Implications of performing unlicensed building work

Unlawful building work performed by an unlicensed person has significant implications for the person who performs the unlicensed building work.   In Queensland, building work is governed by the Queensland Building and Construction Commission Act 1991 (Act).  Under Schedule 1 of the Queensland Building and Construction Commission Regulation 2018 (Regulation), subject to some qualifications (i.e. design work, plumbing, gas fitting etc), work is not building work (as that term is defined in Schedule 2 to the Act) if it is valued at less than $3,300.00.  Pursuant to section 42(1) of the Act, a person can only carry out or undertake to carry out building work if the person holds a contractor’s licence for the appropriate class under the QBCC Act and the Regulation.

What are the implications for performing unlicensed building work?

Breaching section 42 of the Act is a pecuniary penalty offence, conviction for a first offence attracting a maximum penalty of 250 penalty units.  As at the date of writing the value of a penalty unit is $130.55.  Significantly, under subsection 42(3) of the Act, a person who carries out unlawful / unlicensed building work is not entitled to any monetary or other consideration for doing so.

Under subsection 42(4) of the Act, a person is not stopped under subsection 42(3) from claiming reasonable remuneration for carrying out building work, but only if the amount claimed:

• is not more than the amount paid by the person in supplying materials and labour for carrying out the building work; and
• does not include an allowance for:
  • the supply of the person’s own labour;
  • the making of a profit by the person carrying out the building work; and
  • costs incurred by the person in supplying materials and labour if the costs were not reasonably incurred.

Section 42(4) of the Act in operation

The impact of section 42(4) of the Act in operation is clearly illustrated by Yongwoo Park v Betaland Pty Ltd [2017] QCAT 228.

In Yongwoo, Betaland performed not just unlicensed, but also defective domestic building work.  Betaland was to be paid $12,000.00 for the building work to be performed, $6,000.00 to be paid upon commencement and the balance upon completion.  Park paid the initial $6,000.00 as required.  Park terminated the contract for both the defective work and upon becoming aware that Betaland was unlicensed.

It was held that while Betaland was unable to enforce the building contract, section 42 of the Act did not operate to deny Park the right to enforce it against Betaland.  As Betaland had failed to make out a claim for reasonable remuneration, it was required to refund to Park the initial $6,000.00 payment.

As it was an essential term of the contract that Betaland be licensed, Park had validly terminated the contract and he was entitled to claim damages to cover the costs to rectify Betaland’s defective building work.  Accordingly, Betaland was required to pay Park an additional $17,000.00 in damages, being the cost to rectify the defective building work.

Takeaways

Building contractors performing building work for which they are unlicensed run the risk that disgruntled customers will successfully “clawback” significant amounts paid, even if there is no issue with the quality of the work performed.

Links and further references

Cases

Yongwoo Park v Betaland Pty Ltd [2017] QCAT 228

Legislation

Queensland Building and Construction Commission Act 1991

Queensland Building and Construction Commission Regulation 2018

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

Further information about construction law

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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.