The QBCC has recently released a statement confirming their approach to defective building works and the issuing of Directions to Rectify.
Whilst it is good news when the QBCC clarifies their position on such an issue, this particular news may not be good for builders.
QBCC may now direct a person who has carried out defective or incomplete building work to rectify or demolish the works through the issuing of a Direction
to Rectify. They can also issue a Direction to Rectify consequential damage caused by the carrying out of the building work.
Before issuing a Direction to Rectify, the QBCC must take into consideration all reasonable circumstances including the terms of the relevant building
contract and any warranty terms relevant to the works. The Commission must also be satisfied that the work is defective building work as defined in
the relevant legislation; about who is responsible for the defective building works; and that it is fair in the circumstances to direct the person
to rectify the defective works.
Previously, QBCC issued correspondence known as a Requests to Rectify to licensees in lieu of, or prior to issuing a Direction to Rectify. QBCC has now
confirmed this process has ceased. However, the QBCC says it will continue its practice of notifying licensees in writing when it receives a complaint
about defective work.
Such notice will provide details of the alleged defective work and will provide sufficient time for the licensee to seek to address the issues with the
QBCC will thereafter arrange a site inspection with both the licensee and the building owner. If the QBCC building inspector determines that the work remains
defective or is incomplete at the time of inspection, they may issue a Direction to Rectify if they consider it fair to do so. This is obviously concerning
to builders who may not have as much time as they previously did to attempt to address any such issues before QBCC takes action against them.
In addition to this, the QBCC has advised that it has withdrawn its policy (namely the Accountability for Subcontractor Defects Policy) which was implemented
in 2015 to ensure that subcontractors were held accountable for their defective works. This former policy was intended to ease the burden on principal
contractors by having the QBCC issue Directions to Rectify to subcontractors directly for their defective works and thereafter, to take disciplinary
action against that subcontractor if they failed to rectify. Whilst the principal contractor was still ultimately responsible for the subcontractor’s
works (particularly if the subcontractor failed to rectify as directed), this policy provided some assistance to the principal contractor in ensuring
the subcontractor was accountable for the quality of their own works. This news will therefore be alarming to builders who will now, more than ever,
face the consequences of their subcontractors’ defective works.
This highlights the importance of having well-drafted contracts in place that clarify the obligations of all parties (whether subcontractor or principal
contractor), particularly in regards to the processes to be implemented in the event of any defective works. Contracts should contain clear terms,
to be agreed by the parties, as to how any defective works will be rectified, including the timing of such works and what will happen if the works
are not rectified.
If you do not have such written terms in place, it can cause headaches to all parties concerned given the uncertainty as to your respective obligations
and can lead to costly legal battles.
For any assistance in reviewing and/or updating your subcontractor agreements and for any advice generally in regards to the matters addressed above, please contact us.