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Contractors beware – Are you licensed to do the work?

28 August 2018

5 min read

#Construction, Infrastructure & Projects

Published by:

David Lewis

Contractors beware – Are you licensed to do the work?

Section 42 of the Queensland Building and Construction Commission Act 1991 (Qld) (QBCC Act) provides that if you do not have a licence to perform the work under your contract, you will not be entitled to any monetary payment or other consideration under your contract (which includes payment under the security of payment or subcontractor’s charges regimes).[1]

Section 42 of the QBCC Act operates regardless of whether a head contractor requires you to have a licence under your contract or says to you that a licence is not required.  

This was recently confirmed by the Queensland Supreme Court in the decision of St Hilliers Property Pty Ltd v Pronto Solar Innovations Pty Ltd [2018] QSC 164 (St Hilliers v Pronto). 

In St Hilliers v Pronto, Pronto was subcontracted to carry out pile driving, pre-drilling and refused pile remediation works in relation to solar farms in central Queensland for St Hilliers. 

The Court found that Pronto was not licensed to undertake the piling works as this constituted building work and as such Pronto was not entitled to payment for carrying out this work under its subcontract. In its defence, Pronto referred the Court to the following promise made by St Hilliers:

“That’s okay [Pronto] won’t need a QBCC licence, it will be working under our licence and we will be signing off on the finished works”.

While Pronto was said to have believed that this promise negated the application of the ‘no licence – no pay’ provision in section 42 of the QBCC Act, the Court held that St Hilliers’ promise did not stop the application of section 42. 

This is an important decision because while the QBCC Act may provide that an unlicensed head contractor can operate without a licence so long as it engages subcontractors who are licensed to undertake the work,[2] this protection does not apply up the contractual chain.[3] 

This is also made clear by section 51 of the QBCC Act which provides that a person who is not a licensee must not make use of a licensed person’s licence to pretend to be appropriately licensed and licensed principals are prohibited by section 51A of the QBCC Act from contracting with unlicensed persons.[4] 

As such, the St Hilliers decision serves as a timely reminder that you must understand the licensing requirements attached to the work that you are performing. There is no excuse for not complying with your licensing requirements. 

As such, parties to building contracts should keep the following four points in mind to ensure they are not caught out by the QBCC Act:

  • a person must not carry out, or undertake to carry out, building work, unless the person holds a contractor’s licence of the appropriate class, or ensures that all building work within the scope of its contract is carried out by appropriately licensed persons[5] 
  • if an unlicensed head contractor contracts with an unlicensed subcontractor to undertake building work, in this case both the unlicensed head contractor and subcontractor will be in breach of section 42 of the QBCC Act and not entitled to payment under the contract
  • if the head contractor to a project is licensed, it must not:
    • contract with unlicensed persons[6] 
    • allow non-licensed persons to make use of their licence,[7] or 
    • help unlicensed contractors carry out work for which they require a licence[8]
  • it will not be a defence for a head contractor or contractor to say they relied on statements from one another about the licensing requirements for particular works with respect to breaches of the QBCC Act. Both must do their own due diligence and comply with the licensing requirements contained within the QBCC Act. 

It is important that both head contractors and contractors understand the licensing requirements attached to their scope of works. Don’t get caught out and face not being entitled to payment under your contract (amongst other serious penalties). 

We appreciate that the licensing requirements imposed by the QBCC Act can be difficult to navigate. If you are having difficulties navigating the QBCC Act and its licensing requirements, we can provide you with legal advice in relation to these important issues. 

Authors: Jacqui Doyle & David Lewis

[1] An unlicensed contractor may be entitled to claim for reasonable remuneration (not including their own labour, profit or anything for their own direct or indirect benefit) provided the amount is not more than the amount paid by the person in supplying the material and labour (not including their own labour) and is not more than any amount agreed to. 

[2] Queensland Building and Construction Commission Act 1991 (Qld), Schedule 1A, Section 8. 

[3] Save for subcontractors doing work for licensed trade contractors within the scope of the building work allowed by the class of licence held by the trade contractor –See Queensland Building and Construction Commission Act 1991 (Qld), Schedule 1A, Section 2 – this is a very limited group of persons and you should seek legal advice if you do not know whether you are doing work for a “trade contractor”.

[4] Queensland Building and Construction Commission Act 1991 (Qld), Section 51(2) and Section 51B.

[5] Save for the exclusion in relation to subcontractors of Licensed Trade Contractors discussed above at footnote 3.

[6] Queensland Building and Construction Commission Act 1991 (Qld), Section 51B(2) – 80 penalty units for first offence ($10,444).

[7] Queensland Building and Construction Commission Act 1991 (Qld), Section 51(1) – 250 penalty units ($32,637.5).

[8] Queensland Building and Construction Commission Act 1991 (Qld), Section 51A(1) - 250 penalty units ($32,637.5).

The information in this publication is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavour to provide accurate and timely information, we do not guarantee that the information in this publication is accurate at the date it is received or that it will continue to be accurate in the future. We are not responsible for the information of any source to which a link is provided or reference is made and exclude all liability in connection with use of these sources.

Published by:

David Lewis

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