Panel Concepts Pty Ltd v Tomkins Commercial & Industrial Builders Pty Ltd [2021] QDC 322

Sarah Ferrett  | Sarah Cahill  |  Nikole Rabeling

Key takeouts

The ‘Head Contracts’ licence exemption under the Queensland Building and Construction Commission Act (QBCC Act) is not limited to head contractors engaging directly with a principal.  It applies to any unlicensed person intending for work to be carried out by a person who is licensed.

Payment claims must include clear descriptions of the works to which they relate. If a payment claim fails to objectively identify the works under the contract to which it relates, it will not be a valid payment claim for the purpose of the Building Industry Fairness (Security of Payment) Act 2017 (QLD) (BIF Act).

The common understanding that the QBCC Act section 8, Schedule 1A licensing exemption only applies to head contractors engaging directly with a principal is now debunked. This broadens the net for other contractors and subcontractors to take advantage of the exemption.

The Building Industry Fairness (Security of Payment) and Other Legislation Amendment Act 2020 (Qld) will remove this exemption from 24 July 2022 (unless extended).  Until that time, the effect of this case is that the ‘Head Contracts’ licensing exemption can apply to any unlicensed contractor or subcontractor intending for licensed works to be carried out by a person who is licensed.

Facts

Panel Concepts Pty Ltd (Panel) brought an application for final determination of a claim under s 78 of the BIF Act against Tomkins Commercial & Industrial Builders Pty Ltd (Tomkins) in the amount of $99,915.20.  The basis of Panel’s application was that in August 2021 it made a payment claim. Tomkins had failed to respond within the relevant period under the BIF Act and Panel had given the notice required before started proceedings under s 99 of the BIF Act.

In response to that application, Tomkins argued that its failure to respond to the payment claim did not entitle Panel to the amount claimed because:

1.       in breach of s 42(1) of the QBCC Act, Panel had carried out construction work that it was not licensed to perform; and

2.       the payment claim did not identify the construction work to which it related.

Decision

Head contracts licence exemption

Tomkins argued Panel had breached section 42(1) as it was not licensed to carry out fire sealant works required to construct and install tilt panels. Panel countered this by submitting it could take advantage of the licensing exemption under section 8 of Schedule 1A of the QBCC Act, the exemption commonly referred to as the ‘Head Contracts’ exemption.

Porter DCJ concluded that Panel, by engaging a licensed fire sealant subcontractor, was entitled to the licensing exemption under the QBCC Act.  His Honour considered that section 8 of Schedule 1A of the QBCC Act, titled ‘Head contracts to carry out building work’, is not limited to only persons entering into a contract with a principal.  Rather, it should be read broadly to mean any contract where an unlicenced person contracts for works to be carried out by a person who is licenced.

In coming to that conclusion, the Court said that:

• the fire sealant works were only a minor component of the tilt panel construction and it would be uneconomical and inefficient to expect Panel to obtain a licence for that part of the works;
• the licensing exemption should work to advance economic efficiency in the industry, where the work was clearly intended to be undertaken by a licensed professional with whom Panel has contracted many times for this kind of work. 

Identification of works undertaken for payment

Panel’s payment claim described the work it had undertaken as a ‘claim for completion of tilt panels’. Tomkins argued this description failed s 17(2)(a) of the BIF Act (as it then was) as it did not identify the construction work to which the payment claim related. Prior to this payment claim, Panel submitted two payment claims on 25 July 2021 and 8 August 2021 respectively. The descriptions in these claims were also brief, stating the claim was for ‘the fabrication of tilt panels’ along with the claimed quantum.

In determining this issue, His Honour noted that there is no absolute rule to be applied to every payment claim to determine sufficient identification of the construction works and that the bar should not be set too high with respect to what identification means.  In relation to this case, the court considered that the contract between the parties called for the construction of certain tilt panels and their installation. The previous two payment claims by Panel, although brief, provided a sufficiently objective description of the fabrication works undertaken to be comprehensible to Tomkins. However, when looking at the payment claim in dispute, the court determined the words ‘completion of tilt panels’ did not adequately identify the specific work undertaken. This was because it was not a final payment claim for the balance of the contract and so what Panel meant by ‘completion of’ was not objectively comprehensible.  

The words ‘completion of’ failed to adequately identify what specific work under the contract had been completed.  On this basis, Panel’s application was dismissed.