Almost 3 years ago, we wrote about the then-new amendments to the Queensland Building and Construction Commission Act 1991 (Qld) (QBCC Act).
These changes imposed new obligations for contractors in relation to the return of retention and security.
Recently we’ve noticed, however, that there remains a lot of confusion about the amendments, and many contractors are not aware of the full ambit of the changes.
So this article will help you answer one question: are you complying?
What are the requirements?
The requirements apply to:
- ‘building contracts’ as defined in the QBCC Act; and
- contractors and subcontractors of all tiers.
There are two main areas the requirements cover.
Release of retention – s. 67NB
A contracting party must release the retention amount to the contracted party in accordance with the building contract, unless it has a reasonable excuse (s. 67NB).
Failure to do so, without reasonable excuse, may result in a financial penalty or 1 year’s imprisonment.
Notice to be given – s.67NC
A contracting party must give notice concerning the ending of the defects liability period and the retention amount due to be released to the contracted party.
When: The notice must be given within 10 business days before the end of the defects liability period. This will require adequate contract management to ensure compliance, particularly as the onus is on the contractor to give the notice independent of any request or claim by the subcontractor.
Form: The notice must be given in the approved form. There is an approved form published by QBCC which may be issued to satisfy the obligation under this provision.
A financial penalty may be imposed for non-compliance.
To facilitate these obligations, section 67NA introduces a “statutory defects liability period”. It is a period of 12 months starting on the day of practical completion for the contract if the contract does not provide for the release of retention or security at the end of an identifiable period.
Are you complying?
To help you do a quick audit of your processes, here are a few areas you might want to check.
If your contracts provide for retention or security to be held, do the contracts provide for release of retention or security at the end of an identifiable period?
If that is not clear, the contracts should be amended to ensure that there is an identifiable period, otherwise the statutory defects liability period will apply.
Process for Release
Are you releasing retention and security in accordance with the contract?
Many contracts include preconditions to the release of security or retention, such as the requirement to give a deed of release.
These preconditions and the timing of release of retention and security should be considered in light of the QBCC Act requirements, to ensure that the path to compliance is clear and that the contract administration process is simple.
Ensure you know when the defects liability period ends and when and how much retention is to be released.
Are you giving the required notice to subcontractors prior to the expiry of the defects liability period?
Have in place a mechanism to be alerted when to comply with these provisions. Ideally this mechanism should alert more than one person, to allow for potential illness, holidays and departures.
The approved form issued by QBCC may form part of your documentation suite for administration after practical completion.
Aligning your contracts with the QBCC requirements will be simple in some cases and less so in others. Similarly, navigating contractual and statutory requirements for notification and release of retention won’t always be as straightforward as it sounds.
So if you need help to ensure your company is complying with the QBCC Act, get into contact with us and we’ll help ensure that your project administration is on the right track.