Posted: 29 January 2019
Ronald Carmichael (C2-01901)
Mr Carmichael of Christchurch, who held a Carpentry licence, was found to have:
- failed to provide a record of work as required by the Building Act;
- acted in a manner that brings, or is likely to bring, the LBP scheme into disrepute.
Mr Carmichael has previously been disciplined by the Board for failing to demonstrate reasonably expected care in pricing a building project. That decision (C2-01688) can be found in Codewords 84.
In this matter, Mr Carmichael was engaged to build a house for a fixed price. He submitted his price to the homeowner prior to the building consent being issued, and it was accepted.
After the homeowner paid close to the full fixed price, the build was only 60–70 per cent complete. Additional invoicing was questioned by the homeowner, as it exceeded the agreed fixed price, and Mr Carmichael failed to provide a basis for seeking this money. From there the relationship deteriorated.
Mr Carmichael left New Zealand (he claimed permanently) without completing the contracted building work. The complainants told the Board that they will have to spend an additional $230,000 over what they have already paid to Mr Carmichael to complete the build.
The Board doubted that the house could be constructed for the fixed cost sum that was agreed upon. Mr Carmichael failed to pay a number of suppliers, despite being paid by the homeowner for the work undertaken. The Board therefore determined that Mr Carmichael made a financial gain at the expense of the complainants. This, as with his previously publicised matter, brings the LBP regime into disrepute.
In addition, Mr Carmichael failed in his obligation to provide a record of work after he ceased work on the project.
The Board cancelled Mr Carmichael’s licence for a period of five years, ordered he pay costs of $3000 and required this decision to be published.
What we can learn from this decision
Pricing, quoting and tendering for building work is a critical component of operating in the industry – getting it wrong has many significant consequences. The Board has routinely held that LBPs have an obligation to act reasonably and with expected care when engaging with consumers or others. The Board does not get involved in commercial disputes between the parties, but does take an interest in how the LBP went about determining a price for the job and the systems used to both monitor the cost of the job and keep the consumer informed of any changes.
Mr Carmichael has demonstrated a pattern of behaviour over at least two serious complaints where he failed to meet the behavioural standards expected of an LBP. He has caused serious financial harm to consumers and, as a result, the Board has stripped him of his licence and repeatedly published his actions.
These situations can be avoided by pricing work in good faith, with accuracy and care. It is exceptionally poor behaviour to submit a price simply to win a job when the project cannot be constructed for that amount of money.
Read this and other past decisions in full on the LBP website.