A troll around the publicly available High Court judgements on the Ministry of Justice website is an interesting read on a wet weekend - actually it explains why I could never be a lawyer. However, although they are to do with leaky buildings and weathertightness issues, the judgements have a number of common themes that certainly apply to us. The Nautilus case is worth a read - http://bankside.ongoing.co.nz/wp-content/uploads/2015/12/Judgement-of-Gilbert-J.pdf.
This was more than $25m of the Auckland Ratepayers money and I have no doubt the building had fire issues as well although they weren’t part of the claim. The council was ~15% liable, but had to pay for everyone as last man standing.
A recent change in NZ is the arrival of litigation funders and commission lawyers who collect a percentage of the win. James Hardies is facing a couple at present. While I have little sympathy for JH with leaky buildings, it means that a lot of cases that would not see the light of day will now go ahead as they promise a “no money down” solution. I have talked to a couple of lawyers in this area. While Councils are the target since they have the money and can’t disappear, so pay for everyone, they will also target engineers, specifically looking for PS4s or any construction involvement. It is any excuse to get the engineer into the claim. If they are not into the claim before the 10 years is up, then they are away free, so it is a “shoot first” approach of lodge the claim, and then look for proof or justification. The leaky building litigators are deliberately looking for fire issues at present for this reason. If the plaintiffs (building owners) don’t sue you, the defendants certainly will to reduce their liability, reduce the amount they have to pay out and muddy the waters for liability.
Bear in mind that you sign a PS4 personally as a CPEng, so the PS4 will follow you and any disciplinary action is against you personally. This brings up a recent (ish) move which should be of particular concern to engineers is the move to sue people personally as well as the company. I know of a few current or past SFPE engineers over the years where this has been the case, and it is especially prevalent in other areas such as facades (being driven out of leaky buildings). This is not saying they have any fault or did anything wrong, just that they were unlucky and shotgunned in. Many more have settled out of court I am sure.
The court judgements also reference producer statements. Without dragging out the particular judgments, it was clear that PS3s carry no weight and in fact the judgments came out that Councils should not rely on them – e.g. Nautilus case link above para 115.
It would not be appropriate for a territorial authority to accept any producer statement without question. The extent to which a particular producer statement should be relied on in considering whether code requirements had been met would depend on all relevant circumstances. These would include, for example, the skill, experience and reputation of the person providing the statement, the independence of the person in relation to the works, whether the person was a member of an independent professional body and subject to disciplinary sanction, the level of scrutiny undertaken and the basis for the opinion. The territorial authority would also need to consider any other information relevant to whether the works had been carried out to an appropriate standard and could be expected to meet code requirements. This would include the skill, experience and reputation of the party carrying out the works, the complexity of the works, the likely consequences of noncompliance and whether any concerns had arisen regarding the quality of the works.
Consider the PS3s we receive. Based on this, would you say they met these requirements? I would not. I had some beautiful PS3s for a hotel. Despite these PS3s that said everything was wonderful, it took $1-2m and 9 months to fix it to close to being correct for fire stopping.
Interestingly enough in the Nautilus case the Council wanted a PS4 from Walker Architects for the façade, who did not provide one, accepting a PS3 from Façade Technologies instead. It is discussed in para 133.
You can’t rely on the Licensed Building Practitioner regime, it is broken beyond repair with automatic name suppression and a big fine being $2k, and doesn’t apply to the sort of buildings we do. It is cheaper for the builder to do a poor job and pay the fine than do it properly.
Which brings us to insurance. Won’t PI insurance will cover your costs right (except the excess)? It doesn’t cover the 5 years of stress (as most of these cases run to that length of time), and marriage breakups, management time and other costs which are significant.
It also only applies to cases where the insurance is current. If the company has gone through or has changed to a different company even if the trading name is the same or similar and the old one hasn’t paid the insurance premium, you are on your own – refer to the personal liability above…
As ENZ doesn’t seem to be interested and MBIE found it also rather hard and complex, it then lies with us to do something about it. It is not easy and unless everyone moves in unison, it won’t work. It is why the NZIA has been successful, as every member follows their advice to the letter. Ultimately, it will need law changes such as proportionate liability.
What to do?
*Don’t do it.
- If you must, insist that others do their job. They refuse to sign off their work? Well then neither can you because if they don’t believe the work complies with the Building Code and Consent, you certainly can’t. If they believed it was all good, then I am sure they would have no issues signing it off.
- If you must do it, you have to do it well and know what you are looking at. If you use a sub consultant to look at it, they need insurance to match yours, qualifications etc so you have reasonable grounds, and even then you are still responsible for it all despite relying on their advice.
- Scope very clearly what is included and most importantly what is not. Make sure your PS4 refers to this scoping letter and other documents. Many builders just put in the PS4 page and I threatened one with a police complaint for fraud doing this. I now put the number of pages in the document set on my PS4 and refer in the PS4 to the scope letter, (which excludes everything in the building as I haven’t designed anything).
- Have a method of showing you have seen “enough” to draw a conclusion that you can defend, especially on a large job. Have a look at ISO2859-4 (https://www.iso.org/standard/36164.html) and the other ISO2859 series. They are hard going, but you need to look at more than you think to have a valid sample size.
- Some people issue a PS4 on a single walkthrough at the end - is this enough? It depends on the scope of engagement, expectations and duty of care, especially if it is for the BCA. Do you feel lucky?
Follow the builders and developers example of wash the company regularly to leave behind old liabilities behind with a new company.
- If you belong to the “pointy haired boss” school of management, get your juniors to do all the work and take the risk… It helps dilute directors liability as well - or at least it worked for Mainzeal since the directors didn’t have day to day control…