Dylan from Redchip's Litigation team covered: • Directions to rectify issued by the QBCC; • Claims under the Home Warranty Scheme; • Pitfalls of notices issued by the QBCC; • QCAT process for disputing notices issued; and • Methods for recovering money in uncertain times.

1. Construction for Accountants
Dylan Carrier-Hubbard, Lawyer

2. PresentingWednesdays with
RedchipWebinar
Dylan Carrier-Hubbard
Lawyer
DylanC@redchip.com.au
As a litigation lawyer, Dylan spends
his days managing disputes,
drafting claims and defences, and
following Court application
procedures.

3. Topics to be covered in today’s webinar
• Directions to rectify issued by the QBCC;
• Claims under the HomeWarranty Scheme;
• Pitfalls of notices issued by the QBCC; and
• QCAT process for disputing notices issued.

4. Direction to rectify

5. What is a direction to rectify?
A direction to rectify (Direction) is a formal
notice issued by the Queensland Building
and Construction Commission (QBCC)
pursuant to section 72 of the Queensland
Building and Construction CommissionAct
1991 (the Act) directing a person who
carried out the building work (Relevant
Person) in question to rectify or remedy
defective building works and/or damage
within a set period stated in the Direction.

6. What can it do?
A Direction directs a Relevant Person to undertake the following:
a) for building work that is defective or incomplete—rectify the
building work;
b) for consequential damage—remedy the damage.
A Direction there has the capacity to create and encompass a cause
and effect notion, whereby a Relevant Person can be directed and
held liable for defective works and damage which far exceeds their
actual involvement at the building site in question.

7. Who can request for the QBCC to issue a Direction?
Section 71J of the Act states:
1) A consumer may ask the commission
to give a direction to rectify building
work the consumer considers is
defective or incomplete.
2) The owner or occupier of a
residential property adjacent to a
building site may ask the
commission to give a direction to
remedy any consequential damage
to the property.

8. Timeframes to request the QBCC to issue a
Direction cont.
Example:
Due to building work being undertaken at the premises, the premises of
Neighbour A is damaged. Neighbour A can make a request with the QBCC
to issue a Direction for the consequential damage.
The QBCC have discretion ….act on time complaints.

9. • Upon a complaint being made the
QBCC will contact the Relevant
Person and the consumer to discuss
and assess the complaint and obtain
further information or documents if
required.
• A list of defect items will be created
by the QBCC.
• The consumer will then be asked to
give the Relevant Person access to
inspect and assess the items subject
to the complaint.
Process prior to issuing a Direction

10. Process prior to issuing a Direction cont.
It is important that any Relevant Person undertakes the above action
(even if in their view it is a waste of time) as refusal by a consumer to
allow access can be a ground for the QBCC to dismiss the complaint
made before it becomes a Direction.

11. Process prior to issuing a Direction cont.
• The Relevant Person and consumer will then
generally meet on site to review each item
and decide a plan for the repair of any agreed
items.
• Again, it is important for the Relevant Person
to undertake this inspection (and take
detailed notes and photos).
• Subject to the above, if the parties can agree
to a scope of repair work to rectify the
complaint, this is then undertaken by the
Relevant Person.

12. Process prior to issuing a Direction cont.
• The QBCC will then carry out a visual inspection
of the site in question to either inspect the
agreed list of items repairs or to determine if
the items contained within the complaint are
present. (The Relevant Person should attend this
site inspection with all parties).
• Following a site inspection, the QBCC will
provide a report to the parties and determine
whether it will issue the Relevant Person with a
Direction.

13. Timeframes for complying with a Direction
• Upon the issue of a Direction a Relevant
Person has 28 days to either rectify the
items contained with the Direction or seek
a review (methods of review are discussed
further below).
• It is important that these dates are
correctly lodged and calculated as upon
the expiry of the 28-day period, a Relevant
Person’s ability to review a Direction are
limited and an application made to QCAT
brought outside of the 28-day period will
fail.

14. Jurisdiction to review a Direction
A Relevant Person who wishes to review a Direction will be required to
do so through QCAT who has sole jurisdiction to hear reviews involving
a Direction issued (regardless of monetary amounts in question).
Despite the above, QCAT will generally remain a ‘no cost jurisdiction’
meaning that any successful application made by a Relevant Person will
not invoke a costs order being awarded against the QBCC.

15. In certain circumstances, a party
who fails to file an application with
QCAT within the necessary time
period, can in addition to the
application file an application
seeking to extend the period of
time to file a valid application.
Application for an Extension ofTime through QCAT

16. Application for an Extension ofTime through QCAT cont.
While QCAT have the ability to extend this time for a review of a
Direction, they are unable to if the QBCC have :
a) started a disciplinary proceeding against the person under part 6A
of the Act; or
b) served a notice on the person advising a claim under the statutory
insurance scheme has been approved in relation to the building
work relevant to the direction; or
c) started a prosecution, or served an infringement notice, for an
offence against section 73 in relation to the direction.

17. Application for an Extension ofTime through QCAT cont.
Practically speaking and as you will see shortly in the below redacted
letters issued by the QBCC, it is common place for the QBCC to issue an
infringement notice with its non-compliance letter which will bar a
Relevant Person from seeking the above relief.

18. Consequence of non-compliance with a Direction
Should a Relevant Person ignore or fail to comply with a Direction
within the relevant time frame, the following consequences may flow
from their non-compliance:
a) loss of demerit points (can be up to 10 demerit points which is a
third of a builder’s points held over any three-year period).
b) the QBCC may commence prosecuting the Relevant Person in a
Tribunal and/or Court for non-compliance with the Direction
(penalties for a individual can be in excess of $30,000.00).
c) the QBCC can fine the Relevant Person with a penalty for non-
compliance with the Direction (up to $2,669.00).

19. Consequence of non-compliance with a Direction cont.
d) the QBCC may commence disciplinary action in the Queensland Civil
and AdministrativeTribunal (QCAT) or the Courts for the Relevant
Person’s conduct (can result in QBCC applying conditions to a building
licence etc.).
e) the QBCC may issue the Relevant Person with a show cause notice as a
result of the non-compliance with the Direction that may result in
suspending or cancelling the licence (on occasion this can occur while
the Relevant Person is disputing the Direction in QCAT).
In addition to the above, further liabilities can arise should the Direction fall
under the Queensland Home Warranty Scheme (the Scheme) which is
discussed further shortly.

20. • Specific care must be taken when
in receipt of any document issued
by the QBCC to ensure you have
not inadvertently been issued with
a Direction.
• This is because, while the QBCC
have a generic letter which is sent,
these documents are largely auto
generated and are therefore prone
to grammatical and structural
irregularities.
Confusion with whether a Direction has been issued

21. Confusion with whether a Direction has been issued cont.
There are two types of letters issued by the QBCC when issuing a
Direction, namely:
a) A Direction (generally a letter titled “Work by a licensed contractor
is required – Direction to rectify and/or complete No. _____”); and
b) A non-compliance letter ( generally a letter titled “Work not fixed
or completed)”.

25. Confusion with whether a Direction has been issued cont.
• The first letter is a Direction pursuant to section 72 of the Act and
the second letter is a confirmation of a failure to comply with a
Direction.
• It is important to distinguish between the two letters as each have
review rights that are substantially different.
• Put simply, a Relevant Person can review the validity of a Direction
provided the review is made within time for the first letter, however
the scope of review upon the issue of the second letter is limited to
reviewing the reasonableness of the Direction not complied with.

26. Confusion with whether a Direction has been issued cont.
Example:
• BuilderA receives a Direction and
within the relevant period applies
to QCAT to have the validity of
the Direction reviewed.
• The grounds for BuilderA’s
review is that the Direction
relates to building work which
was outside of their scope and
which it did not undertake.
• This would be a valid review.

27. Confusion with whether a Direction has been issued cont.
Alternatively
• If BuilderA ignores the Direction and upon receiving the second letter
seeks to review the validity of the Direction on the same grounds as
stated above, they would be prevented from doing so as this is no
longer a ‘reviewable decision’ as they are not out of time.
• BuilderA would be restricted to reviewing the reasonableness of the
work not fixed or completed under the Direction but would not be able
to review the validity of the Direction being issued (i.e. review of the
method used to rectify the work under the Direction).

28. “Back Door” review
Given the above and the limited review rights a
Relevant Person has upon the period to review a
Direction, attempts have been made to review the
reasonableness of the rectification work contained
with a Direction in its entirety (i.e. the rectification
is not applicable or reasonable and therefore should
be removed from the Direction).
This is known as a ‘back door’ review and have been
ruled as invalid by QCAT.

29. Internal Review or External Review?
• Upon receipt of a Direction, a Relevant Person can within 28 days
seek to have the Direction internally reviewed (through the QBCC)
or externally reviewed (through QCAT).
• While there is no costs associated with having the Direction
internally reviewed, in our experience, commencing an external
review application has been more effective in settling a Direction
with the QBCC.
• It is also important to note, that unless specifically granted by
QCAT, an external review application will not stop or delay the
QBCC from assessing an owner’s right to cover under the Scheme.

30. Judicial review
• In addition to the above methods of
review, a Relevant Person has the ability
to seek to have the Direction altered or
quashed by the Court (generally on the
grounds of breach of natural justice).
• These applications are filed in the
Supreme Court and have significant cost
consequences should the application be
unsuccessful.
• Due to the above, there are very limited
Judgments available illustrating the
methodology applied by the Court when
determining matters of this nature.

31. Reviewable and Non-Reviewable Decisions
Section 86 of the Act contains the
causes of action which are reviewable
by a Relevant Person:
(1) Each of the following decisions of
the commission under this Act is a
"reviewable decision’ -

32. Reviewable and Non-Reviewable Decisions cont.
(e) a decision to give a direction to rectify or remedy or not to give the
direction;
(f) a decision that building work undertaken at the direction of the
commission is or is not of a satisfactory standard;
(g) a decision about the scope of works to be undertaken under the
statutory insurance scheme to rectify or complete tribunal work;
(h) a decision to disallow a claim under the statutory insurance scheme
wholly or in part;

33. Reviewable and Non-Reviewable Decisions cont.
In contrast, section 86F of the Act states:
(1)The following decisions of the commission under thisAct are not
reviewable decisions under this subdivision—
(a) a decision to recover an amount under section 71 ;
(b) a decision to give a person a direction to rectify or remedy, and any
finding by the commission in arriving at the decision if—
(i) 28 days have elapsed from the date the direction was served on a person
and the person has not, within that time, applied to the tribunal for a
review of the decision; and

34. Reviewable and Non-Reviewable Decisions cont.
(ii) the commission has—
(A) started a disciplinary proceeding against the person under part 6A ; or
(B) served a notice on the person advising a claim under the statutory
insurance scheme has been approved in relation to the building work
relevant to the direction; or
(C) started a prosecution, or served an infringement notice, for an offence
against section 73 in relation to the direction;

35. Reviewable and Non-Reviewable Decisions cont.
(c) a decision about the scope of works to be undertaken under the
statutory insurance scheme to rectify or complete tribunal work if 28
days have elapsed since the decision was served on the building
contractor and the contractor has not, within that time, applied to the
tribunal for a review of the decision;
…
This means upon the expiry of the 28-day review period and the issue of
an infringement notice, the Relevant Person is unable review (and
therefore defend against) the Direction.

36. The Queensland Home Warranty Scheme
• In addition to the above, should the
building work subject to a Direction relate
to residential work, it may also be subject
to the provision of the Scheme.
• The Scheme covers consumers for loss
suffered if a contractor (or an individual
where fraud or certain representations are
made) fails to complete a contract for
residential work or fails to rectify defective
work.
• Cover under the Scheme is implemented
from premiums paid by a Relevant Person.

37. Time Limits under the Scheme
• For non-completion of work claims, the contract must end within two
years of the day work starts and the consumer must make a claim with
the QBCC within three months after the date the contract ends.
• For defective work claims, structural defects are covered for six years six
months from the date (whichever is the earlier) of payment of the
premium, a contract is entered or work is commenced and you must
lodge the claim within three months of noticing the defect.
• Non-structural defects are covered if the consumer becomes aware of
the defect within six months after the day the work is completed and
they must lodge the claim within seven months of the completion date.

38. Process under the Scheme
• Similar to the above, the QBCC will consider
whether any complaint made for residential
building work fits within the Scheme.
• Should this be the case, and a Relevant Person
fails or comply with or successfully review the
Direction, then the claim under the Scheme will
proceed and the QBCC will obtain a new builder
to remedy the items under the Direction.
• The QBCC will then direct a new builder to go to
the affected property and complete/rectify the
works subject to the Direction.

39. Process under the Scheme cont.
• The costs associated with the new
builder will be paid for by the
QBCC up to the approved amount
under the claim or until the cap
under the Scheme is reached (this
will vary subject to the insurance
policy applicable).
• The QBCC will then generally
commence recovery action
against the Relevant Person to
recover the funds used to rectify
the works in question.

40. Personal liability under the Scheme
• Unlike most other processes under the Act, liability incurred under
the Scheme will pierce the company and attach to the individual
personally.
• Upon a claim being approved under the Scheme and a Relevant
Person failing to comply with a Direction, there is no defence
available to an individual to protect themselves personally and/or
prevent recovery action being commenced against them.

41. Takeaways
• It is essential that upon a Direction being
received that it is not ignored (even if it is the
intention of the building company to go into
liquidation) as personal liability can still occur
against the individual if the Scheme applies.
• It will almost always be more commercial for
the Relevant Person to rectify the works
themselves or organise another party to do
so rather than leave it to the QBCC to
organise.

42. Takeaways cont.
• Should an individual fail to file a review within time for a Direction, the
only remedy available to them is to try and minimise the costs incurred
and negotiate a payment arrangement with the QBCC (any additional
steps taken to contest the Direction will only be to delay the inevitable).

43. Your questions are important
Please send them through using the
Q&A section 07 3223 6100

44. Thank you for tuning in