Comment: NZ's licensing regime leads to legal uncertainty

FILE

The recent article on the need for a written contract coupled with the industry licensing regime (Business Extra, July 17) may give the impression of solving problems that have beset the construction industry for the last 20 years.

However, in some ways they may create as many problems as they provide solutions. There seems to be a lack of knowledge on what the legal effect of a licence will be and who the contract will involve.

The construction-industry licensing regime is defined as a "Licence Building Practitioner" (LBP) for which there are a number of classes in a main section of the Building Act.

Therefore in any dispute the LBP could be held responsible for anything covered by the Building Act and regulations, one of which is the New Zealand Building Code.

The LBP cannot be compared with the registration/licence of an electrician, plumber or drainlayer as they are registered/licensed under their respective regulations and that is what they are legally responsible for, not the whole building as a LBP could be.

There are no building-design regulations, no bricklaying regulation, carpentry regulations, no concrete-floor regulations or roofing regulations etc for the respective trades to be registered/licensed under. Therefore, the LBPs involved in one job may find themselves involved in a dispute involving something unrelated to their area of training.

Who will the building contract be between - the consumer and who? If it is with a "home building company" supplying everything, there is no requirement for the company owner or manager to have any knowledge of the Building Act or Building Code.

In fact for their protection it will pay them to have as little as possible, then in the event of any problems they can say "here is a list of the LBPs go and see them". I know company owners, directors and managers can be taken to court but history has shown it costs huge amounts of money, often as much as fixing the problem.

If a landowner decides to project manage the building, how many contracts will be involved? If there are written contracts will the landowner have liability under over laws such as health and safety, Resource Management Act etc?

If there is a dispute with one of the LBPs, will it spill over to the others, or prevent others being paid because the code compliance certificate is not issued?

In the above situations, if the company folds or the landowner sells after the dwelling is completed, the LBPs and the LBP's workers on the job will be in the front line if there is a problem.

In 2012 a definition of "builder" was included in the Building Act and it is anyone who undertakes restricted work, and therefore an owner-builder is someone who applies for a building consent as an owner-builder and carries out the restricted work. Will local authorities inspect the restricted work carried out by an owner-builder to a lower standard than of an LBP?

Over the last 20 years the problems in the building industry have been decided on contractual legal points more than on building issues.

Even with a written contract, it is still likely that problems will still be decided on legal points.

Other counties have licensing regimes for their construction industries and what is common among those is that it is always the main contractor who carries the licence.

New Zealand is the odd one out. It has an untried licensing regime and the full effect is unlikely to be fully understood until there is a dispute.

What is clear is that LBPs should start their own association and collectively get the legal advice, representation and collective insurance.

After all, nothing can start or finish without their numbers or returns.

Ray Lichtwark from Rotorua has been involved in the building industry for more than 40 years.