Australia: When will Queensland construction industry players learn?

Building and construction projects can provide fertile ground for disputes of various kinds, including about payments owed for work that is done. In Queensland, a number of cases have shown that there will be limited practical recourse for those who perform work without complying with the licensing and registration requirements that apply to them.

In 2006, the Queensland Court of Appeal's decision in Cant Contracting v Casella¹ established that a builder who undertakes building work without an appropriate licence cannot pursue payment for its work using the rapid adjudication regime established by the Building and Construction Industry Payments Act 2004 (Qld) (BCIPA). Subsequent cases confirmed that the same principle applies to subcontractors who undertake building work on behalf a builder, but without an appropriate licence; they too will be barred from using BCIPA to pursue payments owed to them.²

In a decision issued by the Supreme Court of Queensland last week, this 'no licence, no pay' principle was extended beyond the building fraternity to capture unlicensed electricians and unregistered engineers.³

Those in the construction industry in Queensland should take note of this simple yet necessary reminder about the implications of a failure to comply with relevant licensing requirements.

The facts

Queensland Engineering & Electrical Pty Ltd (QEE) is a provider of electrical engineering and electrical works. In 2013, QEE entered into a contract with Agripower Australia Ltd (Agripower) in which it agreed to perform electrical engineering works and electrical works on Agripower's powder and granulation plants in Charter Towers.

QEE's entry into this agreement was problematic from the start, in light of two key pieces of Queensland legislation.

1. Electrical Safety Act

2. The Electrical Safety Act 2002 (Qld) (Electrical Safety Act) 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", and imposes a penalty for breach of this requirement.⁴ QEE was not licensed, nor was its director.

2. Professional Engineers Act

The Professional Engineers Act 2002 (Qld) (Professional Engineers Act) provides that "a person who is not a practising professional engineer must not carry out professional engineering services", and imposes a penalty for a breach of this requirement. This Act also goes a step further, providing that a person who is not a practising professional engineer "is not entitled to any monetary or other consideration for the performance or carrying out of the professional engineering services". ⁵ QEE was not registered, nor was its director.

The dispute

A payment dispute arose and QEE made an adjudication application under the BCIPA, seeking to recover fees that it thought it was owed. As a result of that application, QEE secured an adjudication decision of $60,000 against Agripower.

Agripower urgently applied to the Supreme Court of Queensland for a declaration that the adjudication decision was void. Agripower's key argument was that its contract with QEE was illegal and unenforceable because of QEE's breaches of the Electrical Safety Act and Professional Engineers Act, and it relied on Cant v Casella to submit that an adjudication decision founded on an illegal contract is void.

For its part, QEE argued that even if it had breached the Electrical Safety Act and Professional Engineers Act, those breaches did not render the contract illegal and the adjudication decision in its favour should stand.

The Court's approach

In relation to the Professional Engineers Act, the Court quickly dismissed QEE's argument in light of the Act's clear wording which expressly prohibited QEE from being entitled to any monetary consideration.

In the case of the Electrical Safety Act, where there is no equivalent express provision, the Court nevertheless found that the contract was rendered illegal by implication, having regard to:

• the "emphatically" stated purpose of the Act itself, being to preserve the electrical safety of the public through the proper licensing and discipline of persons who perform electrical work
• the fact that the penalties imposed for licensing contraventions were not merely concerned with securing revenue.

The result of the Court's findings was that QEE was not entitled to the $60,000 it had initially been awarded in the adjudication decision.

Key takeaway

The case drives home a simple message that should already be obvious to those involved in the construction industry in Queensland, but is obviously still being missed by some – construction players are required to be appropriately licensed not only to legitimately perform their work, but also to be entitled to take recourse under the BCIPA if a payment dispute arises. Where there is no recourse available under the BCIPA, the alternative of pursuing a statutory quantum meruit claim in Court, or in the Queensland Civil and Administrative Tribunal, is a costly and protracted option that most would want to avoid.

Footnotes

¹Cant Contracting v Casella (2006) QCA 538.
²Walton Construction (Qld) Pty Ltd v Eastwing Contracting Pty Ltd (unrpt) per Fryberg J 9412/2008; Walton Construction (Qld) Pty Ltd v Plumber By Trade Pty Ltd [2012] QSC 264.
³Agripower Australia Pty Ltd v Queensland Engineering & Electrical Pty Ltd [2015] QSC 268.
⁴See section 56.
⁵See section 141(2).

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