Is the MBIE determination procedure still fit for purpose?

Have I got your attention now, my Building Control Officer friends around the country? Sure, it’s a provocative title designed to catch your eyes before they stray to whatever lockdown hobby has taken your interest this week. But in all seriousness, I’ve been thinking a lot about whether the time has come to rethink the determination procedure. As customers become more demanding and often litigious, are determinations still the most effective way of resolving a regulatory dispute quickly and cost effectively?

The determinations team at MBIE do a fantastic job. However, in our experience working with councils all over New Zealand, MBIE’s 60 working day statutory timeframe (s 185 of the Building Act) isn’t treated with anywhere near the same level of urgency as the council’s 20 working days for building consents. In fact, it isn’t unheard of anymore to have determinations outstanding after months and even years. This begs the question as to whether the system itself is broken.

While it’s great to see the Building Act getting some much needed reform, new laws passed in June this year haven’t addressed some of the major issues that councils confront when either applying for, or responding to, determinations.

The intention of this article is to start the conversation and, who knows, maybe there could be change on the horizon. I’d be very interested to discuss this hot topic with MBIE and propose to reach out to the manager of determinations and invite her to join me as a guest on our podcast Rice Speir Radio – keep an eye out for that.

Why do we need determinations anyway?
Building projects often involve a number of people working together for the first time, in an environment that is vulnerable to nature, unforeseen events and potential delays (not to mention the crippling effect of forced lockdowns). On top of that, councils have the unenviable task of regulating the built environment and often have to give bad news about non-compliance, with costly consequences for the owner. For all these reasons, the building environment is a hotbed for disputes and the MBIE determination process is designed to achieve quick, cheap and effective resolutions.

Is the current procedure broken?
In my respectful opinion, the determination procedure just hasn’t kept up with the changing landscape of the building industry. It has nothing to do with the fantastic people at MBIE, councils or their customers. Whether we like it or not, house prices continue to rise at unprecedented rates, so do consent numbers and more and more pressure continues to be applied to the system. This type of environment creates an opportunity for tradespeople to cut corners and as products develop and new things come on the market, it is no surprise to me that the determination process has become a litigious setting.

I will put my neck out there and say, yes, the system isn’t working. However, that doesn’t mean it can’t work with just a few tweaks.

My suggested tweaks
The first change I’d make is to get rid of the draft determination phase. In my opinion drafts add little but do hold things up dramatically. You certainly don’t get the opportunity to comment on a draft Court case because it requires much more discipline to think about what your case is, hone it, put it forward in the best way you can and then submit to an experienced third party to make a decision. Yes there is a winner and a loser, but isn’t that true in life? There is of course the District Court appeal process if you aren’t happy with the outcome and I personally don’t think it would be a bad thing to have more cases go on appeal so that the precedent book becomes more thorough.

Some stricter case management would propel things forward also. For anyone experienced in Construction Contracts Act procedure, the determination pace probably feels glacial. In that procedure, things move at a rapid pace because urgency is needed to resolve a dispute while construction is ongoing. The same principle applies for many determinations these days. A firm but fair timetable (that is generic and readily available to everyone on the MBIE website) would allow each party to put their case, respond as necessary and then live with the Chief Executive’s judgment on the issue(s).

Do we really need persons with an interest? Section 176 of the Building Act makes clear who is a party in relation to a determination and broadening out the scope in many instances only slows things down. If the policy really is necessary, perhaps changing it slightly so it is only in exceptional circumstances that persons with an interest are invited to submit would streamline things significantly.

While hearings aren’t common, I’d suggest they are a relic and could be removed from the procedure. At worst, any credibility issues (for instance between two experts) could be balanced by way of a virtual hearing.

The $287.50 (including GST) fixed fee for applying for a determination is much too low. It makes it too easy to apply for a determination and add to a system that is already bulging at the seams. On that note, I believe any application that failed to meet the requirements in s 178 of the Building Act should be immediately declined in the same way that the Court’s registry rejects applications that fall short procedurally. If you’ve already paid your fee but your application doesn’t pass muster, tough luck.

Finally, and probably most important, I would introduce an initial triaging phase that involves statutory dispute resolution (perhaps even online). The ability to mediate building disputes (quick and dirty) would separate the wheat from the chaff and allow parties to be heard and, with the assistance of an experienced mediator, resolve matters in a cost effective and timely way. I note that MBIE has recently promoted mediation and ODR on its determinations website, which is great and signals that the system is under load, but there is little incentive for parties to engage a private mediator given the cost involved. A “one stop shop” for resolving building disputes would solve the problem.

This might be an article with my visions of determination utopia but are these changes so drastic? I believe they would go a long way towards cutting the backlog and freeing up the fantastic people in the determinations team to get to the bottom of some of the more difficult questions confronting our industry.

I know you BCOs don’t mind a good vent so let me know your thoughts!

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