Queensland Construction Law - Year in Review 2020

6 minute read  26.10.2020 David Pearce, Hugh Pegler

Throughout 2020, the Queensland Government has made a number of important changes to laws governing Queensland construction projects. We summarise the changes, and highlight what may be coming in 2021.


Key takeouts


  • COVID-19 continues to present challenges for those involved in Queensland construction projects. Industry participants should carefully monitor the legislative response.
  • Important changes have been made to the laws governing builder's licensing, industrial relations and workplace health and safety, planning approvals and project trust accounts.

 

  • Collaborative contracting is back in vogue – interest in collaborative approaches to contracting continues to grow.

COVID-19 impact has presented new risks

COVID-19 created a wave of unpredictability in commercial contracting. It resulted in significant claims, across areas including force majeure, frustration, change in law and variations arising from directions. While many construction contracts contemplated relief for delays caused by 'pandemics' it was rare that they comprehensively and appropriately dealt with the risks that arose for parties. These include delays in manufacturing and transportation, restrictions on movement of personnel and new 'social distancing' requirements at workplaces. As a result, parties have needed to negotiate appropriate arrangements. The ability of the Australian construction industry to keep working through the crisis also mitigated the potential severity of these claims.

After the initial panic, the market has now started to settle. Arrangements for allocating risks due to COVID-19 in construction and procurement contracts are becoming standard. However, the risks remain real and potentially difficult to scope and price. COVID-19 has presented new risks for contractors due to the significant and unpredictable delays in manufacturing and transport of materials. COVID-19 has increased subcontractor solvency and supply risks for principals.

New contracts should cater for the COVID-19 impacts. Existing contracts and arrangements should be reviewed to ensure clarity of adverse COVID-19 impacts.

A clear approach in new contracts will involve:

  • setting firm baseline timeframes for work (based on current COVID-19 restrictions)
  • maintaining and updating COVID-19 management plans, and
  • allowing for appropriate adjustment mechanisms for delays and delay costs (and acceleration or reduced costs if works become easier as restrictions and impacts of COVID-19 ease).

These relief regimes should work as a sole remedy. They should be aligned with other key clauses and processes, such as those for submitting and updating extension of time claims. Read more about how you can mitigate and deal with your construction risks during COVID-19.

COVID-19: Queensland Government Response

The Queensland Government, rapidly updated its laws to manage COVID-19. To the construction industry this included:

  • frequently revised public health directions regulating cross-border travel, private and public gatherings and the conduct of business; and
  • temporary modifications to allow for deeds, powers of attorney and statutory declarations to be executed electronically and to allow for the witnessing of documents via video link. These modifications are set to apply until 31 December 2020.

As the pandemic runs its course, it is possible that further modifications will be introduced, existing regulations will be augmented and temporary measures will be revoked or made permanent. It is important that participants in the industry continue to monitor these laws.

QBCC Act Licensing – Head Contractor Exemption Removed

Since 2013, an unlicensed party has been able to enter into a contract to perform building work in Queensland without having a builder's licence. This was provided all work requiring a licence is performed by licensed subcontractors.

Due to concerns, this meant the QBCC couldn't issue directions to rectify defective building work to the party responsible for a construction contract this exemption is being removed. This change will particularly impact special purpose entities, and new entrants to the Queensland construction market, such as foreign based EPC contractors seeking to develop projects in Queensland. Read more about the change.

WHS – Mandated COVID-19 safety plan

During 2020 workplace health and safety laws have been amended. The amendments are aimed at preventing the spread of COVID-19 on construction sites. These include:

  • the mandated increased use of PPE and other improved hygiene / social distancing practises, including limiting the number of workers on site
  • creating spaced walkways
  • limiting the number of employees in lunch rooms or other confined spaces.

It is imperative all sites have COVID-19 safety plans and that these are enforced rigorously to avoid significant fines.

Industrial Manslaughter – company fined $3million

Earlier this year, the District Court of Queensland handed down its first sentence under the industrial manslaughter laws introduced in Queensland in 2016. The Court found the company and two directors were liable for the death of an employee on a construction site. The company was fined $3 million.

After incidents at mines across Queensland, the industrial manslaughter laws have been extended to penalise unsafe work practices in the mining industry.

Planning approvals relaxed

The timing requirements and development assessment processes for Planning Act 2016 (Qld) approvals were relaxed in response to COVID-19 and the Queensland Government's infrastructure stimulus packages.

The government's goal is to get major projects and other 'shovel ready' projects off the ground as quickly as possible. A new Ministerial power removes or changes development approval assessment timeframes, to promote economic growth and stability. Also, many forms of development that were impact assessable have been downgraded to code assessable to improve development assessment timeframes.

Trust accounts are coming, slowly

Queensland has continued its rollout of project trust accounts for construction projects, to protect subcontractors from not being paid. Following legislative changes in 2020 the regime now applies to certain Queensland government related building contracts valued between $1 million and $10 million. The Governments policy is that this will be further extended in 2021, however the timeline for it to be extended to private sector contracts is now 2023. See our alerts published in March, July and October for more details.

Collaborative contracting 

The 'catchphrase' for project delivery in 2020 has been 'collaborative contracting'. This has been driven by concerns that major infrastructure projects have involved some inappropriate allocation of risk to contractors and subcontractors, resulting in claims and disputes.

In the 1990s similar sentiments led to the 'No Dispute' report and the introduction of Alliancing into the Australian construction market. While Alliancing fell out of favour, it remains a valid model in the right circumstances and has seen a revival in the past few years for major road and rail projects.
In parallel, Early Contractor Involvement contracting, which began on major projects, has become prolific. While we remain advocates of the use of ECI, care needs to be taken to ensure it is not being used on low value projects as a substitute for completing the procurement process and awarding a contract in time.

Collaborative contracting aims to improve project outcomes and productivity, encourage compliances and foster positive commercial relationships. Concerns have been raised whether 'no blame' approaches such as 'alliance contracting' will bring about new risks. To manage these concerns, a blend of traditional hard risk allocation with contractual features that promote positive and ongoing professional relationships between the parties may be more beneficial. We have discussed the approach in an infrastructure context in more detail here.

Our team has substantial experience in this area. We have tailored specific contracts in a range of different scenarios and jurisdictions. When done right, collaborative contracting can work well, as long as each party has a genuine desire to work collaboratively. Project proponents should be wary about calling a contract collaborative without the genuine desire for true collaboration – naming the contract as such and including a good faith clause is not enough!

State Election on 31 October 2020

Queensland State Elections are now on a 4-year fixed term cycle (coincidentally aligned with US Electoral cycle) with the next election fast approaching.
A return of the ALP or a change of government will no doubt bring a range of new and different legislative and policy changes. In addition, changes to government structures and a host of new announcements – watch this space!

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