Far reaching Security of Payment reforms for the building and construction industry

The Building Industry Fairness (Security of Payment) Bill 2017 (BIF Bill) seeks to:

• regulate contracts between contractors and subcontractors by mandating certain provisions and prohibiting others;
• control and direct the flow of money between the parties with the establishment of Project Bank Accounts (PBA);
• redefine in favour of subcontractors the operations of the BCIPA and SCA through a number of procedural changes;
• hold accountable contractors who do not comply with their payment and contractual obligations through significantly increased QBCC compliance and enforcement powers.

There has been a number of other proposed changes and reforms to the QBCC Act that to date, have attracted little commentary, some of which (not exhaustive) are outlined below.

The composition of the Queensland Building and Construction Board will be increased from 7 members to be no more than 10 members and there will be various prescriptive attributes, qualifications and experience members need to demonstrate so a broad cross section of the industry is represented.

In relation to the Minimum Financial Requirements (MFR’s) for licensing, a specific requirement under the QBCC Act that variations of the contractor’s turnover and assets be brought to the attention of the QBCC.

Significantly increased penalties for:

• a person carrying out unlicensed contracting;
• a licensed company carrying out building work without a nominee for a period greater than 28 days;
• an individual carrying out fire protection work without the required occupational licence or appropriate status recognition under another Act (certain exceptions); or
• a licensed contractor engaging or directing an unauthorised person for fire protection work.

A person who is a party to a building contract, must not, without reasonable excuse, cause another party to the contract to suffer a significant financial loss because they deliberately avoid complying with, or fail to comply with the contract.

The Commissioner of the QBCC may approve an audit program of licensees for one of 6 purposes (currently 4 purposes) to find out if they:

1. continue to satisfy the MFR’s (current);
2. are complying with provisions relating to building contracts other than domestic building contracts (current);
3. are complying with the provisions relating to the Statutory Insurance Scheme (current);
4. are complying with the provisions relating to domestic building contracts (current);
5. are complying with the Building Act 1975, chapter 8 (new); and
6. are complying with the BIFB, chapter 2 (new).

An individual will be an excluded from holding a licence if within 2 years (currently 1 year) before a construction company of which they were a director, secretary or influential person of, succumbed to a defined form of insolvency (“relevant company event”).

Disciplinary action can be taken against a licensee or former licensee under 2 new grounds, namely:

• The licensee contravenes an offence under the BIF Bill, on it becoming enacted; and
• The licensee contravenes section 67NC (new) under the QBCC Act requiring the contracting party to give the contracted party a notice about the end of defects liability period.

We at Helix Legal are committed to informing contractors as to the extent the industry they work in will be regulated in the future.

We will be publishing many more updates so keep an eye out. In the meantime, should you have any questions or concerns, please contact Michael Chesterman at michael@helix.legal or Earl Tan at earl@helix.legal.

Michael Chesterman September 19, 2017