an author of a producer statement will only be criminally liable if it is established beyond all reasonable doubt that the matters certified in the PS4 producer statement are incorrect.
However in providing a degree of certainty as to the position of PS4 producer statements under the Building Act, there is arguably a risk of over criminalising liability in situations where there is mistaken but reasonable belief compliance. Producer statements are expressly based on “reasonable grounds”; there may be circumstances where the certifying professional might have “reasonable grounds” to believe that the construction work was compliant even though this in fact turned out to be incorrect. In such situations, an enquiry would need to be made as to whether the certifying professional did have reasonable grounds to believe the work was compliant when issuing the producer statement. An issue not yet considered by the Court is whether this would inform part of the initial enquiry by the prosecuting authority or whether it would only arise in the defence.
If you have any questions about this article 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.
