As most councils would be aware, the Building Work Contractors Act 1995 (Act) and the Building Work Contractors Regulations 2011 (Regulations) place obligations on building work contractors to be licensed under the Act. Broadly speaking, the Act and Regulations provide that a contractor is required to be licensed to carry on the business of performing ‘building work’ for others.
The definition of ‘building work’ is broad and includes ‘the whole or part of the work of constructing, erecting, underpinning, altering, repairing, improving, adding to or demolishing a building’. The definition of ‘building’ in the Act includes a ‘structure’. Consequently, many of the work and activities which are outsourced by councils will fall within the definition of ‘building works’.
To demonstrate this, Consumer and Business Services (previously OCBA) (CBS) which administers the Act and Regulations considers the definition of “building work” in the Act to include the work listed in the Building Standard Conditions List provided in the document “building work supervisors – standard registration conditions” (Conditions). Please follow the link to see the full list here. As you can see, this goes beyond what may otherwise be considered building work and we are finding that there are some contractors operating on the basis that they do not require a licence when, in fact, they do.
The Conditions set out the scope of what CBS consider to be ‘building work’ for the purposes of the Act and make it clear that building work includes, for example, civil construction, earthworks, brick paving, construction waterproofing, footing construction, painting, paving and stormwater drainage.
Pursuant to the Act, a contractor who undertakes ‘building work’ while unlicensed could be liable to a fine of up to $20,000 and is not entitled to be paid for the building work undertaken.
Councils should be aware that in addition to these consequences for the contractors, a council which engages a contractor to undertake building work who should be licensed but is not potentially exposes itself to a number of risks including a failure of insurance and reputational risk as well as many others.
In our view, councils need to consider the reputational, risk management and governance issues which may arise from engaging unlicensed contractors and implement a strategy to deal with this issue.