Building and Construction Lawyers

What is Adjudication?

Adjudication is an alternative dispute resolution process for claims sought under the Building Industry Fairness (Security of Payment) Act. In order to have the dispute referred to an adjudicator, there must be a claim made by a party to the construction contract in relation to construction work or the supply of related goods and services for the construction work in Queensland.

The adjudicator may determine:

• the claimant’s right to a progress payment;
• the date on which a progress payment becomes payable;
• the interest rate payable on a progress claim.

Why choose Adjudication?

The adjudication process allows for a relatively simple assessment of the BIF Act claims by an independent adjudicator without the involvement of the Courts. The strict timeframes for lodgement of the application and delivery of the adjudication decision ensure that the parties can obtain fast resolution of their dispute.

How do I make an application for Adjudication?

You can apply for adjudication, once you validly serve your BIF Act claim and give notification of your intention to apply to the respondent. The applications can be made online or in person at any of the branches of the Queensland Building and Construction Commission. With your application, you should include submissions outlining your position with respect to the BIF Act claim.

What happens after the Adjudication?

The nominated adjudicator will make a decision based on the details of the payment claim and payment schedule and the parties’ submissions, as well as the terms of the contract between the parties and the relevant provisions of the governing legislation. The adjudicator will decide the ‘adjudicated amount’ and a party who must pay it. If you are successful, you must serve the decision on the respondent, and the respondent will have 5 business days (or another timeframe specified by the adjudicator) to pay the adjudicated amount.

What if I am successful at the Adjudication, but I still cannot get paid?

You can register the adjudication decision with Queensland Courts. The appropriate court will issue a certificate and the decision will become a judgment debt, which can be enforced against the respondent. For more information on Adjudication Applications or how we can help, contact us.

Do I need a building licence?

In Queensland, companies and individuals must hold a QBCC building licence in order to carry out:

• Any building work valued over $3,300
• Building work valued over $1,100 if it involves Hydraulic Services Design
• Building work of any value when it involves:
  – Drainage
  – Plumbing and drainage
  – Termite management – Chemical
  – Fire protection
  – Completed residential building inspection
  – Building design – low rise, medium rise and open
  – Site classification

Developers and licensed contractors entering into commercial work contracts do not require to hold a licence as long as they engage an appropriately licensed contractor to carry out the building work.

How do I apply for a Queensland Building Licence?

The Queensland Building and Construction Commission administers the licensing of building contractors and building professionals in Queensland. All applicants must meet the applicable eligibility criteria, which includes financial requirements, professional qualifications and experience as well as the fitness of character. An application must be accompanied by various supporting documents to provide evidence of the statements made in the application. Eligible applicants must pay annual licence fees, which are calculated based on the category of the licence sought and any conditions applicable to the applicant.

What are the different classes of licence in Queensland?

Different classes of building licence are available for particular types of building work. Any the building work that you carry out must be covered by your licence class, and often a contractor will be required to maintain more than one licence class. There are currently over 80 distinct classes of building licence administered by the QBCC in the following broad categories:

• Builders
• Builders restricted
• Building design
• Completed residential building inspections
• Trade contractors
• Occupational and provisional plumbing and draining
• Restricted plumbing and draining; and
• Fire protection

What if I receive a notice or a request from QBCC with respect to my building licence?

As the industry regulator the QBCC continually monitors the licensees’ compliance with the licensing requirements and the observance of the relevant building standards.
The QBCC may audit a licensee on adherence to the minimum financial requirements for holding of the building licence under an approved compliance audit program or if the Commission is satisfied that there are reasonable grounds to believe that the licensee does not meet the minimum financial requirements for their licence class and/or condition.

The QBCC may decide to suspend or cancel a building licence if the licensee does not meet the audit requirements. The QBCC may also issue show cause notices to the licensees with respect to certain insolvency events, for example, the bankruptcy of the licence holder or licensee’s responsibility for failure of a building company.

The QBCC may decide that such persons and/or associated companies be excluded from holding a building licence. Various periods of exclusion including a life-long ban may apply.

If you receive a notice from the QBCC relating to your building licence you must take urgent action. Check the applicable time frame for your response and understand exactly what is required from you. If you do not comply with the prescribed deadline, you may be eligible for an extension of time in limited circumstances. Most importantly seek legal advice immediately.

I have a query about a building licence for other Australian states?

Not from QLD? We can provide you with building licensing advice relevant to your state. Contact us now.

What is the Queensland Home Warranty Scheme?

The Queensland Home Warranty Scheme is a statutory insurance scheme that provides insurance cover for certain residential construction work valued over $3,300. Its purpose is to provide protection for consumers for non-completion, defective construction and subsidence. The scheme is administered by the Queensland Building and Construction Commission.

What works are covered?

The Queensland Home Warranty Scheme covers ‘residential construction work’ as outlined in the Queensland Building and Construction Commission Act 1991 and the Queensland Building and Construction Commission Regulation 2003. The scheme usually covers construction of and repairs to the singe detached dwellings, residential units and townhouses of three storeys or less.

When are premiums payable?

A policy of insurance for residential construction work must be taken out, by either the licensed contractor or the construction manager, as soon as practicable after a contract for the works has been entered into. The premium is calculated on the value of the contract. A certificate of insurance is issued with respect to the residential construction work once the correct premium is paid and accepted. The certificate of insurance constitutes evidence that the contracted works are covered by insurance.

When does the policy of insurance come into force?

The policy of insurance comes into force on the earliest of the following events:

• When a licensed contractor pays the appropriate insurance premium for the work
• On the date a contract between a building contractor and a consumer is entered into for the work
• When a building contractor commences the work

How do I make a claim?

A homeowner can make a claim on the insurance scheme by lodging a Complaint Form with the Queensland Building and Construction Commission. Complaints can be made with respect to:

• Defective building work, including defects arising during construction
• Incomplete work due to abandonment of site, loss of building licence, bankruptcy, liquidation or death
• Damage to your property caused by building work carried out on a neighbouring property
• A pre-purchase or pest inspection report that didn’t identify the existing defects
• Building design prepared by a building professional
• Unlicensed building work or suspected illegal or inappropriate conduct by the builder
• The professional conduct of a building certifier

What if I am served with a direction to rectify?

The QBCC may direct the building contractor or any other person who carried out or was to carry out the relevant works to rectify or complete the building work within the period stated in the direction.

If you receive a direction to rectify, it is imperative that you comply with the direction or apply for a review within 28 days. If you have received a direction to rectify and you were not the person who carried out the building work in question, you can challenge the validity of the direction notice.

Given the limited timeframe imposed by the QBCC in attending to a direction to rectify, it is important that you attend any scheduled site inspections, so that you can discuss the defects identified with the QBCC’s building inspector and/or the homeowner.

What if the defective work was the fault of a subcontractor?

You should immediately alert the QBCC if the defective work was the fault of a subcontractor, so that they can also pursue the subcontractor. A direction to rectify may be given to more than one person with respect to the same building work.

Please note that notification to the QBCC will not absolve you of the obligations as set out in the direction to rectify.

I did work for a developer. Does it matter if a subsequent purchaser makes a complaint about my work?

No, it does not matter if a subsequent purchaser of residential construction work makes a complaint about your work. The subsequent owners of residential construction work, which was covered by the insurance scheme, may claim indemnity under the statutory insurance subject to certain limitations.

What if I am served with a scope of work?

In the event that you fail to resolve the direction to rectify or complete within the prescribed time period (usually 28 days from issue), the homeowner’s complaint may progress from dispute resolution stage to insurance assessment. The QBCC will then assess the complaint as an insurance claim and may subsequently issue a scope of work for completion or rectification of building work.

You will have 28 days from the date of issue of the scope of work to apply for a review of the QBCC’s decision. If you do not take any action, the claim may progress to payout and you may become liable for repayment of the claim amount to the QBCC.

Payment on a claim under the Queensland Home Warranty Scheme

If you do not comply with a direction to rectify and rectification or completion of the building work is required, the QBCC will upon issuing of the appropriate scope of work, seek tenders from licensed contractors to carry out the scope. The QBCC may then pay any amount assessed under the insurance policy to the rectifying builder or the homeowner, subject to certain limitations.

If the QBCC pays out any amount on a claim made under the Queensland Home Warranty Scheme, it may proceed to recover those amounts as debt from a contractor who carried out or was to carry out the subject building work, or from any other persons through whose fault the claim arose.

The QBCC may also seek recovery against directors if the relevant debtor is a company.

A person may become liable if he or she was a director of the company when the building work, the subject of the claim was, or was to have been, carried out and/or an individual who was a director of the company when the payments were made by the QBCC under the Queensland Home Warranty Scheme.

What can I do if I did not respond to the direction to rectify and/or the scope of work

It is essential for the building licence holders to monitor any correspondence from the QBCC. However, if you miss a direction to rectify or a scope of work notification, you may be able to apply for an internal review of the QBCC’s decision to issue those notices. Any such applications must be made within 28 days of the issue of notices unless an extension of time is allowed by the QBCC.

You may also be eligible to lodge an external review application with the Queensland Civil and Administrative Tribunal (QCAT), if you are not satisfied with the QBCC’s internal review.

However, if you fail to apply for a review, you may be later prevented from raising any matters with respect to the QBCC’s assessment of the claim under the Queensland Home Warranty Insurance in the recovery proceedings with respect to the claim. There is court authority with respect to the various matters which are not justiciable outside of the QCAT’s review proceedings.

Why is it important to keep your contact details up to date with the QBCC?

It is the responsibility of the building licence holder to update their contact details with the QBCC. Any notices or important correspondence are usually subject to the strict compliance deadlines.  It is not sufficient to assert that you did not receive a notice due to an incorrect address supplied to the QBCC and you may not be able to secure time extensions for responding to the QBCC’s directions or requests.

For further information fill out the form to the right to make an online enquiry or otherwise contact us on 07 3009 8444.

What is a Subcontractors’ Charge?

The BIF Act provides a mechanism for subcontractors to secure money owed to them by a head contractor or superior contractor. Under normal circumstances, the building owner or employer (“the employer”) would pay the head contractor pursuant to the contract between the employer and head contractor.

It is then the head contractor’s responsibility to pay the subcontractors which the head contractor has engaged. Sometimes the head contractor would fail to pay to the subcontractor the money owed under the subcontract, despite having been paid by the employer. 

The subcontractor is then placed in a difficult position as there is no contract between the employer and the subcontractor which would allow the subcontractor to seek payment directly from the employer. The BIF Act provides a solution for subcontractors from the difficulties which arise from being outside the ‘protection’ of the head contract.

How do I lodge a charge?

To lodge a subcontractors’ charge, the subcontractor must give a notice of claim of charge to the employer. The Act requires the notice to be in a prescribed form and include certain information including the amount and particulars of the claim supported by a statutory declaration from an independent professional, certifying the amount claimed. The subcontractor must also give notice to the head contractor that the claim has been made.

What happens after I give notice of a claim of charge?

Upon receipt of the claim of charge the employer is obliged to hold the monies, which have not yet been paid to the head contractor with respect to the subcontract.

The subcontractor is then considered a secured creditor. If the employer fails to comply with this obligation, they can be held liable for the amount owing to the subcontractor. The money held by the employer may need to be apportioned between subcontractors where a number of subcontractors lodge a subcontractors’ charge in relation to the same project.

Within 10 days after the notice of the claim of charge is given to the head contractor, the head contractor must give to the employer and the subcontractor a notice (“contractor’s notice”) that it:

(a) accepts liability to pay the amount claimed; or
(b) disputes the claim; or
(c) accepts liability to pay the amount stated in the contractor’s notice, but otherwise disputes the claim.

Can the employer pay the money being held directly to the subcontractor?

Subcontractors should note that money held by the employer can only be paid to the subcontractor in the event that the head contractor consents or the Court makes an order that the money is payable to the subcontractor.

While the BIF Act provides a useful mechanism for subcontractors to secure monies owed to them, it is important to be aware that a claim of charge frequently results in litigation. The subcontractor does not always receive the full amount claimed, particularly in the event that the head contractor becomes insolvent.

However, even in these circumstances the subcontractor is in a position to recover some of the money owed as a secured creditor, which otherwise would not be possible in the case of the head contractor’s insolvency.

Can I ‘leapfrog’ to the employer?

The BIF Act allows subcontractors to lodge a charge directly with the ultimate owner or employer for a project, even where there is a number of contractors in the chain of command. This may ensure a better return for the subcontractor as it ‘leapfrogs’ directly to the entity which is funding the project.

The BIF Act provides a legal framework for the time and cost effective recovery of payments owed for construction work or the supply of related goods or services under a construction contract in Queensland.

Construction work and the supply of related goods or services can include, but is not limited to:

• Construction work;
• Preparatory works;
• Demolition;
• Renovations;
• Fabrication of materials;
• Provision of labour;
• Architectural, design, surveying or quantity surveying services relating to construction work; and
• Hire of plant and equipment

When can I make a payment claim?

A BIF Act Claim can be made with respect to the building work carried out prior to the reference date as specified in the terms of the building contract or otherwise as determined by the BIF Act, usually being on the last day of the month in which the works were carried out or the goods or services were supplied.

What should I do if I am served with a Payment Claim?

A party served with a payment claim has ten business days from the date of service to provide the claimant with a BIF Act Payment Schedule.

The payment schedule must both:

• Identify the payment claim to which it relates; and
• State the amount of the payment, if any, that the party proposes to make.

Where the amount of a payment claim is to be disputed, a payment schedule must be served within the time permitted under the BIF Act. A failure to do so may result in the party served with the payment claim becoming liable for the whole claimed amount in BIF Act decisions.

What is adjudication?

Adjudication is a less formal legal process whereby a respondent’s payment schedule is assessed by an adjudicator in light of the claimant’s payment claim. This is done by way of an adjudication application.

In deciding the adjudication application, an adjudicator will determine:

• the amount of the progress payment, if any, to be paid by the respondent to the claimant (the adjudicated amount); and
• the date on which any amount became or becomes payable; and
• the rate of interest payable on any amount

What if the Respondent does not serve a payment schedule or pay an adjudicated amount?

Where a party fails to serve a payment schedule in response to a payment claim, the claimant may either:

• apply directly to the Court for judgment against the respondent for the claimed amount; or
• proceed with an adjudication application.

Where a claimant decides to proceed directly to Court for judgment, the provisions of the BIF Act prevent the respondent from raising any counterclaim against the claimant or any defence in relation to matters arising under the construction contract.

Alternatively, where a respondent is adjudicated to be liable for an adjudicated amount and fails to pay that amount by the date stipulated in the adjudication, then the claimant can request a certificate from the adjudicator. This adjudication certificate may then be filed as a judgment for a debt and may be enforced in a court of competent jurisdiction.

For more information contact us.

Defective and incomplete work claims arise in Queensland when building work falls short of the agreed standard or is not completed as per the contract.

This legal framework protects homeowners by providing avenues for redress when builders deliver substandard work.

Key points of the law:

• QBCC involvement: The Queensland Building and Construction Commission (QBCC) plays a central role in dispute resolution. Homeowners can lodge complaints and access the Queensland Home Warranty Scheme (QHW) for eligible claims.
• Time limits: Strict timeframes apply for making claims. Non-structural defects must be reported within 7 months of completion, while incomplete work and structural defects have a 12-month window.
• Claim types: Claims can be made for non-completion, defective work (including structural and non-structural), and consequential damage caused by poor workmanship.
• Potential remedies: Depending on the claim’s nature, homeowners may be entitled to:
  • Rectification of the defective or incomplete work.
  • Financial compensation for losses incurred.
  • Payment for repairs or completion of the work by another builder.

Understanding Defective & Incomplete Work Claims empowers homeowners to:

• Be informed about their rights and protections under Queensland building law.
• Recognise potential issues with their building work and take timely action.
• Access appropriate dispute resolution mechanisms like the QBCC.
• Make informed decisions about claiming compensation for defective or incomplete work.

Ignorance of the law can have serious consequences for homeowners.

By being aware of their rights and procedures, you can:

• Avoid financial losses associated with repairing or completing faulty work.
• Hold builders accountable for their actions and ensure compliance with the contract.
• Protect their investment and ensure their home is built to a satisfactory standard.

Overall, understanding Defective & Incomplete Work Claims in QLD Building Law empowers homeowners and fosters a fair and transparent construction industry.