Regulatory Matters

Licensing for 'Building Work'

The Queensland Building and Construction Commission Act 1991 (QBCC Act) applies to all 'building work' carried out in Queensland. Three key things need to be considered:

  • Is it 'building work'?
  • Does the correct entity hold the licence?
  • Is the licensed entity the contracting party noted on the contract?

If the QBCC receives a complaint about unlicensed contracting, you may need help to respond. Our director, Tracey Wood, has worked extensively with the QBCC on a wide range of matters under the QBCC Act and can assist you in preparing your response to a client and/or the QBCC.

If you believe that you have engaged an unlicensed building contractor, it is important that you take steps quickly to protect yourself and the building work being carried out.

Licensing for 'Labour Hire Services'

Labour hire licensing legislation is confusing.

The legislation was first introduced in Queensland to protect backpacker workers in the fruit picking industry, however, it applies to all types of work carried out in Queensland and that includes the building and construction industry. It is regulated by the Office of Industrial Relations who has powers that are separate to the powers held by the Queensland Building and Construction Commission in relation to 'building work' contractors.

The difficulty for the construction industry is that many of the typical arrangements that are in place fall within the ambit of the Labour Hire Licensing Act 2017. There are some exemptions in the Labour Hire Licensing Regulation 2018, however, how and when those exemptions apply is not necessarily easy to follow.

The most likely trades that will fall into trouble with this legislation are concretors, carpenters and perhaps roofers. The reason for this is that builders often engage separate groups to construct the formwork, lay the steel, pour the concrete, and finish the concrete. Builders similarly often engage carpenters to work in 'gangs' to do the work or to carry out rectification work on a site-by-site basis. They are often not responsible for defects and are typically under the direction and control of the builder's site foreperson. On that basis, it is likely that those arrangements would fall within this legislation.

It is also likely that some 'daywork'/variation type arrangements between builders and clients could fall within the scope of this legislation e.g. where a builder 'lends' a subcontractor to a client to clean up the site or to do other labour work for the client.

There are some things you can do to minimise the risk of this legislation applying to your subcontract arrangements and to variation head contract arrangements.

If you are concerned that your business is providing labour hire services, it is important that you take action quickly to either become licensed or change your structure to ensure that you are not captured by this legislation.

Directions to Rectify Defective Building Work

The Queensland Building and Construction Commission (QBCC) has the power to issue a Direction to Rectify Defective Building Work and/or Remediation of Consequential Damage on various entities e.g. builder, trade contractor, nominee etc. The power only applies to 'building work' under the Queensland Building and Construction Commission Act 1991 (QBCC Act) but does include all sectors of the industry.

A person can make a complaint to the QBCC about alleged defective or incomplete building work and/or consequential damage (generally within 12 months of when the person considers it is defective or incomplete or damage occurs) and that may lead to a Direction to Rectify or the QBCC could choose to investigate itself and give a Direction to Rectify. However, just because something is defective, does not automatically give the QBCC the power to give a Direction to Rectify. There are a number of matters that must be taken into consideration by the QBCC in making a decision to give a Direction to Rectify and these are set out in the QBCC Act including:

  • all circumstances that are reasonably relevant including the terms of the contract and warranties in the contract;
  • if it would be unfair to the person to give the Direction;
  • whether the complainant has complied with a process established by the QBCC to resolve the matter e.g. dispute resolution process; and
  • whether the Direction would be given within the maximum time permitted by the QBCC Act i.e. 6 years and 6 months after the building work was completed.

A person who receives a Direction to Rectify can challenge the QBCC's decision by lodging an Internal Review application by the QBCC and/or an external review application through the Queensland Civil and Administrative Tribunal. As strict timeframes apply to make either application, it is important to seek legal advice as early as possible.

If you are concerned that a contractor you have engaged has carried out defective or incomplete building work, it is important to act quickly to ensure that the defective work is not covered up by other work, and that rectification is completed quickly to avoid other consequential damage from occurring.  You may also wish to make a claim under the Home Warranty Insurance Policy and strict timeframes apply to those claims.

Monies Owed Complaint

The 'monies owed complaint' is essentially a complaint made to the Queensland Building and Construction Commission (QBCC) against a licensee that it has failed to meet the minimum financial requirements of its licence in relation to payments of its debts. However, a number of changes occurred to the monies owed complaint process through the inclusion of the Minimum Financial Requirements (MFRs) in the Queensland Building and Construction Commission (Minimum Financial Requirements) Regulation 2018 (MFR Regulation) which commenced on 1 January 2019 because the rules around debts changed significantly. Essentially, it is a requirement on all licensees to pay a debt that is owing to a contracted party, or a supplier of goods or services, on or before the day the debt becomes due and payable. However, a monies owed complaint cannot be lodged by a higher contracting party against a lower contracting party i.e. it is only available for a debt up the contractual chain.

The rules around when a debt becomes 'due and payable' have changed as well e.g. it is not due and payable if the amount of the debt is equal to or less than an amount owed by the creditor to the licensee, or if the debt is the subject of a dispute when it becomes due and payable.  There are a number of matters to be considered to determine if a debt is 'due and payable'.

It is important to ensure that you respond promptly and within the applicable timeframe to any queries from the QBCC regarding a Monies Owed Complaint to ensure that your licence is not suspended and/or cancelled.

Minimum Financial Requirements

It is a requirement of all licensees that they must always meet the Minimum Financial Requirements for their particular licence. The Minimum Financial Requirements changed on 1 January 2019 through the introduction of the Queensland Building and Construction Commission (Minimum Financial Requirements) Regulation 2018 (MFR Regulation). It is important, therefore, that all licensees review the MFR Regulation regularly and ensure that their business meets those requirements. It is also a requirement of the MFR Regulation that Financial Information be given to the Queensland Building and Construction Commission (QBCC) at regular times. Sometimes a licensee is also required to provide an MFR Report signed by a qualified accountant that covers a variety of matters e.g. if a licensee wishes to increase its licence class because its revenue will or is likely to exceed the maximum revenue approved for its licence for that reporting year. Again, strict timeframes apply to when an MFR Report is required to be given and/or when Financial Information is required to be given. If you do not meet those obligations, the QBCC has the power to suspend and/or cancel your licence.

It is also important that you ensure that you are only engaging a qualified accountant to prepare and/or sign your MFR Report for your business as the QBCC has the power to exclude accountants (see the QBCC Website for a list of excluded accountants).

Wood L&M Solutions works with a number of QBCC experienced accountants when matters arise regarding the MFR Regulation.  We can provide you with the details of an accountant who is experienced with the requirements of the MFR Regulation.

Qld Office of Fair Trading

Whilst it is not common for a complaint regarding building work to be lodged with the Queensland Office of Fair Trading, it is certainly not unheard of. A consumer can lodge a complaint regarding any matter relating to a product or service and that includes building work. It is important that all businesses, no matter how big or small, understand their obligations to consumers and ensure that their business and their business practices do not foul the consumer laws in place at both a state level and federal level.

If a complaint is lodged against you with the Office of Fair Trading, you will be notified and given an opportunity to respond to the complaint. It is important that you respond promptly and within the applicable timeframe and provide as much detail in your response as possible. Building and construction matters are often not straight forward and are distinctly different to a typical consumer transaction like purchasing appliances. It is, therefore, extremely important that your response clearly sets out the agreement you have in place with the consumer and what facts impact or affect the products and/or services that you provided to your client.

If you are concerned that a contractor you have engaged has breached the consumer laws in relation to work carried out for you, it is important to act quickly to ensure rectification is carried out before further damage or cover up of work occurs.

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