CONSTRUCTION Alert: Illegal contracts: Performing unlicensed electrical work and unregistered engineering services precludes rights under the BCIP Act 2004 (Qld)

Sep 18 2015

Publications

In the recent decision of Agripower Australia Ltd v Queensland Engineering & Electrical Pty Ltd & Ors [2015] QSC 268, the Queensland Supreme Court determined that an adjudication decision under the Building and Construction Industry Payments Act 2004 (Qld) (BCIP Act) was void in circumstances where the underlying construction contract was void for illegality due to the contractor’s performance of unlicensed electrical and engineering services.

Queensland Engineering & Electrical Pty Ltd (QEE) was engaged by Agripower Australia Pty Ltd (Agripower) to provide electrical engineering and electrical works.  QEE, as the Court found, advertised itself as being in the business of providing both services.

Statutory framework

The Professional Engineers Act 2002 (Qld) provides that a person who is not a practising professional engineer must not carry out professional engineering services.  It further provides that the person in breach of the prohibition is not entitled to any monetary or other consideration for the performance or carrying out of the professional engineering services.  The Queensland Building and Construction Commission Act 1991 (Qld) contains a similar provision (section 42) aimed at unlicensed building work.

The Electrical Safety Act 2002 (Qld) does not contain a similar provision regarding the exclusion of remuneration however it does provide by section 56 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. 

Relevantly in this case, it was a contention of Agripower’s that QEE had breached the prohibition in the Electrical Safety Act merely because it held itself out as carrying on the business of performing electrical work.

Decision

Over an extended period of time, with and without the supervision of external companies, QEE performed services for Agripower that fell within the meaning of ‘electrical work’ under the Electrical Safety Act, and ‘professional engineering services’ under the Professional Engineers Act.  During the performance of those works, neither QEE nor its director was relevantly licensed to carry out electrical work, or registered as a professional engineer. 

The Court embarked on an analysis of the evidence, and, by reason of QEE’s name (referring to both electrical and engineering services) and particular statements made by its director to the effect that QEE was in the business of providing electrical services and a promise to do so, determined that QEE breached section 56 of the Electrical Safety Act.

QEE attempted but failed to rely on the exclusion in section 56 of the Electrical Safety Act that provides there is no breach if the electrical work is intended to be subcontracted to the holder of an electrical contractor licence.

As to the Professional Engineers Act, the Court held that QEE had also provided professional engineering services in relation to the designs that it specified due to the ‘application of engineering principles and data to a design, construction, production, operation or maintenance activity relating to engineering’.

Effect of the breaches

On the basis of QEE’s breach of both the Electrical Safety Act and the Professional Engineers Act, the court concluded that QEE’s contract with Agripower was illegal.

Consistently with previous Queensland Court of Appeal authority that a claimant who had contravened section 42 of the Queensland Building and Construction Commission Act was prevented from receiving remuneration under its contract, the Court held that QEE was not entitled to progress payments under the BCIP Act.  The adjudicator’s decision was thereby held to be void for jurisdictional error.

Lessons

Players in the engineering, building and construction industry need to be alert to the statutory licensing and regulatory frameworks that might apply in any given case.  The consequences of promising to perform, or actually performing, work while failing to be appropriately licensed or registered can lead to lost entitlements under the BCIP Act as well as to payment under construction or consultancy contracts.

To the extent that work is required to be performed that is outside of any applicable licence, care should be taken that it is carried out by a subcontractor or a consultant who is appropriately licenced or registered.

The decision also provides respondents to payment claims and adjudication applications under the BCIP Act with an extra avenue of defence.  Respondents should be aware of the licence or registration status of all contractors.

Written by:

Andrew Kelly | Partner | +61 7 3338 7550 | akelly@tglaw.com.au

Tom McKillop | Senior Associate | +61 7 3338 7530 | tmckillop@tglaw.com.au