Tim Bates and Fiona Dobroshi of Auckland legal firm TM Bates & Co look at the case of Waikato Regional Council v The District Court at Hamilton. The High Court, in particular Justice Wylie, had to consider an application for judicial review of the District Court’s decision — one that focuses on the meaning of sections 163 and 164 of the Building Act 2004.
Facts
• NZ Pork Ltd (“the previous owner”) arranged to construct two effluent ponds on their pig farm in February 2015.
• The effluent ponds were caught under the meaning of “dams” and “larger dams” under section 7 of the Building Act 2004 (“The Act”).
As the smaller pond fell outside the definition of “larger dams”, it was only required to comply with the Building Code.
• Two inspections were carried out on the farm in March 2016 and on August 3, 2016. From those inspections, it was indicated that the stability of the embankment gave rise to the risk of failure of the smaller pond. It was also noted the pond did not comply with the Building Code.
• Subsequently, on September 9, 2016, the Waikato Regional Council (“the WRC”) issued a notice to fix (“NTF”) on the previous owner, which needed to be complied with by November 1, 2016.
• The previous owner sold the farm to the second respondent, Poseidon Holdings Ltd (“PHL”) on September 15, 2016. This prompted the WRC to issue an NTF on PHL to resolve by the same date.
• The WRC served an infringement notice on PHL on February 8, 2017, which led to a series of exchanges between the parties. Ultimately, PHL sought a determination from the chief executive of the Ministry of Business, Innovation and Employment (“MBIE”).
• Three determinations were issued by the MBIE, with the final determination concluding that WRC was incorrect to issue an NTF to PHL. Subsequently, the District Court dismissed WRC’s appeal.
Core provisions and test
Central to the analysis are the provisions of the Act which relate to an NTF. Of most relevance is section 164(1)(a) which states:
1 This section applies if a responsible authority considers on reasonable grounds that —
(a) a specified person is contravening or failing to comply with this Act or the regulations (for example, the requirement to obtain a building consent), or
In section 163(a) of the Act, it defines a specified person to include “the owner of a building”.
The MBIE considered that two tests needed to be met before an authority could issue an NTF. The first was that the authority had to ensure that the person it was issuing an NTF to is a “specified person”.
Secondly, there must be reasonable grounds “to consider that the specified person is contravening or failing to comply with the Act or regulations”.
Analysis
Justice Wylie accepted the District Court’s conclusion that PHL came under the meaning “specified person”. The main issue at stake was the second test as to whether PHL was contravening or failing to comply with the Act or regulations.
The alleged contravention or failure was in respect of section 17 of the Act. This states:
“All building work must comply with the building code to the extent required by this Act, whether or not a building consent is required in respect of that building work”.
Justice Wylie stated this provision did not impose obligations on anyone, and that PHL cannot be said to be contravening or failing to comply merely because it acquired a non-compliant building.
The Judge further assessed section 14B which sets out the responsibilities of owners, and found that neither of those responsibilities were relevant to the notice to fix issued to PHL.
The Judge considered the force in WRC’s arguments, namely that authorities would be hindered in their ability to ensure compliance with the Act if they could not impose an NTF on a current owner, and that such a limitation would create a “device for those wishing to avoid compliance”.
However, the Judge ultimately decided that the Act was not “obscure” or “poorly drafted” such that it could include further obligations not present in the Act.
The Judge supported its finding by identifying various provisions in the Act that deal with non-compliance of the Building Code and obligations of owners.
On that basis, Justice Wylie was not persuaded that there was a gap in the Act, or that it would be appropriate to impose an obligation on current owners to fix the non-complying works of previous owners.
Consequently, Justice Wylie believed the District Court Judge had not erred in its decision, and declined the application for review.
Post note
This decision establishes that the sale of land will extinguish existing Notice to Fix obligations. Its precedent value will have significant ramifications, and it will be interesting to see whether the WRC will seek leave to appeal.
Note: This article is not intended to be legal advice (nor a substitute for legal advice). No responsibility or liability is accepted by TM Bates & Co or Building Today to anyone who relies on the information in this article.
