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What building laws (if any) apply to boatbuilders?

Boat building is a specialised form of carpentry and joinery, but you don’t think of it as building or construction in the traditional sense. Nevertheless, there are just as many risks associated with boat building as there are with designing and constructing buildings that might leak, or collapse on you, or catch fire.

Logic would suggest that boat building ought to be regulated just as stringently as the construction of homes, apartment buildings, office towers, bridges, tunnels and dams. But is that true? Are boat builders as strictly policed as builders are, or do they in fact get a free rein?

The starting point is to look at the various laws governing builders. Those are found in the common law (the law made up by Judges rather than Parliament), and in the statutes passed by Parliament. Under the common law, builders can be sued for breach of contract (for failing to honour the promises they made to their client) and they can be sued for negligence (for failing to take reasonable care to avoid causing loss to other people). Then there are the statutes. The two main statutes that regulate the building trade are the Building Act 2004 and the Construction Contracts Act 2002. And in the residential context, builders are also governed by the Consumer Guarantees Act 1993.

The Building Act

The Building Act is the one that makes sure our buildings are safe and functional. It does that by requiring all building work to comply with the Building Code, by requiring all but the most basic building work to have a building consent at the start, and by requiring a code compliance certificate to be obtained at the end. Because building work is so inherently dangerous, we can’t just rely on the threat of being sued to ensure the industry meets acceptable standards. There needs to be an independent body to oversee their activities, and in New Zealand that job falls upon the local Councils.

Since the leaky building era, the Building Act has required builders who do important residential work to be licensed, it has established the Building Practitioners Board (the “BPB”) to discipline them, and it has given to homeowners a lot of special rights and remedies against all residential builders (not just licensed ones). In a residential building project costing $30,000 or more, there are four mandatory documents that builders have to give to their customers, including a written building contract. And those customers can enforce a lot of implied warranties against them, as well as insist that any defects emerging within 12 months are rectified immediately.

Are boatbuilders covered?

Do any of those rules apply to boat builders? Do they have to comply with the building code, ensure that building consents are obtained, and become licensed? Are they required to hand over the four mandatory documents, and are they subject to the powerful consumer rights and remedies? Perhaps surprisingly, the answer to all those questions is “no”. And that is because the Act specifically says that a “building” does not include any description of vessel, boat, ferry, or craft used in navigation, whether or not it has a means of propulsion, and regardless of what that means of propulsion is.

There are some grey areas of course. There have been a few reported cases where people have built what is effectively a house, but in the style of a boat, and have argued that they should be exempt from the Building Act requirements. Whether they succeed depends upon whether the boat is (or will be once completed) capable of being launched without substantial modification.

However in general, the building code, the building consent regime, the licensing requirements, and the consumer rights and remedies don’t apply to boat building. You don’t have to meet any prescribed standards, you are not scrutinised by an independent regulator, you don’t have to have any special qualifications, and your customers don’t have any special rights and remedies against you.

The Construction Contracts Act

What about the other statute, the Construction Contracts Act 2002 (the “CCA”)? This is the one that is designed to free up cash flow within the industry. It does that by prohibiting certain unfair clauses in building contracts, by establishing a payment claim/payment schedule system that forces parties at the top of the pecking order to either pay up or explain themselves, and by creating a quick and dirty method for resolving building disputes promptly and economically. Recently, rules have been introduced requiring payment retentions to be held in trust or otherwise secured for the benefit of the intended recipients.

Does the CCA apply to boat builders? That depends on whether you are doing “construction work” as defined by the CCA. “Construction work” is much more comprehensively defined in the CCA than “building work” is under the Building Act, but the crucial point is that the structure being built must form, or be intended to form, part of land. And that would appear to exclude boat building, even though there is no explicit exclusion for boats as there is in the Building Act.

That means you don’t have to ensure your contracts are CCA-compliant, you are not subject to the payment claim/payment schedule system, you can’t use CCA adjudication to resolve disputes, and your payment retentions don’t have to be held in trust.

The Consumer Guarantees Act

So what does that leave? Only the law of contract, the law of negligence, and the Consumer Guarantees Act 1993 (the “CGA”). What the CGA does is insert some basic rights and remedies into every contract for the supply of consumer goods or services, and those override anything that the written contract might say to the contrary. The CGA
only applies if you are supplying goods or services to “consumers”, and consumers are individuals, companies, councils, clubs or other legal entities who acquire goods or services “of a kind that are ordinarily acquired for personal, domestic, or household use or consumption”. So unless the boat you are building is a commercial fishing vessel, a tugboat, a destroyer or an oil tanker, then the CGA is the one statute that you can be held accountable under.

by Geoff Hardy
Auckland Commercial Lawyer

Geoff Hardy has 45 years’ experience as a commercial lawyer and is a partner in the Auckland firm Martelli McKegg. He guarantees personal attention to new clients at competitive rates His phone number is (09) 379 0700, fax (09) 309 4112, and e-mail geoff@martellimckegg.co.nz This article is not intended to be relied upon as legal advice.