Codewords Issue 93

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4 December 2019

In this issue:

As we head into the end of 2019, thank you to everyone who has given us feedback through the many consultations this year or met with us to share your knowledge and experience. It’s been a busy year, but pleasing to see we’re making progress with your help to support a lift in performance across the building sector.

In November, we published the latest Building Code update as part of our biannual programme of changes every June and November. Covered this time was liquefaction-prone ground, including extending the current limits for ‘good ground’ in Acceptable Solution B1/AS1. This means that foundation solutions on this type of land will need to be consented as a Verification Method or Alternative Solution, and brings the rest of the country up to the same performance requirements as Canterbury.

We are also making the National Association of Steel Framed Housing (NASH) standard an Acceptable Solution, rather than an Alternative Solution. This will help support higher density housing by increasing the number of construction material options available in compliance pathways. To see all the improvements made during this Building Code update and previous changes, visit our biannual programme webpage.

An upcoming milestone is the launch of the Accord Transformation Plan in December. This builds on the momentum of the Construction Sector Accord, which we launched in April. The Transformation Plan delivers on the pledge made by government and sector leaders to work together to address the challenges faced by the construction industry and transform it to a high-performing sector. It will set out initiatives that will be implemented in the short, medium and longer term to drive the right behaviours and practices among all players in the sector.

The Accord has generated strong interest with nearly 500 people and businesses signing up on the Accord website to get involved in sector transformation. Public workshops across the country to progress the Accord’s work have been attended by nearly 200 sector leaders and interested members of the public. A survey of 230 sector participants found that the sector sees the Accord being a positive contributor to change, and nearly 80 percent said they were motivated to be a change-maker.

I would like to thank those of you who participated in the Accord survey and went along to the Accord workshops. The views, input and support of the wider sector are critical to the success of the Accord programme, and your feedback has been invaluable in the development of the Plan.

For more 2019 highlights, see our article in this issue.

Have a relaxing and enjoyable Christmas break, and we'll see you in the new year.

Anna Butler
GM Building System Performance (BSP)
Ministry of Business, Innovation and Employment

Anna Butler

Anna Butler

GM, Building System Performance

Building system updates

2019 – The year in review

The end of each year inevitably brings with it a period of reflection.

It’s been a productive 2019 for the Building System Performance branch, with a record number of public consultations and a far-reaching legislative reform programme kicking off. Our key achievements include:

  • Government and industry have developed a genuine partnership through the Construction Sector Accord launched in April to transform the sector through improved behaviours and culture. The Transformation Plan, expected to be announced shortly, outlines how the vision of a high-performing construction sector for a better New Zealand will be achieved.
  • All six initiatives across government in the Construction Skills Action Plan are underway to address the skills shortage by getting more people into the construction workforce and growing skills.
  • The first decisions on proposed building law reforms were announced by Government in October, following public consultation earlier this year. These changes will help lift building quality so things go right the first time. They’ll also support people to take responsibility for their role, and allow for people to be held accountable with higher penalties if things go wrong. The first Bill is currently being drafted, with the opportunity to engage during the Select Committee process next year. Further decisions will be made on other proposals early in 2020.
  • One of the key changes in the law reforms is a new certification scheme for modern methods of construction, which will clarify the consenting process and reduce duplication of effort for both BCAs and manufacturers. By supporting increased use of prefabrication and offsite construction, the scheme will also help bring more affordable homes to the market.
  • There’s a regular programme of twice yearly updates to the Building Code (every June and November). A more risk-based approach is helping to inform updates, and we’re hearing more from you to inform change.
  • We expect final proposals on the safety of New Zealand’s large dams to go before Cabinet soon. Great consultation feedback helped shape this work.
  • The Building Amendment Act comes into effect on 18 December 2019. This is a new system for managing buildings after an emergency, and provides clear legislative powers for investigating building failures.
  • Progress on additional exemptions under Schedule 1 is underway, meaning that next year there will be even more work that can be done without a building consent. This will reduce the cost of consenting for minor and low-risk building work and will benefit all areas of New Zealand.
  • In July, 120 New Zealand building standards were made free to access and have so far been downloaded 99,000 times. This supports our core work to help remove barriers to compliance.
  • Also in July, changes were announced to make it easier for owners of earthquake-prone buildings in small towns to undertake modest building work, without having to do seismic strengthening at the same time. These changes come into effect before Christmas.
  • A review of industry’s response to the retention money provisions introduced in 2017 to protect sub-contractors was completed. The review looked at factors such as awareness of the regime, extent of compliance, signs of behaviour change in the sector, and the impact the legislation is having on firms. The Minister for Building and Construction will be releasing the report publicly in the near future.
  • A significant new piece of work is underway to consider how the built environment can contribute to Government's climate change goals.

Keep an eye out for updates on the above projects that are still in progress, as we gear up for an equally busy and fast-paced new year.

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Your rights and obligations in the building process

Whether you’re a builder, tradesperson, designer or homeowner, it pays to know your rights and obligations in the building process so you can protect yourself and others within the law.

With the first changes of the building law reforms expected to come into effect in mid-2020, now is a good time to refresh your knowledge on roles and responsibilities across the building sector.

For homeowners and commercial property owners, understanding your rights and obligations helps you to avoid potentially costly mistakes or delays, and will ensure your property is safe, healthy and durable.

For builders, designers and tradespeople, knowing your obligations helps you to avoid disputes and reduces the likelihood of rework being required. It will also ensure you don’t infringe against the Building Act or risk disciplinary action from your professional body.

Refresh your knowledge

Our Building Performance website provides a range of information to help you understand the roles and responsibilities of those involved in the building process. This includes:

Stay up to date on the building law reforms

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Report published on progress with identifying earthquake-prone buildings

The latest report on how territorial authorities are progressing in their work to identify New Zealand’s earthquake-prone buildings (EPBs) has been published.

Most territorial authorities had either identified all the potential priority* earthquake-prone buildings (EPBs) within the parts of their districts with a high seismic risk, or were confident of meeting the deadline of 1 January 2020. The Ministry of Business, Innovation and Employment (MBIE) is supporting the two remaining territorial authorities to help them meet this timeframe.

*    A priority EPB is a building that could fall on well-used roads, key facilities or routes that are critical for emergency services.

A total of 62 territorial authorities were required to provide a progress update to MBIE for the 2019 report. During the reporting period:

  • 609 potential priority EPBs were identified in areas with a high seismic risk (12-month reporting period)
  • 693 potential priority EPBs were identified in medium-risk areas (24-month reporting period).

As at 1 July 2019, an estimated 700 potential priority EPBs remained to be identified in areas with a high seismic risk.

National system for managing EPBs

On 1 July 2017 a national system was introduced for managing EPBs. Under this system, territorial authorities report on their progress toward identifying potential EPBs according to the following timeframes:

  • annually for 5 years in areas with a high seismic risk
  • two-yearly for 10 years in areas with a medium seismic risk
  • three-yearly for 15 years in areas with a low seismic risk.

Once a territorial authority identifies a building as a potential EPB, the building owner is given 12 months to arrange an engineering assessment unless an extension is granted. This assessment is then considered by the territorial authority alongside other relevant information before determining whether the building (or any part of it) is an EPB.

If a building is deemed to be earthquake prone, the owner is required to carry out seismic strengthening work, with the timeframe for this work set according to seismic risk area and the risk profile (priority) of the building.

A total of 348 buildings in high and medium seismic-risk areas were remediated (strengthened or demolished) during the reporting period.  

Further information

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Crowning the 2019 Apprentice of the Year

The Registered Master Builders CARTERS Apprentice of the Year national competition took place at the ASB Showgrounds in Auckland on 8 November.

Building Performance was proud to sponsor this event which supports apprentice builders across New Zealand.

Richard Merrifield, board member for the Licensed Building Practitioners (LBP) scheme, represented the building regulatory system on the panel of judges. Nine apprentices who were finalists in their regions participated, starting with a full day of interviews, followed by a practical build competition on day two. The apprentices had six hours to build and complete a playground pirate ship, all of which were donated to low-decile kindergartens around Auckland.

“I was very impressed with the high level of skills, especially at such early stages of their careers, and it was great to be part of something so positive. The apprentices were under a lot of pressure to complete the tasks and considering they’ve been in the industry a short time, they did really well”, said Richard.

The mood was festive with kids dressed up as pirates, and employers, family and friends all supporting their favourite apprentice with plenty of yelling and cheering.

Building Performance would like to congratulate all apprentices who participated – it was a showcase of the great talent in the building sector. Special congratulations to Morgan Willis, aged 23 from Hamilton, who took out first place. Morgan is currently employed by Stewart Hanna Ltd, after completing his training with BCITO.

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LBP knowledge link

Keeping your records straight

It's important to provide your Record of Work on completion of Restricted Building Work.

Article is relevant to LBP licence classes: All

They must be filled in on time, every time, to avoid complaints being made against you and potential disciplinary action. The Building Practitioners Board received a disappointingly high number of complaints this year about ROWs.

Don’t withhold Records of Work

Some Licensed Building Practitioners (LBPs) hold back the ROW in a dispute or because the client is behind in their payment. This is done under the belief that they can use the ROW as leverage. This is bad practice, as the disgruntled client can complain to the Board that the LBP did not complete the ROW. The Board will then have to discipline the LBP for failing to provide their ROW, regardless of any commercial dispute, as this is not a valid reason to withhold a ROW according to the Building Act. The Board has no jurisdiction over contractual disputes – it only addresses the conduct of LBPs. Therefore the LBP can be fined, even if the client hasn’t paid for the work.

Knowing when work is over

Usually it is easy to know when to complete the ROW. The job is finished, so you complete the ROW before moving on. However, sometimes a job ends unexpectedly. Perhaps there is a dispute between contractors, or the client stops paying the bills. If the job isn’t finished, but you won’t be returning to finish it, you should submit a ROW. On it you can detail what work you did complete, even though the overall job was unfinished. Sometimes it is uncertain if you will return or not. When in doubt, you can still submit a ROW on what you have done thus far. In the unlikely event you do return, you can add to your records.

Submit your own ROW, don’t pass to others

There is still the myth that if you’re a labour-only contractor to another LBP, the head contractor will do the ROW. This is not the case. Each LBP who does RBW must do a ROW.

Another mistake is to provide the ROW to the head contractor who does not pass it on to the homeowner or council. The Building Act puts the responsibility on the LBP to ensure the ROW is sent to the homeowner and council. You can still be disciplined even if you did provide the ROW to the head contractor.

Typical penalties

When a complaint against an LBP for failing to provide a ROW is upheld, the Board usually issues a fine and requires a payment towards the cost of the hearing. If this was the only offence committed by the LBP, the fine is typically $1,000–$3,000 and costs are around $500.

Quiz

1. When should you provide a ROW?

a. When the client has paid for the work.
b. When the job is complete.
c. When your part of the job is complete, or you do not anticipate returning to do more work.

2. The Building Act requires LBPs to send ROWs to:

a. The main contractor who engaged them.
b. The homeowner and the territorial authority.
c. The homeowner and/or the territorial authority, if they ask for one.

3. If the Board finds that you failed to provide a ROW, the likely disciplinary action will be:

a. Cancelling your licence.
b. A fine and payment of costs towards the enquiry.
c. Nothing, as long as you agree to fill in the ROW.

Check answers

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A view from the Board

The 2019 Annual Report of the Building Practitioners Board shows that the number of complaints against LBPs is low but there are trends we can learn from.

Article is relevant to LBP licence classes: All

The Licensed Building Practitioner (LBP) scheme is overseen by the Building Practitioners Board (the Board).

The Board’s functions are to hear appeals against licensing decisions of the Registrar of LBPs, investigate and hear complaints about LBPs, and approve rules for LBPs.

Every year we review our operations and report to the Minister for Building and Construction. Our 2019 Annual Report is now available on the Licensed Building Practitioners website.

The report highlights trends we are seeing within the LBP scheme, and I encourage you to have a read.

The commentary on complaints may seem a bit grim, but given that there are over 25,000 LBPs, the number of complaints is very low, with around one percent of LBPs coming to the attention of the Board. This suggests a lot of good work is being undertaken, and consumers rarely feel the need to report LBPs to the Board.

This year was a busy one with the Board receiving over 250 complaints and holding 143 hearings. Many of the complaints did not proceed to a hearing. This is often because the Board believed the threshold for discipline had not been met or there was not enough evidence.

As a result of the hearings, 119 complaints (or 84%) were upheld, which means the LBP was found to have committed an offence and held to account. Of those LBPs who were disciplined, nine had their licence cancelled, five were suspended, four were ordered to undertake training, and the majority were fined and required to pay costs. The fines ranged from approximately $5,000 to $7,000 at the higher end and $500 to $1,500 at the lower end.

Of the LBPs sanctioned, 10 also had their name published in Codewords to alert the industry of the severity of their offending. This represents a minority of cases (8%), as the Board only orders publication (over and above the inclusion in the register and in the decision documentation) when there is a perceived need for the public and/or profession to know the findings of the hearing.

One of the key themes from the complaints was LBPs starting work before the building consent had been issued. The Board understands there is often pressure to get started, but the law is clear. As an LBP, you need to be strong and refuse to start work before you have sighted the stamped copy of the building consent and any amendments. Note that building work includes demolition and preliminary work on the foundations.

Many LBPs still think that if they ignore a complaint issued by the Board, nothing will happen. In fact, the opposite is the case. No response from an LBP generally leaves the Board with no option but to proceed. LBPs who engage early with the process have a much better chance of providing credible evidence that may persuade the Board not to proceed to a hearing. If the complaint does proceed to a hearing, evidence provided much earlier in the process is seen as more genuine.

Some LBPs come to a hearing and try to excuse poor work by saying they had been ordered from the site and that the errors would have been picked up at the end of the job. While in some cases this may be correct, the Board is made up of practitioners with many years of experience who understand the job. They can tell the difference between unfinished work and snag-list items, and cases where the LBP clearly did not do the job correctly in the first place, or in sequence, and the cost to remediate would have been high.

The LBP scheme was founded on having skilled people doing the job correctly the first time. LBPs, especially those supervising unlicensed workers, need to take responsibility for the quality control of their work. It is not acceptable to do poor building work and hope mistakes will be picked up later, maybe by the council, or go undetected.

The complaints process is a valuable tool to ensure consumers have confidence in the system and LBPs are held to account in a fair and timely manner. If you do the job correctly the first time, fix issues, communicate well, and take pride in your LBP status, there will be very little chance you will come before the Board.

Chris Preston
Chairman, Building Practitioners Board.

Quiz

1. If you are notified that there is a complaint against you, you should:

a. Ignore it, hopefully it will blow over.
b. Engage with the investigation, so you can provide evidence that may exonerate you.
c. Get legal advice, if you feel you need to.
d. Both b. and c.

2. The board is NOT responsible for the following:

a. Hearing complaints about LBP conduct.
b. Hearing appeals against licensing decisions made by the Registrar.
c. Hearing contractual disputes.

3. Some complaints do not lead to hearings, this is because:

a. The LBP has not responded to the complaint.
b. The Board believes the threshold for discipline has not been met or there is not enough evidence.

Check answers

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Tax evader’s LBP licence cancelled

Rajesh Sami’s LBP Carpentry licence was cancelled after the Board learned he had been convicted and imprisoned for tax evasion.

Mr Sami (licence number BP 118692) was sentenced in the Papakura District Court in September 2017 on 17 charges of tax evasion, amounting to $550,000 of unpaid tax. He had not filed income tax or goods and services tax returns over a seven-year period.

Inland Revenue noted that when its investigation began in 2015, Mr Sami was uncooperative and disingenuous about his true earnings. When income tax returns were eventually filed, Mr Sami had grossly underreported his income by more than half. For the tax years 2011–2015, it was assessed that Mr Sami’s gross income was just under $1.8 million and the income tax evaded was $433,571. During the same period, he was assessed as having not paid $115,676 in GST, and had also aided his partner to evade $120,615 of income tax.

Mr Sami was sentenced to two years and 10 months’ imprisonment as a result of his offending.

Building Practitioners Board investigation

The Board became aware of Mr Sami’s offending when a complaint was made that he had failed to provide a Record of Work (ROW) to a client. Mr Sami provided a written response to the complaint, noting that he was in prison and not aware that the Complainant was seeking a ROW but had no intention to withhold it.

The Building Act states there may be grounds for discipline by the Board if an LBP is convicted of an offence punishable by six months or more of imprisonment, and the offence reflects poorly on their fitness to work as an LBP. The Board requested an investigation into why Mr Sami was imprisoned, so it could decide if the offending met the threshold for discipline under the Building Act.

Board decision

As the tax evasion conviction carried a sentence of more than six months in prison, the Board had to decide if Mr Sami’s offending affected his ability to work as an LBP. The Board took into account the nature and seriousness of the charges, acceptance of responsibility, previous history and the effect on public confidence.

Carrying out or supervising building work often involves handling client funds or entering into credit arrangements. Tax evasion is a dishonesty offence, which calls into question Mr Sami’s trustworthiness as an LBP. Mr Sami did not cooperate with the Inland Revenue investigation and attempted to mislead them as to the true nature of his income. His serious offending could have an effect on public confidence in the LBP licensing regime.

The Board found there were grounds for discipline and Mr Sami’s licence was cancelled. He cannot reapply for a licence for three years. In addition, the Board believes it is important that the building industry and wider public is aware of this offending, so it ordered that this decision be made public.

What we can learn from this decision

Convictions with a prison sentence of over six months can be grounds for discipline if the offence reflects negatively on the person’s fitness to carry out or supervise building work or inspection work. In this case, the dishonest behaviour that led to Mr Sami’s conviction indicates that Mr Sami is not fit to work as an LBP. Additionally, the seriousness of his offending risks damaging public confidence in the LBP scheme.

This decision and other past decisions can be read in full on the LBP website.

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Recent determinations

Can councils refuse a code compliance certificate without inspecting the building?

Determination 2019/032 considers the decision to refuse a code compliance certificate without doing a building inspection first.

Background

On 28 October 1997 a building consent authority (BCA) issued a building consent for a commercial building. The steel portal frame building is clad with direct-fixed metal sheet cladding and rusticated cedar weatherboards. The building work was carried out between November 1997 and March 1998. A code compliance certificate was not sought when the building was completed. In April 2019, the BCA received an application for a code compliance certificate for the 21-year-old building.

Due to the age of the building, the BCA refused the code compliance certificate. The BCA did not inspect the building, but told the applicant it did not have enough evidence to be satisfied with the weathertightness and durability of the building. The BCA suggested the applicant engage a building surveyor to inspect the building – that report could then be used as evidence of compliance with the weathertightness and durability requirements of the Building Code.

Discussion

Section 95A of the Building Act states that if a BCA refuses to issue a code compliance certificate it must give the applicant written notice of the refusal and reasons for the refusal. Section 95A requires the BCA to identify the aspects of the building that do not comply with the Building Code or Building Act.

However, the BCA did not inspect the building work in order to see how it had performed over the past 21 years. The determination noted an inspection would have allowed the BCA to identify any areas of concern or non-compliance. Instead, its refusal to issue the code compliance certificate was based only on the age of the building and general concerns regarding weathertightness and durability.

A BCA is required to make a current decision about the compliance of the building work to satisfy section 95A. The determination noted the BCA could rely on its own inspection records and the performance of the building based on a visual assessment of the building. This assessment could also identify whether more information was needed to determine compliance.

The decision

The BCA incorrectly refused to issue a code compliance certificate and its decision was reversed. The BCA was required to make a new decision taking into account the findings of the determination.

Determination 2019/032 in full.

You can read previous determinations in the determinations register.

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Previous issues

About Codewords: Our Codewords newsletter is published six times a year. It will keep you up to date on the latest regulatory and related information for the building and construction industry.

Codewords issues are available for two years after their publish date. If the issue you are looking for is older, please contact us.

This information is published by the Ministry of Business, Innovation and Employment’s Chief Executive. It is a general guide only and, if used, does not relieve any person of the obligation to consider any matter to which the information relates according to the circumstances of the particular case. Expert advice may be required in specific circumstances. Where this information relates to assisting people: