UPDATE – Important Amendments to the Queensland Building Services Authority Act
The following statement issued by the Queensland Building Services Authority on 21 November, 2013.
On 30 October 2013, the Residential Tenancies and Rooming Accommodation and other Legislation Amendment Act (the RTA Act) was passed by Parliament, and it is expected that the Bill will come into force on 1 December 2013.
On commencement, this legislation will effect significant changes to the QBCC Act, which will have significant implications for those in the building industry and the lawyers who act for them.
Currently, section 42 of the Queensland Building Services Authority Act 1991 (the QBSA Act) states that a person must not carry out, or undertake to carry out, building work unless that person holds a contractor’s licence of the appropriate class. The broad compass of the provision means that at present, a wide range of people are required to be licensed, including developers.
The amendments to section 42 will radically alter this position in relation to commercial work, although it should be noted that these changes have no effect on residential construction work or domestic building work.
Under the amended Act, a person may contract with an unlicensed person (such as a developer) for the carrying out of commercial building work as long as the developer contracts with an appropriately licensed building contractor to actually carry out the work. In these circumstances, the developer would not be required to hold a contracting licence to enter into the contract. Practitioners should note, however, that the developer cannot personally undertake or perform any work which requires a licence.
Practitioners drafting contracts in the circumstances described above would be prudent to ensure that the head contract contains an obligation on the developer to engage appropriately licensed persons to perform all work which requires a licence. Practitioners must always keep in mind that in order for the above amendments to apply, the following criteria must be met:
- the contract is for the construction of a commercial building;
- the unlicensed person must engage appropriately licensed contractors to actually carry out the building work; and
- the unlicensed person must not personally carry out the building work.
The RTA Bill also amends section 67K of the QBSA Act. Currently, section 67K of the QBSA Act states that the total value of retentions in building contracts, which are not subcontracts, must not be more than 5% of the contract price. Section 67L of the QBSA Act applies to subcontracts, and states that the total value of retentions under subcontract must not be more than 5% of the contract price. The main difference between the two sections is that parties may contract out of the provisions of section 67K of the QBSA Act.
The RTA Act amends section 67L to the effect that it does not apply to a subcontract if the contracting party to the building contract is a special purpose vehicle. A special purpose vehicle is defined in the RTA Act as an entity established for the purpose of carrying out a public-private partnership and declared by the treasurer by gazette notice, and the amendments will not affect standard subcontracting arrangements between principal contractors and subcontractors. In other words, unless the contracting party is a special purpose vehicle, retention moneys under subcontracts remain limited to 5% of the contract price and the parties cannot contract out of this provision.
Practitioners involved in providing advice to principal contractors and subcontractors in the building industry need to be aware that subcontracts will need to be drafted in accordance with section 67L of the QBSA Act in all circumstances which do not involve a special purpose vehicle.