Despite the harsh penalties for unlawful building work, many contractors are still engaging in works that they aren’t licensed to carry out. Most of these contractors don’t realise that the financial consequences of unlicensed work will often extend far beyond the penalty provisions of the QBCC Act 1991 (Qld).
As a starting point, the infringing contractor will not be entitled to any payment under its contract but limited to a claim for “reasonable remuneration” as prescribed by the QBCC Act. Such remuneration will not include any amounts for profit and certain labour. The contractor may also find itself facing legal proceedings commenced by the client to recover amounts previously paid under the contract.
The infringing contractor will also be precluded from using the security of payment system and subcontractors’ charges regime to pursue payment from the client. This is because the underlying legislation in both situations requires a contractual basis for the payment being pursued.
Take, for example, the decision of the Supreme Court of Queensland in St Hilliers Property Pty Ltd v Pronto Solar Innovations Pty Ltd  QSC 164. Pronto carried out piling works for St Hilliers on a project involving the construction of solar farms. A payment dispute arose, with Pronto issuing a purported payment claim and subcontractor’s notice of claim of charge for approximately $1.6 million. St Hilliers argued that Pronto was not appropriately licensed under the QBCC legislation and applied to the Court for a declaration that the payment claim was invalid and order that the charge was cancelled. His Honour Justice Daubney found that Pronto had carried out unlawful building work and made the orders sought by St Hilliers.
The decision serves as an important reminder to players in the building industry to properly consider their licensing position before signing up to new contracts. It is worth noting that similar consequences can also flow from a failure to comply with the licensing requirements of other legislation impacting the construction industry. For example, the Electrical Safety Act 2002 (Qld) and Professional Engineers Act 2002 (Qld).
Tony Mylne is a director in our Disputes and Litigation Team. Tony represented St Hilliers in the Supreme Court proceedings referred to above and frequently advises clients on building licensing issues and construction payment disputes.
If you require any assistance with licensing issues please contact us today.
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