Engineers and builders could face new Liability for Producer Statements
Engineers and builders could face new Liability for Producer Statements
Wednesday 23 October, 2024
The recent Court of Appeal decision of Solicitor-General's Reference (No 1 of 2022) [2024] NZCA 514 has important implications for engineers, builders, and other professionals in the construction industry, particularly for those who issue producer statements. The Court held that producer statements fall within the definition of "building work" under the Building Act 2004 (Act), even though producer statements are not explicitly provided for in the legislation.
The Court of Appeal clarified that the issuance of producer statements in relation to non-compliant building work can give rise to criminal liability under s 40 of the Act, which prohibits building work without proper consent. This decision overturns the High Court ruling that had previously held that producer statements did not give rise to such liability (although a negligently issued producer statement can give rise to liability in tort).
Liability for Producer Statements
Engineers and professionals who issue producer statements can be held liable if the building work the producer statement relates to does not comply with the building consent or Building Code. These statements are not just formalities; they reflect the professional's certification that the work complies with regulations. The absence of a specific reference to producer statements in the Act was not significant, given that the provision of producer statements assists the parties who have specific responsibilities under the Act to fulfil those responsibilities.
Importance of Construction Monitoring
Engineers are often involved in construction monitoring, and their producer statements serve as a confirmation that they have reviewed the work sufficiently to ensure compliance. This case involved an engineer who issued PS4s certifying work that later turned out to be non-compliant. The Court held that the engineer’s role went beyond merely issuing paperwork; it included on-site construction monitoring, physical investigations and assessments, making him liable when his statements were incorrect. The work necessary to issue a producer statement constituted "sitework" as defined in the Act.
Role of Producer Statements in the Building Process
Producer statements are widely used, and carry significant weight with building consent authorities. They help streamline compliance processes and reduce the burden on councils, but this case confirms that professionals issuing these statements must ensure the work complies with building consents. A producer statement asserting compliance when work is non-compliant can be considered building work not carried out in accordance with a building consent, therefore contravening section 40(1).
In summary, this decision stresses the critical role producer statements play in ensuring building compliance and underscores the professional accountability of engineers and other construction professionals who provide such certifications. This interpretation aligns with the Act's purposes of promoting accountability and ensuring public safety in building work and will give building consent authorities increased comfort in their ability to rely on producer statements for assurance that work has been carried out in accordance with the requirements of the building consent and the building code.
