Deputy Solicitor-General Brendan Horsley said Christchurch Crown Solicitor Mark Zarifeh considered that there was sufficient evidence to prosecute the two men for negligent manslaughter, but Horsley decided to take a more "conservative" approach.
"A key difficulty for the prosecution would be in proving that the building would not have collapsed in the absence of the identified design errors," he said.
He said a prosecution was also ruled out by a clause in the Crimes Act providing that a prosecution for negligent manslaughter must be started within a year and a day after the negligent conduct ceased.
"The year and a day rule is an historical anomaly and law reform is currently being considered," he said.
Justice Minister Andrew Little said a law change "may well be justified".
"Right now my thoughts are with the families," he said.
"A bit like the Pike River families, they will be extremely disappointed that, yet again, a major tragedy, another disaster that seems to have been avoidable - everybody involved in this has walked away scot-free. And that's not right."
Mary Anne Jackson, a receptionist in the building who ran outside when the quake hit, said she was "gutted" by the decision not to charge Reay.
"I think the families won't let it lie," she said. "He might think he's got away with it. He won't be."
Tim Elms, whose daughter Teresa McLean died in the building, said he would like to have seen a prosecution go ahead even if it failed.
"You can't fault the police, they have done a great job, a very thorough investigation. It's the lawyers that have made the call in the end," he said.
He said he still hoped that the Ministry of Business, Innovation and Employment might succeed in its 2015 application for a judicial review of the engineers' professional body Ipenz's decision in 2014 that it could not take any action against Reay because he had resigned from the institution.
Ipenz, now known as Engineering NZ, said todaythat a date for a substantive hearing of the case has still not been fixed.
"In the meantime, we have changed our rules so that a member can't resign to avoid a complaints process," it said.
Lawyer Nigel Hampton QC, who acted for some of the victims' families, said it was hard to see anything more that could be done.
"Theoretically an individual or group of individuals could try to mount a private prosecution," he said.
"Realistically, that is not a practical possibility. These are a disparate group of mostly ordinary and not very well-off people spread all over the world. How are they going to do that, and get the resources to do that?"
Hampton said any attempt to get a judicial review of the police decision not to prosecute would be "a big mountain to climb".
"I haven't looked at the question of civil remedies," he said.
"Even there, I think there are real problems. I suspect that, in practical terms, this is the end of the line."
