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Australia – Queensland Introduces Building And Construction Commission.

16 December, 2013

 

Legal News & Analysis – Asia Pacific – Australia – Construction & Real Estate

 

Queensland Building and Construction Commission Act 1991 (Qld)


WHAT YOU NEED TO KNOW

 

  • The development, bidding, commercial negotiation and execution of a commercial construction contract can now be carried out by unlicensed entities in some circumstances.
  • A regulatory impediment for businesses seeking to tender for public infrastructure projects to be carried out under a Public Private Partnership (PPP) or similar arrangement has now been removed.
  • Restrictions regarding retention moneys for PPPs have now been removed to eliminate impediments to the use of special purpose vehicles (SPV) for PPPs.
  • The Queensland Building and Construction Commission (QBCC) will facilitate earlier resolution of building disputes by acting in matters referred to the Queensland Civil and Administrative Tribunal (QCAT) in certain circumstances.

In May 2013, the Queensland Government released its response to the recommendations from the Inquiry into the Operation and Performance of the Queensland Building Services Authority 2012 undertaken by the Transport, Housing and Local Government Committee. The Government’s response was in the form of a “Ten Point Action Plan” which outlined the Government’s approach towards re-structuring the regulation of the Queensland construction industry.


The actions outlined in the first stages in the Ten Point Action Plan have already begun to be implemented as two new pieces of legislation amending the former Queensland Building Services Authority Act 1991 (Qld) (QBSA Act), the Queensland Building Services Authority Amendment Act 2013 (Qld) (Amendment Act) and the Residential Tenancies and Rooming Accommodation and Other Legislation Amendment Act 2013 (Qld) (Other Legislation Amendment Act), commenced on 1 December 2013.


Queensland Building Services Authority Amendment Act 2013


The purpose of the Amendment Act is to replace the Queensland Building Services Authority (QBSA) (which has been the industry regulator since its inception over 21 years ago) with the QBCC. The QBSA Act has been renamed the Queensland Building and Construction Commission Act 1991 (QBCC Act). While the QBCC will perform largely the same functions as the QBSA there will be some key differences. The QBCC board will have sole responsibility for setting the strategic direction and the operational, financial and administrative policies of the QBCC. Furthermore, in accordance with the Ten Point Action Plan, the QBCC will have a stronger focus on licensing, certification and dispute avoidance and management.


The express goal of the new entity is to achieve improved governance in relation to the construction industry with no additional cost to industry and homeowners. A professional governing board has been established which will be responsible for developing the structure of the QBCC and appointing the Commissioner as Chief Executive in early 2014 (although the Commissioner must be approved by the Minister). The board will report directly to the Minister for Housing and Public Works.


Residential Tenancies and Rooming Accommodation and Other Legislation Amendment Act 2013


Changes To Licensing Requirements


The key change flowing from the Other Legislation Amendment Act is the amendment of section 42 of the QBSA Act. The revision will ensure that there will be no breach of the QBCC Act if “building work” is carried out by an appropriately licensed builder. Under the QBSA Act a company was required to be licensed even if the company contracted a registered building company to perform the ‘building work’. The exemptions have been specifically tailored to allow for (and encourage) PPPs and Government tendering.


Under the QBCC Act:

 

  • An unlicensed person (head contractor) can enter into a contract to carry out building work where the work is to be carried out by an appropriately licensed contractor.
  • An unlicensed person can submit a tender or make an offer to carry out building work where the work is to be carried out by an appropriately licensed contractor.
  • A SPV under a PPP can undertake to carry out building work where the work is to be carried out by an appropriately licensed contractor.
  • An unlicensed person can undertake to carry out building work for a prescribed government project where that work is to be carried out by an appropriately licensed contractor.

Changes To Limits For Retention Amounts And Securities


The Act also removes restrictions regarding retention moneys for PPPs to reduce impediments to the use of SPVs for PPPs. Previously, a contract between a SPV and a building contractor was treated as a subcontract arrangement under section 67L the QBSA Act. Accordingly, the SPV was not able to enter into a building contract for work to be carried out for the purposes of a PPP whereby the retentions or securities held were more than 5%. This caused significant difficulties in PPP arrangements as financiers commonly require SPVs to hold retentions and securities for an amount in excess of 5%.
Under the QBCC Act:

 

  • SPVs will be treated on the same basis as principals when entering into building contracts or subcontracts, in accordance with section 67K.
  • Parties to a building contract, where one party is a SPV, can agree that retentions and securities under the contract can exceed 5%.

The amendments will not affect standard subcontracting arrangements between principal contractors and subcontractors.


Changes To Disputes Involving Both The QBCC And The QCAT


Finally, the Act is expected to facilitate earlier resolution of building disputes by giving the QBCC the power to continue to act in relevant QCAT matters. Previously, the QBSA has been unable to act in relation to a complaint about defective building work if one of the parties prior to, or after receipt of, the complaint commences a proceeding in the QCAT.


Under the QBCC Act:

 

  • Where a building dispute before the QBCC is referred to the QCAT, the QBCC can apply to the QCAT for an order that it can continue to act in the dispute while the QCAT proceedings are on foot.
  • The QCAT may approve the QBCC to act in relation to the dispute with or without conditions.

Implications


The Queensland Government has made it clear that it considers the building and construction industry to be one of the “four pillars” which will form the foundations of the State’s future prosperity. Industry participants should be aware that the Government has highlighted, in the Ten Point Action Plan, that a number of significant changes may occur following the establishment of the QBCC and the QBCC board.

 

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For further information, please contact:

 

Joanna Jenkins, Partner, Ashurst
joanna.jenkins@ashurst.com


Mark Disney, Partner, Ashurst
mark.disney@ashurst.com

 

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