June 15, 2017

MCW In Focus | Construction & Infrastructure

How to invalidate your payment claim – engage licensed subcontractors when you don’t have a building licence!

It’s true!

Licensed contractors who engage licensed subcontractors can still breach the licencing requirements of the Queensland Building and Construction Commission Act 1991 (QBCC Act).

A breach can be devastating. It can mean even a licensed contractor:

  1. can only make a claim for an amount paid by the contractor in supplying materials and labour for carrying out the works (i.e. the contractor cannot make a profit or benefit from the works or claim costs not reasonably incurred); and
  2. cannot make payment claims under the Building and Construction Industry Payments Act 2004 (Qld).

An example of this was in our firm’s success in Wetlock Industries Pty Ltd trading as Wetlock Waterproofing (ABN 45 151 807 359) v Body Corporate for Citilink (Unreported, Magistrates Court of Southport, Magistrate Callaghan, 25 May 2017).

Wetlock Industries Pty Ltd (“Wetlock”) has a waterproofing licence.  It contracted to carry out external renovations for the Body Corporate.  It included repairing and repainting damaged walls, converting planter gardens into car parks, and constructing a new tiled sitting area.

Some of these works are clearly not covered by a waterproofing licence.  So Wetlock hired a renderer, a landscaper, a tiler, and a roofer, for those works.

However, Wetlock was still held in breach of the QBCC Act.

Wetlock’s problem was that to “carry out” “building work” includes “building work services” as those concepts are defined in the QBCC Act. “Building work services” includes coordinating and supervising licensed subcontractors.  Wetlock was held to have engaged in “building work services” when it:

  • hired the subcontractors;
  • told the subcontractors when to be on site;
  • held site meetings to coordinate the works; and
  • checked the progress of the subcontractors’ works.

We lock therefore needed an open building licence.  It did not have one.  Wetlock was in breach of the QBCC Act.  Its payment claim was therefore invalid.

But what about the exception in section 8 of schedule 1A of the QBCC Act? – Doesn’t it say I can engage licensed contractors to do work outside the scope of my licence?!

In this case, the Court said no.  The Magistrate said “…there would be no need for a builder licence as any person could contract any other licensed contractor to do those parts of the building work for which they are licensed.[1]

Put simply, the exemption does not allow a tiler to contract to build a high rise office tower by hiring licensed subcontractors.

So what does the exemption cover?

In our view the exemption is aimed at protecting developers.  Land owners often engage developers to construct a development for them.  While the developer does not hold a building licence, it usually engages a licensed builder for the actual construction and coordination of subcontractors.

In those circumstances the exemption would apply because it covers the engagement of “an appropriately licensed contractor”.

The QBCC’s website contains some handy flowcharts which summarise the licencing requirements.

 


[1] At [43].