The Queensland Court of Appeal in McNab Constructions
Australia Pty Ltd v Queensland Building Services
Authority1 has confirmed that the Queensland
Building Services Authority can require construction managers to
rectify defective or incomplete building work, even in situations
where the construction manager only provided supervisory services
and was not involved in the design or execution of the work.
Failure to comply with a direction to rectify exposes
construction managers to fines of up to $25,000 per direction,
accruing licence demerit points and being liable for the
rectification costs. Construction managers should therefore make
sure that appropriate provisions are included in their contracts
with owners/principals to deal with this exposure.
Advanced Traders Pty Ltd (Principal) engaged McNab under the
Australian Standard Construction Management General Conditions
(Management Contract), to manage the construction of a residential
Under the Management Contract, McNab's role was to
coordinate aspects of construction, monitor progress, check quality
of construction, administer the individual trade contracts and
report on these matters to the Principal. Importantly, McNab was
not involved in the design or execution of the work. The actual
construction of the building was performed by a number of separate
trade contractors each of whom was engaged by the Principal.
The Management Contract conferred on McNab only a limited
capacity to deal with defective work. McNab could do no more than
point out a defect to the trade contractor, request its
rectification and report to the Principal. McNab was given no power
of sanction in the event a contractor refused to make good its
work. That power rested with the Principal who could withhold
monies or have defective work repaired by others and set off the
cost of doing so against monies it owed the contractor.
The building was accepted as practically complete on 30 November
2006. Following disagreements between McNab and the Principal, the
Management Contract was terminated on 29 November 2007.
Between 3 October 2007 and 15 January 2009, the QBSA issued 15
separate directions to McNab to rectify building work under s.72
Queensland Building Services Authority Act. As a
consequence, McNab was responsible for rectifying the work and if
it failed to do so, faced fines of up to $375,000, demerit points
and liability for the cost of having the rectification done by
McNab challenged the QBSA's power to issue the directions
against it and the issue came before the Queensland Court of Appeal
The Court of Appeal considered the construction of s.72, the
relevant parts of which provide:
(1) ... the [QBSA] may direct the person who carried out the
building work to rectify the building work ...
(11) (a) a person carries out building work whether the
person directly or indirectly causes it to be carried out;
(b) a person is taken to carry out building work if the person
provides advisory services, administration services, management
services or supervisory services for the work.
McNab argued that the class of persons covered by s.72(11)(b)
was limited to those who are also erecting or designing the
The Court of Appeal disagreed with McNab. The Court of Appeal
held that such a limitation could not be found. One of the objects
of the QBSA Act is to provide remedies for defective building work.
It therefore seemed to the Court that limiting the class of persons
to whom a rectification direction may be given, to those erecting
or designing the building, would be counter to that object.
The Court of Appeal held that so long as there is a connection
between the services provided and the building work, the service
provider is liable to a direction to rectify. In this case, there
was such a connection since the work here was the provision, over
some two years, of supervisory, management and administration
activities performed directly for the purpose of having the
Consequently, the Court of Appeal ordered that the QBSA had the
power to issue the 15 directions to rectify to McNab and remitted
the matter to the Queensland Civil and Administrative Tribunal for
1.  QCA 380.
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