Hit and miss? Compliance with the Building Code

Achieving the “satisfied on reasonable grounds” test for compliance with the Building Code

Introduction

It is a challenging time to be a building certifier or building officer with a territorial authority. The Weathertightness Overview Group (“the Overview Group”) in a two part report (“the Hunn Report”), identified a number of potential contributing causes for the current failure of some buildings to deal with moisture in and through their exterior envelopes. These include failures attributable to deficiencies in the Building Act 1991 (“the Act”), the Building Code (“the Code”), and their administration by the Building Industry Authority (“the Authority”), territorial authorities, and building certifiers.

The Hunn Report (Addendum: Section 3) comments that (p 10):

If all the parties in the process interpreted the Building Act, Code and Approved Documents as no doubt intended by their authors and acted in a professional manner exercising their ‘duty of care’ responsibilities, there would probably not be an issue.

Performance criticisms of territorial authority consent officers, inspectors, and building certifiers have been linked to the difficulties these parties have in applying the “satisfied on reasonable grounds” test for compliance with the Code. A failure to properly apply the test may also result in a failure by territorial authority officers and building certifiers to exercise their statutory and common law duty of care responsibilities. This article reviews the Hunn Report’s findings on the application of the “satisfied on reasonable grounds” test by territorial authorities and building certifiers, and looks at the recommended action to resolve the current performance issues.

Functions of territorial authorities and building certifiers

Section 24 of the Act sets out the various functions and duties of territorial authorities. These include the duty to:

• Administer the Act and Building Regulations;
• Receive, consider, approve or refuse any application for a building consent within the set time limit;
• Enforce the provisions of the Code and Building Regulations; and
• Issue code compliance certificates.

Part VII of the Act defines a building certifier as a person approved by the Authority to issue building certificates with respect to specific provisions of the Building Code. A building certifier may also carry out inspections of the physical work in progress and issue a code compliance certificate that certifies that the work complies with the Code.

What is the “satisfied on reasonable grounds” test?

The “reasonable grounds” standard underpins a territorial authority’s and building certifier’s functions as described above. The main instances of the test in the Act as they relate to building consent and compliance processes are:

• Section 34(3): covers applications for building consents and states that “the territorial authority shall grant the consent if it is satisfied on reasonable grounds that the provisions of the Code would be met if the building work was properly completed in accordance with the plans and specifications submitted with the application”;
• Section 43(3): provides that the territorial authority shall issue a code compliance certificate if it is satisfied on reasonable grounds that the building work which the certificate relates to complies with the Code;
• Section 56(2): states that a building certifier may issue a building certificate if the certifier is satisfied on reasonable grounds that the proposed building work would comply with the provisions of the Code if it was completed in accordance with the plans and specifications; or the building work complied with provisions of the Code on the date of certification; and
• Section 56(3): allows a building certifier to issue a code compliance certificate pursuant to s 43 if the certifier is satisfied on reasonable grounds that the building work complied with the provisions of the Code on the date of certification.

How can the test be met?

The Act and the Authority presently provide minimal guidance for territorial authorities and building certifiers on the interpretation of the Code and specifically the “satisfied on reasonable grounds” test.
Section 50 of the Act lists a number of documents which a territorial authority and building certifier shall accept as establishing compliance with the provisions of the Code. They include:

• A determination to that effect given by the Authority;
• A current and relevant product accreditation certificate to that effect issued by the Authority;
• Compliance with the provisions of an Authority Approved Document. Approved Documents comprise Acceptable Solutions and Verification Methods that provide methods of achieving compliance with the minimum performance requirements of the Code, but are not the only means of compliance.

Sections 33(5), 56(3A), and 43(8) of the Act further allow territorial authorities and building certifiers to accept a producer statement at their discretion, as establishing compliance with all or any of the provisions of the Code.
In addition to the above documents, some form of verification and a proper and informed exercise of judgment as to Code compliance by a territorial authority and building certifier is key. Ultimately, what amounts to reasonable grounds on which a territorial authority or certifier may be so satisfied as to compliance will always be a question of fact in all the circumstances of any particular case.

Where there is a dispute on this point, it will be the role of the Courts and tribunals to determine whether reasonable grounds existed. Case law confirms that the Courts will apply the common law objective standard of the competent and reasonable building officer, inspector, or certifier in the circumstances of the case. By way of example, in the context of a claim against a territorial authority inspector for failure to exercise his or her duty of care in inspections of building work, the Court may take into account such factors as:

• What a “reasonably vigilant building inspector” has been able to observe in the course of their inspections; and
• Whether the general poor standard of construction in the particular case was such that it would have been obvious to a reasonable building inspector that there may be a number of building items (which may now be covered) that ought to give rise to concern as to their Code compliance (See Birch v Palmerston North CC 22/7/98, Heron J, HC Palmerston North CP116/92).

The Hunn Report’s findings on performance issues

The Hunn Report states that both territorial authorities and building certifiers are experiencing difficulties in applying the “satisfied on reasonable grounds” test for compliance with the Code. In the context of building weathertightness problems, the principal issues identified include (p 22):

• Acceptance by territorial authorities and building certifiers of building consent applications with insufficient and inadequate detail provided in drawings and specifications;
• Undue reliance on and unquestioned acceptance of producer statements and appraisals for products such as cladding systems;
• Insufficient inspections. There is no mandatory requirement to undertake any inspection, just a requirement to be “satisfied on reasonable grounds”. The Overview Group found little evidence of pre-clad inspections to check flashings, building wrap and so on, although there now appears to be an increasing awareness and trend to do so. The common reason given by territorial authorities and building certifiers for this was that “the market level of inspection fees will not allow it”;
• The vagueness of the Code clauses B2 “Durability” and E2 “External Moisture”, which make them difficult to administer. With these clauses, the “satisfied on reasonable grounds” compliance test cannot be measured against any definitive or quantifiable criteria, unlike B1 “Structure” and most of the other clauses in the Code. Territorial authorities and building certifiers are therefore left to make subjective decisions requiring a reliance on interpretation and judgment. The Hunn Report states that this subjective decision-making leads to the very inconsistency the Act was designed to avoid.

The Overview Group was particularly concerned with territorial authorities’ and building certifiers’ acceptance of, and misplaced reliance on, producer statements and “the unofficial product appraisal certification process”. These matters are examined in more detail.

Producer statements

“Producer statement” is defined in s 2 of the Act as meaning:

[A]ny statement supplied by or on behalf of an applicant for a building consent or on behalf of a person who has been granted a building consent that certain work will be or has been carried out in accordance with certain technical specifications.

Territorial authorities and building certifiers currently appear to vary widely in their approaches to the acceptance of producer statements. Examples are:

• Requiring the producer statement to be on a structured form produced by the territorial authority or building certifier;
• Maintaining a list of persons from whom the territorial authority and certifier are prepared to accept a producer statement; and
• Issuing internal guidelines relating to the required qualifications of the maker of the producer statement.

These approaches do not necessarily provide reasonable grounds for being satisfied as to compliance with the Code. Again, it is necessary for the territorial authority or certifier to make an informed judgment as to their reliability in all the circumstances of each case.

Determination No. 2000/4 — Cladding incorporating a proprietary plaster cladding

Determination No. 2000/4, issued by the Authority on 28 August 2000, provides a useful review of the proper reliance by a territorial authority on a producer statement in its assessment of reasonable grounds for compliance with the Code.

The matter before the Authority involved a territorial authority’s approval of the use of a proprietary exterior cladding, referred to as an external insulation and finishing system (“EIFS”), on the basis of an appraisal certificate issued by an appraisal organisation. The territorial authority refused to issue a code compliance certificate because the wall cladding system did not comply with the specifications as set out in the appraisal certificate and for which the building consent had been issued.

The Authority was of the view that the appraisal certificate was in effect a producer statement as the appraisal amounted to the technical opinion of an individual or an organisation. The Authority made the following key statements (para 6.2.3):

• It is not enough simply for the territorial authority (or building certifier) to obtain producer statements from persons who are prepared to stand behind them. It is also necessary to make an informed judgment as to the reliability of the statements and the weight to be given to the statements and any other relevant evidence;
• That judgment must take account of the skill and experience of the person making the producer statement; and
• It must also take account of the fact that any producer statement (other than a peer review) is likely to be to the effect that the maker of the statement did in fact comply with relevant statutory or contractual obligations. That does not of itself prevent the statement from being correct and reliable, but it does mean that appropriate care must be taken when considering whether or not to rely on a statement.

The Authority concluded that (para 7.6):

Section 43(3) provides that the territorial authority “shall” issue a code compliance certificate when satisfied on reasonable grounds as to compliance with the building code, not as to compliance with the building consent. The Authority takes the view that even when the building work does not comply with the building consent the territorial authority should consider the evidence as to whether or not the work complies with the building code. A territorial authority should then make a reasonable decision, on the basis of that evidence, as to whether or not to issue a code compliance certificate. In this case, the territorial authority does not appear to have looked beyond the fact that the work did not comply with the appraisal certificate.

The Authority determined that a code compliance certificate was to be issued given the evidence submitted of Code compliance.

Product appraisal and accreditation systems

Part VIII of the Act provides for the Authority to operate a procedure for accrediting proprietary products that are to be accepted as complying with the Code. The Hunn Report notes that in practice the accreditation system has failed with there being only 15 accreditations in the 11 years of the Act’s existence, and not one of them covering cladding systems. The Authority’s onerous requirements, cost and time factors, and little identifiable commercial benefit are blamed.

By contrast, product appraisals have become well established but much criticised. An appraisal is a detailed and reasoned technical opinion issued by an independent and appropriately qualified organisation. BRANZ has established itself as the pre-eminent organisation for undertaking such appraisals.

The Overview Group’s report on appraisals is that (p 27):

The manner in which appraisals are being undertaken, presented and promoted, and relied on by territorial authorities and building certifiers as the basis for being “satisfied on reasonable grounds” with little and often no challenge, has been the subject of much concern expressed by those interviewed by the Overview Group.

Some of the criticisms are that appraisals (p 27):

• Rely heavily on supplier’s trade literature, which is not comprehensive and is largely marketing driven;
• Often relate to a specific product or element rather than a system. Little if any testing is done to determine compliance with the weathertightness requirements of E2 of the Code;
• Are accepted without question by territorial authorities and building certifiers because they do not have the resources to investigate further; and
• Too often do not adequately set out the scope and limitations that apply to the product.

The Hunn Report notes that BRANZ has undertaken approximately 26 appraisals of cladding systems, but the Overview Group is not aware of specific testing having been undertaken relating to weather penetration of the building envelope. The Overview Group concludes that (p 28):

The current weathertightness problems relate to a large extent to cladding products that have been the subject of ‘appraisal’, which has been the basis of their acceptance by a territorial authorities or building certifier as complying with the Building Code. The products’ function and purpose as part of a building envelope or building system is not being adequately appraised.

Hunn report recommendations

A number of recommendations for action have been made in an attempt to cure the shortcomings in the application of the “satisfied on reasonable grounds” test by territorial authorities and building certifiers. The essential recommendations are:

• Recommendation 23
  That the Authority works with the Building Officials Institute of New Zealand (BOINZ) to develop more definitive criteria and guidance for achieving the “satisfied on reasonable grounds” test for compliance with the Code;
   
• Recommendation 7
  That the Authority in conjunction with BOINZ develop guidelines on the interpretation of the Act and companion documents to provide an educational and reference document for building inspectors and certifiers. It should provide guidance on the interpretation of the Code provisions for objective, functional and performance requirements, as well as such terms as “satisfied on reasonable grounds” and “adequate”;
   
• Recommendation 22
  That the Authority:
  1. Complete as a matter of urgency the current review of the Approved Documents relating to Durability B2 and External moisture E2 including the verification method criteria;
  2. Review the procedures and criteria relating to review of the operation of territorial authorities and building certifiers in relation to their functions under the Building Act; and
  3. Review the processes and scope of information dissemination to industry and in particular to the territorial authorities and building certifiers.
      
• Recommendation 11
  That the Authority:
  1. Develop more prescriptive Acceptable Solutions and Verification Methods for the Approved Documents B2 Durability and E2 External Moisture;
  2. Develop recommended procedures and processes for the development and approval of Alternative Solutions; and
  3. Promote with Standards NZ the development of a national performance-based Standard for domestic building weathertightness;
      
• Recommendation 6
  That the Authority in conjunction with BOINZ:
  1. Review and upgrade the criteria for what constitutes a reasonable level of detail to be provided with building consent applications with respect to weathertightness detailing including flashings;
  2. Review and develop guidelines for an inspection regime as part of the code compliance certification process, with specific reference to weathertightness aspects; and
      
• Recommendation 12
  That the Authority review the current practice for product appraisal and develop formalised requirements. This should include:
  1. Establishing specific criteria for the process;
  2. Accrediting and/or auditing appraising bodies;
  3. Monitoring ongoing product performance; and
  4. Establishing and maintaining a register of the “approved” product.

  It would then seem sensible to explore the possibility of better alignment of Australian and New Zealand practice.

Conclusion

Swift implementation of these recommendations is required to provide urgent assistance to territorial authorities and building certifiers in the performance of their statutory functions. Until this happens, territorial authorities, certifiers and ultimately consumers will be left wondering about the weathertightness of future residential homes.