the LOCAL Edge
Court of Appeal Reinforces Accountability Across the Building Industry
A recent Court of Appeal decision has confirmed that professionals who issue producer statements can be held liable under section 40 of the Building Act 2004 for inaccurate statements.
This pivotal case, which Meredith Connell partner Nathan Speir has been involved in from the beginning, reinforces accountability across the building industry while maintaining confidence in our building control system.
Everyone in the building industry should stand behind the work they do, the statements they make, and the approvals they give. If you’ve worked with me before, you’ll know I’ve been saying it for years.
Councils – and, by extension, ratepayers – shouldn’t be the last ones standing when things go wrong. Yet, all too often, we are.
It’s for this very reason that I’ve put my energy into advocating for qualified and experienced engineers – who issue producer statements and are compensated accordingly – to be liable, like everyone else, when mistakes happen.
The road has been long and winding, but it has been a genuine pleasure to assist Tauranga City Council (TCC) in breaking new legal ground on the interpretation of section 40 of the Building Act 2004 (the Act).
The Court of Appeal’s decision in Solicitor-General’s Reference (No 1 of 2022) [2024] NZCA 514 sets the record straight.
RECAPPING THE “BELLA VISTA” STORY
This story began in March 2018, when TCC’s experts recommended the evacuation of 21 partially completed homes due to structural, geotechnical, and building code compliance concerns.
After the dust settled, the Council successfully prosecuted five of the construction parties, including the builder, Bruce Cameron, and The Engineer Limited (TEL).
In December 2020, following a lengthy trial in the District Court, all defendants were convicted under section 40 of the Act.
Following this, TEL, and Mr. Cameron (the engineer) appealed their convictions to the High Court.
THE HIGH COURT DECISION
In March 2022, the High Court allowed appeals by Mr. Cameron and TEL against their convictions. Justice Lang held that:
“the issuing of producer statements in relation to non-compliant building work does not give rise to liability under s 40 of [the Act].”
This decision left the Council in a sticky situation. It strongly believed section 40 should give rise to liability, but they had no statutory right of appeal.
THE ROAD TO THE SOLICITOR-GENERAL’S REFERENCE
After reviewing the issue and getting on the phone to Crown Law, I was able to help TCC find a way forward. Under section 313 of the Criminal Procedure Act 2011, the Solicitor-General, with leave from the Court of Appeal, can refer a question of law to the Court. The catch? The Solicitor-General needs to agree that it’s a legal issue that deserves the attention of the Court of Appeal.
Fortunately, the Solicitor-General agreed that the interpretation of section 40 needed to be looked at more closely and referred the following question of law:
“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’S DECISION
In preferring the Council’s argument and deciding that the issue of producer statements (following or as a result of construction monitoring) in relation to non-compliant building work is capable of giving rise to liability under section 40 of the Act, the Court of Appeal looked to the statutory text and purpose.
Councils – and by extension, ratepayers – shouldn’t be the last ones standing when things go wrong. Yet all too often, we are.
It’s for this very reason that I’ve put my energy into advocating for qualified and experienced engineers – who issue producer statements and are compensated accordingly – to be liable, like everyone else, when mistakes happen.
Nathan Speir Partner, MC
GET IN TOUCH
For guidance on how this Court of Appeal decision may affect your council’s liability and compliance processes, or to discuss any building and construction issues, don’t hesitate to contact Nathan Speir
Statutory text
The Court considered that while the Act does not provide for producer statements, or formally recognise the role they continue to play, they clearly fall within the ambit of building work, as defined.
Although not a statutory document, a producer statement is a standard document with well-understood content and purpose, intended to contain reasonable statements of professional opinion that the building works to which they relate have been completed in accordance with the building consent and the building code.
Interestingly, the Court of Appeal observed that the PS4 producer statements can be understood as a record of the work completed by [the engineer]. And all involved in the process, including the building consent authority, are entitled to proceed on the known basis of what must be provided in producer statements.
The Court of Appeal ultimately decided that the producer statements breached the requirements of the Act by wrongly stating work had been carried out in conformity with the requirements of the building consent and building code, when that was not the case.
Put simply, if a producer statement falsely claims that work complies when it doesn’t, that’s a breach of the Act.
Statutory purpose
The Court of Appeal took the view that holding the author of the producer statement accountable under section 40 accords with the purposes of the Act. Requiring the statements to be accurately made clearly furthers the statutory purpose of promoting accountability of the owner, and the builder for the work that is done. It also assists the building consent authority to carry out its responsibilities as the regulator, thus promoting public safety and wellbeing.
The Court reminded us that the author of a producer statement will not be criminally liable unless it’s established beyond reasonable doubt that the matters certified in the statement are incorrect.
WHAT DOES THIS MEAN FOR THE INDUSTRY?
Some observers have suggested that the Court of Appeal’s decision will cause concern amongst engineers and other professionals who issue producer statements. I don’t agree.
For the overwhelming majority of engineers, who have integrity and stand by the accuracy of the educated statements they make, the decision won’t move the needle.
I also don’t buy into the idea that the decision will likely increase the costs of design review and construction monitoring services, as professionals seek to be adequately compensated for this non-insurable risk.
Such a negative outlook does a disservice to the engineering profession in my opinion. As above, most producer statement authors aren’t cutting corners now, and will continue to exercise their professional judgment with care, without needing to increase their costs.
The reality is that this decision simply confirms what we’ve all known for a long time. There are multiple contributors to a building and each contributor, whether it be a homeowner, designer, engineer, builder or a consent authority, faces both risk and reward. Each party plays an important role in the construction of a building, but is also exposed to consequences if they fall short of expectations.
FINAL THOUGHTS
This decision should give building consent authorities confidence to accept producer statements from qualified individuals because, while not a statutory document, the Court of Appeal has acknowledged their continued value in our building control system.
The only people who should be worried by this case are those who are planning to cut corners. Fortunately, there aren’t many of those and for the few that do exist, hopefully the Court of Appeal’s decision offers some deterrence.
Public Works Act Review What’s on the horizon for councils?
In this article Meredith Connell partner Simon Rickit provides us with an overview of the key changes we can expect from the review of the Public Works Act 1981, and what these could mean for local government.
The Government is moving ahead with its promised review of the Public Works Act 1981 (PWA), a move aimed at modernising and improving the efficiency of public infrastructure projects.
Last week, Hon. Chris Penk, the Minister for Land Information New Zealand, released his second statement for the month regarding the reform. What was once called a “targeted review” only a few months ago, is now being positioned as an ”overhaul” of the Act.
Having not been substantially amended in over 35 years, the consensus seems to be that the Act is no longer fit-forpurpose, and fails to reflect the modern realities and evolving needs of Aotearoa New Zealand.
SCOPE OF CHANGES
In July last year the Minister tasked Toitū Te Whenua Land Information New Zealand (LINZ) with establishing a fiveperson Expert Advisory Panel (Panel) to provide independent specialist advice, with a focus on three core principles: efficiency, effectiveness and clarity.
The scope of the review is, essentially, improvements that will support the delivery of infrastructure. The changes will be focussed on the following:
• Streamlining and simplifying the compensation application process, taking cues from international best practice
• Updating dispute resolution processes
• Shortening timeframes for the acquisition process
• Repealing historic and redundant sections
• Improving the incentives for property owners to settle early
• Simplifying the administrative processes, such as timing requirements for notice and survey works
• Updating the objection process and defining the relationship between the Resource Management Act 1991 and the designation process
• Including Māori land valuations and tikanga practice.
WHAT CAN WE EXPECT
In his press release last week, Minister Penk confirmed that extensive policy changes will be announced over the coming weeks.
The Minister provided a preview of what to expect under the first tranche of proposed PWA changes, including the following relevant items for councils:
• Enable relocation of infrastructure: Allowing local authorities to acquire land to move existing infrastructure (eg powerlines or pipes), which are in the way of new public works.
• Refine the role of the Environment Court: Clarifying the factors which the Court considers when reviewing objections to land acquisitions for public works. This will contain a focus on individual property rights and will remove overlap with the Resource Management Act.
• Enable collaboration between agencies: Allow agencies to work together when acquiring land for connected public projects. Instead of each agency acquiring land separately, they will be able to coordinate acquisition of land as needed to make the process smoother. Although this statement referenced “government agencies”, it seems logical the principle would accommodate local government too.
• Require mediation for compensation disputes: Requirement that parties attempt to resolve disputes over compensation through mediation or alternative dispute resolution before going to the Land Valuation Tribunal.
The Government also intends to ensure equitable treatment of Māori land in acquisition processes, including – importantly – in land valuations, where Māori land has historically been marginalised.
Further improvements will of course be revealed in the Public Works Amendment Bill itself, which is expected to be introduced to Parliament in mid-2025.
LIMITED REVIEW?
Minister Penk initially narrowed the scope of the Panel’s review to ensure a quicker turnaround, with a focus on New Zealand’s demand for improved public infrastructure. This decision drew some criticism, with commentators labelling it a piecemeal approach and a missed opportunity for a comprehensive review of the entire PWA, including the offer-back and disposal functions.
Minister Penk’s recent statement, describing the review as an “overhaul”, suggests that the review scope has broadened; however the Government is still not indicating it will tackle certain big-ticket items like offer-back in the review.
There is certainly some truth to the suggestion that the Act would benefit from a universal review and reset. The above ‘shopping list’ of fixes will not iron out all wrinkles that currently exist in the legislation.
But the obvious benefit to the approach is that by narrowing the scope, and staging amendments, there’s less risk of the legislation becoming mired through debate, or passing in such controversy as to endure further review and potential revision by a subsequent government (refer RMA for a cautionary tale). There’s also less risk of priority changes being delayed by debate on other, less pressing, items.
OUR VIEW
Of the revisions announced last week, it is good to see the infrastructure relocation and agency collaboration concepts as they create much-needed flexibility for acquiring authorities to address project peculiarities.
We are less convinced that a compulsory alternative dispute resolution requirement will be effective, but it’s likely that the final wording on this will be less blunt/more nuanced than the press release suggests.
From our experience working with local authorities, better clarity on acquisition process and – where reasonably possible – more speed, must be a priority. We have seen uncertainty from both councils and landowners in terms of the appropriate process steps, and in particular how to manage and coordinate the negotiation phase in a way that maintains momentum without falling foul of process requirements.
As a starting point, the process must be easier and quicker once agreement is reached between authority and landowner. Better accommodation of Māori land considerations is also a must.
As always the devil will be in the detail. Meredith Connell continues to monitor the review and will keep our local government clients and contacts updated on progress.
GET IN TOUCH
Questions on any aspect of the review? For more information or advice on how it may impact your organisation please contact Simon Rickit .
Enhanced enforcement armoury coming under Phase 2 RMA reforms
In this article, Meredith Connell partner David Collins and solicitor Sophie Vreeburg explore the implications of enforcement changes proposed under Phase 2 of the RMA reform
Local authority prosecutors and compliance teams will be aware that the Resource Management (Consenting and Other System Changes) Amendment Bill (the Bill) is currently before the Environment Select Committee.
The Bill introduces several important changes, which are set to enhance the enforcement armoury of the Resource Management Act 1991 (RMA), including:
• substantial uplifts in maximum penalties for RMA offences;
• removal of jury trial election;
• provision for local authorities to set administrative fees for carrying out monitoring and enforcement functions;
• a new enforcement tool to suspend or revoke resource consents held by repeat offenders; and
• prohibition on taking out insurance cover for fines.
These amendments had formed part of the package of enforcement changes previously introduced under the (now repealed) Natural and Built Environment Act 2023 (NBEA).
In this article we explore the implications of, and how to get ready for, these notable changes to the enforcement toolkit, which are expected to become law later this year.
INCREASE IN MAXIMUM PENALTIES
The maximum penalties for individuals are set to increase from $300,000 to $1 million, a three-fold uplift, and from $600,000 to $10 million for companies, a 16-fold uplift. This is a significant uptick from the last adjustment (in October 2009), which resulted in a 50% uplift for maximum penalties for individuals, from $200,000 to $300,000, and a separate maximum penalty of $600,000 for companies.
In essence, the increase of the maximum penalties is a directive from Parliament as to the sentence reserved for the
worst offence of its type, committed by the worst offender. Adjustments are required from time to ensure the penalties keep pace with inflation, are fit for purpose, and are capable of deterring serious offending into the future.
These uplifts will give the courts greater flexibility to fix penalties that ensure the offender internalises the environmental cost of offending, as well as reflecting important sentencing principles, such as general deterrence.
An increase in maximum penalties will inevitably impact sentencing levels overall, not just for cases at the most serious end.
Following the last (more modest) uplift of maximum penalties in 2009, while the courts did not apply a corresponding increase in fines by the same factor as the maximum penalty uplift, a Ministry for the Environment study later confirmed a steady increase in fines was observable over time.
Similarly, if the amendments in the Bill are enacted, local authorities should expect a noticeable increase in the fines imposed for new prosecutions, albeit the courts will always be guided by orthodox sentencing principles, including relevant factors such as a defendant’s financial capacity.
REMOVAL OF JURY TRIAL ELECTION
On the other hand, the Bill also proposes to lower the maximum term of imprisonment from two years to 18 months. This reduction in penalty may seem counterintuitive alongside the substantial uplifts to maximum fines. However, the policy intent is to remove the right of defendants to elect trial by jury for RMA charges, rather than to signal that courts impose more lenient sentences of imprisonment.
The typical penalty for an RMA prosecution is a fine, and there have only been a handful of cases that resulted in the defendant facing imprisonment. The removal of the right to
elect a jury trial will be welcomed by many local authorities as a means of reducing the complexity and delays that can result from the jury trial process.
By its nature most RMA offending is better suited to a judgealone trial format, given the technical nature of planning rules and expert evidence, and that the offences are strict liability.
SUSPENSION OR REVOCATION OF RESOURCE CONSENTS
The Bill also introduces a new power to apply to the Environment Court or District Court for an enforcement order to suspend or revoke a resource consent, which could be a potent alternative to prosecution.
This new enforcement tool will be a useful alternative remedy in relation to recidivist offenders, who can be shown to have committed ongoing, significant or repeated non-compliance with the conditions of a resource consent.
Compliance and enforcement policies should be updated to incorporate guidance on the use of this new tool alongside other RMA enforcement remedies.
ADMINISTRATIVE FEES AND INSURANCE
A further change proposed by the Bill will enable local authorities to recover the cost of compliance and enforcement functions pursuant to the RMA (for example, issuing an abatement notice). This addresses a gap in the administrative charging framework, in which there is express provision to charge for monitoring of a consented activity, but not for the monitoring of an unconsented activity. This proposed change will align the administrative fee framework in the RMA with comparable legislation, such as the Building Act 2004. The removal of insurance against fines also aligns with other regulatory regimes such as the Health and Safety at Work Act 2015. The Bill does not prevent parties from taking out insurance for the costs of defending a prosecution or remediation. While the removal of insurance against fines
will provide more effective deterrence, it may also lead to an increase in arguments at sentencing about financial capacity of offenders.
GETTING READY FOR THE PROPOSED CHANGES
With the Bill anticipated to come into effect this year, there is no better time for local authorities to start planning how these new enforcement measures will be deployed effectively, and integrated into existing enforcement policy and practice.
Any review of enforcement policies should also take into account the changes introduced under the revised SolicitorGeneral Prosecution Guidelines, which came into force on 1 January 2025.
Developing a coherent enforcement policy framework that utilises enforcement tools effectively will best position local authorities to sustainably fund, monitor, and deliver on enforcement objectives in a fair and principled manner for the benefit of the community as a whole.
GET IN TOUCH
Any questions? To discuss how to deploy these RMA enforcement changes effectively, please contact David Collins or Sophie Vreeburg
Meet the team Wade Morris joins MC in Ōtautahi Christchurch
Each month we’ll spotlight a member of the Meredith Connell team, so you can get to know our Local Government law experts.
This month we’re thrilled to introduce Wade Morris, the latest addition to our Local Government team, in Ōtautahi Christchurch.
Wade is a seasoned solicitor with a strong focus on civil litigation and regulatory compliance, offering practical solutions for local government clients across the country. With expertise in defective building claims, including High Court cases around weathertight homes and Christchurch Earthquake Insurance Tribunals, Wade has also represented councils before Tribunals and in the District Court seeking civil orders.
His diverse background in both central and local government roles ensures a deep understanding of the unique challenges our clients face.
OUTSIDE THE OFFICE
Outside of work, Wade enjoys spending time with his young family and exploring the outdoors. Originally from Wellington, and a staunch Hurricanes fan, he loves to spend time around Canterbury and says he also continues to be amazed by the stunning landscapes of Central Otago, with both its natural and engineered lakes.
GET IN TOUCH
Based in Christchurch, Wade frequently travels to meet local government clients nationwide. If you’re in the South Island or have any legal questions in his areas of expertise, don’t hesitate to reach out to Wade Morris.