Construction Defects

The policy defines defective building work as work considered faulty or unsatisfactory. It includes, for example, work that:

• does not comply with the Building Act 1975 (Qld), the Building Code of Australia or Australian Standards; or
• involves the use, construction or installation of a manufactured product in a way that does not comply with the manufacturer’s instructions.

This defective work can be structural or non-structural.

“Structural defective building work” means work that is faulty or unsatisfactory because it:

• adversely affects the structural performance of a building; and/or
• adversely affects the health and safety of occupants of a building; and/or
• adversely affects the functional use of a building; and/or
• allows water to penetrate the building.

On the other hand, “non-structural defective building work” means work that is faulty or unsatisfactory because it:

• does not meet a reasonable standard of construction or finish expected of a competent holder of a contractor’s licence of the relevant class; or
• has caused a settling in a period defect in a new building. i.e. building work that does not perform at a standard reasonably expected of work carried out by a competent holder of a contractor’s licence of the relevant class.

Under the Queensland Building and Construction Act 1991 (Qld), a “tier 1 defective building work” is a type of construction defect that:

• falls below the standard reasonably expected of a licensed contractor for the type of building work; and either
• adversely affects the structural performance of a building to the extent that a person could not reasonably be expected to use the building for which it was, or is being, erected or constructed; or
• is likely to cause the death of, or grievous bodily harm to, a person.

For this type of defective building work, the government can cancel a building contractor’s licence, and ban the person from holding a licence for three years, or for life depending on subsequent offences.

In construction contracts, there are specific steps to resolve defect disputes. If negotiations with the contractor fail, the owner can file a complaint with the Queensland Building and Construction Commission within 3 months of discovering a structural defect and within 7  months of discovering a non-structural defect. 

QBCC may involve engineers to assess the complaint and can issue a Direction to Rectify (DTR) to the contractor, requiring them to fix the issue within 35 days for most cases. The DTR must also be issued within six years and three months (structural defect) or 12 months (non-structural defect) of project completion.

If the contractor doesn’t comply with the DTR, QBCC may initiate legal proceedings in QCAT or Magistrates Court. 

If QBCC can’t resolve the dispute through Early Dispute Resolution (EDR), they can issue a certificate allowing the owner to seek dispute resolution in QCAT. In some cases, another contractor may rectify the work, but the feasibility of this approach should be carefully assessed, as damages from the original builder may not cover the cost of rectification by the subsequent builder.

In Queensland, the QBCC Act provides a statutory  home warranty insurance scheme for residential construction projects exceeding $3,300 in value. It provides protection for both the building contractor and the homeowner, particularly when dealing with unresolved defective work issues.

To utilize this scheme, a homeowner must file a formal complaint with QBCC within three months (for structural defects) or seven months (for non-structural defects) of discovering the issue. If the claim is successful, QBCC pays out the necessary amount and then seeks reimbursement from the building contractor responsible for the defect. This arrangement ensures that homeowners have the means to address defects even if the contractor fails to rectify them.

A building contractor can also be directed to rectify consequential damage caused by defective building work.

Under the Queensland Building and Construction Act 1991 (Qld), consequential damage is damage caused by building work at a residential property, regardless of any intention, negligence or recklessness of the person carrying out the work. Such damage includes

• the impairment of drainage;
• the undermining of a fence, retaining wall or other boundary structure;
• the compromising of the structural integrity of a building, swimming pool, or wall;
• the cracking, lifting or cratering of a driveway or path;
• water penetration; and
• termite infestation.