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Introduction of liability in chain of supply and installation for non-conforming building products

NewsFlash 13 June 2017

On 25th of May the Queensland Minister for Housing and Public Works, Mick de Brenni introduced the Bill 'Building and Construction Legislation (Non-conforming Building Products – chain of responsibility and other matters) Amendment Bill 2017'. The Bill has various important provisions dealing with the licensing of builders and their responsibility (with others) for non-conforming building products. In addition the Bill provides for very significant penalties where there is an offence against the Work Health and Safety Act and other Acts. 

Objects of the Queensland Building and Construction Commission (QBCC) Act

Two further objects have been added under section 3 namely:

(e) To regulate building products to ensure:

  1. The safety of consumers in the public generally;  and
  2. Persons involved in the production, supply or installation of building products are held responsible for the safety of the products and their use. 

The explanatory memorandum of the Bill suggests additional objectives:

  • Facilitate safety on building and construction sites by requiring licensees to notify about activities that might be in breach of work health and safety (WH&S) issues.
  • Require QBCC to report about WH&S issues where there is a serious injury or death.
  • Enable sharing arrangements to be entered into with QBCC and other agencies in relation to WH&S issues.
  • Substantially widened grounds for disciplinary action by the QBCC against licensees where convictions against WH&S rules occur or where work on a building site may have caused death or grievous bodily harm or a serious risk of health or safety.

Non-conforming building materials

It is argued that the current framework focuses on the end of the supply chain and the installer of the product rather than other inadequacies in the supply chain and therefore adding obligations to others within the supply chain addresses that inequity. 

Persons in the chain of responsibility include designers, manufacturers, importers or suppliers of the building product who know reasonably, or are expected to know, the product is likely to be associated with a building (in addition to whoever installs the product). Each person in the chain is said to have the responsibility “so far as reasonably practicable” to ensure the product is not a non-conforming building product for an intended use (Section 74AF).

Required information

Section 74AG importantly requires “required information” to be supplied to the next party in the chain of responsibility. It is envisaged that the required information will be about how the product must be associated with the building and intended to be used, including information concerning the suitability and any instructions about the intended use of the product. This will be defined in regulations yet to be promulgated. It is meant to ensure that each person in the chain and the consumer will have accurate information concerning that product, the manner in which it is installed, its intended use and the standard to which it has been made. 

One can foresee a significant amount of paper being generated for each particular product within a building.  Everyone within the supply chain, particularly the builder, will need to record and retain documentation, a copy of which is handed over to the consumer so as to ensure the proof of complying with the responsibility required.  In a lot of cases that would seem to just add to the cost that the consumer will need to pay.

Licensing and other matters

As referred to above, the Act will empower QBCC to cancel or suspend licences in circumstances where a licensee is convicted of an offence under the Building Act, Work Health and Safety Act, Electrical Safety Act, Public Health Act or others prescribed by Regulation.  In addition and very importantly, a licence can be cancelled or suspended in circumstances where the site under the licensee’s control may have caused death or grievous bodily harm or involved a serious risk to the health or safety of a person. These substantial powers are reviewable before the Queensland Civil and Administrative Tribunal.

There are provisions relating to recalls and the compliance with those recalls and any non-compliance with the duties outlined in Division 2 (Duties of person in chain of responsibility to ensure there is not a non-conforming building product, providing accompanying information, duties to respond to recalls) sets a maximum penalty of 1000 units ($126,150.00).

Section 74AL provides the Commissioner with the power to give notice to a person in the chain of responsibility to direct them to take a stated action to remove or minimise any safety risks with penalties to apply in the event of not complying with the direction.

Section 74B allows the Commissioner to take action against licensees and former licensees that contravened the Building Acts earlier referred to or might have caused death, grievous bodily harm or serious risk of health or safety.

There are additional powers for inspectors to enforce the provisions of the Act to investigate and to enter premises to obtain information and issue warrants as well as the power to seize items.

The above is not a ball-by-ball summary of what is over a 90 page piece of amending legislation but highlights some of the more important points. Real teeth are added to the QBCC Act in circumstances where there are WH&S issues or incidents. A significant administrative burden is added to those within the supply chain including the installer (builder) with each needing to keep records of what was received i.e. information of each product for each individual job, and what was handed to any other party within the supply chain and to the consumer.  While it is said within the explanatory memorandum that each of the parties within the chain of responsibility has an obligation and responsibility to ensure the product is not a non-conforming building product the clear tool of enforcement falls mainly with respect to licensees or former licensees. A concept of enforceable undertakings similar to the Commonwealth consumer provisions has been introduced which is a considerable advance. While fines might apply to all within the chain it would seem that in terms of rectifying the improper installation and any consequential effects will fall mainly to the builder. The question of recovery of such costs from others with the supply chain is not dealt with and a contract should be reviewed with that in mind.

Tony Mylne, Partner

NewsFlash 13 June 2017
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