Over the last 11 months, the Government has announced some hefty changes “for a major reform of the building consent system to improve efficiency and consistency across New Zealand.”^[1]

In recent media statements the Hon Chris Penk (as Minister of Building and Construction) has expressed the Government’s intention “to construct a new-certification scheme for trusted building professionals and accredited businesses carrying out low risk building work.”^[2]

The proposed amendments are in response to a perception that the building consent process is uncertain, lengthy and costly, and that “the status-quo is not serving New Zealanders well”.[3] In this article we briefly outline the proposed amendments and provide our views.

Aiming to achieve more using less time

Building Consent Authorities (BCAs) are tasked with certifying that all building work is compliant with the Building Code, the only exception being gasfitting and electrical work where a form of self-certification already exists.^[4] The proposed changes will extend the proposed self-certification process and give more building professionals such as plumbers, drainlayers and builders the ability to self-certify ‘low-risk’ building work on basic residential dwellings. This new process will apply to companies and businesses with a proven track record (such as group housing companies with repeat work using standard house plans and designs).

At this stage, it is unclear what role BCAs will play in the amended self-certification scheme. As the scheme is limited to low-risk building work, the intention seems to be that BCA inspectors will focus their resources on larger more complex projects.^[5]  

Our comments

This new self-certification scheme is likely to raise a raft of issues concerning liability for defective building work. However, the Minister has flagged an intention to review ’liability settings’ which could mean that “where work is self-certified, council liability will be reduced, or eliminated, depending on their residual role in the scheme.”^[6] This review will be pivotal in light of the leaky building crisis that has haunted BCAs and ratepayers alike since the 1990s.

In terms of current ‘liability settings’, the current position in NZ is that all parties named in a statement of claim are jointly and severally liable for the damage arising from their work/involvement. In practice this means that construction companies may choose to liquidate their assets rather than meet the costs of an adverse judgment. Therefore, BCAs are frequently left as the last party standing with apparent liability - meaning the ratepayer ultimately shoulders the greater part of any settlement or award of damages than if the other defendants were solvent, and could pay their share.

Therefore, implementing the self-certification scheme should coincide with a reconsideration of joint and several liability to minimise ambiguity in litigation relating to building defect disputes.

Our views are: 

• The self-certification scheme operates on a trust model, reducing time and cost, and offering building practitioners greater autonomy over their work. However, the scheme should be clearly defined because, without appropriate limitations, it can have the opposite effect and lead to an increase in litigation relating to self-certified but non-compliant work.
• One of the stated goals is for building practitioners to shoulder more of the risk through self-certifying their work, incentivising better quality work and lower liability for ratepayers. However, to achieve this in practice, a move towards proportionate liability may be needed, as outlined above. Therefore, it would be timely for a further review of joint and several liability by the Law Commission.^[7] 
• The self-certification scheme will need buy-in from building practitioners, with a greater level of care and criticism across the industry. The self-certification scheme is intended to reduce construction time, not to reduce the overall quality of work completed. Quality must remain high if the proposed changes to the scheme are to be worthwhile.
• With responsibility for self-certification falling to licenced building practitioners, this could lead to higher insurance premiums. This could put further strain on an already stretched small business. 

Of course, discussion and feedback from those in the industry will be crucial to the expanded self-certification model if it progresses to the consultation stage. Click here to read an FYI we recently published on the introduction of remote building inspections.

Get in touch

Please get in touch with one of our contacts for more information about this new building reform and how it may affect you. 

Special thanks to Joeli Filipo for his assistance in writing this article.