Resource Management

30 Nov 2010

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Building Amendment Bill (No. 3)

The Building Amendment Bill (No. 3) was introduced into Parliament on 23 November 2010, and is awaiting its first reading. It is the first of two Bills aimed at implementing a number of policy decisions arising from the Government's 2009 review of the Building Act 2004.

The Bill provides for better regulation of building work, and adjusts the licensing regime for builders already in place under the Act. It seeks to promote accountability from those responsible for ensuring building work complies with the Building Code. This article explores some of the main amendments in the Bill.

In brief

As outlined in the explanatory note, the Bill:

1. More clearly signals the accountabilities of participants involved in building design and construction;
2. Enhances accountability under the licensed building practitioners regime;
3. Introduces a stepped risk-based approach to how building consent and inspection requirements are administered so that the role of the building consent authorities at each step is aligned with the risk involved;
4. Repeals the offence of allowing the public use of a building without a Code Compliance Certificate for building work commenced between 1992 and 2005;
5. Provides for an owner-builder exemption from the restricted building work provisions of the Building Act 2004;
6. Makes a number of changes to enhance and clarify the building warrant of fitness regime;
7. Makes a number of other minor and technical amendments.

Reasoning behind the Bill

The construction and building sector is very important for New Zealand's economic performance and prosperity. In 2009, the Government completed a review of the Building Act 2004. This review found there remains a heavy reliance on building consent authorities for building quality. There are also concerns about costs, complexity, and delays in building consent processes. Change is needed to give incentives to building professionals and trades-people to take responsibility for the quality of their work and to stand behind it.

The Building Amendment Bill (No. 3) aims to introduce the policy decisions arising from the 2009 review. According to Building and Construction Minister, Maurice Williamson, such amendments will 'help drive a more efficient and productive sector that stands behind the quality of its work'.

Responsibilities and accountabilities

The 2009 review found the current system is unbalanced because there is an unduly heavy reliance on building consent authorities (mostly territorial authorities) to identify and fix inadequacies in building design and construction. Building consent authorities have tended to be more cautious, and this has led to a level of checking and inspection that may be higher than necessary for low-risk work. This can cause delays and extra compliance costs.

Proposed sections 14A - 14F of the Bill make it clearer to building consent authorities, builders, designers and consumers who will be accountable for what:

1. Section 14B: Owners of building work are responsible for getting any necessary approvals. An owner is responsible for ensuring the building work complies with the building consent or, if there is no building consent, with the Building Code.
2. Section 14C: Owner-builders are responsible for ensuring the work complies with the building consent, and the plans and specifications, to which the building relates.
3. Section 14D: Designers are accountable for ensuring that their plans, specifications and advice will meet the requirements of the Building Code.
4. Section 14E: Builders are responsible for building to any approved plans or specifications. If there are no approved plans or specifications, then builders are responsible for meeting the requirements of the Building Code.
5. Section 14F: Building consent authorities are responsible for checking the Building Code compliance of plans and specifications that accompany a building consent application, and for checking that work is done according to the plans and specifications, as well as issuing the statutory consents and certificates. Building consent authorities must also approve any critical variations.

A building consent authority's responsibility will be better balanced under the new structure. Each party now has express responsibilities set out in the Act and building consent authorities now perform a more supervisory role.

Stepped consenting

The Bill introduces a new stepped risk-based approach to how building consent and inspection requirements are administered. This means that the role of the building consent authority at each step is aligned with the risk involved, and the skills and capability of the people doing the work.

The Bill introduces 4 types of building consent:

1. A standard building consent - essentially a consent as is currently provided for in the Act;
2. A low-risk building consent - a stream-lined consent process for some low-risk work, such as a free-standing garage or a large rural shed. This process simply checks that certain conditions are met (for example, that the work is undertaken by a licensed practitioner), but involves no further inspection by building consent authorities;
3. A simple residential building consent - this provides for a simplified and more prescribed consenting process for certain simple residential building work that is at the lower-risk end of the spectrum. As an example, the Department of Building and Housing identify a single-storey house built using proven methods and design, with low structural and weathertightness risks; and
4. A commercial building consent - there will be new building consent processes and requirements for commercial buildings, that rely on third-party (non-building consent authority) review and assurance processes. These processes are an alternative to the current consenting and inspection requirements, provided certain conditions are met.

Liability

As part of the 2009 review the Government examined whether there should be any change to the joint and several legal liability framework, as it applies in the building and construction sector. Ultimately no changes were made. Submissions identifying problems with this liability regime included:

1. building professionals and trades people seek to protect themselves through measures such as limited liability companies and a reluctance to take on some types of work
2. risk averse behaviour by local authorities results in more inspections and greater-than-necessary compliance costs (arising out of the fact that local authorities generally carry between 40 and 70 percent of the total cost of settlement in weathertightness cases, so a greater number of inspections is seen as a way to reduce Councils having to carry any liability at all).

However, some submissions on the review noted that any change would potentially leave homeowners more vulnerable, because if one party is unable to pay then the homeowner would be left 'out of pocket'. It appears the Government has opted to support the homeowner in not changing the liability regime, but no doubt on the basis that other measures in the Bill will impact on the level of liability for BCAs, as a result of their reduced involvement.

Section 363B of the Building Act 2004

The Bill repeals section 363B of the Building Act 2004. Section 363B makes it an offence for a building owner to permit any part of a building to be used that is intended to be open to, or used by, members of the public for which:

1. the building work was undertaken between 1 July 1992 and 31 March 2005; and
2. a Code Compliance Certificate was never issued.

An independent review of section 363B concluded that the section is not an effective means of revealing whether there are risks to the public arising from uncertified building work undertaken under the Building Act 1991. The review concluded that section 363B is not an effective means of controlling such risks. Other commentators have also previously pointed to difficulties arising from this section where there are difficulties obtaining a certificate of acceptance or code compliance certificate. While the possibility of committing an offence may be appropriate for some building owners, if the owner did the building work under urgency, or because a private building consent authority is unable or refuses to issue a code compliance certificate through no fault of the owner, then the owner is in a difficult situation. The repeal of this section will remove the chance that Councils will have to deal with any awkward 1991 Act situations involving public use buildings.

Minor technical amendment: Consent Completion Certificate

Under the Building Act 2004, a Code Compliance Certificate is issued when a building consent authority is satisfied that building work complies with the building consent. However, the Bill proposes to change the terminology to 'Consent Completion Certificate', on the basis this more accurately captures the policy intent. The new term is in line with the new accountabilities and makes it clear that a Consent Completion Certificate is not an absolute guarantee, but records that the process has been completed. The Consent Completion Certificate signifies completion of the building consent process and that the building consent authority has satisfied itself that the prescribed checks and inspections have been properly carried out, as required for the particular consent type.

The new wording under the Bill is helpful because there is a change of perception around what building consent authorities will be doing and responsible for in comparison to builders. Builders should be ensuring code compliance in accordance with their building consent, whereas building consent authorities will be signing off the work once a consent has been completed.

Minor technical amendment: extension of structures which are not 'buildings'

The Bill also amends section 9 to further extend the definition of structures not classified as 'buildings'. These additions will please the electricity industry as they relate to:

"(ac): security fences, oil interception and containment systems, and similar machinery and structures that are part of, or related to, a NUO system; or

(ad) structures that form part of works as defined in s 2(1) of the Electricity Act 1992, for example, wind turbines and gantries."

Schedule 1 exemptions

Although the Bill does not make any amendments to Schedule 1 of the Building Act 2004, there is a new Building (Exempt Building Work) Order 2010, which comes into force on 23 December 2010. That order adds several new classes of building work to Schedule 1, allowing a greater range of building work to be done without a consent. Comparing the exemptions introduced under the recent Canterbury Earthquake (Building Act) Order 2010, with those in the new order, most of the "earthquake" exemptions are included. However, the Government has rolled out a much larger number of exemptions in this new order that will apply throughout New Zealand. This will presumably have an effect on the amount of building levy collected by the Government, but will ensure that Council/building consent authority time is spent on considering larger building projects.

One of the interesting additions is the ability to demolish all or part of a damaged building that is detached and is less than 3 storeys high. This could see the demolition of some quite large buildings, as there is no limitation on the footprint of the building. It is also not clear how "damaged" a building has to be before it can be demolished without consent. Once the building is demolished, what proof is there that there was any damage to allow the owner to utilise this exemption? It also begs the question, why a building has to be damaged before it can be demolished without consent?

Summary

It is not clear at this stage how these changes will impact on the building sector. Some may still be grappling with the national multiple use approvals and other recent changes to the Act. But it does appear there is light at the end of the tunnel for territorial authorities - or perhaps that should be - a tightening of the traditional Council "deep pocket".

The responsibility on Councils/building consent authorities is certainly likely to be better balanced given the explicitly stated accountabilities in sections 14A - 14F, and also through the new types of consent, spreading the load of responsibility.

Authors

Duncan Laing

Partner - Public Sector

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Bill Loutit

Partner - Public Sector

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Judith Cheyne

Senior Associate - Public Sector

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Ann Maddox

Senior Associate - Public Sector

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