BIF payment claims and the QBCC ACT – part 1

Two of the most important pieces of Queensland legislation impacting upon the building and construction industry are the Queensland Building and Construction Commission Act 1991 (QBCC Act) and the Building Industry Fairness (Security of Payment) Act 2017 (BIF).

Perhaps the most important purpose of the QBCC Act is to regulate the industry to ensure the maintenance of proper standards for building and construction work.  One of the mechanisms to achieve that is requiring those performing building work (as defined in the QBCC Act) to be appropriately licensed.

In comparison, the BIF’s objectives are centred on those working in the building and construction industry being paid for the work they perform, in part achieved by establishing a procedure for making statutory payment claims and the adjudication of such claims.

The operation of the QBCC Act can impact upon the validity of BIF payment claims, as illustrated in the building dispute considered by the Court in The Trustee for Hardev Property (Dev 10) Unit Trust v Palmgrove Holdings Pty Ltd & Ors [2019] QSC 208 (Hardev Property).

Background to Hardev Property

Hardev Property Pty Ltd ABN 70 342 914 520 (Hardev) contracted with Palmgrove Holdings Pty Ltd ABN 37 010 870 925 (Palmgrove) to provide water and sewerage services to proposed residential lots in a subdivision development.

At the time when Palmgrove discharged its obligations under the contract, no individual lots existed under a survey plan nor had any houses been erected.  The installed sewerage and water services branch connections extended about 1 metre into the proposed residential allotments.

Hardev asserted:

• the work identified in the contract was licensed building work as defined in the QBCC Act; and
• as Palmgrove was not licensed to perform that building work, the payment claim it issued in reliance upon the BIF for the work performed was void.

The law

Section 42 of the QBCC Act makes it unlawful for an unlicensed person to carry out building work.

Schedule 2 of the QBCC Act defines building work as including the provision of water supply, sewerage or drainage in connection with a building or any site work related to work of that kind.  The schedule goes on to define a building as including any fixed structure.

Section 5 and clause 11 of Schedule 1 of the Queensland Building and Construction Commission Regulation 2018 (the Regulation) excludes from the definition of building work in the QBCC Act the construction of a water reticulation system, sewerage system or stormwater drain, other than works connecting a particular building to a main system or drain. Building is defined as including a proposed building.

Cant Contracting Pty Ltd v Casella & Anor [2006] QSC 242 held that because of section 42 of the QBCC Act, an unlicensed contractor is not entitled to make a statutory progress payment claim.

The Court’s decision

The Court observed the sewerage and water reticulation connection works would not be licensed building work unless as a result of the extended definition of building, they were works connecting a proposed building to a main of the reticulation system.

However, at the time of contracting, no proposed buildings were identified and accordingly it could not be said that Palmgrove undertook to do work to connect a proposed building to a main.  Rather, it undertook to provide branch connections which would make the services available to proposed lots which did not exist at the time the works were performed.  It was noted that local governments, when approving subdivisions for residential purposes would ensure by appropriate conditions, for the provision of water supply, sewerage and drainage services to proposed lots.

The Court commented that was the sort of work intended to be excluded by clause 11 of Schedule 1 of the Regulation from the definition of building work, that intend being defeated if branch connections to proposed lots were found to be building work.

Accordingly, the Palmgrove payment claim and adjudication of it were valid.

Takeaways

The case illustrates that the statutory definition of building work under the QBCC Act is complex and notwithstanding the passage of time, is still subject to ongoing interpretation and arguments resulting in building dispute litigation.

Links and further references

Legislation

Queensland Building and Construction Commission Act 1991

Queensland Building and Construction Commission Regulation 2018

Building Industry Fairness (Security of Payment) Act 2017

Cases

Cant Contracting Pty Ltd v Casella & Anor [2006] QSC 242

Related insights

Top ways to avoid a building dispute in Queensland

Implications of non-compliance with the Queensland Building and Construction Commission Act (Qld) 1991

Why you should not engage an unlicensed building contractor

Implications of performing unlicensed building work

Further information about BIF payment claims

Disclaimer

This article contains general commentary only.  You should not rely on the commentary as legal advice.  Specific legal advice should be obtained to ascertain how the law applies to your particular circumstances.