Defective works: A guide for Queensland contractors

Overview

The Queensland Building and Construction Commission (QBCC) has broad discretion in their decision-making capacity to require contractors to rectify defective building work. This guide outlines some information to prepare contractors for an investigation by the QBCC after an allegation of defective work has been lodged by a client.

Directions to rectify

Since July 2017, the QBCC no longer issue any “Requests to Rectify”. If a QBCC inspector attends site, there is a high likelihood a Direction to Rectify (DTR) will be issued if a defect is detected.

The QBCC can make a DTR for defective works within 12 months from practical completion for non-structural defects, and six years and six months for structural defects. The QBCC also have the ability to direct works to be rectified whilst construction is still underway.

Actions and consequences

NEVER IGNORE CORRESPONDENCE FROM THE QBCC! A DTR is significant and should be treated seriously. The following is a table of actions and possible ramifications as a result of a DTR:

Client complaints about a defect

If a client makes a complaint about a defect, the contractor should engage with the client to determine whether there is a defect in the work or not. If there is a defect, the contractor should establish whether it was their work, the work of a subcontractor, or the homeowner who is at fault. If a defect is acknowledged, it is recommended that it be fixed before a complaint is escalated through QBCC.

Timeframes for complaints about defective works

For building contracts entered into, a client must make a complaint to the QBCC:

• within 12 months of noticing a defect that appears within six years and six months from practical completion; and/or
• for non-structural defects, within 12 months of practical completion.

Timeframes for assistance under the Queensland Home Warranty Insurance Scheme

For a claim under the Queensland Home Warranty Insurance Scheme to be successful, the claim must be lodged:

• within three months of noticing the defect or structural defect; and/or
• for non-structural defects, within seven months of the completion date.

Contents of client complaint

The QBCC advises that consumers must do the following before making a complaint to the QBCC:

• talk to the contractor; and
• put the complaint in writing.

If the client has not contacted the contractor prior to making a complaint to the QBCC, the contractor should make it clear to the QBCC inspector that the client has not raised the matter with them before. If the clients have contacted the contractor, the QBCC expect the contractor to investigate the allegations prior to QBCC becoming involved.

What is a structural or non-structural defect?

For statutory warranty claims

Non-structural defective building work means defective building work (other than structural defective building work or residential construction work causing subsidence) that is faulty or unsatisfactory because:

a. it does not meet a reasonable standard of construction or finish expected of a competent holder of a contractor’s licence of the relevant class; or
b. it has caused a settling in period defect in a new building. 

Structural defective building work means defective building work (other than residential construction work causing subsidence) that is faulty or unsatisfactory because it does one or more of the following:

a. adversely affects the structural performance of a building;
b. adversely affects the health or safety of persons residing in or occupying a building;
c. adversely affects the functional use of a building; or
b. allows water penetration into a building. 

For Home Warranty Insurance claims

A structural defect means:

• if the work is for a residence or related roofed building:
  • a defect in the work that causes or contributes to deflection or movement of the footing or slab of the residence or building so that the residence or building no longer complies with the building assessment provisions under the Building Act 1975;
  • the work does not comply with a performance requirement under the Building Code of Australia; or
  • a defect in the work that causes the residence or building to be uninhabitable or not reasonably accessible;
• if the work is for a swimming pool: A defect in the work that allows water to escape through the shell of the swimming pool;
• if the work is on or for a residence, related roofed building, or swimming pool: A defect in the work that adversely affects the health or safety of persons who occupy or use the residence, building, or swimming pool; or
• if the work is on or for a residence or related roofed building: A defect in the work that allows water penetration of the residence or building.

When explaining potential defects to clients, it is useful to refer to the “Standards and Tolerances Guide” published by the QBCC.

It is recommended that you contact a HIA Technical Adviser who can discuss the specific defect, any building codes that may apply, and how a QBCC inspector may look at the situation.

When a QBCC complaint is made

The QBCC will telephone each party to determine if a site visit is necessary. The file will then be assigned to a QBCC inspector.

At the site meeting the QBCC inspector is likely to decide on whether or not to issue a DTR. Prior to any site meeting taking place, you should provide the QBCC inspector with as much information as possible.

The QBCC has the power to take into consideration all circumstances that are reasonably relevant, not limited to the terms of the contract, including any circumstances that would make it unfair to issue a DTR.

“Unfair” considerations

It is important for a contractor to make the QBCC inspector aware of any considerations that may be unfair, including:

• denial of access – if the client has in any way restricted or denied a contractor access to complete rectification work, then a detailed record of this should be kept and provided to the QBCC inspector;
• maintenance – general maintenance is a clients responsibility. Any maintenance issues that a client has failed to undertake should be detailed;
• subsidence – if there has been subsidence and the contractor has followed the relevant process, then it may be considered unfair for a DTR to be issued;
• scope of works – if the allegations are regarding defective works for which the contract was not responsible for, clear contractual documentation is necessary to show the QBCC inspector that such works were outside of the contractor’s scope;
• unfair process – examples include the client not contacting the contractor before making a complaint or insufficient time afforded by the QBCC for the contractor to visit the site;
• timeframes;
• defect classification – a DTR on a non-structural defect should not be given after 12 months from practical completion; and
• all other relevant matters – examples include unpaid money for the job or the issue currently being before QCAT.

Subcontractor involvement in defective work

If a subcontractor was involved in carrying out the alleged defective work, the QBCC can:

• monitor the situation and ensure the defective work is satisfactorily rectified if the subcontractor agrees to rectify defective work;
• issue a DTR against both the subcontractor and the principal contractor if the principal contractor agrees that there is defective work but cannot get the subcontractor back on-site;
• proceed to disciplinary action if a subcontractor fails to comply with a DTR; and
• ensure the defective work is satisfactorily rectified by the principal contractor if a subcontractor fails to comply with a DTR.

Conduct during site meetings

Contractors are encouraged and should attend site meetings where the QBCC inspector and the client may be present. Once a site inspection date is set, it is unlikely to change. If the contractor themselves cannot attend, the contractor should have a representative attend in their place.

For a site meeting, it is recommended that the contractor:

• be respectful and courteous;
• bring a witness;
• take detailed notes;
• bring any relevant documents; and
• film the site inspection (with consent from all parties first).

Extensions of time

Once a DTR has been made, a timeframe (generally 28 days) is given for a contractor to rectify the defective works.

If the contractor is willing to undertake the rectification work but is unsure whether the work will be completed in time, they should ask for an extension of time. An extension of time should be requested as soon as possible, and must be before the date the DTR is required to be complied with. The QBCC has issued infringement notices for contractors who have completed work in accordance with a DTR but were one or two days late in completing peripheral/ancillary works.

Reviewing a DTR

If a DTR has been issued, the contractor generally has 28 calendar days from the date of the QBCC decision to review that decision. The contractor should contact the HIA as soon as the DTR is issued (if not before) to discuss the contractor’s rights to review.

Right to information

As the QBCC make a range of decisions that have the potential to adversely affect contractors, contractors have a right to certain information that the QBCC holds.

At times, the QBCC will make a decision but not release all relevant information to the contractor that they have relied upon in making that decision. If you have requested information from QBCC, you should not wait to receive this before taking further action such as applying for an extension of time for a DTR or reviewing a DTR.

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