Potential prosecution under the Building Act 2004

On 11 October 2024, the Court of Appeal issued a prominent decision regarding whether criminal liability can arise for individuals who issue inaccurate producer statements.

The Court confirmed that the issue of a producer statement (following or resulting from construction monitoring, known as a PS4) in relation to non-compliant building work, can result in criminal liability for the person who issued the producer statement.

The potential liability arises under section 40 of the Building Act 2004, which provides a basis for prosecution. It states:

40 Building work not to be carried out without consent

1. A person must not carry out building work except in accordance with a building consent.
2. A person commits an offence if the person fails to comply with this section.
3. A person who commits an offence under this section is liable on conviction to a fine not exceeding $200,000 and, in the case of a continuing offence, to a further fine not exceeding $10,000 for every day or part of a day during which the offence has continued.    

The decision highlights the significance of producer statements in the building industry, and the care which must be taken when issuing them. It is key to ensure that when issuing a producer statement, it is based on reliable information which demonstrates to the professional issuing it, that the building work is compliant with the applicable building consent and building code. We discuss the case and its implications in more detail below.

PS4s are "Building Work"

The case concerned a residential subdivision and development 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 and safety concerns, the Tauranga City Council and Worksafe New Zealand became involved, and action was taken against five parties regarding their failure to perform compliant building work.

The Engineer (Bruce Cameron and The Engineer Ltd – a company which Mr Cameron was sole director) was amongst the parties pursued. Mr Cameron was engaged to perform on-site construction monitoring, physical investigations and testing, and issue instructions and directions to building contractors in respect of the next stages in construction. Charges were brought against Mr Cameron for issuing producer statements (PS4s) for building work which did not accurately reflect the work which had been performed.

The Court determined that issuing a PS4 constitutes "building work" under the Building Act. This is because activities involved in issuing a PS4, such as siteinspections and construction monitoring, fall within the definition of"site work". Since Mr Cameron's role involved work which came within the definition of "building work", this meant that the PS4s he issued could be subject to scrutiny under s 40 of the Building Act, and his actions capable of prosecution.  

Key learnings

The case is significant as it provides clarity around the definition of "building work" in the context of section 40 of Building Act and reinforces the importance of compliance and accuracy in the issue of producer statements. It should be noted by all parties involved in building and construction work, including engineers, architects, builders and project managers who usually issue producer statements, and developers/property owners who tend to rely on them.  

Key learnings from the Court of Appeal's decision include:

• Producer statements may not be statutory documents guided by a legislative framework, but they are standard documents well understood in the building industry, and councils/regulators rely heavily on the professional opinions, qualifications and competencies of the individual issuing them.  
• A person issuing a PS4 is subject to legal risk and has a responsibility; they are required to confirm there is reasonable grounds to believe the building work is compliant to enable them to issue the producer statement.
• Where building work is found to be non-compliant, the producer statement(s) are subject to scrutiny, and liability for an incorrect producer statement can be established if it can be found beyond reasonable doubt that the producer statement is wrong. If this cannot be established, then no offence would be committed.
• When issuing a producer statement, it is important to ensure there is enough information to support it. Record keeping is advised such as collecting diary notes, photographs and site monitoring notes which can be relied on as a basis to the belief that the work is compliant. Failure to do so can result in an inaccurate producer statement which is capable of prosecution.

If you need further information or have any questions about this case or the implications of the Court of Appeal's decision, please do not hesitate to get in touch. Our Dispute Resolution and Litigation specialists can help you understand the legal requirements that are crucial to ensuring compliance and avoiding potential liabilities in your building projects.

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