Recent changes to construction licensing requirements in
Queensland should provide welcome relief from the unintended
regulatory complications caused by section 42 of the Queensland
Building Services Authority Act.1
THE ISSUE WITH SECTION 42
Prior to recent amendments, the Queensland Building Services
Authority Act 1991 (now the Queensland Building and Construction
Commission Act 1991 or QBCC Act) required any contracting
party who agreed to carry out or undertake to carry out
"building work" (as defined in the Act) to hold a
building licence. This effectively imposed an often unnecessary
regulatory burden on certain parties, in particular developers, who
were required to be licensed even where they engaged licensed
building contractors to perform the actual building work.
THE NEW EXCEPTIONS TO SECTION 42
As of 1 December 2013, amendments to Schedule 1A of the QBCC Act
remedy this situation by expanding the exceptions to the
requirement to hold a building license. Provided the building work
is entirely contracted to an appropriately licensed builder,
specific exceptions now exist for:
head contractors (including developers);
special purpose vehicles established for PPPs; and
persons who tender for or contract to carry out building work
for prescribed government projects.
This amendment removes the requirement for developers not
engaged in performing actual building work to be licensed
unnecessarily. Importantly, these exceptions relate only to
commercial building work.
CAUTION STILL REQUIRED
The new exceptions will not apply if a party "causes or
allows any of the building work to be carried out by a person who
is not licensed to carry out building work of the relevant
The implications of this are twofold. First, it imports a
responsibility on the head contractor/developer to ensure a
licensed contractor carries out the relevant building work. Second,
care must be taken that the work performed by any party who does
not hold a license does not fall within the broad definition of
'carrying out of building work' under the QBCC
Act, which includes the provision of 'building work
services' (namely administrative, advisory, management
and supervisory services).
CONCEPT OF 'SPECIAL PURPOSE VEHICLE' AND LIMITS ON
RETENTION MONEY AND SECURITY
The QBCC Act also now recognises the concept of a 'special
purpose vehicle' (SPV), being an entity established for the
purpose of carrying out a public-private partnership and declared
by the Queensland Treasurer to be an SPV.
In addition to relief from the licensing requirements of section
42 of the Act, the recent amendments change the limits on retention
money/security applicable to security provided under a contract to
which an SPV is a party.
Under section 67K the QBBC Act, retention amounts and securities
for building contracts other than subcontracts are limited to 5% of
the contract price. Parties can, however, contract out of this
limit by express provisions in the contract.
Section 67L limits the retention amounts and securities for
subcontracts to 5% of the contract price for the subcontract.
Parties cannot contract out of this limit.
The Amending Act provides that the section 67K limit applies to
contracts involving an SPV and expressly states that section 67L
does not apply to a subcontract if the contracting party is an
1Changes to section 42, Schedule 1A and
section 67K of the Queensland Building and Construction Commission
Act are contained in Part 3 of the Residential Tenancies and
Rooming Accommodation Amendment Act 2013.
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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