Unlicenced Contracting: Even the Small Parts Matter

The recent Supreme Court of Queensland decision of Galaxy Developments Pty Ltd v Civil Contractors (Aust) Pty Ltd trading as CCA Winslow & Ors [2020] QFC 51 confirms that contractors must ensure they are properly licenced to perform all of the work under their contract because a failure to do so may render the entire contract void, resulting in non-payment and no right to the benefit of an adjudication decision.

The Case

In 2019 an Adjudicator delivered an adjudication decision (which was late and which has other consequences not considered in this article) which found that a contractor was entitled to be paid $1.3 million.

The contract the subject of the adjudication was for civil works, a minor part of which included widening a road.  As part of the widening of the road the contractor was required to remove a bus seat, bus shelter, bus sign and bike rack before constructing paving, a retaining wall and some fencing work.

The contractor then reinstalled the bus stop seat, shelter and bike rack to the new concrete paving that had been created.

In an application to set aside the Adjudicator’s decision it was argued that:

1. The bus stop works (because they were structures fixed to land) were buildings within the Queensland Building and Construction Commission Act 1991 (QBCC Act).
2. The contractor had a ‘Builder restricted to structural landscaping licence’. It was argued that this licence was not appropriate for the scope of work performed, nor was the work exempt under a regulation. The consequence being that the contractor could not recover under the contract and had no entitlement to the benefit of an Adjudication because it was unlicenced to perform that part of the work.
3. The Adjudicator had made a jurisdictional error in determining that the contractor could recover the claimed amount.

The Supreme Court held that the contractor was not appropriately licenced to perform the bus stop works.  The Court found that:

1. A bus stop shelter is effectively a shed and therefore its removal and return fell within the definition of construction work relevant to ‘pre-fabricated sheds’. This was within the scope of works permitted under the contractor’s landscaping licence (as described in the QBCC Regulations).
2. However, the remaining bus stop works (the bus seat and bike rack) did not fall within works permitted by that licence and were not exempt under the QBCC Regulation.

Accordingly, the contractor was unlicenced to perform those works and was not entitled to be paid under the contract.

Dalton J, in making this decision, observed that the provisions in the schedules to the QBCC regulations were ‘illogical’ and produced a result that was correct in law but ‘absurd in reality’.  Her Honour invited the Parliament to review this issue.

However, until that occurs, any part of the scope under a civil works contract that falls within the very wide definition of construction work under the QBCC Regulations will require a licence. Contractors without the relevant licence assume the risk that their contracts are unenforceable and will not be entitled to proceed to adjudication to secure payment.

If you have any queries please direct them to John Cary, Partner of our Building and Construction team.