Queensland Building Construction Commission and other Legislation Amendment Act 2014 (Qld)

The Queensland building and construction industry has seen significant legislative reform in recent months. 

In addition to the amendments to the Building and Construction Industry Payments Act 2004 (Qld) (BCIPA) which commenced in December 2014, a raft of amendments to the Queensland Building and Construction Commission Act 1991 (Qld) (QBCC Act) commenced in December 2014 and January 2015.  Some further amendments are yet to commence.

The amendments were part of the previous government’s Ten Point Action Plan for the building and construction industry.

This article highlights some of the key changes which will impact day-to-day business in the industry.

DIRECTIONS TO REMEDY ‘CONSEQUENTIAL DAMAGE’ TO ADJACENT PROPERTY

Owners and occupiers of land adjacent to a building site may now seek relief from QBCC if their property suffers ‘consequential damage’ as a result of the carrying out of building work at the building site.

QBCC may direct the person who carried out the building work to remedy ‘consequential damage’ to the adjacent property. The direction may be issued regardless of any intention, negligence or recklessness of the person carrying out the work.

Consequential damage includes the impairment of drainage at the property, the undermining of a fence, retaining wall or other structure along the boundary of the property, the compromising of the structural integrity of a building, swimming pool or wall on the property, water penetration and termite infestation.

Although there are good policy reasons for the extended power to direct remediation for ‘consequential damage’ to adjacent property, there is obvious scope for disputes concerning the extent to which the acts or omissions of person carrying out the building work has directly caused the ‘consequential damage’ to the adjacent property.

Principals (developers) may in some circumstances be directed to remedy consequential damage, as the legislation retains the broad definition of ‘person who carries out building work’.

NEW RECTIFICATION OF BUILDING WORK POLICY

Effective October 2014, the QBCC Rectification of Building Work Policy establishes new timeframes for consumers to notify QBCC of defective building work.  The timeframes (set out below) are more generous than the timeframes which applied previously.  In addition, the Policy categorises defects as ‘structural’ or ‘non-structural’, instead of ‘category 1’ and ‘category 2’ under the previous policy. 

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NO STAY OF DIRECTIONS OR INSURANCE DECISIONS

Under the Queensland Building Construction Commission and other Legislation Amendment Act 2014 (QLD) (the Amending Act) reforms, contractors should now consider applying to court for an injunction to restrain QBCC from enforcing a direction to rectify, where the value of the rectification works is sufficiently high.

A major criticism of the previous dispute resolution process for domestic building administered by QBCC was the length of time between the making of a complaint, and an eventual insurance payment. In particular, the ability of contractors to halt the process with multiple reviews was a major concern.

Under the amendments, the Queensland Civil and Administrative Tribunal (QCAT) is no longer able to stay decisions of the QBCC to direct rectification, a finding that rectification work is unsatisfactory, or decisions regarding insurance including the initial decision to extend cover, the scope of works for the tender, or a decision that a contract was lawfully terminated in a non-completion case.

Contractors have not lost their review rights in respect of any of these decisions, but cannot use a stay to hold up the process. In practice, this means that homeowners are likely to receive insurance payments substantially sooner.

Contractors who believe that they have been unfairly directed will need to carefully consider whether to comply with the direction regardless, as they will not now get a second chance following a QCAT review, but will be exposed to recovery of the amount paid out under the insurance scheme.

Hence, in high-value cases such as body corporate matters, or properties where subsidence has occurred, it may now be cost-effective to apply for an injunction to stop the QBCC taking action.

QBCC-ASSISTED NEGOTIATIONS AND INTERNAL REVIEW

On the other side of the coin, the QBCC’s new disputes resolution procedure includes a new step prior to the issue of a direction, where the QBCC acts as a mediator to assist parties in achieving a negotiated outcome without the need for a formal direction. This takes into account the reality that contractors often acknowledge the existence of defects, but refuse to go back to site unless outstanding invoices are paid by the homeowner.

The Amending Act has also introduced a QBCC ‘internal review unit’ as an alternative to a QCAT review, to provide a quick and low-cost mechanism for reviewing decisions. Any decision which is capable of being reviewed in the QCAT is also capable of internal review, but internal review will be especially useful where the value of rectification work is relatively low, and a QCAT review is not cost-effective.

Importantly, parties taking advantage of internal review do not lose their ability to apply to QCAT at a later stage.

UPCOMING REFORMS FOR THE DOMESTIC BUILDING INDUSTRY

Contractors will need to be aware of the new categorisation of domestic building contracts and ensure that their contracts comply with the new requirements under the QBCC Act, when the provisions commence.

The Amending Act repeals the Domestic Building Contracts Act 2000 (Qld) (DBCA) and incorporates provisions regulating domestic building contracts new Schedule 1B of the QBCC Act.  The commencement date for this amendment is not yet known. 

New Schedule 1B rationalises and simplifies the regulation of domestic building contracts.

Relevantly, the new provisions establish ‘level 1’ regulated contracts and ‘level 2’ regulated contracts, which are subject to different levels of regulation. The monetary threshold which determines how a contract is categorised will be established by regulation.

Level 1 contracts must comply with the basic requirements for domestic building contracts, including the identification of the parties’ details, the specifications pertaining to the work, contract price, date for completion and the standard ‘cooling off period’ notice.

Level 2 contracts must additionally state the statutory warranties applicable to the work and warnings about how the contract price may be changed.  The builder must give the owner a commencement notice and the consumer building guide. We will issue a further update once the commencement date for these provisions is known.

OTHER REFORMS

Other reforms which have recently come into effect include:

  • Licensing of plumbers, drainers and pool safety inspectors is now administered by QBCC (in place of the Plumbing Industry Council and Pool Safety Council); 
  • QBCC's financial requirements for licensing have changed and are now set out in the Minimum Financial Requirements Policy.