A recent determination by the Ministry of Business, Innovation and Employment (MBIE) has ruled in favour of a Mount Maunganui couple who challenged the registration of a notice on their title which identified inundation risk.^[1]

This update provides a brief overview of the background, the dispute and findings, and its implications for building consent authorities and property owners dealing with flood and inundation risk.

Background

In early 2023, Tauranga City Council (TCC) received a building consent application for a property at Mount Maunganui. The application was supported by a geotechnical report confirming that the stormwater system was designed to manage a 1% AEP (one in 100 year) storm event, and that it would prevent increased flooding on the property or for neighbours.

The property is within a major overland flowpath, which was predicted to inundate part of the property’s driveway and garage, and the land underneath the house, in a 1% AEP flood.

As the proposed stormwater management would not prevent inundation from the overland flowpath, building consent was granted on the condition that a section 73 notice be registered to advise of the inundation risk.

Legal Framework

New buildings, or major alterations to an existing building, on a property that is subject to one or more natural hazards are managed by sections 71 - 74 of the Act. These provisions are designed to ensure that risks are recognised and mitigated during building work. And if risks cannot be sufficiently mitigated, a notice (under section 73) can be placed on the title to advise future owners of the risk, and protect the building consent authority from liability.

The Dispute

The owners objected to the need for the hazard notice, arguing that adequate provision had been made to protect the land and that the proposed works would not increase the risk. They disputed the extent of flood risk, and contended that any flooding would be minimal and temporary, and would not cause damage that would need to be restored. TCC disagreed, maintaining that all of the land was at risk of significant flooding in a 1% AEP event, which could impact the land and its occupants.

The Determination

MBIE:

• Agreed that the flooding hazard was likely. This aligns with previous determinations where the 1% AEP standard has been used as a threshold for “likelihood” of flood risk.
• Agreed that the land would be affected. In order to engage the natural hazards provisions, land affected by a hazard must be “intimately connected” to the building work. MBIE concluded that there was a sufficient connection, as the modelling showed that the inundation would cover areas subject to the proposed building works.
• Disagreed that a notice was required. MBIE agreed with the owners that adequate provision had been made to protect the land and that a section 73 notice was not required. The determination emphasised that the occurrence of inundation does not automatically mean that the land was inadequately protected. The critical point is whether the inundation would cause direct or indirect damage to the land. This is a factual question, and here the inundation was modelled to be somewhere between 100mm to 300mm in depth, and likely of “minimal inconvenience to the property’s occupants” only.

MBIE also observed that the building consent authority did not identify what damage would be caused, or provide evidence supporting that view. Overall, MBIE found that the notice should not have been imposed, and the building consent should have been granted in the usual way (ie without reference to the natural hazard provisions).

Implications for building consent authorities and landowners

Is a higher threshold test now in place for ‘damage’?

When making decisions on whether the natural hazard provisions apply to building work, earlier determinations have held that building consent authorities should consider whether the effect of the hazard will be more than “minimal or trivial”. This is because protection from minimal or trivial effects is not required.

This determination appears to have shifted the dial, with a different test now in place. That test is whether “damage” will result from an identified hazard, which remains a factual assessment. The determination and this new test may be at odds with the decision in Logan v Auckland City Council, which stated that both the land and building work must be protected from inundation, although it is clear from past decisions that the standard for protection for land is less than for buildings and that a common sense approach to risk is required.^[3]

Unsurprisingly, TCC has appealed the determination, stating that it “creates a significant liability risk for its ratepayers when consenting development in areas known to flood”.^[4] 

If the appeal is unsuccessful, how are building consent authorities to assess flood risk?

Ultimately the assessment will remain a factual one, and be guided by the nature of the hazard, the degree of risk presented by the hazard, and how the building work will respond to the identified hazard.

However, for flooding specifically, what constitutes “damage” to land does remain somewhat unclear. For example, is it relevant to consider the ability for people to have safe access to and from a building across land that will be inundated in a flood event (which was discussed in another Determination)?^[5] It is also unclear what evidence building consent authorities will be expected to produce to demonstrate that damage to a building or land may occur.

Is there a liability risk?

Across the country we are seeing far greater interest in the information about hazard risk being made available to prospective purchasers, whether through LIMs or through policy and regulatory decision-making under the Act, the Resource Management Act 1991, and other legislation. The exercise of these functions can present a risk of challenge for local authorities.

Based on the seemingly higher threshold introduced in this case, it may be more challenging for section 73 notices to be registered, or at least there may be more limited situations where that is possible. In any case, the determination makes clear that the expectation is that evidence is produced in support of that decision, which puts a greater burden on building consent authorities at the consenting stage.

The consequence of this is that building consent authorities could be exposed to increased risk of liability for hazard-related damage to land in the future, if a more conservative approach is taken. On the other hand, they may face more challenges from property owners alleging that they have registered section 73 notices without sufficient evidence.

The matter is now with the District Court and we will watch with interest as to whether the Court provides further clarity about the application of sections 71 to 73.

Get in touch

Please contact one of our experts if you would like to discuss any of the above, or you'd like advice on this developing area of law.

Special thanks to Jade Magrath and Oscar Wilson for their assistance in writing this article.