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20 Nov 15
Contractors beware: be licensed or face no rights under BCIPA

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WHO SHOULD READ THIS

  • Contractors carrying out work that needs to be licensed (e.g. electrical work, building work or engineering services).

THINGS YOU NEED TO KNOW

  • If you contract to carry out work or services that you are not licensed to perform, your contract may be illegal and you may be prevented from obtaining payment under the BCIPA.

WHAT YOU NEED TO DO

  • Ensure that your licences and registrations are kept up to date and that you don’t tender, advertise or offer to carry out work or services that you are not licensed to perform.

In Agripower Australia Ltd v Queensland Engineering & Electrical Pty Ltd1,  the Queensland Supreme Court held that an adjudication decision in favour of a contractor under the Building and Construction Industry Payments Act 2004 (Qld) (BCIPA) was void because the relevant contract was illegal and unenforceable under other legislation. 

The case in brief
The Contractor in this case was a provider of engineering services and electrical works.  The Contractor had an adjudication decision under the BCIPA awarded in its favour in respect of engineering services and works it performed for Agripower Australia Ltd (Agripower) on Agripower’s powder and granulation plants at Charter Towers.  Agripower successfully applied to the Supreme Court to have that decision declared void.  Justice Douglas held that the adjudication decision was invalid because the parties’ contract was illegal and unenforceable due to the Contractor’s breach of both the Electrical Safety Act 2002 (Qld) (Electrical Act) and the Professional Engineers Act 2002 (Qld) (Engineers Act).

The contractor was found to have breached section 56(1) Electrical Act.  That section provides that ‘a person must not conduct a business or undertaking that includes the performance of electrical work unless the person is the holder of an electrical contractor licence that is in force’.  At the relevant time, the Contractor did not hold an electrical contractor’s licence.  His Honour held that the services the Contractor performed for Agripower, as well as statements made by the Contractor that it carried on a business of providing electrical engineering and electrical works and the name of the Contractor’s company, was sufficient to support the conclusion that the Contractor conducted a business of providing electrical work, in breach of section 56(1) Electrical Act.2 

The Contractor was also found to have breached section 115(1) Engineers Act, which provides that a person who is not a practising professional engineer must not carry out ‘professional engineering services’.   

His Honour found that, in contravention of section 115(1), the Contractor and its agent and subcontractor were not practising professional engineers but performed services within the meaning of ‘professional engineering services’ under the Engineers Act.

The next question for the Court was whether these contraventions of the law made the payment of money under the BCIPA illegal.  

Under section 141(2) Engineers Act, a person in breach of section 115(1) is not entitled to any monetary or other consideration for performing or carrying out professional engineering services.  Although the Electrical Act does not contain an equivalent provision, the Court concluded that there was an implied prohibition against entering into a contract with an unlicensed person in breach of the provisions of the Electrical Act.4

Based on the above, his Honour decided that the contract with Agripower was illegal and unenforceable.5   This meant that the payment of money pursuant to the BCIPA was illegal and the adjudication decision under the BCIPA was void for jurisdictional error.6

What next for your business?
This is another Queensland decision that highlights that those who perform work, or promise to perform work, that other laws prohibit them from performing, will have no right of recourse under the BCIPA. 

In 2006, the Queensland Court of Appeal decision of Cant Contracting Pty Ltd v Casella7   established the guiding principle that contractors in Queensland, who are in breach of the Queensland Building Services Authority Act 1991 (Qld) (now the Queensland Building and Construction Commission Act 1991 (Qld)) because they do not hold the required licence for work or services they perform, are not entitled to claim payment under the BCIPA. 

Principals, contractors and consultants need to be aware of the legislative framework under which work or services are being performed.  Contractors and consultants must ensure that they are appropriately licensed and registered and that they are not breaching any laws by tendering, advertising or offering to carry out work or services that they are not entitled to perform.  It should also be noted that an insurer may refuse to indemnify a claim in respect of work or services that are carried out illegally.

1. Agripower Australia Ltd v Queensland Engineering & Electrical Power Ltd & Ors [2015] QSC 268
2. At [34]
3. Those services included the ‘application of engineering principles and data to a design, construction, production, operation or maintenance activity relating to engineering', at [44]
4. At [39] and [40]
5. At [41] and [53]
6. At [54]
7. Cant Contracting Pty Ltd v Casella  [2006] QCA 538

 

Focus covers legal and technical issues in a general way. It is not designed to express opinions on specific cases. Focus is intended for information purposes only and should not be regarded as legal advice. Further advice should be obtained before taking action on any issue dealt with in this publication.

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