Knowledge

10 October 2015

Third Phase Building and Construction Reform

Introduction

As of 1 July 2015, the third phase of the Queensland Building and Construction Commission and Other Legislation Amendment Bill 2014 came into force, resulting in a number of significant changes for the building industry.

The changes include an overhaul of the licensing provisions in the Act.  In particular, the Queensland Building and Construction Commission’s (“QBCC“) ability to cancel a license as a result of an insolvency or bankruptcy event.

At the same time, QBCC has adopted a new “Accountability for Subcontractors Defects Policy” (“Policy“) which has the capacity to shift responsibility for the rectification of defects.

Subcontractor accountability 

In the past, QBCC has issued rectification instructions to Head Contractors only.  As a result of these changes QBCC will hold Subcontractors liable for the rectification of defective work which they have carried out.

Whilst the Act clearly recognises the right of an owner or consumer to complain about defective work, the QBCC has indicated that it will also act on the complaints of Head Contractors, insofar as they relate to the defective work of a Subcontractor.

Sanctions (including licence suspension or cancellation) will apply to Subcontractors who do not comply with directions to rectify.

Licensing changes

The licensing changes include:

  1. the reduction of the statutory exclusion period from five to three years;
  2. the restriction of insolvency events to those involving a “construction company”; and
  3. repealing the “permitted individual” application process.

Prior to 1 July 2015, if a person holding a QBCC license was made bankrupt or was director, secretary or influential person of a company which was wound up, that person was excluded from holding a QBCC license for a period of five years.

This period has now been reduced to three years.

It is important to note that whilst the statutory exclusion period has been reduced, a person will still be excluded for life if they are involved in two separate bankruptcy or insolvency events.

One of the more significant changes is the inclusion of the definition of “construction company” in the relevant provisions.  Under the new provisions, a construction company means a company which directly or indirectly carries out building work or building work services.

This amendment ensures that a person will only be excluded from holding a QBCC license if they are a director, secretary or influential person of a construction company which is wound up.

This is an important change.  Prior to 1 July 2015 the Act did not distinguish between the types of companies which were affected by the licensing provisions.  This meant that a person could have been excluded from holding a QBCC license if they were a director, secretary or influential person of a company which was wound up even if the company had no connection or involvement with the building industry.

Conclusion

Given the nature of the changes and the significant effect they will have, it is important to seek legal advice about any decision made by the QBCC, or any external factors which may impact upon licensing issues.

For further information or advice, please contact litigation partner, Tim McGrath on (07) 4036 9700.

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