back to news

Further legislative changes for the Building and Construction industry in Queensland

NewsFlash 02 September 2014

Queensland Building and Construction Commission Act, Queensland Building and Construction Commission Amendment Bill and others

Further to our Building & Construction News Alert, ‘Legislative developments within the Building & Construction industry’, the following outlines additional proposed reforms expected to be passed into law by the end of the year. It is particularly crucial for those working in the Queensland Building & Construction industry to ‘watch this space’ as these changes come into effect.

So what are some of the most important changes you should be aware of?

Internal Reviews

In addition to the Queensland Civil and Administrative Tribunal (QCAT) review, an internal review system has been set up within the Queensland Building and Construction Commission (QBCC). These reviews will be conducted by an independent team within the QBCC and are expected to reduce the number of matters going before QCAT.

Domestic Building Contracts Act Repeal

While the Domestic Building Contracts Act (DBC Act) will be repealed, essentially the provisions of the DBC Act will now form part of the Queensland Building and Construction Commission Act (QBCC Act). Major changes which will occur once the Acts have been ‘merged’ include:

  • There will no longer be restriction on cost plus contracts or regulation of cost escalation clauses, prime cost items and provisional sums.
  • It is proposed there can be no claim for any particular stage of the contract unless the owner receives all certificates of inspection relevant to that stage.
  • There will be less complicated provisions with respect to Level 1 Contracts, which are not fully defined as yet, but are expected to have a definition based on a value at less than $20,000. Level 2 Contracts are for all other contracts above $20,000.
  • There has to be a new commencement notice served within 10 business days’ of commencing on site and that notice also needs to indicate the date of expected practical completion.
  • There will be an extended warranty for anything other than structural defects for a period of two years rather than the previous 7 months.
  • New provisions in relation to deposits will take effect, allowing for a deposit of up to 20% in circumstances where 50% of the contract price is made up of offsite works.
  • There will be no prescribed percentage payments for each stage.
  • There will be no regulation of the practical completion and the exchange of defects lists.
  • Should parties have sought legal advice prior to signing a contract there will be no cooling off period applicable.
  • The provisions for variations is being substantially amended to provide:
    • A document evidencing the variation needs to be provided within 5 business days.
    • Work cannot start until the owner agrees in writing in respect of the variation.
    • There will be no provision excluding recovery if noncompliance with this regime.
  • Extensions of time will see extra regulation. A licensee can only claim for extensions of time if the delay:
    • Was not reasonably foreseeable and beyond the reasonable control of the contractor; or
    • Caused by the building owner; or
    • Caused by a variation of the contract complying with variation provisions.

The claim has to be made in writing and given to the owner 10 business days following the contractor becoming aware of the delay or when he should reasonably have become aware. The owner needs to approve the claim by signing the claim.

If these provisions are not complied with and the contractor seeks to rely on the extension of time there are substantial penalties that apply of over $2,000.

  • There will no longer be any provisions allowing an owner to terminate in circumstances where price escalation exceeds 15% or where the time of the contract exceeds 1 ½ times the original contracted time.

Minimum Financial Requirements

There will no longer be a need for construction companies or licensees to submit to an independent review report (IRR) process when renewing their licence. It was felt that the QBCC could do away with this expensive requirement and at the same time obtain more up to date and reliable information on the status of companies by making their own enquiries. In order to undertake the further enquiries, inspectors will have enhanced powers of enquiry and the obtaining of documentation from licensees.

Other amendments include:

  • Self-certification categories have been increased to $600,000.
  • ‘Allowable Annual Turnover’ is replaced by the term ‘Maximum Revenue’. This revenue is now aligned with the financial year rather than as had previously been the case the 12 months from renewal.
  • A requirement to maintain internal management accounts on a quarterly basis, so as to align with Australian Tax Office reporting.
  • Rather than an emphasis on judgments, there now is a requirement that where there is a legally enforceable debt, not the subject of a genuine dispute, or not subject to legal proceedings yet to be finalised and not paid within normal trading terms, the licensee will be deemed to fail to meet minimum financial reporting standards allowing for the licence to be suspended or cancelled. An emphasis therefore on paying people on time will be a factor in retaining a licence.

Directions to Rectify

In the past when directions have been issued and licensees have challenged that direction before QCAT, no works could be undertaken under the insurance scheme until the matters before QCAT had been dealt with. As a result this leads to long delays. It is now proposed that a consumer will have the ability to have those items attended to after appropriate tender for the works. The insurance fund is prepared to wear the risk of being unsuccessful before QCAT but having paid out essentially on the insurance claim and won’t seek recovery of that from the consumer.

Future amendments are expected

The QBCC have flagged further amendments to deal with the disconnect between consumers’ expectations of what the certifiers should supply and what they currently do. It is understood that amending legislation will seek to ensure more quality assurance is carried out by the certifier rather than more self-certification.

If you have any queries regarding this article or require building and construction legal advice please do not hesitate to contact Tony Mylne, Partner, Brisbane Construction Team.

Tony Mylne, Partner

NewsFlash 02 September 2014
back to news