In late 2013, the Queensland Building Services Authority (QBSA) was abolished and replaced by the new Queensland Building and Construction Commission (QBCC).

The change has fundamentally altered the governance of the industry regulator and set the scene for further reforms.

In the short term, the changes to the legislation address:

  • powers of the QBCC’s Board;
  • when building work can be carried out without a licence; and
  • licence requirements for businesses involved in the construction of roads.

Powers of the new QBCC Board

The most significant difference between the QBCC and its predecessor is the establishment of the Queensland Building and Construction Board, which has broad management, decision-making and governance responsibilities analogous to a corporate board. Previously, the Queensland Building Services Board was an advisory board only.

The new Board is chaired by Phil Kesby, an experienced businessman who has held senior roles at a number of construction companies, and currently also sits on the boards of Queensland Urban Utilities and the Brisbane City Council Field Service Group.

Other board members bring backgrounds in construction industry management, insurance, and the legal and auditing professions.

In February 2014, Steve Griffin was appointed as the new Commissioner, replacing outgoing General Manager Ian Jennings. Mr Griffin previously held a similar role in the New South Wales Department of Fair Trading, which serves as the regulator for the home building industry in NSW.

Changes to when ‘building work’ can be carried out without a licence

A new Schedule 1A to the Queensland Building and Construction Commission Act 1991 (QBCC Act) sets out the circumstances under which an entity may carry out, or undertake to carry out building work without holding an appropriate licence.

These exceptions were created with a view to facilitate the delivery of major infrastructure, such as the Gold Coast Commonwealth Games Village, however they have broader application:

  • Schedule 1A, section 8 provides that an entity entering into a ‘head contract’ for commercial building work does not need to hold a licence, as long as the contract provides for the building work to be carried out by an appropriately licensed contractor, and also creates exemptions for contracting with that licensed contractor or otherwise causing them to carry out the work.
  • Schedule 1A, section 9 creates a similar exemption for an entity tendering or offering to carry out commercial building work.
  • Schedule 1A, section 10 extends the exemptions from section 8 to special purpose vehicles undertaking to carry out work under a private-public partnership (PPP), or causing that work to be carried out.
  • Schedule 1A, section 11 extends the exemptions from sections 8 and 9 to entities tendering, offering, or undertaking to carry out ‘prescribed government projects’.

These provisions take into account the commercial reality that the entities tendering, offering, or contracting to deliver major projects will frequently be incorporated joint ventures or special purpose vehicles. Whereas the entity actually performing the building work (and holding the licence) will be one of the JV participants, or a related company to the SPV.

In effect, the unlicensed entity is not subject to penalties under section 42 as long as the negotiations and contractual documentation are premised on the contract being passed through to a single licensed contractor, who will carry out all of the building work for the project (including through subcontractors). The unlicensed entity is also protected in relation to subsequent steps taken to pass the contract through to the licensed entity.

Significantly, Schedule 1A, section 8 ensures that entities contracting in the private sector enjoy the same exemptions as those contracting for public sector projects.

It is important to note that the unlicensed entity still must not undertake any ‘building work services’ in relation to the project, which include administration, advisory, management, and supervisory services as defined in Schedule 2 of the QBCC Act.

Furthermore, the section 8 exemption does not apply to ‘domestic building work’ as defined by the Domestic Building Contracts Act 2000, nor ‘residential construction work’ as  defined by  the Queensland  Building  and Construction Commission Regulation 2003 (QBCC Regulation).

Licence requirements for construction of roads

The recent amendments have also sought to clarify the licensing obligations for civil works contractors, with regard to the construction of roads and related infrastructure.

The recent decision of the Supreme Court in Ooralea Developments Pty Ltd v Civil Contractors (Aust) Pty Ltd [2013] QSC 254 caused concern for many civil works contractors. In the decision, Daubney J found that the building of roads and associated infrastructure on subdivisions (where the roads were yet to be declared) by a civil works contractor was ‘building work’ within the meaning of the QBCC Act: so that the contractor was required to hold a licence to carry out such works.

As a consequence, his Honour applied the decision of the Court of Appeal in Cant Contracting Pty Ltd v Casella [2007] 2 Qd R 13, which had held that a contractor was precluded from making BCIPA claim if it did not hold the appropriate licence.

However, civil contractors can now breathe a sigh of relief. The Queensland Building Services Authority and Other Legislation Amendment Regulation (No. 1) 2013 has now amended the QBCC Regulation, to make the definition of ‘road’ an inclusive one, with the result being that building of undeclared roads and associated infrastructure on subdivisions should generally fall within its terms. This means that civil contractors do not require a QBCC licence to carry out such works in most cases.

It should be noted, however, that work on or under private property (which is not intended to become a public road at a later stage), or a driveway connecting private property to the road, is still treated as ‘building work’ and thus contractors carrying out works in those circumstances may still be required to obtain the appropriate QBCC licence.

What to expect in 2014

With  the  QBCC’s  new  management  now  in  place, the  industry can  expect that  the  remaining  items  of  the Government’s ten point action plan will now proceed quickly.

These include:

  • creating an internal review unit in the QBCC, to reduce the volume of litigation in the Queensland Civil and Administrative Tribunal (QCAT);
  • reviewing the licensing regime, including the asset to liability ratios for the financial requirements for licensing; and
  • the potential development of a rapid adjudication system for domestic building work, to mirror the Building and Construction Industry Payments Act 2004 (BCIPA).

The BCIPA itself was also reviewed in 2013, with the unpublished report under consideration by a Parliamentary Committee. Reforms to that Act can also be anticipated in the near future.

We will provide further QBCC and BCIPA updates once they are made public. The authors would like to thank Eden Bird for his contribution to this article.