Clifford Gouldson Lawyers

A shift in liability for subcontractors

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Following extensive consultation with building industry associations, the Queensland Building and Construction Commission (Commission) has introduced a new policy to take effect from 1 June 2015 which will see subcontractors held accountable for any defective building work they undertook (Policy).

This Policy has mostly been welcomed by principal contractors who have in the past largely been held responsible for ensuring rectification of defective building work performed under their supervision by subcontractors. Whilst this Policy will not alter or negate a principal contractor’s responsibility to properly supervise all building work, it is a first step towards reducing the responsibility on principal contractors.

The Policy and procedure

Where a complaint is made by a consumer or principal contractor to the Commission about defective building work, the Commission will attend the site and establish whether there is defective building work, and if so who is responsible for the rectification of it (contractor and/or subcontractor).  In the event that the subcontractor is found responsible for the defective building work then the following process unfolds:

  1. The Commission will seek the subcontractor's cooperation in rectifying the defective building work.
  2. Where a principal contractor agrees with the Commission that there is defective building work, and the principal contractor is having difficulty getting the relevant subcontractor back to undertake the rectification work, then the Commission will issue a direction to rectify (Direction) to the relevant subcontractor as well as the principal contractor.
  3. If the subcontractor and/or principal complies with the Direction, the Direction will not appear on the public record.
  4. Should the subcontractor fail to comply with the Direction, the Commission will undertake disciplinary action against the subcontractor which may lead to suspension or cancellation of their licence.
  5. In the instance that the subcontractor fails to comply with the Direction, the responsibility to rectify will fall on the principal contractor to either undertake the rectification work themselves or have another subcontractor do the work at the principal contractor’s costs.

What the Policy means for you

If you are the principal contractor:

  • the Policy will commence and apply to you from 1 June 2015
  • if you suspect one of your subcontractor’s work is below standard and will need rectification, you can and should make a complaint with the Commission who will attend the site and assess the work
  • making your complaint to the Commission as soon as possible will increase the likelihood that the subcontractor will cooperate because it can be difficult to locate subcontractors and force them to rectify work months after the work has been completed
  • the Policy is a tool for you to utilise in circumstances that you realise a subcontractor’s work is below standard, but it does not negate you from your responsibility as principal contractor
  • you must continue to properly supervise all building work
  • if the subcontractor refuses and/or fails to rectify its defective work, you will need to rectify the work at your cost

If you are the subcontractor:

  • the Policy will commence and apply to you from 1 June 2015
  • under the Policy you will be held accountable for the defective work you have completed, which is fundamentally different to the old policy that held the principal contractor accountable
  • if the Commission issues you with a Direction, you must comply with it at your cost or you risk:
    • losing your licence;
    • having your licence suspended; and/or
    • facing other disciplinary action.

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