Construction & Infrastructure Archives » Rostron Carlyle Rojas Lawyers

February 10, 2021February 23, 2021

CONSTRUCTION LAW 101

What is construction law?

Construction law can be broadly defined as a branch of law that involves the regulation of all types of construction and building works. The body of law that deals with construction is diverse and there are a number of laws and regulations that are State or Territory specific that regulate the construction industry.

What do construction lawyers do?

Construction lawyers specialise in construction law. They are often called upon to draft, negotiate and review construction contracts, assist with the tender process, advise parties to a construction contract on various aspects either before, during, or after a project and assist with construction disputes and debt recovery.

What are the relevant statutes that regulate the construction industry?

There are a number of laws and regulations that apply to the construction industry and these can either be federal, state, and local laws.

The National Construction Code (NCC) was formally known as the Building Code of Australia. The NCC sets out the minimum requirements for safety, health, amenity, and accessibility in the design and construction of all new buildings, building work, plumbing and drainage systems, and all new building work must comply with the dictates of the NCC. All States and Territories have adopted the NCC.

Each State has its own respective legislation and regulations that regulate the construction industry. Typically, State legislation and regulations deal with issues such as contracting, licensing, registration, insurance of building works, and warranties.

The table below sets out some of the legislation in force in each State and Territory.

STATE/TERRITORY	LEGISLATION
New South Wales	Building and Construction Industry Security of Payments Act 1999 Home Building Act 1989/Home Building Regulation 2014 Environmental Planning and Assessment Act 1979
Victoria	Building and Construction Industry Security of Payment Act 2002
Queensland	Building and Construction Industry Security of Payments Act 1991 (QBCC Act) Building Industry Fairness (Security of Payment) Act 2017 (BIF Act)
Australian Capital Territory	Building and Construction Industry (Security of Payment) Act 2004
Western Australia	Constructions Contracts Act 2004
South Australia	Building and Construction Industry Security of Payment Act 2009
Northern Territory	Constructions Contracts (Security of Payments) Act 2004
Tasmania	Building and Construction Industry Security of Payment Act 2009

The statues listed above are not an exhaustive list of the laws that may be applicable to construction matters. Other laws may very well be applicable depending on the circumstances such as employment laws and regulations, local government planning and environment laws, and even common law principles.

Do I need to be licensed to carry out building work?

Each State has its own definition of what building work is and when a license (to carry out building work) is required. The table below sets out when a license (to carry out building work) is required for the States of New South Wales, Queensland and Victoria.

STATE/TERRITORY

LICENSE REQUIREMENTS

New South Wales

You must hold an NSW building license to conduct residential building work in NSW valued at more than $5,00.00 in labour and materials.

A general builder may do any work that is residential work. Work that you need to have a license for includes:

Constructing or erecting a garage, carport or shed
Bathroom, kitchen or laundry renovations
Swimming pool building and structural landscaping
Screened, glass or pool enclosures
Atriums and conservations
House lifting
Removing and resitting dwellings; and
Saunas and steam rooms

Queensland

You must hold a QBCC license to carry out building work, where:

The value of the building work is over $3,300.00
The works involve hydraulic service design works valued at over $1,100.00
Works of any value where the work involves:
- - Drainage
  - Plumbing and drainage
  - Gas fitting
  - Terminate management – chemical
  - Fire protection
  - Completed residential building inspections
  - Building design – low rise, medium rise and open
  - Site classifications; and
  - Mechanical services

How can I apply for a license?

Each State has its own licensing procedures and requirements. The table below sets out the governing body for the States of New South Wales, Queensland, and Victoria. You will need to contact the relevant governing body of your State to find out the specific licensing requirements.

STATE/TERRITORY	GOVERNING BODY
New South Wales	Fair Trading NSW via Service NSW
Victoria	Victorian Building Association
Queensland	Queensland Building and Construction Commission (QBCC)

Are there different categories of licenses?

Yes, in Queensland licensing for building work is divided into licence types and, subsequently, licence classes. The critical element understanding is to be aware of the work you are performing, as this will dictate whether a licence is required.

The types are summarised as follows:

Type	Supervise building work	Be a nominee for a building company	Enter into building contracts for building work
Contractor	Yes	Yes	Yes
Nominee Supervisor	Yes	Yes
Site Supervisor	Yes
Fire Occupational	Yes

In relation to the licence classes, they are varied depending on the scope of work performed for a particular project. For example, irrigation or steel fixing. There are also varying levels of general building licences according to the type of building. These are divided into low rise, medium rise and open.

In New South Wales, there are three categories of licence:

• Contractor licence – allows you to contract and advertise to do work.

• Qualified Supervisor Certificate – allows you to supervise and do the work described on your certificate.

• Endorsed contractor licence – is issued to individuals who apply for a contractor licence and who also have the qualifications and experience needed to be a qualified supervisor.

What happens if I carry out building works without a license?

In Queensland, the QBBC Act makes it an offence to undertake to carry out building work without a license of the appropriate class. The maximum penalty:

for a first offence is 250 penalty units;
for a second offence is 300 penalty units; and
for a third or later offence is 350 penalty points or 1 year’s imprisonment (this offence constitutes a crime pursuant to the QBCC Act).
In addition, you will only be entitled to reasonable remuneration for carrying out the construction work which generally means you can only claim for the cost of supplying material and labour only and not any profit.

In New South Wales, a person who performs building works without a licence may receive a penalty:

for a first offence – maximum 1,000 penalty units; and
for a second or subsequent offence – maximum 500 penalty units or imprisonment for a term not exceeding 12 months, or both.

Do I need to have a written construction contract?

In Queensland, all:

domestic building work costing more than $3,300.00 must be covered by a written contract. Whilst you need not have a construction contract for works that are valued at less than $3,300.00 it is a good idea to have a contract in place or at the very least a detailed written quotation; and
commercial building work costing more than $10,000.00 must be covered by a written contract.

In New South Wales, all:

residential building work over the price for labour and materials of $5,000 (GST incl.) must be documented by written contract. There are two classes of residential building contracts for NSW: Small Jobs Contract which are between a value of $5,000 and $20,000 and Contracts (other than Small Jobs) above $20,000; and
commercial building works over $20,000 must be covered by a written contract.

Are there any laws that regulate how much deposit is to be paid pursuant to a construction contract?

In Queensland, the maximum deposits permitted are:

5% of the total contract price for domestic building work costing $20,000.00 or more; or
10% for work costing more than $3,300 but less than $20,000.00.

In New South Wales, the maximum deposit is 10% of the contract price.

What should I do if I get involved in a construction dispute?

Your building contract is an important document. It sets out the rights and responsibilities of each party to the building contract. It therefore follows that you must first check the building contract to determine your legal position.

The relevant laws and regulation of your State or Territory also set out your rights and the course of action you can take if you find yourself in a situation where you are faced with a building dispute. In addition, the course of action you take to resolve the building dispute will depend on whether you have a domestic construction contract or a commercial construction contract. It is a good idea to seek legal advice at the outset of the first signs of a dispute.

How do I protect my payment rights if I’ve entered into a commercial construction contract?

The Security of Payment legislation has the primary purpose of facilitating cash flow for commercial construction projects in each respective State and Territory. It achieves this objective by regulating commercial construction contracts and establishing a regime of strict payment terms that exist in each transaction.
Accordingly, protecting payment rights occurs by adopting the provisions of the legislation and implementing procedures that coincide with the process.

This includes the issuance of payment claims on and from reference dates, in addition to responding with payment schedules. When disputes arise, these documents will be critical to adjudication and other mechanisms under the relevant statute. Each State and Territory has its own legislation that deals with security of payment.

For further details on the security of payment legislation in Queensland and New South Wales please click here. [insert hyperlink to packages]

What do I do if I discover defective building work to my home?

In Queensland, you may lodge a complaint at the QBCC. If the QBCC determines that they have the power to take further steps with respect to your complaint, a QBCC inspector will carry out a site inspection.

The QBCC inspector will then issue a decision either directing that the works complained of are not defective or directing that the Builder is to rectify the defects. If the Builder fails to rectify the defects, the QBCC may commence disciplinary action against the Builder and the defective work may also be rectified pursuant to a claim under the QBCC home warranty insurance scheme.

In New South Wales, you will need to raise a complaint either through Fair Trading or bring proceedings through a court of competent jurisdiction. Defective residential building work may be covered by the iCare Home Building Insurance, but is only paid after the liability has been established. This is because unlike Queensland with the QBCC, the NSW system is an insurance of last resort.

Is it necessary to get a standard form construction contract reviewed?
Yes, we would recommend that you have a standard form construction contract reviewed. Contrary to popular belief, standard form construction contracts can be amended. We would recommend that you have your standard form construction contract reviewed to:

Ensure that the clauses are compliant with existing legislation. This is a common issue, considering frequent changes in legislation.
Ensure that your rights and interests are adequately protected.
Simplify, where appropriate, contractual mechanisms to coincide with the nature of the project and development.
Modify the payment terms.
Have standardised processes and documentation that complement the contract that may not be immediately apparent, such as variation and extension of time forms.
Create awareness regarding rights and obligations, particularly with respect to payment obligations, resolving disputes, termination clauses and default of payment.

At Rostron Carlyle Rojas lawyers we have low fixed fees for the review of home building contracts starting from as little as $450.00. You can find further details click here.

September 21, 2020December 11, 2020

Subcontractors’ Charge: All You Need to Know to Get Paid

Getting paid in the construction industry can sometimes be challenging. The good news is that there are a range of options that you can pursue to get paid. The course of action you take to enforce your right to payment will depend on a number of factors. One option to pursue is a subcontractors’ charge.

The Building Industry Fairness (Security of Payment) Act 2017 (QLD) (the BIF Act) regulates subcontractors’ charges in Queensland. This article explains what a subcontractors’ charge is and sets out the process of making a subcontractors’ charge in an easy to understand question and answer format.

What is a subcontractors’ charge?

A subcontractors’ charge is a means to enforce a payment right. If you are a subcontractor, a subcontractors’ charge can be used as a way for you to secure monies owed to you by a contractor. This is achieved by placing the higher contractor (for example the contractor higher in the chain or the principal) on notice to redirect money owed to the contractor to you.

As the above suggests, there are usually 3 parties involved in a subcontractor’s charge. These would typically be:
• a subcontractor engaged by a contractor to perform construction work or supply related goods and services pursuant to a subcontract agreement (the Subcontractor); and
• a contractor engaged by a principal to complete the construction work pursuant to a construction contract (the Contractor); and
• a principal who engaged the contractor to complete the construction work and owes money to the contractor pursuant to a construction contract (the Principal).
In circumstances where the Principal is not the owner of the land, you may be in a position to ‘leap frog’ the Principal and file a subcontractors’ charge against the owner of the land directly.

When is a subcontractors’ charge available?

Before you go-ahead and lodge a subcontractors’ charge, you must ensure that, the:
• monies owed to you as a Subcontractor arise out of “work” as defined in section 105 of the BIF Act; and
• claim for payment must be in relation for work done under a subcontract (i.e. you must be a Subcontractor).
In addition, it is important to note that a subcontractor’s charge is only available where there is money owing to the Contractor by the Principal. If monies are indeed owing, then any charge will be limited to the amount owing by the Principal to the Contractor. By way of example, if a Subcontractor is owed $10,000.00 but the Contractor is only owed $7,000.00 by the Principal, the subcontractors’ charge will be limited to $7,000.00 only.

How is a subcontractors’ charge made?

The BIF Act requires that a Subcontractor is to give written notice to the Principal (the person obliged to pay monies to the Contractor), with a copy to the Contractor (the person that owes money to the Subcontractor). This can be done by completing an approved form as issued by the Queensland Building and Construction Commission.
It is important to note that section 122 (2) of the BIF Act states that the notice must be in the approved form and must:
• state the amount of the claim; and
• include details of the work done as certified by a qualified person; and
• include the other information prescribed by regulation.
To ensure compliance with the BIF Act, you must complete the form accurately.
In addition, the amount of the claim must be certified by a qualified person. Section 147 (1) of the BIF Act states that a qualified person is:
• an architect registered under the Architects Act 2002; or
• a registered professional engineer under the Professional Engineers Act 2002; or
• a person licensed under the Queensland Building and Construction Commission Act 1991 to carry out or supervise work of the type to which the claim relates; or
• a quantity surveyor who is a member of the Australian Institute of Quantity Surveyors; or
• a person having expert knowledge of the work to which the claim related and who is accepted in a particular case as a qualified person by the contractor and subcontractor.
It is important to note that if the works have been completed, the notice of claim must be given within 3 months after practical completion of the work.

What happens if you don’t have any information about the Principal?

You may rely on section 119 of the BIF Act to obtain any relevant information from the Contractor that would be necessary to give a notice of claim.
Section 119 of the BIF Act requires a Contractor to provide, within 10 business days of being notified in writing, the name and address of the Principal together with any other details that would enable a Subcontractor to give a notice of claim to the Principal. A failure to comply will result in a maximum penalty of 20 penalty points.

Do I need to provide a copy of the notice to the Contractor?

Yes. A copy of the notice must be served on the Contractor. If a Subcontractor fails to serve the notices as required by the BIF Act (that is to the Principal with a copy to the Contractor), the notices shall be of no effect resulting in the subcontractors’ charge not attaching.

What happens after the notice is served?

Both the Principal and the Contractor may be required to take action if they are in receipt of a notice.

The Principal
The Principal, must, until a court order is made in respect of the amounts claimed, retain the amounts that is or is to become payable to the Contractor. The Principal can do so by holding the monies itself or generally in most circumstances paying the monies into Court.
If the Principal fails to do so, the Principal may become personally liable to pay to the Subcontractor the amount of the claim (to the extent of the amount the Principal is required to retain).

The Contractor
The Contractor, must, within 10 business days respond to both the Subcontractor and the Principal. The response must be made on the prescribed form and must state whether the claim is accepted (in whole or in part) or rejected. Any amount that is accepted by the Contractor is to be paid by the Principal to the Subcontractor (where the Principal is holding monies that are payable to the Contractor).
In circumstances where the Contractor rejects the amount sought in the notice, where there are funds captured by the notice, then those funds will be deposited into Court.

How do you enforce a subcontractors’ charge?

Where a notice has been validly served and the amounts claimed are disputed, a Subcontractor must commence Court proceedings to enforce the subcontractors’ charge. It is important to note that the BIF Act requires that Court proceedings are to be commenced within one month of the date of the notice, unless it is a claim of subcontractors’ charge in respect of retention monies, in which case Court proceedings must commence within four months after the retention money becomes payable. A failure to comply with the timeframes for commencing Court proceedings shall result in any charge being extinguished.

What are the benefits of issuing a notice?

If you’ve issued a notice and the Contractor subsequently goes into liquidation, you will be classed as a secured creditor. As a secured creditor, you hold priority over other creditors.

What are the pitfalls of a subcontractors’ charge?

Strict Compliance
The BIF Act sets out various requirements that must be met and a failure to strictly comply with the requirements of the BIF Act may result in a subcontractors’ charge not attaching/being invalid. In addition, there must be strict compliance with time frames.

No money or security
As previously mentioned, a subcontractor’s charge is only available where there is money owing to the Contractor by the Principal or where the Principal is holding some form of security. As a result, where a Principal has, prior to receiving a notice, already paid a Contractor, a subcontractors’ charge would not be of effect.

Insufficient money or security

A subcontractors’ charge is limited to the amount owing by the Principal to the Contractor. Furthermore, where there are multiple claims, any secured money will be allocated in accordance with the proportion of each claimed lodged.

Court Proceedings
In order to enforce a subcontractors’ charge, a Subcontractor must commence Court proceedings to enforce the subcontractors’ charge.

Affects Relationships
A subcontractors’ charge should only be used as a measure of last resort – in circumstances where the Contractor is experiencing cashflow problems and you’re certain that the Contractor will not be in a position to pay you. A Contractor that is the subject to a subcontractor’s charge that is unmeritorious is unlikely to give you further work.

If you are a Subcontractor and you are owed monies, a subcontractors’ charge can be an effective means to recover monies due and owing. However, there must be strict compliance with the BIF Act in order to make a valid subcontractors’ charge. If you think you may be entitled to recover monies due and owing to you by way of a subcontractors’ charge, it is strongly recommended that you get advice from experienced building and construction lawyers.

Rostron Carlyle Rojas have an expert team of building and construction lawyers. If you have a question or you’d like more information on the content of this article, contact us today on (07) 3009 8444 or email us at [email protected].

August 12, 2020August 12, 2020

Important Legal Considerations when Buying or Selling Residential Property during the COVID-19 Pandemic

There is currently a great deal of uncertainty as to just how great of an impact the COVID-19 pandemic will have on the residential property market. With the real possibility of a second wave of the pandemic reaching QLD, there are also contractual issues which those who are currently engaged in the buying/selling process need to consider.

One of the most common questions we are receiving at the moment is ‘what happens if a party is unable to complete a Contract of Sale due to the impact of COVID-19?’ The answer will always depend on the individual Contract however given the vast majority of residential property sales are conducted using the standard form REIQ Contract, it is prudent to be aware of how this particular contract deals with the issue.

The REIQ Contract specifies that time is of the essence. This key concept means that by not completing the Contract (i.e. settling) on the due date, you may find yourself in breach of an essential Contract term, entitling the other party to terminate the Contract and sue you for damages.

The Contract does however contain a provision that will, in certain circumstances, suspend the parties’ obligation to complete the Contract and make time no longer of the essence. In order for these obligations to be suspended, a Delay Event must have occurred. A Delay Event is defined in the Contract as the following circumstances:

1. A tsunami, flood, cyclone, earthquake, bushfire or other act of nature;
2. Riot, civil commotion, war, invasion or a terrorist act;
3. An imminent threat of an event described in the above two paragraphs; or
4. Compliance with any lawful direction or order made by a Government Agency.

Whilst there may be a possibility in very limited circumstances for a COVID-19 related delay to fall within the scope of paragraph 4 above, in most instances the types of delays encountered as a result of COVID-19 are very unlikely to be classified as a Delay Event. Therefore, in most cases, a failure to settle on the due date as a result of COVID-19 will not prevent you from breaching an essential condition of the REIQ Contract and exposing yourself to considerable legal risk.

The simplest solution to avoid any unnecessary risk is to negotiate the insertion of a special condition into your contract prior to signing. An appropriately drafted special condition will ensure that the common COVID related delays will suspend your settlement obligations until such time as completion of the contract becomes possible.

Please note that the advice contained in this article is general in nature. If you are considering buying or selling residential property in these uncertain times, contact Rostron Carlyle Rojas Lawyers prior to signing a contract of sale. Our team will be able to review your contract, provide legal advice tailored to your individual circumstances and ensure you are adequately protected against the uncertainty posed by COVID-19.

August 6, 2020August 24, 2020

Guide For Buying Or Building A New Home

Purchasing a new home, building a new home, or renovating a home? Here is the ultimate guide to all grants and concessions available in Queensland.

What is available?
Grants
• HomeBuilder grant: $25,000.00
• Queensland First Home Owners’ Grant: $15,000.00
• Regional home building boost grant: $5,000.00
Stamp duty Concessions
• First home concession
• Home concession
• First home vacant land concession
Scheme
• First home loan deposit scheme

Queensland Government Financial Grants

Grants and eligibilities below are only available for Queensland property purchases

*if you buy an off the plan dwelling after 4 June 2020, and the construction of the home commenced before 4 June 2020, then the home does not qualify for HomeBuilder.

Queensland Stamp duty Concessions

You might not lose the concession because of an intervening event. We can apply on your behalf in writing to the Commissioner of State Revenue explaining these reasons.

First home loan deposit scheme

The scheme and eligibilities apply throughout Australia. It is important to note that an application for this scheme can only be made by banks who the Government have selected can participate in the scheme. The banks are listed in the link: https://www.nhfic.gov.au/what-we-do/fhlds/how-to-apply/#FHLDSlenders
First home buyers with less than 20% of deposit will need to pay lenders mortgage insurance. With the scheme eligible first home buyers can purchase a home with 5% deposit. This is subject to lenders criteria.

To be eligible you must satisfy the below: –
– Australian Citizen;
– At least 18 years of age;
– You and your spouse never owned a residential property before;
– Purchase as an individual (not company or trust);
– Must be purchasing a residential property in Australia;
– Must live in the property as your principal place of residence;
– Taxable income must be below $125,000.00 for individual or $200,000.00 as a couple for the preceding financial year;
– Must purchase within the price threshold; and
– You must demonstrate savings equivalent to at least 5% but not more than 20% of the residential property you intend to buy.

To determine whether a buyer is eligible to any of the grants, concessions and schemes it is important to assess each situation on a case by case basis. Whether you are eligible will be determined by your individual circumstances.

Rostron Carlyle Rojas Lawyers can explore your options with you ensuring that you gain the most out of the government Grants and Concessions available. If you have any questions or would like more information regarding the above please contact any of our property experts below.

Name	Email	Direct number
Gerard Thorpe (Special Counsel)	[email protected]	(07) 3009 8476
Ying Ying Tay (Senior Associate)	[email protected]	(07) 3009 8451
Jessica Lee (Lawyer)	[email protected]	(07) 3009 8422

August 4, 2020

Build-to-Rent: NSW Government’s new scheme aimed at tackling affordability

Build to Rent NSW Government 2019s new scheme aimed at tackling affordability

In a continued effort to support COVID-19 recovery and boost a struggling construction industry, the NSW Government will half land tax for developers of build-to-rent housing for the next twenty years.

A ‘build-to-rent’ model, which is well established in the United States and Britain, refers to a residential development scheme where the developer retains rather than sells off units and acts as the property manager. In the Government’s recent media release, NSW Treasurer Dominic Perrottet said that “Build-to-rent is popular overseas but still in its infancy in Australia, and we want to remove barriers and allow this segment of the market to grow”.

To be eligible for the land tax reduction, build-to-rent developments in metropolitan areas must be at least 50 units, unified under single ownership and include options for long tenancies. Construction of the development must also have commenced on or after 1 July 2020. It is expected that the Government will release the full eligibility criteria, as well as confirm the requirements for regional areas, in the coming weeks.

The NSW Government hopes that the build-to-rent scheme will offer renters greater choice and affordability as well as help boost certainty and jobs in the construction industry as Australia recovers from the economic impacts of COVID-19.

In addition to land tax cuts, the NSW Government is also exhibiting a new streamlined Housing
Diversity State Environmental Planning Policy to help support investment in diverse and affordable housing types, including co-living, short and long-term rentals, and social and student housing. The policy also encourages build-to-rent developments as a means of meeting NSW’s future housing needs. The Housing Diversity policy is on exhibition and inviting feedback until 9 September 2020.

The NSW Government’s full ministerial release can be viewed here.

July 23, 2020July 31, 2020

What is the Government’s New COVID-19 Grant HomeBuilder?

Since its much-anticipated announcement in early June, we have received an influx of questions from our clients regarding the Australian Government’s new HomeBuilder grant.

This brief note sets out all you need to know about the HomeBuilder grant.

Why HomeBuilder?

Homebuilder is a government led initiative to cushion and stimulate the residential construction industry from the effects of the COVID-19 pandemic. HomeBuilder aims to encourage the commencement of new home builds and substantial renovations.

How much is the HomeBuilder Grant?

Eligible owner-occupiers (including first home buyers) may be entitled to a grant of $25,000 to either build a new home or substantially renovate an existing home.

Am I Eligible for the HomeBuilder Grant?

To be eligible for the HomeBuilder grant, you must:
• be an Australian Citizen (you must be a natural person; the grant is not available to a company or trust);
• be aged 18 years or older;
• if applying as an individual, have a taxable income of not more than $125,000;
• if applying as a couple, have a combined taxable income of not more than $200,000;
• if you are building a new home that will serve as your principal place of residence, the value of your property must be less than $750,000;
• if you renovating your principal place of residence, the value of your home (prior to the renovation works) must not exceed $1,500,000 and the contract for the renovation works must be between $150,000 and $750,000; and
• sign a contract between 4 June 2020 and 31 December 2020, with construction required to commence on or after 4 June 2020 and within 3 months of the contract date.

Implementation

HomeBuilder will be implemented by respective State and Territory Governments via a National Partnership Agreement with the Commonwealth Government. The relevant State or Territory revenue offices are expected to release information on when and how you will be able to access HomeBuilder.
An imminent release of information by State and Territory revenue offices, on when and how you will be able to access HomeBuilder, is expected. This briefing note will be updated once further information has been made available.

As always, Rostron Carlyle Rojas Lawyers are dedicated to keeping you updated on the continuously evolving COVID-19 situation. If you would like more information on this briefing note, please contact us today on (07) 3009 8444 or email us at [email protected]

July 7, 2020December 11, 2020

Building and Construction Reform Package set to Raise Standards for Residential Developments in NSW

Building and Construction Reform Package set to Raise Standards-Residential Developments in NSW

The NSW Government passed two new pieces of legislation in June 2020, designed to ensure greater standards of construction for residential developments. The Residential Apartment Buildings (Compliance and Enforcement Powers) Act 2020 (NSW) (“RAB Act”) and the Design and Building Practitioners Act 2020 (NSW) (“DBP Act”) both attained royal assent on the 10th of June and will commence in stages throughout the next 12 months.

The legislation places a greater onus on the developers and design practitioners by apportioning responsibility to them where a building defect is discovered. The Government hopes the implementation of these Acts will regain public confidence in residential developments after substantial defects in new developments around Sydney made headlines in 2018. The RAB Act is focussed on procedures and bestows powers to the regulator through the development process. While the DPB Act sets out to register and regulate design practitioners; assigning a duty of care and accountability around building defects. We detail the key takeaways of each act below.

The Residential Apartment Buildings (Compliance and Enforcement Powers) Act 2020 (NSW) Key Takeaways:

– The RAB Act is the first of its kind in Australia; establishing a requirement for developers to notify the Secretary of the Department of Customer Service (“the DCS”) at least six months, but no more than 12 months, of the intended completion of building work. This is intended to afford the Secretary time to make regular inspections prior to completion. Where a defect is discovered the DCS can withhold a buildings occupational certificate until rectifications are made by the developer.

– The RAB Act allows for a grace period of 60 days if expected completion is advanced or delayed. If the expected completion is moved beyond the grace period, the developer must submit a notice of change to the secretary within one week of his knowledge of the change.

– A failure to correctly file an expected completion notice with the Secretary may result in a maximum penalty of $210,000 for a body corporate or $42,000 in any other case.

– The definition of a “developer” for the purposes of the RAB Act includes “the person who contracted or arranged for, or facilitated or otherwise caused, the building work to be carried out”. If the building work is the erection or construction of a building or part of a building, the owner of the land is also taken to be a developer.

– The RAB Act was assented on 10 June and will commence on 1 September 2020. However, it should be noted that it will retroactively apply to buildings completed within the last six years. The date of the occupational certificate is the relevant consideration.

– If work is, or likely to be in contravention to the Act, the Secretary may issue a stop work order. The RAB Act also sets out the process required to appeal against a stop work order. Proceedings for offences will be taken before the Local Court or before Land and Environment Court. (This applies for the DPB Act as well).

The Design and Building Practitioners Act 2020 (NSW) Key Takeaways:

– The DBP Act introduces a statutory duty of care for the benefit of land owners and places accountability for new and existing defective construction work. Any person who carries out construction work has a duty of care to avoid economic loss caused by defects relating to building or construction work.

– Construction work includes the construction of a building, making alterations or additions to a building, renovations, applying protective treatment, preparations of design, and building products used for the development of residential buildings.

– The DBP Act states that any design practitioner who makes a compliance declaration must be registered and qualified to do so. Major variations to designs must be declared as compliant before being provided to the builder. Registered building practitioners must build in accordance with these declared designs and issue a compliance declaration stating that the final building complies with the Building Code of Australia.

– Design practitioners will have responsibility for their designs that are ultimately relied upon for building work. A registered design practitioner must provide a compliance declaration if they prepare a regulated design for a person and that design is in connection with building work.

– Penalties of up to $420,000, two years imprisonment, or both may apply for breaches of the DBP Act.

– The DBP has been written to comply and cooperate with other established legislations such as the Home Building Act, Civil Liability Act, Strata Schemes Management Act, Building Products Management Act etc. Relatively, the DBP Act and RAB Act does not limit the rights and obligations set out in these acts.

– The DBP Act was assented on the 10 June, commencing partly on the same date and partly on 1 July 2021.

Who Does this affect?

The purpose of this reform package was to limit the risk of building defects from going unnoticed in through the design and certification processes. It does this by placing a heavier burden of responsibility onto the design professionals for building defects. It is important if your business is involved in the development of residential dwellings that you are complying with the new regulations. This includes:
– understanding if you meet the registration and qualification requirements;
– consider how this may affect current and ongoing projects;
– be prepared for inspections and possible investigations; and
– form an action plan around the process of stop work orders.
These changes also affect land owners within residential buildings that have experienced calamity as a result of a building defect. If you have experienced economic loss as a result of a building defect within the last 6 years you may be entitled to reasonable compensation.

Rostron Carlyle Rojas is here to help
Understanding how new legislation may affect you can be difficult. We are committed to keeping you updated with relevant updates on legislation that may effect you and your business. Should you require further advice on this current matter or others, we would be delighted to assist.

Cntact us today at:
Email [email protected]
Telephone 9307 8900
Address: Rostron Carlyle Rojas Lawyers
13.05, 88 Phillip Street
Sydney NSW 2000

May 5, 2020May 5, 2020

Adjudication 101

As specialist construction lawyers, we act for a number of clients in adjudication proceedings. This guide sets out the adjudication process in a succinct and easy to understand manner.

What is adjudication?

The Building Industry Fairness (Security of Payment) Act 2017 (BIF Act) commenced on 17 December 2018. The Act provides for adjudication, which is a streamlined dispute resolution process that allows a party that has executed construction work or provided related goods and services to recover a disputed or unpaid progress payment.
Adjudication is a statutory based, alternative dispute resolution process where a qualified person, known as an adjudicator, is tasked with making a determination with respect to a payment dispute between parties. As adjudication is an alternative dispute resolution process, it falls outside of the court system and is relatively cheaper than litigation

When can an adjudication application be made?

Adjudication is run on very strict timelines. Clause 79 of the Act sets out the timeframes that determine when an adjudication application can be lodged. The table below sets out how and when an adjudication application can be made.

It is crucial that you adhere to the timeframes within which an adjudication application is to be filed. If you do not comply with the deadlines within which you must file an adjudication application, your adjudication application may be dismissed. Furthermore, it must be lodged on a business day, before 5:00 pm (AEST). It is important to note that any applications lodged after 5:00 pm (AEST) on a business day will be taken to be lodged the next business day.

Where can an adjudication application be made?

An adjudication application is lodged with the Registrar of the Queensland Building Construction Commission (QBCC).

What is usually contained in an adjudication application?

The Claimant (i.e. the person making the application) must complete the QBCC adjudication application form which is usually accompanied by the following:
• written submissions,
• a copy of the payment claim;
• a copy of the construction contract;
• a copy of the payment schedule (if there is one); and
• other supporting documents that may be relevant to the adjudication application.
You must also serve a copy of the adjudication application on the Respondent.

What happens once an adjudication application has been lodged?

After the adjudication application has been lodged, the QBCC must, within 4 business days of receipt of the adjudication application, refer the adjudication application to an accredited Adjudicator. If the accredited Adjudicator accepts the appointment as Adjudicator, he must serve the parties with a notice of acceptance within 4 business days after receiving the referral.

What happens once an Adjudicator has been appointed?

Once an Adjudicator has been appointed, the Respondent must file an Adjudication response within the later of the following periods:
(i) for standard claims (i.e. claims that are less than $750,000.00), 10 business days after being served with an adjudication application or 7 business days after being served with a notice of acceptance by the adjudicator; and

(ii) for complex claims (i.e. claims that are greater than $750,000.00), 15 business days after being served with an adjudication application or 12 business days after being served with a notice of acceptance by the adjudicator.
If an adjudication response is filed out of time, the Adjudicator will not consider it.

The adjudication response must be in writing and must identify the adjudication application to which it relates and may include written submissions.

It is important to note that the Act prohibits a Respondent from filing an adjudication response if the Respondent has not submitted a payment schedule. Furthermore, an adjudication response must not contain reasons that were not recorded in the payment schedule.

What happens after an adjudication response is filed?

The Adjudicator must now consider the adjudication application and the adjudication response and must then decide on the matter. The Adjudicator would ordinarily determine whether the Respondent owes the Claimant any monies, the date on which such monies became due and any interest.

The Adjudicator is required to hand down a decision within strict time frames. An Adjudicator must make a decision no later than:
(i) for standard payment claims, 10 business days after the adjudicator is given the adjudication response and where no adjudication response has been given, the last day on which the adjudicator receives the response; or

(ii) for complex payment claims, 15 business days after the adjudicator is given the adjudication response and where no adjudication response has been given, the last day on which the adjudicator receives the response.

What happens after an Adjudicator makes a decision?

The answer to this question depends on whether or not the Adjudicator awards an amount to be paid.

If the Adjudicator decides that an amount is to be paid by the Respondent, the Respondent is required to pay the amount to the Claimant on or before the day that is 5 business days after the day on which a copy of the Adjudicator’s decision is given to the Respondent by the Adjudicator or if the Adjudicator decides a later date for payment, then by such later date.

What is an adjudication certificate?

An adjudication certificate is usually only issued where the Respondent is required to pay an amount.

As soon as practicable after being given a copy of the decision by the Adjudicator, but no later than 5 business days after being given the decision, the QBCC must give the Claimant an adjudication certificate of the decision which sets out the following details:

(i) the name of the Claimant;

(ii) the name of the Respondent;

(iii) the adjudicated amount;

(iv) the date on which payment of the adjudicated amount is required to be paid;

(v) the rate of interest that is applicable; and

(vi) the costs that the Respondent is required to pay.

What happens if payment of an adjudicated amount is not made?

If the Respondent fails to make payment in whole or in part, the Claimant may:
(i) give the Respondent written notice of the Claimant’s intention to suspend works or supplying related goods and services; and/or
(ii) file the adjudication Certificate as a judgment for a debt.

As the above suggests, adjudication is a quick, cost effective method of getting paid for construction works or supplying related goods and services.

However, in order to ensure that your rights are protected and preserved, it is imperative that the provisions of the Act, in particular the strict time frames, are complied with.

Rostron Carlyle Rojas have an expert team of specialist building and construction lawyers.

If you have a question or you’d like more information on the content of this article, contact us today on (07) 3009 8444 or email us at [email protected]

March 30, 2020July 28, 2020

My building contract does not provide for a due date for progress payments – am I still entitled to progress payments?

Yes, you are still entitled to progress payments.

One of the objectives of the Building Industry Fairness (Security of Payment) Act 2017 (BIF Act) is to ensure that those individuals that carry out building and construction work or provide related goods and services get paid. This object is achieved, in part, by granting builders a statutory entitlement to progress payments, regardless of whether or not the construction contract makes provision for progress payments.

Accordingly, if your building contract is silent on due dates for progress payments, you can rely on clause 73 (b) of the BIF Act. Pursuant to clause 73 (b) of the BIF Act, if a construction contract does not provide for due dates for progress payments, the time for payment will be 10 business days from the date a payment claim was received. The BIF Act defines a business day from 12:00 am – 11:59 pm and does not include weekends, public holidays, the date the notice was given or the period from 22 December to 10 January. It is important to note that in order to enjoy the statutory entitlement to progress payments afforded by the BIF Act, you must issue a valid payment claim.

For further information, please see our answer to the question below, “What is a payment claim?”.

What is a payment claim?

A payment claim is a written document that requests payment for construction work or related goods or services. Prior to the enactment of the BIF Act a payment claim had to include an endorsement that it was made pursuant to legislation. This is no longer the case – under the BIF Act a claim for payment is considered a valid payment claim if it is in writing and:
• identifies the construction work or related goods and services;
• specifies the amount claimed;
• requests that the claimed amount be paid (a tax invoice satisfies this condition); and
• be the only payment claim served for the relevant reference date.

You must also ensure that your payment claim is properly served upon the correct entity or individual in accordance with the terms of the building contract.

It is important to note that if your tax invoice meets the requirements set out above, it will be considered as a payment claim. Accordingly, it is good practice to have a standard template tax invoice that complies with the payment claim requirements of the BIF Act. By doing this, each tax invoice you issue will be considered a payment claim – the advantage of this is that you will be entitled to rely on the BIF Act to enforce your right to payment.

I’ve been served with a payment claim – now what?

You cannot simply ignore a payment claim. If you’ve been served with a payment claim, the law requires that you respond appropriately to the payment claim. You have two options:

• where you agree with the amounts being claimed, you must pay the claimed amount in full by the due dates; or
• where you disagree with the amounts being claimed, you must respond to the payment claim by properly serving a payment schedule.

If you fail to issue a payment schedule, you will become liable to pay the amount claimed under the payment claim. Furthermore, if you hold a license issued by the Queensland Building and Construction Commission, you may also be subject to disciplinary action under the Queensland Building and Construction Commission Act 1991 QLD.

If you do not pay the amount owed on or before the due date, the builder can take steps to recover the unpaid amounts as a debt in Court or apply for adjudication. In addition, the builder may serve you with written notice of intention to suspend works.

For further information, please see our answer to the question below, “What is a payment schedule?”.

What is a payment schedule?

A payment schedule is a response to a payment claim, in which you are stating the amount you intend or are willing to pay and providing reasons why you are paying that amount, instead of the full amount.

If you receive a payment claim you must, either:
• pay the claimed amount in full by the due date; or
• respond to the payment claim by properly serving a payment schedule.

As the above suggests, you are only required to issue and serve a payment schedule if you do not intend to pay the full amount claimed.

Here’s some important points to bear in mind – a payment schedule must:
• identify the specific payment claim you are responding to;
• state the amount that is to be paid – if you intend to pay an amount that is less than the claimed amount it is essential that you clearly state the reasons for doing so. This is because you will not be allowed to put forward any reasons for withholding payment if the matter proceeds to adjudication; and
• be served within 15 business days of the date you are served with a payment claim of a shorter period if your construction contract provides for one.

I have not been paid the amount the adjudicator has awarded me, what can I do?

If you have not been paid the amount you were rewarded by the adjudicator you can give written notice of intention to suspend construction work. In addition to that you can institute legal proceedings in court to have adjudicator’s decision recognised as a judgement debt.

It is important to note that an adjudicated amount is to be paid within 5 business days of receiving a copy of the adjudicator’s decision or by a later date that the adjudicator may have set. If the party ordered to pay the adjudicated amount fails to do so within the prescribed period, you can:
• give written notice of intention to suspend carrying out construction work;
• institute proceedings in Court to have the adjudicator’s decision recognised as a judgment debt.

Are pay when paid clauses in a construction contract legal?

No. Pay when paid clauses are void – clause 74 of the BIF Act provides that pay when paid clauses have no effect in relation to any payment for construction work carried out or related goods or services supplied under a building contract.

Pay when paid clauses have traditionally been used by head contractors to reduce their payment risk. By using a pay when paid clause, the head contractor is informing a subcontractor that they will pay them after they receive payment from the principal.

Do I Need to Conduct Searches on the Party I am Entering into a Contract With?

We would strongly recommend that you conduct searches on the party you are entering into a contract with. Verifying the identity of the other party to a contract is critical – it ensures that you are adequately protected in the event of a dispute. There are a number of searches that you can conduct to ensure that the other party’s details are recorded correctly or to verify that the other party holds valid licenses, for example:
· a free license check on the Queensland Building and Construction Commission (QBCC) website to check that the builder’s name as it is listed on the construction contract matches the builder’s name on construction contract;
· ensure that the director(s) name on the QBCC license search and the address match;
· ensure that QBCC license is valid;
· an Australian Business Number (ABN) search; or
· if the other party has an Australian Company Number (ACN), you can do a free search on the Australian Securities and Investment Commission’s (ASIC) website to verify that the name and the ACN is correct.

Rostron Carlyle Rojas have an expert team of building and construction lawyers. If you have a question or you’d like more information on the content of this article, contact us today on (07) 3009 8444 or email us at [email protected].

March 11, 2020March 11, 2020

New Legislation Brings Major Changes To The Building And Construction Industry

On 5 February 2020, the Queensland Government introduced the Building Industry Fairness (Security of Payment) and Other Legislation Amendment Bill 2020 (Qld) (“Bill”) that will bring major changes to the building and construction industry.

The Bill proposes extensive changes to the Building Industry Fairness (Security of Payment) Act 2017 (Qld) (“BIF Act”) that will ensure effective, efficient and fair payment procedures for those who work in the building and construction industry.

These changes will be rolled out in 4 phases; the commencement dates of each phase are outlined below.

Background to the new Building Industry Fairness Legislation

On 14 May 2018, the Minister for Housing and Public Works, Minister for Digital Technology and Minister for Sport established the Building Industry Fairness Reforms Implementation and Evaluation Panel (“the Panel”). The goal of the panel was to review the implementation and effectiveness of the building industry fairness reforms introduced by the BIF Act and provide recommendations accordingly.

The panel’s recommendations were provided in the Building Industry Fairness Reforms Implementation and Evaluation Panel Report (“the Report”).

The Bill was issued as a direct response to the Report, which proposed 20 recommendations to the BIF Act. These recommendations have been grouped into three major themes:

Managing the financial transition – to enable minimum financial stress following implementation;
Simplifying the framework – to reduce administrative costs while providing for transparency; and
Improving protections – by obligating all contractors and private principals in the contractual chain to hold retentions on trust and providing new mechanisms for securing funds in dispute to all claimants.

The Queensland Government has accepted, or accepted in-principle, all 20 recommendations.

Key changes

Major changes have been proposed by the Bill, including reform of project bank accounts (“PBAs”), improvements to the security of payment regime and imposing liability for executive officers.

Project Bank Accounts

The PBA framework will be simplified by removing the requirement for each contract retention to have a separate trust account. This will mean less administration for head contractors and ensure payments that subcontractors are entitled to are protected until they are due to be paid.

Previously, PBAs were only required by government building contracts between $1 million and $10 million. Head contractors were required to have a set of 3 trust accounts (known as PBAs) for each qualifying project that operated to secure funds, under a building contract, until they are paid to a subcontractor:

progress payments;
disputed funds; and
retention money.

The new framework will remove the disputed funds account and rename PBAs “Project and Retention Trusts” accordingly. The new approach to dealing with disputed funds is outlined below under ‘Security of Payment’.

Following implementation of the Bill, head contractors will be required to establish a Project Trust for each project and a Retention Trust for all cash retentions held. This framework will eventually be expanded to all building and construction contractors (including subcontractors) and the private sector through the aforementioned phased approach.

The Queensland Government has acknowledged that the “removal of project and retention funds from operating capital is an intended consequence of the reforms and some businesses may need to change their financial management practices and find other sources of working capital from savings, by increasing debt, or liquidating assets”[1]. In an attempt to overcome this, it has been put forward that the roll out approach will leave “plenty of time for the industry to prepare and have new administrative procedures in place, minimising financial stress”[2].

Security of Payment

The Bill introduces many changes that will improve the security of payment regime by increasing protection for contractors (including head contractors) and subcontractors from a failure to pay by principals. The following examples are some of the major changes presented by the Bill.

Based on New South Wales’ model, head contractor’s payment claims will be required to be accompanied by a supporting statement. Payment claims are requests for payment given to an individual or company from a contractor progressively for construction work (or related goods and services) completed under a construction contract to a certain point in time. The supporting statement must declare that all subcontractors have been paid as at the date of the payment claim or identify any subcontractors which have not been paid and the outstanding amounts.

Further, it will be an offence to pay less that what is stated in a payment schedule. A payment schedule, as required by the BIF Act, is a document that identifies a specific payment claim, states the amount that will be paid and provides reasons if the amount that will be paid is less than the payment claim.

The Bill also introduces additional measures to secure payment. Claimants will be able to make payment withholding requests against the principal over amounts in dispute in adjudication. Payment withholdings requests will enable a claimant to require a higher party [3] to retain the adjudicated amount [4]. Additionally, head contractors can register a security interest over a property for an unpaid adjudicated amount if the respondent is the registered owner of the property [5].

Liability for Executive Officers

Executive officers will be personally liable for certain trust offences by the company if all reasonable steps in ensuring the corporation did not engage in the offending conduct are not taken [6].

An executive officer (of a corporation) is a “person who is concerned with, or takes part in, the corporation’s management, whether or not the person is a director or the person’s position is given the name of executive officer” [7].

Offences that will attract executive liability include withdrawing money from a Project Trust account for an inappropriate purpose, which has a maximum penalty of 300 penalty units ($40,035 at the time of writing) or 2 year’s imprisonment [8], and dissolving a Project Trust without authorisation, which has a maximum penalty of 500 penalty units ($66,725 at the time of writing) or 1 year’s imprisonment [9].

When will the changes be rolled out?

The enhanced PBA program will be rolled out in 4 phases. The phased approach aims to ensure that those most capable to cope with the changes will be affected first.

It is anticipated that Phase 1 will commence on 1 July 2020, extending to government building projects, including Health and Hospital Services, above $1 million.

Phase 2 will commence on 1 July 2021 and will apply to all building projects above $10 million.

Phase 3 will commence on 1 January 2022 and will apply to all building projects above $3 million.

Phase 4 will commence on 1 July 2022 and will apply to all building projects above $1 million.

What this means for you?

Implementation of the Bill will affect every stakeholder in the Queensland building and construction industry.

Participants should familiarise themselves with the Bill to ensure compliance with these forthcoming amendments. In particular, those who will be affected by the replacement of the previous PBA framework with Project and Retention Trusts should consider any financial impacts well in advance of commencement.

How can we help?

If you would like to know more on how the Bill will affect you, please contact our Building & Construction Lawyers on (07) 3009 8444 or email us at [email protected]

References:

[1] https://www.hpw.qld.gov.au/__data/assets/pdf_file/0028/9199/panelgovernmentresponse.pdf.

[2] http://statements.qld.gov.au/Statement/2019/11/28/palaszczuk-government-delivers-confidence-for-queensland-tradies-and-business.

[3] If the claimant for the amount is a subcontractor—the person from whom an amount is or becomes payable to the respondent under an arrangement with the respondent for related work or services; if the claimant for the amount is a head contractor—the person who is the financier for the related work or services.

[4] Building Industry Fairness (Security of Payment) and Other Legislation Amendment Bill 2020 (Qld) s 97B(2).

[5] Ibid s 100B.

[6] Ibid s 58A.

[7] Ibid.

[8] Ibid s 20A.

[9] Ibid s 21A.