April 15, 2024
Under the Queensland Building and Construction Commission Act 1991 (QBCC Act), any person who carries out or undertakes to carry out building work without an appropriate licence, commits an offence.
The QBCC regulators have zero tolerance for unlicensed activity and imposes more than a mere warning if you are caught… expect to be slapped significant penalties and a hefty fine. This article explores the implications and financial penalties on contractors carrying out building work without the appropriate licence under the QBCC Act, and director and manager personal liability in respect of any company caught doing the same.
What are the implications?
Unlawfully carrying out building work attracts an escalating series of penalties for each offence. Section 42(1) of the QBCC Act, states that the maximum penalties are:
- First time contravention – 250 penalty units;
- Second time contravention – 300 penalty units; and
- Third time contravention or more – 350 penalty units or 1 year’s imprisonment.
As of today, the value of one penalty unit is $154.80.
Typically (but not always) a first offence may be dealt with by way of a penalty infringement notice, the second offence may be dealt with before the Magstriates Court and a third or later offence, upon indictment before the District Court.
Recently in January 2024, Mr Paul Lawrence Coplick became the first person in Queensland to face potential imprisonment over a third conviction for carrying out unlawful building work. Mr Coplick was prosecuted upon indictment in the Brisbane District Court and pleaded guilty for unlawfully carrying out building work in relation to a property at Greenslopes. His Honour Judge Rafter SC fined Mr Coplick $15,000 and was ordered to pay compensation of $3,300 to a homeowner. Further, he was warned that if compensation was not paid by a certain date, Mr Coplick would need to show cause why a 3-month prison term should not be enforced.
Contractors entitlement to payment?
If a builder is found to be undertaking unlicensed building work they will be denied the benefit of the Building Industry Fairness (Security of Payment) Act 2017 (Qld) and will be unable to recover payment for the work performed under the contract (even if there is no issue with the quality of the work performed).
Instead, they will only be entitled to claim for ‘reasonable remuneration’ under section 42(4) of the QBCC Act. This means that the contract will only be entitled to the costs of supply other labour and materials (i.e., they are not entitled to claim profit or payment for their own labour). If you wish to know more about payment for works when undertaking unlicensed building work you can read the first article of the ‘BIFA In Focus’ series here.
Director and Manager Liability
Generally, the unlicensed company will bear the impact of performing unlicensed building work.
However, under the QBCC Act, the directors and senior management of building companies may be personally liable for the company’s breach of licensing requirements.
Section 111B of the QBCC Act states that an ‘executive officer of a company’ commits an offence it:
- the company commits an offence against an executive liability provision (being section 42 (unlawful carrying out of building work) and section 42D (licenced contractor must not engage or direct unauthorised person for fire protection work)); and
- the officer did not take all reasonable steps to ensure the company did not engage in the conduct constituting the offence.
Executive Officer
The definition of an executive officer of a company encompasses many individuals, including a director or secretary or any person who takes part in the company’s management (i.e., CFO, CEO and other senior personnel).
Consequently, where a company commits an offence under section 42 or 42D of the QBCC Act (that is, performing unlicensed building work, or engaging or directing unauthorised fire protection work), the executive officer of the company also commits an offence, unless they can show that they took all reasonable step to ensure that the company did not engage in the relevant conduct.
Reasonable Steps
When deciding whether the executive officer took reasonable steps the court will have regard to whether the officer knew or ought reasonable to have known of the company’s conduct, and whether the officer was in a position to influence said conduct.
The maximum penalties for breaches of these provisions are the same as under section 42(1). for individual under the QBCC mirror those
Therefore, any person involved in the management of a company is a risk of personal liability for the company’s breach in undertaking unlicensed building work, therefore, it is important everyone in the industry is aware of the licencing requirements.
Therefore, it is important for not only contractors and builders but also anyone involved in the management of a company to ensure they are aware of the QBCC licencing requirements and review the permitted scope of work for the company’s current licence and scope of work being tendered for to ensure their company is operating within the requirements of their QBCC licence.
Lamont Project and Construction Lawyers
If you have any questions relating to the QBCC licencing regime and compliance, please contact Lamont Project and Construction Lawyers.
If you would like to discuss any matters raised in this article as it relates to your specific circumstances, please contact LPC Lawyers.
The content of this article is for information purposes only and does not discuss every important topic or matter of law, and it is not to be relied upon as legal advice. Specialist advice should be sought regarding your specific circumstances.
Contact: Peter Lamont or Stephanie Purser
Email: [email protected] or [email protected]
Phone: (07) 3248 8500
Address: Suite 2, Level 2, 349 Coronation Drive, Milton Qld 4064
Postal Address: PO Box 1133, Milton Qld 4064