7 minute read
The new Code of Ethics for licensed builders
As a Licensed Building Practitioner (LBP), you enjoy a privilege that isn’t available to anyone else – the exclusive right to do the more complex residential building work. No-one else is allowed to. But that privilege comes at a price – you have to prove your credentials, you have to keep upskilling, you have to closely supervise your staff, and you have to answer to the Building Practitioners Board (the “BPB”) if anyone files a complaint about you.
However, there’s no point in feeling singled out or hard done by. Every occupation that has been granted a monopoly over their type of work – including lawyers, doctors, dentists, engineers, architects, electricians, plumbers, drainlayers and gasfitters – are all subject to much the same controls. But the reason I feel sympathy for the licensed builder is that the work that they do is often the biggest investment their clients are going to make in their lives. Which means it’s going to drag on a long time, cost a lot of money, and put the owners under a lot of stress. Consequently, there’s a much greater risk of the relationship falling apart, and therefore a much greater risk of an eventual complaint, than, for example, when a lawyer prepares a will, or a dentist fills a tooth.
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Ever since licensing got underway in 2012 the BPB has been investigating complaints about LBPs and imposing penalties in appropriate cases. But homeowners can’t get the BPB to investigate any old grievance they may have. The grounds under which the BPB can discipline a LBP are strictly defined under section 317 of the Building Act. They are limited to such things as being convicted of a serious offence, being negligent or incompetent, working outside the LBP’s licence, not complying with a building consent, failing to submit a record of work promptly, obtaining a licence under false pretences, misrepresenting or working outside of his or her competence, and doing something that brings the LBP regime into disrepute. Ever since 2012 the BPB has also had power to discipline a LBP for a breach of the LBP Code of Ethics. Only there hasn’t been a LBP Code of Ethics, until 25 October this year. Now there is one, and it significantly broadens the grounds on which a LBP can be disciplined. Bear in mind that you are only bound by the Code of Ethics while you hold a current licence that is not suspended. But if you breached the Code while you were fully licensed, the BPB can still discipline you whether or not you are still a LBP.
To avoid straying into an unexpected trap, it pays to know what the Code of Ethics requires of a LBP. Because it goes a lot further than just being a nice person, acting with integrity, upholding high standards, being honest and law-abiding, behaving fairly and reasonably, and similar kinds of things. There are 19 different requirements, and you won’t satisfy them all just by applying common sense. Some of them will take you by surprise.
Like all codes of ethics, the LBP Code only requires a standard of behaviour of one party to the project. There is no code of ethics for homeowners, no professional body to discipline them, no repercussions if a complaint turns out to be vexatious or unfounded, and no concession or allowance given to the poor LBP if he or she has the misfortune to come across a “client from hell”. You can’t help thinking that these codes get written by well-intended policy graduates from university who haven’t had much in the way of life experience yet, and haven’t ever done a building project, let alone run a business. Nevertheless, a lot of the requirements of the LBP Code of Ethics are uncontroversial. Let’s start with those first.
You have to take responsibility for health and safety. You have to know what restricted building work you are and aren’t allowed to do. You need to ensure your clients have enough information to enable them to make fully informed decisions about the building project. You must own up to any defective building work and you must advise your clients of any delays as soon as they become apparent. You must do your work to an “acceptable standard” whatever that means. You have got to act professionally and treat your clients and colleagues with respect. If a dispute arises you must act in a professional and respectful manner and you must attempt to resolve the dispute in good faith and give everyone a fair hearing. You have to maintain adequate records of the project. You can’t disclose your client’s confidential information. And, perhaps in recognition of the more enlightened age we live in, you must avoid harming the environment, and you must respect different cultures and values.
Then there are the more demanding obligations. With health and safety, you can’t just be a passive observer of unsafe behaviour or work practices. You have to take some positive action by raising it with the person responsible, and if that doesn’t work, reporting it to a higher authority. And that isn’t the only law you become an enforcer of. As a supervisor of restricted building work, you become a kind of policeman to ensure your subordinates comply with a whole range of building legislation – Acts of Parliament that even the most versatile lawyer would struggle to have a full understanding of. Although the Code suggests that all you have to do is raise the issue, and report it if it continues, the Code is also clear that you must “ensure” that these various laws are complied with.
Next, it is your responsibility to become your client’s risk manager. Notwithstanding the fact that the client is an adult who owns a home, and the plans and specifications have been designed by university-educated architects and engineers and approved by a Building Consent Authority, it is your job to inform your client of all design and construction risks and how to manage them. If a new risk arises during construction, you actually have to inform your client “in writing”. You are required to follow your client’s instructions at all times, which is fair enough, unless it would be dumb or unlawful to do so for a variety of reasons. But if your client remains obstinate, then you are required to betray your client by dobbing them in to some appropriate authority. When it comes to conflicts of interest with your client, you don’t have to avoid them at all costs, you just have to declare them and manage them. Both of those concepts are fairly alien to a lawyer, who has to observe much stricter standards of client loyalty.
Finally, there are some requirements around the pricing of jobs that perhaps best illustrate the innocence of the authors of the Code of Ethics. For a start you can’t pay bribes – except small ones to foreign public officials! And understandably you can’t quote an unrealistically low price with the intention of winning the job and then overcharging to make up the difference later. Next, when you are asked to quote a price, you can’t assess or estimate it “unfairly” (not carelessly or recklessly), which is fair enough. But the crunch comes when you “become aware that a contract for building work may involve additional costs”. Since when does a building project not involve additional costs – through variations, provisional sums, cost escalations, COVID-19 restrictions, shortages of materials or labour, or delays caused by the client? The Code of Ethics requires the LBP to advise the client of every additional cost, and not incur that cost unless the client agrees. Does that override what the building contract says? And what do you do in a cost-reimbursement project – notify the client and request their consent every second?
Fortunately, this Code of Ethics is going to be enforced by a Board comprised of pragmatic people who are experienced in the construction industry. Thank goodness for that.
Geoff Hardy is a partner in the Auckland law firm Martelli McKegg Lawyers and is a construction law specialist. Geoff also operates the Business Related Legal helpline for NZCB members, contact Geoff on 09 379 0700 or geoff@martellimckegg.co.nz for 20 minutes of free advice.
