Self-Certifying Builders

December 14, 2015

By Richard Maiden, Director, Chartered Surveyor & Chartered Arbitrator

In late September Paula Bennett; Minister of Local Government, Minister for Social Housing and Minister of State Services, released a media statement on the findings of the Rules Reduction Taskforce, aka ‘The Loopy Rules Report: New Zealanders Tell Their Stories’.

Reported “Top 10 Fixes”
> Make it easier to get building consents
> Get serious about lifting the skills of the building sector
> Make it easier to get resource consents
> Reduce the cost of consenting fees
> Sort out what “work safety” means and how to do it
> Make it clear what the rules are
> Establish a new customer focus in the public sector
> Departments should introduce a stakeholder engagement approach to developing local government policies and regulations
> Reform the Local Government Act 1974 and the Reserves Act 1977
> Stop making loopy rules

The report goes on to discuss the Building Act 2004 and how councils, who are empowered under the Act to administrate it, have become risk averse as a consequence of being held liable for building failures. As a result councils have become increasingly difficult, and one might say pedantic, over issuing building consents, administering amendments to them and generally when inspecting building work.

The consequent delays to building projects has had a considerable effect on building owners who often cannot live in buildings that are being repaired and are perhaps renting accommodation whilst continuing to pay a mortgage. The costs are debilitating for many.

The report suggests that a way of combating council bureaucracy is:
“the long term solution is for the building sector to carry responsibility for its own work”

This is a nice idea, and in a Utopian society I am sure it would work, but sadly that society does not exist.

The Building Act 1991 introduced the use of Building Certifiers, private companies or individuals who were licensed by the government to carry out some of the duties of the councils. Certifiers were required to carry adequate insurance against claims made against them, but the insurance was only valid for the period that the Certifier was in business.

In that situation, where Certifiers were found not to have adequate insurance, any claim made against a Certifier within the 10-year backstop provision of the Building Act was not likely to be supported by the Certifier’s insurers. The issue was put to bed by the “Sacremento” (Attorney-General v Body Corp 200200 [2007] INZLR 95 (CA)) case when the government was sued (in part anyway) for not ensuring that Certifiers had adequate insurance, i.e. a policy that would provide cover for acts or omissions under the Building Act.

The current suggestion that builders certify their own work is really another derivative process of the certifier regime and if builders were to selfcertify then it would require a major overhaul of the Building Act. If there were to be any consumer protection against builders for building defects then such a scheme would also require the backing of the insurance industry.

Of course, the report has the statement that, ”in order for builders to self-regulate they would need to upskill”, but in my view, and from a timing perspective, that would be a generational change.

Education and upskilling of the industry is of course the crux of the problems in the industry but many of the issues culminating in building defects can be avoided by better supervision of the workforce. So, in that respect, building companies could improve in the short term. Such a move would inevitably have a financial effect for building owners but other measures will also have a similar effect so one way or another the cost of the building process will increase.

The industry requires its practitioners to have greater pride and confidence in the product they provide, and building owners should put the thought that builders are trying to rip them off out of their minds, because most of the time, they are not.

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