Queensland introduces Non-conforming Building Products Legislation and reforms BCIPA and other legislation

November, 2017

By Greg Richards, Partner

The Building and Construction Legislation (Non-conforming Building Products – Chain of Responsibility and Other Matters) Amendment Act 2017 (NCBP Amendment Act) commenced on 1 November 2017.

The Building Industry Fairness (Security of Payment) Bill 2017 (BIFSOPA), which replaces the Building and Construction Industry Payments Act 2004 (BCIPA) and the Subcontractors’ Charges Act 1974 (SCA), was passed with amendment by the Queensland Parliament on 26 October 2017 but has not yet received royal assent and is yet to come into effect.

The above legislation effects significant reforms to the existing legislation and includes numerous penalties for non-compliance.

You need to be aware of your rights and obligations and ensure that proper processes are in place to effectively deal with the changes and avoid penalties for non-compliance.

Non-conforming Building Products

Key Amendments

The NCBP Amendment Act amends four current Acts, in particular the Queensland Building and Construction Commission Act 1991 (QBCC Act). Importantly, it introduces a new Part 6AA, dealing with building products, into the QBCC Act.  The Code of Practice is available on the Department of Housing and Public Works’ website.

Parties involved in the supply chain (e.g. designers, manufacturers, importers, suppliers and installers) will face increased accountability for non-conforming building products on building projects.

The legislation introduces a primary duty on all participants in the ‘chain of responsibility’ to ensure, insofar as reasonably practicable, that building products are not non-conforming building products for an intended use.

A building product is ‘a non-conforming building product’ for an intended use if the association of the product with a building:

A person in the chain of responsibility has a duty to notify the QBCC as soon as practicable but within 2 days after becoming aware or reasonably suspecting, that the building product is a non-conforming building product for an intended use, unless the person has a reasonable excuse.

A person in the chain of responsibility is also required to report a ‘notifiable incident’ to the QBCC within 2 days after becoming aware or reasonably suspecting the notifiable incident.

The NCBP Amendment Act imposes duties to give required information about the building product to each subsequent person in the chain of responsibility.

Executive officers of companies in the chain of responsibility must exercise due diligence to ensure the company complies with their duties under the legislation.

The QBCC has power to direct remedial action in respect of a breach.

The NCBP Amendment Act introduces ‘building product undertakings’ which the QBCC may accept in connection with a matter relating to a contravention or alleged contravention.

The relevant Minister is given a power to make recall orders and publish warning statements in relation to non-conforming building products.

Penalties

The legislation introduces a number of penalties including for:

Reforms to BCIPA and Other Legislation

Overview

BIFSOPA will:

Key Reforms

The reforms to the security of payment legislation (formerly BCIPA) include:

Project Bank Accounts

BIFSOPA will introduce PBA’s for Queensland State Government projects of $1m – $10m value where more than 50% of the contract price is for building work.

PBA’s will not be required for:

PBA’s will only apply to first tier subcontractors and are only required for building work.

Head contractors will be required to set up a PBA for the project within times provided by the BIFSOPA and will be required to establish the following trust accounts:

The principal will make payment of amounts under the head contract into the PBA rather than make payments to the head contractor.

If a subcontractor is entitled to be paid an amount under its subcontract, the head contractor may only pay the amount to the subcontractor from the relevant trust account.

If an amount is due to be paid to a subcontractor and there is an insufficient amount available in a trust account to pay the subcontractor, the head contractor must as soon as the head contractor becomes aware of this, deposit into the trust account an amount equal to the shortfall.

A head contractor must not withdraw an amount from the PBA to pay itself unless there would still be a sufficient amount available in the trust account after the withdrawal to pay all amounts due to be paid to the subcontractors at the time of the withdrawal.

Excluded Individuals

BIFSOPA will expand the ‘excluded individuals’ provisions in the QBCC Act to include a person involved in a company failure in another State, or who was a director, secretary or influential person of a company up to 2 years prior to the failure.

Penalties

BIFSOPA introduces penalties for failure to comply with parts of the legislation including for:

Contact Mills Oakley

To find out more please do not hesitate to contact Greg Richards.

Greg Richards| Partner
T: +61 7 3228 0443
E: grichards@millsoakley.com.au

[1] As of 1 July 2017 a penalty unit in Queensland is $126.15.

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