- Are you about to enter into a contract to have building work done in Queensland?
- Are you about to contract 'down the chain' to a contractor or subcontractor?
Here are five things which can raise warning flags. They are no-cost, quick and easy 'must-do's' which you can seamlessly integrate into your due diligence process as part of your decision to contract.
1. Check whether the contractor is licensed
- Every person who contracts to perform building work must be licensed. An unlicensed contractor cannot recover the contract price, however they can make your life miserable by claiming "reasonable remuneration" (refer to s 42 of the QBCC Act 1991 (Qld)) and leaving you with (generally) dodgy work.
- It is an offence for a licensed contractor to contract with a person to carry out building work who is not licensed (refer to s 51B of the QBCC Act 1992 (Qld)). This can result in a licensed contractor being found guilty because the other party is unlicensed.
Check the QBCC licence register here.
Tip: You escape an offence if you took "all reasonable action". You should therefore check for a licence and record the details of the check in your system, so you can demonstrate to the QBCC that you took "reasonable action".
2. Check the contractor's adjudication dispute history
A competitive price isn't quite so good if it means you are constantly required to deal with an aggressive claims-oriented contractor.
In Queensland, all adjudication decisions appear on the QBCC's adjudication register. You can search the register by claimant name here.
Note: The site contains only adjudication decisions. If a dispute is resolved before a decision, for example by agreement, it won't appear on the register.
3. Check the contractor's litigious history
Adjudication under the Building Industry Fairness (Security of Payment) Act 2017 (Qld) (BIFA) is the preferred weapon of choice for claimants. However, claimants can still litigate.
In Queensland, you can search who has issued proceedings in the Supreme and District Courts by a party search here.
Note: It is not currently possible to search online for proceedings issued in Magistrates Courts in Queensland.
4. Check the contractor's quality of work
Contractors with quality issues decrease productivity and result in reputational damage.
The QBCC records directions to rectify defective work on a contractor's licence. You can search a contractor's licence here.
For prospective contracts, be insistent about requesting referee details from contractors. Contractors with a good record on quality will welcome the opportunity to reference their past work.
5. Check the contractor's financial stability
The financial impacts of insolvent contractors (and those on the brink) have a multiplier effect. The costs of the following will cause expensive headaches:
- a new contractor to complete the work
- interface issues between new contractor's work / insolvent contractor's work (e.g. fixing defective work)
- dealing with the insolvent contractor's liquidator / administrator
- dealing with subcontractor's charges
- securing warranties from unpaid suppliers
Ask for financials. Check the contractor's licence history for suspensions for late lodgements of financials with the QBCC. A recent history of adjudications can also be an indication that financial distress is imminent.
If you require further information or have any queries in relation to this legal update, please contact Lex Orange.