Key Takeaways A holding company may be liable for a subsidiary’s debts if there were reasonable grounds for suspecting the subsidiary’s insolvency and the holding company, or one or more of its directors, was aware of those grounds, or it was reasonable to expect that awareness. The Corporations Act 2001 (Cth) provides four key statutory defences for holding companies facing liability under section 588V, through section 588X, focusing on reasonable grounds for expecting solvency, reasonable reliance on a competent and reliable person, genuine non-participation in management for good reason, or taking all reasonable steps to prevent the debt. The safe harbour regime provides a separate form of protection where directors are actively developing a course of action reasonably likely to lead to a better outcome than immediate administration or liquidation. For directors, the key provision is section 588GA, and for holding companies there is parallel protection under section 588WA. Meticulous, contemporaneous documentation is critical to supporting any of these defences, including where a claim is brought by a liquidator or the Australian Securities and Investments Commission (ASIC). The Australian construction landscape, particularly in Queensland, is a high-stakes environment. Developers frequently leverage sophisticated corporate structures, using Special Purpose Vehicles (SPVs) or subsidiary companies for individual projects to isolate risk. In theory, the corporate veil protects the parent (or holding) company from the financial distress of its subsidiary. However, this protection is not absolute. When a subsidiary project company faces insolvency, the holding company itself may, in some circumstances, be liable for debts incurred by the subsidiary under the insolvent trading provisions of the Corporations Act 2001 (Cth). That upstream exposure represents a significant risk for developers and their holding companies, particularly where warning signs are not identified and addressed early. The statistics paint a sobering picture. The construction industry consistently represents the largest share of corporate insolvencies in Australia, accounting for a staggering 26-27% of all failures in recent financial years. The number of construction firms entering administration or liquidation has seen a sharp increase, rising to 3,217 in 2024. Crucially, ASIC consistently reports that insolvent trading is the most common form of misconduct alleged in this sector. For directors of a parent development company, these are not just numbers; they highlight the seriousness of insolvency risk within corporate group structures and the importance of early oversight and advice. The Unique Focus of This Guide This article is not merely an explanation of the law; it is a practical playbook for directors. We will first outline the specific legal test used to establish a holding company’s liability for a subsidiary’s debts. We will then transition to a deep dive into the specific statutory defences available in that context under the Corporations Act. Finally, and most importantly, we will detail how to proactively build a case for those defences through meticulous documentation and robust corporate governance. While the risk of holding company liability is significant, the law provides specific shields for diligent directors. This guide is focused on defence and mitigation, shifting the mindset from passive risk awareness to proactive strategic preparation. Establishing Parent Company Liability: The Test Under Section 588V For liability to flow from a subsidiary to its parent company, a liquidator or ASIC must satisfy a specific legal test. Liability is not automatic; it hinges on the provisions of Section 588V of the Corporations Act. Understanding this threshold is the first step in building an effective defence against a potential insolvent trading claim. The corporate structures common in the property development sector, designed to navigate the complex web of construction law, are precisely what these provisions scrutinise. What is the Legal Threshold for Liability? Section 588V establishes a five-part test that must be satisfied for a holding company to be held liable for the debts of its insolvent subsidiary. All five conditions must be met: The Status Test: The parent company must have been the holding company of the subsidiary at the time the subsidiary incurred the specific debt in question. The Insolvency Test: The subsidiary must have actually been insolvent at that time, or have become insolvent by incurring that debt (or other debts at that time). The Suspicion Test: At that same time, there must have been "reasonable grounds for suspecting" that the subsidiary was insolvent, or would become insolvent by incurring that debt (or other debts at that time). The Awareness Test: Either the holding company or one or more of its directors was actually aware of those grounds for suspicion — or, having regard to the nature and extent of the holding company's control over the subsidiary's affairs, it was reasonable to expect that a holding company in its circumstances would have been so aware. The Timing Test: The debt must have been incurred at or after the commencement of the Corporations Act 2001. The term "reasonable grounds for suspecting" is critical. It's a lower bar than "knowing" or "expecting." A suspicion is more than idle speculation but falls short of a firm belief. The court will assess whether a reasonably competent director, looking at the available financial information, would have harboured a suspicion of insolvency. If you are second-guessing the solvency of a subsidiary project, do not wait for a liquidator's notice. Instruct our team to conduct an urgent, privileged review of your corporate structure to secure your commercial position. Understanding the "Awareness" Test: Actual vs. Objective Suspicion A common but serious mistake for directors is to assume that ignorance will provide a defence. The fourth condition under section 588V is satisfied not only by actual knowledge — it also has an objective element. It is not enough for a director to say they did not actually know or suspect insolvency; the court will also examine whether, having regard to the nature and extent of the holding company’s control over the subsidiary’s affairs and the information available, it was reasonable to expect that awareness. This means a director of a holding company cannot simply turn a blind eye to the financial health of a subsidiary and later claim they were unaware of any problems. The court will examine the information that was available to the parent company's board—management accounts, cash flow reports, board papers, and correspondence—and determine if those documents contained warning signs that should have triggered suspicion. Active oversight and a baseline of financial literacy are not optional; they are fundamental duties for any director involved in a holding company structure. The Four Core Defences: Your Shield Against an Insolvent Trading Claim The Corporations Act is not purely punitive; it provides specific statutory defences under section 588X, which applies directly in the holding company context. These defences recognise that corporate decision-making occurs in a complex commercial environment and do not impose a standard of infallibility. However, each defence requires proof of diligence, reasonableness, and active engagement. A holding company seeking to rely on one of these protections must be able to point to specific actions and evidence supporting the defence. Defence 1: Expecting Solvency on Reasonable Grounds The first and most commonly argued defence, found in s 588X(2), is that the holding company — and each of its relevant directors — had reasonable grounds to expect, and did expect, that the subsidiary was solvent and would remain solvent even after incurring the debt. This is an active defence. "Expecting" solvency requires more than just passive optimism or a vague hope that things will improve. A director must demonstrate that their expectation was based on a rational and informed assessment of the subsidiary's financial position. The process of forming this reasonable expectation involves actively seeking, reviewing, and questioning financial information. Evidence that can be used to substantiate this defence includes: Detailed and up-to-date cash flow forecasts showing a capacity to meet future obligations. Regular profit and loss statements and balance sheets. Evidence of access to credit facilities or other sources of funding. Valuations of company assets that could be realised to pay debts. The key is that the director's expectation must have been reasonable at the time the debt was incurred. Hindsight is irrelevant. The court will place itself in the director's shoes and assess whether, based on the information available then, the belief in solvency was justifiable. Defence 2: Relying on a Competent and Reliable Person Under s 588X(3), the holding company — and each of its relevant directors — can argue that they had reasonable grounds to believe, and did believe, that a "competent and reliable person" was responsible for providing adequate information about the subsidiary's solvency, and that this person was fulfilling that responsibility. This defence acknowledges that directors, particularly in a large holding company, must rely on others. The "competent and reliable person" could be the subsidiary's Chief Financial Officer, an experienced financial controller, or an external accountant tasked with monitoring and reporting on the company's finances. However, the reliance must be reasonable. A director cannot simply delegate their oversight duties entirely. They must have made sufficient inquiries to satisfy themselves of the expert's competence and had no reason to doubt the information being provided. If the financial reports are clearly nonsensical or contradict other known facts, a director cannot blindly accept them. This defence is not a "get out of jail free" card for abdicating responsibility. You cannot wilfully ignore obvious red flags—like creditors constantly calling or suppliers demanding cash on delivery—and then blame the CFO for providing optimistic reports. The reliance must be in good faith and objectively reasonable. A director retains the ultimate duty to apply their own mind to the information presented. This is where seeking sound commercial legal advice can be a crucial step in testing the assumptions you are being asked to rely on. Defence 3: Justifiable Non-Participation in Management This is the narrowest of the four defences, and its operation in the holding company context — under s 588X(4) — is more limited than it first appears. Where a relevant director of the holding company did not take part in management at the time the debt was incurred due to illness or some other "good reason," that director's personal awareness of the grounds for suspecting insolvency is to be disregarded for the purposes of the section 588V liability test. In other words, it neutralises the awareness element attributable to that particular director — it does not, of itself, fully exonerate the holding company if the remaining conditions of section 588V are otherwise satisfied. Consider a director of a parent company who was legitimately incapacitated due to a serious illness and required hospitalisation for two months. During that period, the subsidiary incurred several large debts and subsequently failed. When a liquidator later pursues the holding company, the incapacitated director's awareness cannot be used to satisfy the awareness limb of section 588V — provided the absence is properly evidenced through medical records, formal leave of absence notifications, and board minutes recording their non-attendance. This provision is not available for directors who are simply disengaged, on an extended holiday without making arrangements, or who choose not to pay attention. The non-participation must be total and for a compelling, verifiable reason. Defence 4: Taking All Reasonable Steps to Prevent the Debt The final defence, under s 588X(5), is the last resort for a holding company that suspected its subsidiary was in trouble but took positive steps to stop it. This defence requires proof that the holding company itself took "all reasonable steps" to prevent the subsidiary from incurring the debt. Inaction is fatal to this defence. The court will look for evidence of positive action. "Reasonable steps" are context-dependent and will be assessed against the size and complexity of the company, but could include: Formally voting against resolutions to incur further debt. Expressing strong, documented dissent in board meetings and demanding it be minuted. Attempting to have the board appoint a voluntary administrator. Voicing concerns in writing to other board members. This defence is directed to those who recognised the seriousness of the position and took positive steps to prevent further debt being incurred, even if those steps were ultimately unsuccessful. Its practical application will depend heavily on the quality of the contemporaneous evidence available. In Queensland and New South Wales, we routinely advise parent companies on the exact steps required to isolate contagion from a failing subsidiary. Merlo Law acts decisively to document your dissent and enforce protective legal measures, ensuring your holding entity is not dragged down by a rogue project. Engage our team to implement immediate, aggressive risk-mitigation strategies before subsidiary debt spirals out of control. Proactively Building Your Defence: A Director's Documentation Playbook Understanding the statutory defences is one thing; being able to prove their requirements is another. In any legal challenge from a liquidator, ASIC, or another regulator or decision-maker, memory alone is a poor substitute for a clear, dated paper trail. Effective corporate governance and meticulous documentation are not merely administrative tasks; they may become critical evidence in support of a defence. Why Contemporaneous Records are Your Best Weapon From a court’s perspective, undocumented decisions, questions, and warnings are often much harder to prove later. Records created after the event to justify an earlier decision will usually carry less weight than contemporaneous notes, emails, and board minutes created at the time. When an insolvent trading claim is later examined, the quality of the contemporaneous record may be highly influential. The Anatomy of Defensible Board Minutes Board minutes are often among the most important pieces of evidence in an insolvent trading case. To be genuinely useful, they should go far beyond simple one-line resolutions. Well-prepared board minutes should provide a detailed record of the board’s oversight process. They must document: The Data Reviewed: A clear record of the key financial documents tabled and considered by the board (e.g., "The board reviewed the management accounts for the period ending 31 October, the aged creditors list, and the revised cash flow forecast to the end of the financial year."). The Questions Asked: The specific, probing questions asked by directors about the financial data. For example, "Director Smith questioned the CFO on the significant increase in the 90-day creditor balance and the assumptions underpinning the revenue forecast for the next quarter." The Advice Received: The answers and advice provided by management or external advisors in response to those questions. The Reasoning: The detailed reasoning behind the board's conclusion that the subsidiary remained solvent and that it was in the company's best interests to incur a specific debt. A simple resolution "that the company proceed with the contract" is weak; a resolution that explains why the board believes it can meet that obligation is strong. Board minutes are not an administrative chore; they are a legal shield. When we defend directors, the first documents we ask for are the minutes. Minutes that show robust debate, critical questioning of financial reports, and a clear, reasoned basis for decisions are invaluable. Vague, one-line resolutions offer almost no protection. Establishing a Cadence of Financial Scrutiny A one-off, detailed board meeting is not enough. To build a robust "reasonable grounds" defence, directors must demonstrate a consistent and disciplined process of financial scrutiny. This means establishing a formal cadence of reporting between the subsidiary and the parent company board. Parent company directors should be demanding, at a minimum: Monthly management accounts (Profit & Loss, Balance Sheet). Detailed cash flow projections, updated regularly and tested against actual performance. Aged creditor and debtor reports. Reports on compliance with statutory obligations like tax and superannuation. This regular flow of information does two things. First, it provides the raw data needed to make informed decisions. Second, it creates a paper trail that demonstrates a system of active oversight. This system is fundamental to proving that the directors were diligent and had a reasonable basis for their belief in the company's solvency. Unpacking the Safe Harbour Defence: A Modern Lifeline for Restructuring Beyond the four core defences in section 588X, the Corporations Act also provides a separate safe harbour regime for companies in financial distress. For individual directors of the subsidiary, the relevant provision is Section 588GA. For the holding company itself, protection from liability under Section 588V is accessed through the parallel provision at Section 588WA — which shields the holding company where it has taken reasonable steps to ensure Section 588GA applied to each of the subsidiary's directors in relation to the relevant debt. This regime was introduced to shift the legal incentive away from a premature rush to administration and instead encourage genuine, well-considered turnaround attempts. What is the Safe Harbour and How Does It Work? Safe harbour operates as a carve-out from insolvent trading liability in defined circumstances. It may protect directors from civil liability for debts incurred by a company that may be insolvent, provided they are actively developing a course of action that is reasonably likely to lead to a better outcome for the company than the immediate appointment of an administrator or liquidator. It allows directors breathing room to attempt a restructure, refinance, or orderly wind-down without the constant fear of personal liability for every new debt incurred during the process. Where those directors have the benefit of the safe harbour, the holding company can in turn rely on Section 588WA — provided it took reasonable steps to ensure that protection was in place. This interconnected structure is a key focus of the updated ASIC's Regulatory Guide 217, which acknowledges the commercial benefit of attempting a viable turnaround. Key Conditions for Safe Harbour Protection Entry into the safe harbour is not automatic. Directors must satisfy several strict prerequisites to gain its protection. The essential steps include: Maintaining Core Obligations: The company must be keeping its employee entitlements (including superannuation) paid up to date and must be complying with its tax reporting obligations. Developing a Plan: The directors must start developing one or more courses of action. Seeking Expert Advice: A crucial step is obtaining advice from an "appropriately qualified entity" – typically a registered liquidator, a specialist turnaround advisor, or a lawyer with expertise in restructuring. Documenting the Plan: While the statute does not prescribe documentation as a hard entry condition, it is a factor the court will have regard to in assessing whether a course of action was reasonably likely to lead to a better outcome. In practice, a well-documented plan outlining the steps to be taken and the reasoning behind them is essential to discharging the evidentiary burden — and its absence will significantly undermine any safe harbour claim. This process may involve navigating complex issues like security of payment legislation to ensure all liabilities are properly understood and factored into the turnaround strategy. A poorly documented safe harbour strategy is legally useless when a hostile liquidator comes knocking. Instruct Merlo Law to formalise your turnaround plan and aggressively defend your directors from personal liability. What Does a "Better Outcome" Look Like? The term "better outcome" is the lynchpin of the safe harbour defence. The comparison point is always the estimated financial return to creditors in an immediate formal insolvency process (i.e., administration or liquidation). The turnaround plan does not need to guarantee success or a return to profitability. It simply needs to be reasonably likely to provide a superior result for creditors than the alternative of pulling the plug immediately. Illustrative Example: A subsidiary construction company is facing a severe cash flow crisis due to a delayed project. Immediate liquidation would likely yield only 10 cents on the dollar for unsecured creditors, and all employees would lose their jobs. The directors engage a turnaround specialist. They develop a plan that involves negotiating with the principal on the delayed project, selling a non-core land asset to inject cash, and terminating construction contracts that are unprofitable. This plan, while carrying risks, is projected to allow the company to trade through its difficulties and eventually pay creditors an estimated 50 cents on the dollar. This projected improvement over the 10-cent liquidation return is the "better outcome" that the safe harbour is designed to facilitate. When a Defence Fails: Understanding the Consequences The defensive framework outlined in this guide is intended to reduce liability risk. However, if a holding company or relevant person cannot establish an available statutory defence in the applicable context, or safe harbour protection where available, the consequences can be serious. Understanding the powers of a liquidator and the corporate regulator, ASIC, underscores the importance of proactive governance. The Powers of a Liquidator and ASIC When a company is liquidated and a director is found to have engaged in insolvent trading, two key parties can take action: The Liquidator: Acting on behalf of creditors, a liquidator may bring proceedings in relation to insolvent trading and seek compensation for loss suffered as a result of debts incurred while the company was insolvent. In the holding company context, this may include proceedings against the holding company under the relevant provisions of the Corporations Act. ASIC: As the corporate regulator, ASIC has its own enforcement powers. Depending on the statutory pathway engaged, it may seek civil penalties, compensation orders, or disqualification orders. The scope of relief available will depend on the claim, the parties involved, and the provisions relied on. These serious outcomes highlight the high stakes involved. Navigating a complex claim, which may involve proceedings in the Queensland Civil and Administrative Tribunal (QCAT) for related building matters or the Federal Court for corporate law matters, requires the guidance of a specialist building and construction lawyer. The Final Word: Proactivity Is Critical The legal framework governing insolvent trading and related defences places a clear premium on proactive, engaged, and diligent corporate oversight. A close examination of the defences reveals that common theme. The defence of having reasonable grounds for expecting solvency requires active financial scrutiny and questioning. The defence of reasonable reliance requires a sound basis for trusting the information provided. The defence of taking all reasonable steps is explicitly concerned with proactive intervention. And the safe harbour regime is likewise premised on timely, documented efforts to develop a better outcome than immediate external administration. Passivity, disengagement, and the failure to respond appropriately to warning signs create significant risk under the Corporations Act 2001 (Cth). Accordingly, one of the most important practical protections in this area is a system of proactive governance, careful documentation, and a willingness to seek appropriate advice at an early stage. We encourage directors to review their governance processes in light of this information and seek specific advice where needed. Merlo Law has spent years defending QLD and NSW construction firms from aggressive liquidators and regulatory overreach. We do not just dispense academic advice; we deploy hard-hitting, commercial strategies designed to fiercely protect your parent company’s balance sheet. Secure your corporate structure today by instructing our senior lawyers to conduct a comprehensive legal audit of your operational subsidiaries. FAQs What is the difference between a holding company and a parent company? In the context of the Corporations Act, the terms are often used interchangeably. A company is considered a "holding company" of another company (the "subsidiary") under section 46 of the Corporations Act 2001 if it controls the composition of the subsidiary's board, is in a position to cast or control more than half of the votes at a general meeting, or holds more than half of the subsidiary's issued share capital (excluding share capital carrying no right to participate beyond a specified amount in a distribution of profits or capital). Importantly for developers using tiered SPV structures, a company is also a holding company of any entity that is itself a subsidiary of one of its subsidiaries — meaning liability under section 588V can travel up through multiple layers of a corporate structure. Does this liability apply to non-executive directors of the parent company? Non-executive directors are not immune from scrutiny in this context. While the statutory framework differs between direct insolvent trading claims and holding company liability, non-executive directors are still expected to be financially literate, to participate actively in board oversight, and to apply an independent mind to the financial information presented. They cannot simply defer to management or executive directors where warning signs are apparent. How soon should a director act if they suspect insolvency? Immediately. Once there are reasonable grounds for suspecting insolvency, delay increases legal and practical risk. The first step should be to raise the concern formally at board level, ensure the company’s financial position is urgently assessed, and obtain prompt professional advice from an appropriately qualified lawyer, insolvency practitioner, or accountant. Can a director resign to avoid liability for insolvent trading? Not usually. Resignation does not wipe out potential liability for debts incurred while the person was still a director, because section 588G of the Corporations Act 2001 (Cth) turns on whether the person was a director at the time the company incurred the debt. If the relevant debts were incurred before the resignation took effect, a later resignation will not, by itself, avoid exposure. However, where a person has genuinely ceased to be a director, liability under section 588G will not usually arise for debts incurred only after that point. In practice, a former director is more likely to face continuing risk only where there is some additional complication — for example, the resignation was ineffective, the resignation date is disputed, ASIC was not properly notified, or the person continued to act in the affairs of the company in a way that may leave them characterised as a director despite the resignation. So the practical position is that resignation is not a clean escape from liability for past debts, but nor does it ordinarily make a former director liable for future debts once they have genuinely left office. If resignation is being considered because of solvency concerns, the director should raise those concerns formally, record any dissent and steps taken to prevent further debts, obtain urgent legal or insolvency advice, ensure the resignation is validly effected and properly notified, and avoid continuing to act in management after resigning. What is the difference between administration and liquidation? Voluntary administration is a process where an independent administrator takes control of the company to try and find a way to save the company or its business. The goal is restructuring and rescue. Liquidation (or 'winding up') is the formal process of ending the company's existence, selling its assets, and distributing the proceeds to creditors. It is a terminal process. The "better outcome" in the safe harbour provisions is measured against the likely return in an immediate administration or liquidation. Does the Queensland Building and Construction Commission (QBCC) get involved in insolvent trading? While insolvent trading is primarily governed by the federal Corporations Act and enforced by ASIC and liquidators, the QBCC has a strong interest in the financial viability of licensees. An insolvency event can be grounds for the QBCC to take disciplinary action, including licence cancellation or exclusion of individuals from the industry, under the Queensland Building and Construction Commission Act 1991. This guide is for informational purposes only and does not constitute legal advice. For advice tailored to your specific circumstances, please contact Merlo Law.

Key Takeaways A novation is not a mere assignment of rights. It substitutes a new contractual relationship for the old one, but the deed should deal expressly with accrued rights and liabilities and with the treatment of pre-novation services. Agreeing to an "ab initio" (from the beginning) novation without first reconciling the original consultancy terms with the builder's D&C contract can expose pre-novation services to elevated standards and uninsured liabilities. Queensland's proportionate liability scheme cannot simply be excluded by contract for apportionable claims, but a separately drafted indemnity may still create additional contractual exposure depending on its wording. A builder’s value-engineering demands do not displace the architect’s compliance obligations, professional duties or the need to act within the architect’s authorised scope of services under a novated contract. Day One After Novation: Managing the Builder’s Immediate Value-Engineering Demands You have just signed the novation deed, shifting from the developer’s consultant to a consultant engaged under the D&C builder. The ink is barely dry, and the builder is already pressing for design changes to reduce cost. This is the point at which the architect must establish clear boundaries: what falls within ordinary design development, what requires a formal variation assessment, and what must be refused because it would compromise compliance, exceed scope or undermine the project record. Navigating the Builder’s First Cost-Cutting Directive The first RFI from the new D&C builder usually marks an immediate shift in the project’s commercial reality. The architect’s reporting line has changed from implementing the developer’s design brief to responding to the builder’s delivery objectives. Builders may have legitimate commercial reasons for reviewing specification choices, but the pace and breadth of those requests can force rapid decisions that affect compliance, scope and future liability. In a novated design and construct arrangement, commercial pressure to approve cheaper materials or simplified detailing often becomes the starting point for later defect allegations. The builder controls procurement and programme pressure, but the architect still controls design documentation within the agreed scope. That makes early concessions particularly dangerous if they are undocumented, conditional without follow-up, or allowed to blur the line between compliant design development and builder-led substitution. The moment the first post-novation RFI arrives, the architect’s response strategy begins shaping the project record that may later be examined by a certifier, insurer, regulator or court. It should not be treated as a routine documentation query. Any RFI that seeks a design change should be treated as a proposed variation to the design basis and assessed accordingly. Apply the following protocol to every post-novation RFI that involves a design alteration. Classify the instruction before you respond. Separate each item into three categories: (a) design development that does not alter NCC compliance or the approved development application — these you may action through your ordinary documentation workflow; (b) value-engineering substitutions that alter materials, systems or construction methods but remain code-compliant — these require a formal written variation assessment and your express approval before you proceed; and (c) any instruction that would produce a design the architect reasonably considers non-compliant with the NCC, the Queensland Development Code or the approved basis of assessment — these should be refused in writing, with the relevant compliance reason identified before any further action is taken. Respond in writing in a form that can be independently retained by your practice, not only within the project management platform. The written response should identify the reason for rejection, reference the relevant NCC provision, Queensland Development Code requirement or approval constraint where possible, and state clearly that the instruction is not being accepted for compliance or scope reasons, rather than mere design preference. A status change within a shared platform is rarely enough to create the independent documentary trail needed if the design is later challenged by a certifier, insurer, regulator or claimant. Confirm your authorised scope before answering. Before responding to any RFI requesting a design substitution, check whether the assessment falls within your post-novation scope of services and expertise. If the builder is asking you to approve a product, performance claim or system outside your engagement, record in writing that the assessment sits outside scope and decline to approve it unless and until the engagement is varied appropriately. Scope creep at the RFI stage is a common way architects become exposed to liability for procurement decisions they did not control. Our team at Merlo Law routinely defends QLD and NSW design professionals who have been inadvertently cornered into assuming procurement risks outside their contracted scope. We help architects implement rigid RFI protocols that rapidly identify and shut down uncompensated scope expansion before it hardens into an uninsured liability. Instruct our team to audit your post-novation administration processes and secure your commercial position. Log and segregate every response immediately. Each RFI refusal or variation assessment must be copied to your own file on the day it is issued, tagged with the RFI number, the date received, the date of your response, and a clear notation of whether your response constituted approval, conditional approval or refusal. This document segregation is the pre- and post-novation record your practice will rely on to defend against a defect claim years after practical completion. Warning: Responding to a value-engineering RFI with a conditional approval — for example, approving a product substitution 'subject to structural engineer confirmation' — without obtaining and filing written confirmation that the condition has been satisfied before construction proceeds can shift practical risk back onto your practice. Do not issue conditional approvals unless your engagement includes a documented process for verifying and recording that each stated condition has been satisfied before the substitution is incorporated into the works. Drawing the Line on Compliance, Professional Duties and Scope Warning: Contractual obligations owed to the D&C builder do not relieve the architect of compliance obligations, professional duties or the need to act within the agreed scope of services. Accepting a builder-led instruction that compromises compliance may expose the practice to certification problems, disciplinary issues, uninsured contractual arguments and later defect claims, regardless of the commercial pressure applied under the novated contract. In Queensland, building work and building assessment processes are governed by legislation and by the applicable building assessment provisions, including the NCC. A D&C builder’s value-engineering instruction does not displace the architect’s obligation to act consistently with those requirements or with the architect’s professional obligations. Protecting the practice’s compliance position requires discipline in following the written refusal and record-keeping protocol outlined above for each non-compliant or out-of-scope instruction. For registered architects in Queensland, that approach also aligns with the BOAQ Code of Practice requirements to notify the client in writing of matters preventing the architect from following instructions and to maintain proper records. Documenting Pre-Novation vs Post-Novation Instructions Isolating your pre-novation design decisions from post-novation variations is a critical administrative step that must begin on day one. The developer approved your original schematic design and development application; the builder is now demanding deviations during the construction documentation phase. You must implement a strict document control system that clearly tags which party instructed which variation and when. If a defect claim arises three years after practical completion, this precise paper trail serves as vital evidence. Without it, you risk bearing liability for a compromised, hybrid design that neither fully satisfies the developer's original brief nor meets the required compliance standards. Novation Is Not Assignment: Why the Deed Wording Still Matters The most dangerous misconception at this stage is treating the novation as a simple handover of the client file. A novation is legally different from an assignment: it substitutes a new contractual arrangement in place of the old one. That distinction matters because the deed may also deal with pre-novation services, accrued rights and the extent to which the builder assumes the developer’s position from the novation date or from the beginning. Why Novation is a Substitution, Not a Transfer At law, a novation substitutes one contractual relationship for another. This differs fundamentally from an assignment, which transfers the benefit of rights but does not, by itself, transfer obligations. In practice, the precise effect of the deed still depends on its drafting, particularly in relation to accrued rights and pre-novation services. Under section 190 of the Property Law Act 2023 (Qld) — which replaced the Property Law Act 1974 (Qld) on 1 August 2025 — an assignment of a debt or legal thing in action must be absolute, in writing, and the debtor must be given actual notice of the assignment for the transfer of legal rights to become effectual. The precise statutory mechanics of s 190 establish the mechanism for an absolute assignment of a legal thing in action, sharply distinguishing it from the common law doctrine of novation, which requires tripartite consent to substitute entirely new obligations. This conceptual separation between assignment and novation is well established. Careless use of 'transfer' language in a deed can create avoidable ambiguity about whether rights alone are being assigned or a broader substitution of contractual position is intended. That is one reason the deed should deal expressly with release, accrued rights and the treatment of pre-novation services. The "Ab Initio" Trap: Accepting Liability for Past Developer Decisions Expert insight: Signing an 'ab initio' novation deed without aligning the pre-novation design basis to the builder’s contractual requirements can create significant contractual and insurance risk. Where the deed retrospectively treats the builder as if it had always been the client, the architect may be exposed to allegations measured against a different brief, different risk allocation and, potentially, obligations that fall outside ordinary PI cover. The legal mechanism behind this trap is straightforward. An ab initio novation deed treats the builder as if it had been the client from the commencement of the architect’s engagement. In practical terms, that can expose the architect’s pre-novation work to review against the builder’s contractual framework rather than the original developer brief. If the builder’s terms include fitness for purpose language, uncapped liability or performance obligations exceeding ordinary reasonable skill and care, the architect may face arguments based on standards that were not the basis on which the earlier services were priced, documented or insured. This is structurally different from a prospective novation, also called a switch novation, in which the architect's contractual obligations transfer to the builder only from the novation date forward. Under a prospective deed, the developer retains responsibility for the brief they issued and the instructions they gave prior to novation. The architect's exposure to the builder is limited to post-novation services. The pre-novation design record remains governed by the original consultancy agreement, which aligns with the policy wording under which the architect's PI insurance was written. The PI coverage gap is most acute where the two contractual documents are materially inconsistent. Consider a scenario in which the developer engaged the architect under a standard consultancy agreement requiring reasonable skill and care, but the builder's D&C contract — which the ab initio deed now deems to have always applied — contains a fitness for purpose warranty for the building envelope. The architect's PI policy was issued against the reasonable skill and care standard. The ab initio deed has retrospectively imposed a fitness for purpose obligation. Have you unknowingly assumed retrospective fitness for purpose warranties under an 'ab initio' novation deed? Request an urgent review of your executed contracts today to identify and ring-fence your uninsured exposures. The insurance risk is obvious. Many PI policies contain exclusions for liability assumed under contract beyond the liability that would have attached at common law absent the contract. If the novation deed retrospectively imposes a higher contractual standard, the insurer may dispute cover for that additional exposure. That is precisely why the deed should be reviewed against the policy wording before execution and notified promptly afterwards. Builder-drafted novation deeds often adopt ab initio wording by default. The deed language that triggers this effect includes phrases such as "the Architect is deemed to have been engaged by the Contractor from the date of its original engagement" or "the Contractor steps into the position of the Principal from the commencement of the Architect's services" or any formulation that deems the builder's contract to apply "as if" it had always been in place. Each of these formulations achieves the same result: it applies the builder's elevated standards to design work that was completed before those standards were ever agreed to. If you have already executed an ab initio novation deed without obtaining prospective language, the position is more difficult but not necessarily irretrievable. Three remedial steps should be taken immediately. First, instruct your solicitor to review the executed deed and the original consultancy agreement side by side to identify every material inconsistency between the two — particularly fitness for purpose warranties, unlimited liability provisions, and indemnity obligations that exceed your common law duty of care. Second, notify your PI insurer in writing of the executed deed and its terms without delay, attaching both the deed and a schedule of the specific clauses that extend your liability beyond the original engagement. Late notification is not ideal, but it is usually preferable to silence. Section 40(3) of the Insurance Contracts Act 1984 (Cth) may preserve cover where written notice of facts that might give rise to a claim is given as soon as reasonably practicable and before the policy expires. Third, write to the builder requesting a supplementary deed or side letter that retrospectively limits the novation to prospective effect only. Builders will not always agree, but the request itself creates a contemporaneous record that you did not intend to assume retrospective liability on the elevated terms — a record that may assist both your insurer and your solicitor if a claim eventuates. For architects who have not yet signed, the position is far more straightforward. Before executing any novation deed, instruct your solicitor to identify whether the deed is ab initio or prospective in its effect and to insert express prospective language in its place. The following form of words is commonly used to achieve this result: "This deed takes effect from the Novation Date only. The rights, obligations and liabilities of the parties in respect of services performed and instructions given prior to the Novation Date remain governed by the Original Agreement and are unaffected by this deed." If the builder refuses to accept prospective language, that refusal is itself an important signal about the risk you are being asked to assume, and warrants immediate legal advice before you proceed. Dealing Expressly with Accrued Rights and Pre-Novation Liability If a novation deed does not deal expressly with accrued rights and pre-novation liability, the architect may face uncertainty about whether the original developer retains rights in relation to earlier services. For that reason, the deed should address release and the treatment of pre-novation claims in clear terms. Standard form novations sometimes stay silent on the express release of the architect's liability to the original developer for pre-novation services. Without that drafting discipline, the architect may still face arguments about responsibility for earlier decisions under contract, tort or statute. Addressing the point expressly during the transition from developer engagement to builder engagement is therefore a basic risk-control step. Paragraphs 24, 26 and 34 of the BOAQ Code of Practice operate together to impose specific record-keeping and notification obligations on registered architects in Queensland. Paragraph 24 requires an architect to promptly advise the client in writing of anything that would, or would be likely to, prevent the architect from following the client's instructions. Paragraph 26 requires the architect to maintain thorough records of all correspondence and documents sent and received for at least seven years after completion of services. Read together with paragraph 34 of the Code, which requires an architect to withdraw from services where continuing would require a breach of the Act or the Code, these obligations mean the Board expects architects to create and preserve a clear documentary record where client instructions conflict with professional obligations, the agreed scope or the architect's ability to continue acting consistently with the Code. A failure to do so is not merely a litigation risk — it is a potential disciplinary matter. The Board of Architects of Queensland has the power to take disciplinary action against a registered architect who fails to comply with the Code of Practice, and a pattern of undocumented acquiescence to non-compliant builder instructions could support a finding of unsatisfactory professional conduct, independent of any civil claim. Merlo Law possesses deep, practical experience advising architects facing BOAQ investigations and professional negligence claims born from aggressive D&C environments. We step in to fortify your project records and establish clear boundaries with demanding builders across Queensland and New South Wales. Secure your professional registration and commercial standing by engaging us to manage your high-risk project correspondence. Proportionate Liability in Pre- and Post-Novation Design Defects When a water ingress or structural defect surfaces three years after practical completion, the homeowner won't distinguish between your pre-novation concept and the builder's post-novation variations. At this point, the risk shifts to how liability is divided among the original developer, the D&C builder, and your practice. Queensland's statutory apportionment rules will heavily influence your ultimate financial exposure. Defining Concurrent Wrongdoers Across the Novation Boundary When a design defect claim bridges the pre- and post-novation periods, the architect, the developer, and the builder may all be classified as concurrent wrongdoers if their independent acts contributed to the same loss. A flawed pre-novation developer brief combined with poor post-novation builder execution creates a complex web of shared responsibility. Under section 30 of the Civil Liability Act 2003 (Qld), a concurrent wrongdoer is one of 2 or more persons whose acts or omissions caused, independently of each other, the loss or damage that is the subject of the claim. For construction defect disputes, that concept becomes relevant where loss is said to arise from a combination of design, briefing, coordination, certification or construction decisions across the pre- and post-novation periods. Novation may also have separate insurance and regulatory consequences on residential projects. Where the underlying contract or delivery structure changes materially, home warranty and other insurance arrangements should be checked directly against the applicable policy, statutory requirements and current QBCC guidance rather than assumed to carry across automatically. Section 31: Apportionment Helps, but Only Within an Apportionable Claim In a multi-party design defect claim, the proportionate liability regime can be a significant protection for an architect. If a builder’s later value engineering, procurement choice or construction method materially contributed to the failure, the statutory scheme may limit the architect’s liability to its just and equitable share. However, that protection operates within an apportionable claim itself. It does not automatically dispose of a separate contractual indemnity the architect may have given in the novation deed. Under section 31 of the Civil Liability Act 2003 (Qld), liability in an apportionable claim is limited to the proportion of the loss the court considers just and equitable having regard to the defendant’s responsibility. Under section 28, that regime applies to claims for economic loss or property damage of the relevant kind, not to every claim that may be pleaded in a construction dispute. As defined in section 31, the liability of a defendant who is a concurrent wrongdoer in relation to the claim is limited to an amount reflecting that proportion of the loss or damage claimed that the court considers just and equitable having regard to the extent of the defendant's responsibility. For a proportionate liability Queensland architect, this statutory apportionment is a critical factor in defending an apportionable claim involving a D&C builder — but it must be understood alongside the contractual indemnity analysis discussed below, because the two operate on parallel tracks. Why You Cannot Contract Out of the Apportionment Scheme Warning: D&C builders often seek broad indemnity clauses in novation deeds to shift downstream defect risk onto the architect. Under Queensland law, parties cannot simply contract out of the statutory apportionment regime for apportionable claims. That said, an indemnity may still create a separate contractual avenue of recovery depending on its drafting and the way the claim is framed. This is why broad indemnities should be resisted or narrowed at the deed stage rather than treated as harmless boilerplate. Under section 7(3) of the Civil Liability Act 2003 (Qld), this Act, other than chapter 2, part 2 and chapter 3, does not prevent the parties to a contract from making express provision for their rights, obligations and liabilities under the contract. By explicitly excluding Chapter 2, Part 2 from the freedom to contract out, the statute prohibits parties from overriding the statutory apportionment scheme within an apportionable claim. However, a well-drafted contractual indemnity does not purport to override the apportionment regime; it creates an independent contractual obligation to reimburse the builder for loss. The distinction is critical: the court may apportion liability within the statutory claim, while a separately worded indemnity may still need to be analysed on its own terms. This is why simply relying on the proportionate liability scheme without also negotiating the indemnity wording in the deed is an incomplete risk strategy. Do not let aggressive D&C indemnities strip away your statutory apportionment protections. Instruct our senior construction lawyers to strike out predatory indemnity clauses and negotiate a novation deed that strictly aligns with your PI coverage. Professional Indemnity Insurance: The Notification Dead-zone As the commercial dynamic shifts from developer to builder, your practice's risk profile alters fundamentally. Insurance issues begin as soon as the draft novation deed arrives. Failing to test the deed against current PI cover and notification obligations can leave the practice exposed if the builder later seeks to pass on defect-related losses. PI Insurance Notification Protocols Before Executing the Deed Expert insight: Executing a novation deed often materially changes the architect's risk profile (especially if standard terms are amended by the D&C builder). Failing to implement correct PI insurance notification architect protocols before executing the deed is a common administrative error that can compromise coverage for future design defect claims. Executing a novation deed that materially alters the architect’s risk profile without checking notification and cover implications can compromise the practice’s position on future design defect claims. The notification protocol operates in four stages, each of which must be completed in sequence. Send the proposed deed to your PI broker before you execute it. Do not wait until after the deed is signed to involve your insurer. The moment a draft deed arrives from the builder, forward it to your PI broker with a covering note that specifically identifies every clause extending your liability beyond your common law duty — indemnity clauses, fitness for purpose warranties, unlimited liability provisions, and any clause that removes your right to rely on proportionate liability under the Civil Liability Act 2003 (Qld). The point is to assess whether those specific clauses are likely to fall within the scope of the current policy before the practice becomes bound by them. Obtain a written coverage opinion, not merely a verbal assurance. If your broker advises that a particular indemnity or warranty is likely to be acceptable, ask for that view in writing and keep it on file. A verbal assurance is of limited value if a defect claim arises years after practical completion and the advice later has to be proved. If the insurer identifies clauses that sit outside coverage, you have three options available to you: negotiate the offending clauses out of the deed; request a specific policy endorsement to extend coverage to the new risk; or decline to execute the deed in its current form. The second option is only available if the insurer is prepared to issue the endorsement before you sign. Formally notify the insurer once the deed is executed. Under standard policy conditions, and reinforced by section 40(3) of the Insurance Contracts Act 1984 (Cth), providing written notice to your insurer of facts that may give rise to a future claim before your current policy expires preserves coverage even if the actual claim is made in a later policy period. If the deed or surrounding circumstances disclose facts that might give rise to a claim, consider giving formal written notice to the insurer promptly after execution, attaching the executed deed and identifying the relevant risk features. Disclose the novation at your next renewal. PI insurance in Australia operates on a claims-made and notified basis. The policy that will respond to a defect claim made three years from now is not the policy you hold today — it is the policy in force when the claim is eventually made against you. Every renewal application you lodge between now and that future claim must accurately describe your contractual obligations, including any elevated indemnities you accepted in the novation deed. Failure to disclose a material change in the nature of the practice’s professional activities or contractual risk profile at renewal may create difficulties on a later claim, including non-disclosure issues or reliance on contractual liability exclusions, depending on the policy wording and the facts. How elevated builder indemnities create uninsured exposure. Many PI policies exclude or limit cover for liability assumed under contract to the extent it would not have attached at common law absent the contract. If a novation deed requires the architect to indemnify the builder for losses beyond the architect’s proportionate responsibility or beyond ordinary reasonable skill and care, that may create assumed contractual liability exposure. Insurers commonly scrutinise those clauses closely, and the insurer may contend that the additional liability falls outside cover. The policy wording, not the novation deed, ultimately defines the outer boundary of available cover. Why Broad Deed Indemnities and PI Cover Often Misalign When a D&C builder inserts broad indemnity clauses into a novation deed, the commercial effect — whether or not it is the conscious intention — is to shift the cost of a future defect claim entirely onto the architect. The commercial purpose of these clauses is usually to shift loss arising from design issues onto the architect, but their practical effect depends on their drafting, their interaction with the architect’s ordinary duty of care and the terms of the PI policy. Many PI policies do not respond fully to liability assumed under contract beyond the architect’s ordinary duty to exercise reasonable skill and care. If the novation deed includes broad indemnities untethered to fault, scope or insurance, the practice may assume exposure that is only partly insured or uninsured altogether. While s 7(3) of the Civil Liability Act 2003 (Qld) preserves the statutory apportionment regime for apportionable claims, that does not remove the need to control indemnity drafting at the front end. Protective Strategies for the Novation Deed and D&C Contract You are not obligated to sign a standard-form novation deed that strips your protections, no matter how aggressively the builder pushes. This is the moment to negotiate terms that quarantine your pre-novation advice and strictly limit your liability for builder-led substitutions. The following strategies outline what needs to be in the deed before you proceed. Defining the Post-Novation Scope So Builder Variations Do Not Become Architect Liability Clearly defining the post-novation scope of services within the novation deed ensures you are not held contractually responsible for supervising the builder's unauthorised design deviations. A rigorously drafted scope of services should quarantine the architect’s responsibility to the agreed documentation and review functions, such providing construction detailing or reviewing shop drawings, while expressly excluding any broader role in general superintendency, site supervision or approval of unauthorised substitutions. A rigorously defined post-novation scope of services ensures the architect is only liable for agreed documentation phases and not for unapproved onsite variations executed by the D&C builder. Vague scope definitions often leave the architect exposed to allegations of failing to identify a builder's non-compliant substitution during periodic site visits. Resisting Fitness for Purpose Warranties and Other Elevated Standards D&C builders frequently demand "fitness for purpose" warranties in the novation deed, attempting to force the architect to guarantee that the final design will meet the builder's broad, often undefined, commercial objectives. The point of resisting or qualifying a fitness for purpose clause is to keep the architect’s contractual standard aligned with reasonable skill and care, rather than an outcome guarantee. The enforceability of a fitness for purpose exclusion depends on the specific wording of the novation deed and the architect's ability to resist the builder's drafting demands. As detailed in the PI insurance sections above, standard policies contain a strict exclusion for liability arising from fitness for purpose warranties, meaning acceptance of such an obligation will almost certainly leave the practice personally exposed for any claim arising from that warranty. Where the deed is professionally reviewed before signing, removing or heavily qualifying these warranties should be a primary focus. Essential Clauses for a Safer Novation Express release of accrued rights: Ensure the deed deals clearly with release, accrued rights and responsibility for pre-novation services. Limitation of liability cap: Negotiate a clear monetary cap on your liability, ideally aligned with your PI insurance limits and any applicable professional standards scheme. Proportionate liability preservation: Include a clause expressly confirming that nothing in the deed is intended to exclude the proportionate liability provisions of the Civil Liability Act 2003 (Qld) to the extent they apply. Strict variation mechanism: Define a mandatory written variation process that requires the builder to obtain your formal approval before implementing any design substitution or value engineering on site. PI insurance alignment: Ensure indemnities, warranties and retrospective risk assumptions are reviewed against the practice’s current claims-made PI policy before execution. To ensure your novation deed includes these critical protections, get legal advice from a construction lawyer before signing the builder's proposed terms. Conclusion That first aggressive RFI from the new D&C builder is the moment the theoretical risks of novation become a practical project problem. The deed has been signed, the builder is pressing for thinner slabs and substituted glazing, and the architect is suddenly being asked to trade documentation control for speed and cost savings. By understanding the legal mechanics at play, you can see that novation is not a mere assignment and that the deed wording matters materially to pre-novation exposure, accrued rights and insurance risk. More importantly, the builder’s cost-cutting mandate does not displace the architect’s compliance obligations, professional duties or the need to act within scope. Queensland’s proportionate liability regime may limit exposure within an apportionable claim to the architect’s just and equitable share, but it does not eliminate the need to control deed indemnities and retrospective risk assumptions. That is why deed negotiation remains as important as technical compliance. Before responding to the first value-engineering RFI, secure the baseline. Review the deed to understand how it treats pre-novation services, accrued rights, indemnities and scope. Check PI notification and coverage issues promptly, and implement a disciplined written variation process that records every post-novation builder demand and every refusal, qualification or approval. In practice, those early boundaries are what protect the architect’s compliance position when the defect allegations arrive later. FAQs What is the legal difference between assigning and novating an architect's contract in Queensland? An assignment transfers rights, but does not by itself transfer contractual obligations. Under section 190 of the Property Law Act 2023 (Qld), an absolute assignment of a debt or legal thing in action must be in writing and notified to the debtor. By contrast, a novation substitutes a new contractual arrangement for the old one and requires the consent of all relevant parties. In practice, the legal effect still depends on the deed’s drafting, especially in relation to accrued rights and pre-novation services. Can a D&C builder force a Queensland building designer to approve non-compliant value engineering? No. A D&C builder’s commercial instruction does not relieve an architect or designer of the need to act consistently with the applicable compliance requirements, professional obligations and the agreed scope of services. If a proposed substitution would compromise compliance or falls outside scope, it should be refused or qualified in writing with the reason recorded clearly. How does proportionate liability apply when a design defect claim bridges pre- and post-novation periods? In a multi-party defect claim, the architect, developer and builder may all be concurrent wrongdoers under section 30 of the Civil Liability Act 2003 (Qld) if their separate acts or omissions contributed to the same loss. Under section 31, liability in an apportionable claim is limited to the share the court considers just and equitable, having regard to each party’s responsibility. In construction disputes, that can be important where pre-novation design decisions and post-novation builder changes both contribute to economic loss or property damage. Can a novation deed contract out of Queensland's proportionate liability scheme? Not simply. Parties cannot contract out of the statutory apportionment regime for apportionable claims in Queensland. Section 7 of the Civil Liability Act 2003 (Qld) expressly prohibits parties from overriding Chapter 2, Part 2 by contract. However, a contractual indemnity in the novation deed does not technically override the apportionment scheme — it creates a separate contractual right for the builder to recover loss from the architect. The court may apportion liability within the statutory claim, but a separately drafted indemnity may still require separate contractual analysis. That is why negotiating indemnity clauses carefully, rather than relying solely on the statutory regime, is essential. What is the "ab initio" novation trap for design professionals? The 'ab initio' (from the beginning) trap arises where the novation deed treats the builder as if it had always been the client from the commencement of the architect’s engagement. That can expose pre-novation services to assessment against a different contractual framework, including broader warranties, indemnities or performance obligations than those applying under the original developer engagement. Why is PI insurance notification critical before signing a novation deed? Executing a novation deed can materially alter the architect’s risk profile, particularly where the builder proposes elevated indemnities, retrospective risk assumptions or fitness for purpose obligations. Because PI insurance is written on a claims-made basis, the deed and surrounding facts should be reviewed promptly for notification and coverage implications before and after execution. This guide is for informational purposes only and does not constitute legal advice. For advice tailored to your specific circumstances, please contact Merlo Law

Key Takeaways Leverage Legislative Intent: Use the stated goals of the Housing Availability and Affordability (Planning and Other Legislation Amendment) Act 2024 in current planning submissions to argue your project aligns with urgent state priorities. The "State Facilitated Development" Pathway is Your Precedent: Even before it's fully utilised, the existence of this pathway in law demonstrates the government's intent to fast-track housing. Frame your development as a prime candidate for this type of expedited approval. Proactive Engagement is Non-Negotiable: The new laws signal a shift towards greater state intervention. Developers must now proactively engage with state bodies and align projects with explicit government housing and infrastructure goals to succeed. Social Impact Law is Already in Force: The Planning (Social Impact and Community Benefit) and Other Legislation Amendment Act 2025 commenced in July 2025, introducing mandatory Social Impact Assessments and Community Benefit Agreements into Queensland's planning framework. In its current form, the Act applies to prescribed renewable energy developments — but it establishes a framework the Planning Regulation can expand to other development types. Residential developers should be integrating community benefit principles into their proposals now, as both proactive best practice and a genuine strategic advantage. For Queensland property developers, the primary frustration is universal: valuable projects, meticulously planned and desperately needed, are stalled by planning bottlenecks, council delays, and persistent regulatory uncertainty. In a challenging economic environment, marked by the state's lagging construction productivity and the immense pressure from an ongoing housing crisis, these delays are more than just an inconvenience—they are a direct threat to project viability. However, the recent and proposed legislative changes, particularly the Housing Availability and Affordability (Planning and Other Legislation Amendment) Act 2024 (HAAPOLA), are not just future regulations to be aware of. They are powerful tools that can be used right now. This article is a practical legal toolkit, designed to help developers leverage the clear intent of this new QLD legislation to unlock stalled development approvals, navigate planning disputes, and push critical housing supply projects forward. The Crisis Context: Why QLD's Planning System is Under the Microscope To understand the power of the new reforms, one must first grasp the severity of the crisis that prompted them. The Queensland government's intervention is not a routine adjustment; it's a direct response to a series of compounding failures in housing delivery, construction productivity, and economic development that have reached a critical point. The state's planning system is under the microscope because the old way of doing things is no longer tenable in the face of overwhelming population growth and a severe QLD housing crisis. The Productivity Paradox in Queensland Construction There is a stark and alarming contrast between the construction sector's productivity growth and that of the broader Australian economy. Over the last thirty years, construction productivity has grown by a mere 5%, while other sectors have surged ahead by 65%. More concerning for developers on the ground in Brisbane and across the state is the recent decline of approximately 9% since 2018. This isn't just an abstract statistic; it translates directly into higher costs, extended project timelines, and eroded profit margins, making the viability of new developments precarious. This data paints a clear picture of an industry struggling to keep pace. For developers, this productivity slump manifests in everyday challenges: labour shortages, supply chain disruptions, and the rising cost of materials. These factors, compounded by planning delays, create a perfect storm that threatens to derail even the most well-conceived projects. The legislative intervention, therefore, is an acknowledgment that the market cannot solve this productivity problem alone and that regulatory friction, governed by instruments like the Building Act 1975, must be reduced. Facing mounting holding costs while council drags its feet? Instruct our team to review your stalled application and identify immediate statutory levers to force a timely decision. Falling Critically Short of Housing Targets The existing planning framework has proven incapable of meeting Queensland's housing needs. This is not a matter of opinion but a statistical fact. The state missed its annual housing delivery target by a significant 15,782 homes, a shortfall that directly contributes to the affordability crisis. This failure has been noted nationally, with Queensland ranking low among states for its efforts to address the housing shortage. This public and political failure is the primary catalyst for the government's new, more interventionist approach to planning and development. The housing deficit is the core political and economic driver behind the recent legislative reforms. For developers, this context is crucial. It means that any project that can demonstrably contribute to closing this gap is now aligned with the highest level of state priority. The government has signalled its intent to remove barriers to housing supply, and this provides a powerful new basis for arguing the merits of your development application. The Unrelenting Pressure of Population and Price Growth The crisis is being fuelled by two relentless pressures: explosive population growth and soaring property prices. South-East Queensland's population is projected to increase by a staggering 2.2 million by 2046, creating unprecedented demand for new housing. This future demand is already impacting the current market, with the statewide median house price rising by 12.67% annually, reaching $895,000 in the third quarter of 2025. Illustrative Example: Imagine a medium-sized developer with a 150-unit residential project stuck in council planning for 18 months. During that time, the combination of population pressure and market dynamics has driven up their projected end-unit sale prices, but their holding costs and construction estimates have also soared due to the productivity slump and labour shortages. This developer is in a high-stakes race against time, and the planning delay is the single biggest threat to their project's feasibility. This is the exact scenario the new legislation aims to resolve. Decoding the Legislative Shift: Your New Legal Arsenal The Queensland government's response to the housing crisis is not a single policy but a multi-faceted legislative overhaul. At its heart is the Housing Availability and Affordability (Planning and Other Legislation Amendment) Act 2024 (HAAPOLA), a piece of QLD legislation designed to fundamentally reshape the development approval landscape. For developers, understanding the specific mechanisms within this new legal arsenal is the first step toward leveraging them effectively. This isn't just about future compliance; it's about using these new tools to argue your case today. What is the Housing Availability and Affordability Act (HAAPOLA)? The HAAPOLA, which passed Queensland Parliament in April 2024 and came fully into force in July 2024, is a direct and powerful amendment to the foundational Planning Act 2016. Its primary objective is unambiguous: to urgently expedite housing supply by giving the state government significantly more power to overcome local-level planning blockages and delays. It represents a decisive shift in the balance of power, moving authority away from local councils and towards a centralised, state-driven agenda focused on delivering homes quickly. This Act introduces several key concepts, including the "State facilitated development" pathway, expanded powers for land acquisition for infrastructure, and a clear signal that the government will intervene directly to achieve its housing targets. For developers, HAAPOLA is the most significant change to Queensland planning law in recent years. It provides a new set of rules and, more importantly, a new strategic language for justifying projects that align with the state's urgent priorities. The "State Facilitated Development" Pathway Explained At the core of HAAPOLA is the creation of the "State facilitated development" pathway. This is a new approval route that, for selected projects, can entirely bypass traditional council assessment processes. A project identified for this pathway is effectively fast-tracked by the state. The process begins with the state identifying a development that aligns with its strategic housing priorities, such as delivering affordable housing, increasing density in key transport corridors, or unlocking a large parcel of land for a master-planned community. Once a project is declared a "State facilitated development," the assessment is managed by a state-appointed authority, dramatically reducing assessment timeframes from years to months. The benefits for a developer are immense: certainty, speed, and the removal of often parochial local political considerations from the decision-making process. While not every project will qualify, the very existence of this pathway is a powerful tool for all developers, demonstrating the government's willingness to intervene decisively. At Merlo Law, we have seen firsthand how citing the intent behind the 'State facilitated development' pathway can aggressively shift the balance of power in negotiations with local authorities across Queensland and New South Wales. Our senior legal team routinely leverages these macro-level legislative tools to break complex deadlocks, moving critical commercial and residential projects from the "too hard" basket back onto active approval agendas. Understanding New State Powers for Land Acquisition To support the delivery of new housing, HAAPOLA also grants the state expanded powers to acquire land for critical infrastructure. This is designed to solve the classic "chicken and egg" problem where development is stalled because essential services like water, sewerage, and roads are not in place. These new powers build upon the existing framework of the Economic Development Act 2012, giving the government a more agile tool to compulsorily acquire land needed to unlock major residential projects. Warning: While these new powers are designed to unlock development, they also represent a significant expansion of state authority. Developers must be aware that this can work both for and against them. Having a project that relies on infrastructure the state deems non-critical could put you at a disadvantage. Legal advice is crucial to understand how your project fits within the state's infrastructure priorities. An expert building and construction lawyer can provide this clarity. The Social Impact and Community Benefit Act 2025: Already Law, and Worth Watching The Planning (Social Impact and Community Benefit) and Other Legislation Amendment Act 2025, which passed Queensland Parliament on 25 June 2025 and commenced on 18 July 2025, represents the "other side of the coin" to HAAPOLA's pro-development push. While HAAPOLA focuses on speed and supply, this Act focuses on quality and community acceptance. In its current prescribed form, the Act's mandatory requirements — a Social Impact Assessment (SIA) and a formal Community Benefit Agreement (CBA) negotiated with the relevant local government — apply to renewable energy developments: wind farms, large-scale solar farms, and battery storage facilities. Critically, however, the Act deliberately establishes a flexible framework. The Planning Regulation carries the power to prescribe additional development types in the future, and the intent of the legislation is clear — formal, structured community engagement is becoming an embedded feature of Queensland's planning system, not an optional extra. For residential and commercial property developers, this is not simply a renewable energy story to file away. It is a strong signal of the direction Queensland's planning framework is heading. Developers who proactively adopt social impact thinking and community benefit principles in their residential proposals now are positioning themselves ahead of potential regulatory expansion — and demonstrating the kind of sophistication that planning authorities and community stakeholders increasingly recognise and reward. The Strategic Toolkit: Arguing Your Development's Case Today Understanding the new legislation is only the first step. The real advantage lies in actively using its principles and intent as legal leverage in your current and future planning submissions. This toolkit provides actionable strategies to transform the HAAPOLA from a piece of background reading into a powerful tool to argue your case, challenge delays, and unlock development approvals in the here and now. It's about shifting the narrative from one of compliance to one of partnership in solving a state-declared crisis. Citing Legislative Intent in Your Planning Submissions The most direct way to use the new laws is to embed their explicit purpose directly into your development application and supporting arguments. The process begins by identifying the purpose provisions of the Planning Act 2016 — the foundational legislation that the HAAPOLA directly amends. Section 5(2)(f) of the Planning Act states that advancing the Act's purpose includes "providing for housing choice, diversity and affordability." The HAAPOLA was explicitly designed to give effect to that purpose, and its Explanatory Notes and Second Reading Speech make clear the legislation's intent to facilitate the timely delivery of housing and address the affordability crisis. The next step is to draft submission arguments that directly quote this legislative language. Instead of simply stating that your project provides new apartments, you argue that it "directly responds to the legislative imperative of the HAAPOLA by facilitating the timely delivery of 200 dwellings." You then connect these quotes to specific, tangible features of your development. For example, if your project includes a mix of one, two, and three-bedroom units, you frame this as "fulfilling the Act's stated goal of increasing housing diversity to meet the needs of a growing Queensland." This technique transforms your planning submissions from a technical document into a compelling legal and political argument, proving its alignment with the state's declared mission. How to Frame Your Project as a Solution to the Housing Shortfall A powerful strategy is to use the government's own data on the housing shortfall as a central justification for your project. Your application should explicitly reference the official housing deficit statistics, noting the state fell short by 15,782 homes. This immediately frames your project not as a commercial venture, but as a crucial part of the solution to a documented public problem. The key is to quantify your project's specific contribution. Don't just say you are adding to supply; calculate and state exactly what your impact is. For instance, an argument could be structured as: "This 200-unit development directly addresses a quantifiable portion of the local area's documented housing need, delivering essential supply that the current planning framework has failed to provide." This puts the planning authority in the difficult position of having to justify why they would block a project that helps solve a problem they are under pressure to fix. Council planning departments are operating under the old rules, but the state government has fired a starting gun on a new race. In your submissions, you must position the council's delay not as a procedural issue, but as an active barrier to achieving a legislated, urgent state government priority. This reframes the entire conversation and puts the onus on them to justify why they are obstructing a clear government mandate. Stop accepting unreasonable council delays as the unavoidable cost of doing business. Request an urgent strategic review of your project to secure your commercial position and compel local planning authorities to act. Leveraging the "State Facilitated Development" Concept in Disputes Even if your project is not formally designated for the "State Facilitated Development" pathway, the pathway's very existence is a powerful negotiating tool in planning disputes. The core of this argument is that the pathway proves the government's willingness to override local councils for projects of state significance. You can therefore argue that your project, while being assessed by the council, embodies the principles of a State Facilitated Development and should be treated with similar urgency and priority. In a planning dispute, whether in negotiation or before a tribunal, you can contend that a refusal or unreasonable delay is contrary to the demonstrated intent of the Queensland Parliament. This sophisticated legal argument suggests that the local authority is acting out of step with clear state policy. It elevates the dispute from a technical disagreement over a planning scheme to a matter of alignment with state objectives. When facing a complex dispute where these principles are in play, it is the right time to Speak with a planning dispute lawyer. Negotiating Community Benefit Agreements Proactively Imagine a developer whose multi-residential project is facing strong, organised local opposition based on concerns about its impact on community amenity. Instead of digging in for a protracted fight, the developer proactively applies the community benefit principles now embedded in Queensland's planning framework through the 2025 Act. They commission a brief social impact statement and propose a formal Community Benefit Agreement, offering to fund a significant upgrade to a nearby local park and playground. This single move neutralises the most vocal opposition, gains the support of the local councillor, and reframes the project as a net asset for the community. The path to approval is smoothed long before the law makes such agreements mandatory. This scenario illustrates a powerful proactive strategy. By proactively adopting social impact and community benefit principles — already a mandatory feature of Queensland's planning framework for certain development types — developers can turn an emerging expectation into a genuine strategic advantage today. It builds goodwill, reduces the likelihood of costly objections and delays, and demonstrates a level of sophistication that planning authorities appreciate. Successfully managing these negotiations is a key part of handling complex commercial legal matters. Navigating Common Roadblocks in the Current System Even with a powerful new toolkit, developers will still encounter familiar roadblocks: entrenched legal disputes, council delays, and jurisdictional confusion between courts and tribunals. The key is to apply the new legislative principles to these old problems, creating fresh arguments and new pathways to resolution. Understanding the roles of the Planning and Environment Court, the Queensland Civil and Administrative Tribunal (QCAT), and regulatory bodies like the Queensland Building and Construction Commission (QBCC) is essential for navigating building disputes and planning challenges effectively. What Happens When You're Stuck in the Planning and Environment Court? The Planning and Environment Court is the primary venue for resolving major development disputes in Queensland. For developers already embroiled in a lengthy and expensive court battle, the new legislative landscape offers a new angle of attack. The core legal arguments in your case can be bolstered by introducing the clear legislative intent of the HAAPOLA. This is effective even if your dispute began long before the Act commenced. Your legal team can argue that the court, in making its decision, should give significant weight to the state's recently clarified, urgent priority to increase housing supply. This reframes the context of the dispute. A council's refusal, which may have seemed reasonable under the old framework, can be argued to be contrary to public interest and state policy under the new one. This approach requires a deep understanding of how the court interprets its role within the broader framework of planning laws and the Building Act 1975. Navigating the Planning and Environment Court demands more than just textbook legal knowledge; it requires tactical litigation experience grounded in immediate commercial realities. Merlo Law’s construction and planning specialists regularly translate these complex legislative shifts into hard-hitting court submissions, consistently forcing planning authorities across QLD and NSW to legally justify their refusals against the weight of state-mandated priorities. Dealing with Council Delays and "Deemed Refusals" One of the most common and frustrating scenarios for a developer is the "deemed refusal," where a local council fails to make a decision on an application within the statutory timeframe, effectively refusing it without reason. This often forces the developer to initiate a costly appeal process, typically to the Planning and Environment Court. The HAAPOLA's intense focus on speed and housing delivery provides a powerful new argument in these specific cases. You can now contend that the council's delay was not merely a procedural lapse but an unreasonable action that actively obstructs the achievement of critical state objectives. This strengthens your case that the appeal should be upheld and the development approved, putting the onus on the council to defend its inaction in the face of a housing crisis. For developers navigating the complexities of tribunal processes, our guide to QCAT in Queensland offers valuable insights. The Role of QCAT in Minor Planning Disputes While the Planning and Environment Court handles major development appeals, it's important to understand the specific jurisdiction of QCAT in certain planning and building matters. QCAT's role is often misunderstood. It does not typically hear appeals against a council's refusal of a development application. However, it does handle disputes related to building and construction matters, including directions from the QBCC, and certain decisions made under specific legislation that fall outside the primary planning acts. For example, a dispute over a certifier's decision or a matter concerning compliance with building codes might end up in QCAT. Its process is typically faster and less formal than the courts. For developers, knowing which disputes belong in which jurisdiction is critical to an efficient and cost-effective legal strategy. Effectively preparing a case for QCAT requires an understanding of the standards and regulations set by bodies like the QBCC, which operates under the Queensland Building and Construction Commission Act 1991. Preparing Your Development Pipeline for the New Regulatory Landscape The legislative reforms demand more than just reactive tactics; they require a fundamental shift in long-term strategic planning. Proactive developers are now auditing their entire project pipeline, re-evaluating their legal partnerships, and changing how they engage with government. This is about future-proofing your business by ensuring your project management and risk management frameworks are aligned with the new reality of state-led development priorities and construction contracts. Auditing Your Project Pipeline for State Priority Alignment The first strategic step is to conduct a comprehensive review of your entire portfolio of future projects. This audit should assess each project against the explicit goals of the HAAPOLA. Ask critical questions: Is the project located in a priority development area? Does it increase housing density near public transport? Does it offer a diverse range of housing types, including affordable options? Based on this assessment, you can create a priority ranking for your pipeline. Projects that are highly aligned with the new state agenda should be fast-tracked, as they now have the greatest chance of a smooth and rapid approval process. Projects that are less aligned may need to be re-scoped or placed on hold. This proactive self-assessment ensures you are deploying capital and resources toward developments most likely to succeed in the new regulatory environment. This is a crucial step in managing long-term risk and protecting your payment rights in construction on viable projects. Why Your Legal Team Must Understand Both Development and Policy The era of treating planning law as a purely administrative, box-ticking process is over. The new legislation is deeply political and driven by high-level economic and social policy. A successful legal partner must now be able to craft arguments that speak to economic policy, housing targets, and legislative intent, not just the technical codes within a local planning scheme. Your legal team needs to be adept at connecting the micro-details of your development to the macro-priorities of the state government. They must be able to argue not just that your project complies with the rules, but that it actively serves the public interest as defined by the government of the day. This requires a unique blend of legal acumen, policy analysis, and strategic communication. We are seeing a fundamental shift. Previously, a planning lawyer's job was to interpret the existing rules. Now, their job is to interpret the direction of the government and use that to shape how the rules are applied. It's a move from technical compliance to strategic advocacy. Your legal team needs to be as comfortable reading a parliamentary report as they are a planning scheme. Building a Stronger Relationship with State Development Under the new laws, the Department of State Development, Infrastructure, Local Government and Planning is a more critical stakeholder for developers than ever before. Success is no longer solely dependent on your relationship with the local council. It is vital to understand the Department's strategic documents, infrastructure plans, and priority growth corridors. Proactive, informal engagement with state-level bodies can provide crucial intelligence on emerging priorities and policy shifts. It allows you to position your company not merely as an applicant seeking approval, but as a capable partner in helping the government solve the housing crisis. Building this reputation can pay significant dividends, potentially opening doors to being considered for State Facilitated Development pathways or gaining state support in disputes with local authorities. Further insights into legal and policy trends can be found in our publications. Conclusion: The Proactive Developer's Advantage The 2024 and 2025 legislative changes in Queensland are not just another layer of regulation; they are a clear signal of a new era in property development. The balance of power has shifted decisively towards the state, and the government has armed itself with the tools to intervene directly in the planning process to achieve its housing goals. For developers, this represents both a challenge and a significant opportunity. Success is no longer just about technical compliance with a local planning scheme; it's about strategic alignment with urgent state priorities. The laws provide immediate and powerful leverage for developers who are willing to be proactive, assertive, and strategic. By citing legislative intent, framing projects as solutions to the housing crisis, and preparing for future social benefit requirements, you can turn this regulatory shift into a decisive commercial advantage. The proactive developer who understands this new landscape will unlock stalled projects, navigate disputes more effectively, and ultimately, build more homes. The time to act is now. Review your current submissions, audit your future pipeline, and seek expert counsel to ensure you are positioned to thrive in this new environment. FAQs Can I use the HAAPOLA to challenge a planning decision that was made before the Act's key provisions commenced in mid-2024? Yes, potentially. While the Act is not retrospective, its principles can be used in current legal proceedings, such as an appeal in the Planning and Environment Court. You can argue that the court should consider the Act's clear statement of state interest regarding housing supply when reviewing the "public interest" element of the original decision. It provides a new, compelling context for your case. What specific types of projects are most likely to be chosen for the "State Facilitated Development" pathway? While specific criteria are still being refined, projects that deliver significant housing numbers, include a substantial affordable or social housing component, are located in priority growth corridors identified by the state, or unlock critical infrastructure are prime candidates. Large-scale, master-planned communities and high-density transit-oriented developments are also likely to be favoured. How does this new legislation affect my relationship with the local council? Your relationship with the local council remains important, but it is no longer the only one that matters. The new laws effectively make the state government a key stakeholder in almost every significant residential development. You must now engage on two fronts, ensuring your project not only meets local planning scheme requirements but also aligns with the state's broader strategic objectives. What is a "Community Benefit Agreement" and how can I prepare for it? A Community Benefit Agreement is a formal, often legally binding, agreement between a developer and a community or council that outlines the specific benefits the development will provide. This can include funding for local parks, contributions to community facilities, local employment targets, or public art installations. To prepare, start incorporating a "community benefit" section into your development proposals now. Engage with local community groups early to understand their needs and proactively offer solutions. Do these changes affect my obligations under the QBCC Act? These planning law changes do not directly alter your obligations regarding licensing, building standards, or home warranty insurance under the Queensland Building and Construction Commission Act 1991. However, by streamlining approvals, the new laws may get you to the construction phase faster, at which point all QBCC regulations and compliance requirements will apply as usual. Navigating QBCC regulations remains a critical part of the process. If my project is delayed by a council, what is the first legal step I should take? The first step is to get formal legal advice to confirm your procedural rights. If the delay has resulted in a "deemed refusal," your primary remedy is typically to file an appeal in the Planning and Environment Court. Your legal submission in that appeal should now lean heavily on the arguments outlined in this article, citing the HAAPOLA's intent to demonstrate that the council's delay is contrary to state policy and the public interest. This guide is for informational purposes only and does not constitute legal advice. For advice tailored to your specific circumstances, please contact Merlo Law

The Queensland Government has passed further amendments to the Building Industry Fairness (Security of Payment) Act 2017 (Qld) (BIF Act). The BIF Act provides sweeping changes to existing construction legislation in Queensland. BE WARNED - No second chances. Under the new law a disputed payment claim may be immediately enforced in a Court when no valid payment schedule has been provided in response to it. Claimants will not need to provide respondents with prior notice and a second chance to provide a payment schedule as under the 2004 BCIPA as amended in 2014. All possible times at which payment claims may be served should be identified and checked regularly. Call Merlo Law today to understand these and other wide sweeping and serious changes to the law governing Construction – before its to late for your project or business. This publication considers legal and technical issues in a general way. It is not intended to be legal advice. Any legal advice is qualified on the basis that the reader should immediately confirm the information relied upon with Merlo Law. We look forward to being of assistance.

Did you know that self-represented litigants typically are not able to claim for their costs, even if successful, except for disbursements such as court filing fees subpoena and expert witness appearances? That’s a real problem, for several reasons: Firstly you will not be an expert and likely to get the best result yourself. Court rules and procedures are complex and often difficult even for experienced practitioners. There is a high probability you will not be successful Don’t forget the adage he who has himself for his own lawyer is awful – that statement is for very good reason, we are just too close to our own matters to see it clearly. You may not like to believe this but you will always get better service from a completely objective lawyer. Time you spend  Trying to represent yourself, will only take away from your ability to earn your regular income, or care for your loved ones. The seminal precedent The Chorley Exception, first decided in London Scottish Benefit Society v Chorley (1884) 13 QBD 872, held that where a self-represented litigant is in fact a qualified solicitor, they are entitled to claim professional costs for legal work they performed themselves. The same does not apply for regular self litigants in ordinary circumstances. That  proposition holds because solicitor costs are quantifiable by courts according to scale costs, whereas costs claimed by a layperson for representing themselves for time spent performing legal work are amorphous and insusceptible to precise calculation. Recent Australian cases In Pentelow v Bell Lawyers Pty Ltd [2018] NSWCA 150, the New South Wales Court of Appeal considered a claim for costs by a barrister and the Chorley Exception was held to extend to barristers as well. Once previously, the High Court in Cachia v Hanes [1994] HCA 14 had cast doubt on the exception, but the exception remained. Other appeal courts have held that the exception applies and that only the High Court could alter this: Waller v Freehills [2009] FCAFC 89. The High Court decision in Cachia v Hanes was recently considered on Special Leave in Coshott v Spencer & Ors [2018] HCATrans 81 (10 May 2018). The current position of the law The exception remains. Talk to Merlo Law today to assist you with your matter. This publication considers legal and technical issues in a general way. It is not intended to be legal advice. Any legal advice is qualified on the basis that the reader should immediately confirm the information relied upon with Merlo Law. We look forward to being of assistance.

As a response to the concerns about combustible cladding, the Queensland Government passed the Building and Construction Legislation (Non-Conforming Building Products -Chain of Responsibility and Other Matters) Amendment Act (NCBP Act) 2017 on 24 August. On 1 October 2018, the Building and other Legislation (Cladding) Amendment Regulation 2018 came into effect compelling building owners to complete the combustible cladding checklist to determine the type of material used on their building and whether any further assessment is required. The Queensland Government has announced new legislation to increase accountability and disciplinary action for the supply and use of non-conforming building products. What are non-conforming building products? Non-Conforming Building Products (NCBPs) are building products and materials that are not safe, not of acceptable quality, do not meet Australian standards, or are otherwise not fit for their intended purpose.  You cannot rely on product technical material. In some cases,  product technical material may contain false or misleading statements. This Australia-wide issue is very complex, and affects a plethora of industries including manufacturing, importation, retail and construction.  The NCBP Act applies to individuals or corporations who are "persons in the chain of responsibility" for building products, and this includes designers, manufacturers, importers or suppliers and installers.  The NCBP Act casts an important onus on senior executives deemed to be 'controlling minds' in the chain of responsibility. The NCBP Act puts a duty at each stage of the building product supply chain to: ensure that NCBP’s are not used; pass information about the suitability and use of a building product on to the next stage of the chain; notify the Queensland Building and Construction Commission (QBCC) of suspected non-conforming building products. Policed by QBCC The duty will be policed by the QBCC, which the NCBP Act has given powers to enter, inspect, examine and test building products.  The QBCC will be able to impose very heavy fines and other consequences for breaches, including cancellation of building licences and stop-work or recall orders . New duties of care and new offences WARNING - Two key changes in the NCPB Act and Regulations are the imposition of duties on building supply chain participants and the creation of new offences. The imposition of new duties There is now one primary duty, applicable to all participants in the supply chain, and a range of additional duties applying to specific to particular roles within the supply chain. Primary duty The primary duty is that each person involved in the chain of responsibility must ensure, insofar as reasonably practicable, that a product is not a NCBP. The scope of the primary duty is dependent upon where that duty falls in terms of the stage of the supply chain. Do not assume risks ignorance is no excuse in the eyes of the law and the QBCC is here to set punitive examples to illuminate illegal conduct.  Can your business afford  $130,550.00 in fines? Merlo Law is here to help you avoid serious criminal and punitive consequences in running your business. Get Advice now or pay the price later and be held out as a public example by the QBCC. Additional duties Additional duties now operate in conjunction with the overarching primary duty. The additional duties will provide further guidance as to how a person’s primary duty is to be discharged. These duties create the need for significant changes in your business – engage the best, engage John Merlo today to assist your business before you get caught by the new laws and regulations. New Offences The penalty unit value in Queensland is $130.55 (current from 1 July 2018). The amending legislation introduces a number of new offences into the QBCC Act.  These include: An offence, carrying a maximum of 1000 penalty points $130,550.00 - if a breach of any of the duties discussed occur; an offence, carrying a maximum of 1000 penalty points $130,550.00 - if representations are made about the intended use of the product does not comply with requirements for representations prescribed by regulations; and an offence, carrying a maximum of 50 penalty points - if a person in the chain of responsibility has a reasonable suspicion or knowledge that a building product is a non-conforming building product for an intended use and does not give notice to the Commission. Notifiable incidents An additional duty is imposed on all persons in the chain of responsibility to notify the QBCC of any ‘notifiable incident’.  Notifiable incidents include death, serious injury, or an incident that exposes any person to serious injury or illness. Breaching this reporting obligation carries a maximum penalty of 100 penalty units. This publication considers legal and technical issues in a general way. It is not intended to be legal advice. Any legal advice is qualified on the basis that the reader should immediately confirm the information relied upon with Merlo Law. We look forward to being of assistance.

Did you know work health and safety law in Queensland are a serious matter and now impose criminal liability for certain failures. Don’t ‘wait and see’ if you are investigated or fined… the time you take to respond could be the difference between, at best a small fine or a large fine, or at worst, a fine and jail time. Have you ever heard the expression “you never get a second chance to make a first impression”? I can help you make sure you get through what’s occurred the best way possible. Let’s look at the law and where you stand. A breach to work health and safety law in Queensland occurs when: A person conducting a business or undertaking (PCBU), or its senior officers' conduct, negligently causes the injury or death of a worker; or an action is taken that places any person at risk of injury, illness or death; steps are not taken to avoid a risk from occurring; and there is a failure to comply with regulatory requirements. Categories of offences The Work Health & Safety Act (WHS) sets up a ‘health and safety duty of care’. There are 4 categories of offences for failing to comply with a health and safety duty under the WHS Act depending on the degree of seriousness or liability involved. Industrial manslaughter The highest penalty under the WHS Act is for industrial manslaughter where a PCBU, or a senior officer, negligently causes the death of a worker. If a PCBU, or senior officer, commits the offence of industrial manslaughter, a maximum penalty of 20 years imprisonment for an individual or $10 million for a body corporate applies . Category 1 offence The next highest penalty possible under either the WHS Act or the Electrical Safety Act is for a category 1 offence. These offences occur where it is found that a duty holder recklessly exposed and so endangered a person to risk of death or serious injury. These offences will be prosecuted in the District Court. Corporations face up to to $3 million in fines. A person conducting a business or undertaking (PCBU) or an officer will face up to $600,000 in fines and 5 years jail time. A worker faces up to $300,000 in fines and 5 years time. Category 2 offence A category 2 offence is a failure to comply with a health and safety duty or electrical safety duty which exposes a person to a risk of death, serious injury or illness. Offences will be prosecuted in the Magistrates Court. Corporations face up to $1.5 million in fines. An Individual as a PCBU or an officer face fines of up to $300,000 A worker face fines of up to $150,000. Category 3 Offences A category 3 offence is a failure to comply with a health and safety duty or electrical safety duty. Offences will be prosecuted in the Magistrates Court. Corporations face up to $500,000 in fines. An Individual as a PCBU or an officer faces up to $100,000 in fines. A worker faces up to $50,000 in fines. On-the-spot fines An infringement notice, is an alternative to prosecuting alleged offenders directly through court. On-the-spot fines may be issued for work health and safety offences prescribed in the State Penalties Enforcement Regulation 2014. Both PCBUs and workers can be issued with on-the-spot fines. Examples of offences which can be issued with a fine include  failure to record a notifiable incident; failure to allow a health and safety representative to exercise powers or functions; failure to use/wear personal protective equipment (PPE) provided by PCBU in accordance with reasonable instruction information or training given by PCBU; allowing persons to carry out high risk work without noting written evidence that the worker has the relevant high risk work licence; failure to test electrical work; and failure to ensure electrical equipment was de-energised before carrying out electrical work. This publication considers legal and technical issues in a general way. It is not intended to be legal advice. Any legal advice is qualified on the basis that the reader should immediately confirm the information relied upon with Merlo Law. We look forward to being of assistance.

Did you know the Queensland Government has passed further amendments to the Building Industry Fairness (Security of Payment) Act 2017 (Qld) (BIF Act) in an attempt to clarify how project bank accounts (PBAs) are to operate. Get your hand out of the cookie jar The amendments aim to further restrict a head contractor’s ability to access amounts in PBAs. Previously as drafted, Head contractors were able to contort the intent of the laws by relying on the fact that if an amount in the PBA was not due and owing, it was fair game. Head contractors will not be able to withdraw amounts from the general trust account in circumstances where: The head contractor is “liable to pay” any subcontractor amounts, which are amounts certified, stated in a payment schedule or assessed as payable (e.g. by the superintendent); Disputed fund account The money is tied up – possibly for years. Head contractors will not be able to withdraw any amount from the disputed funds account until after the conclusion of the period in which an appeal may be commenced or otherwise the end of the appeals process.  Once the laws are in place this will mean head contractor may be required to hold an amount in the disputed funds account for conceivably years – e.g. after the adjudication process, after application to set aside the adjudication decision, after any appeal, etc.). Further, the amendments provide that: Head contractors will be prohibited from withdrawing any amount from the retention trust account until after the expiry of the defects liability period, unless the withdrawal is: to make payment to the relevant subcontractor; by order of a court; or to make payment to another subcontractor engaged to correct the defects in relation to the first subcontractor’s defective work, subject  to the head contractor having an entitlement to pay itself the amount under the original subcontract to which that retention amount relates. Payment schedules – if you don’t have a good reason right now, you don’t have a good reason later Be warned – the proposed amendments stipulate that the time respondents have to issue a payment schedule will be reduced to the earlier of the period stated under the contract; or 15 business days after the payment claim is given to the respondent – this was previously 25 business days in the last amendments. Get help now The war in these areas is continually being amended and developed as the Commission trials and rolls out its provisions. Penalties are strict. In the midst of COVID19 crisis, You can expect to see rapid regulation in strict terms from a Commission which has already made it very clear that it intends to ‘take a broom to the construction industry’.   Don’t take a risk on incurring heavy penalties and loss of license. Get help immediately and contact Merlo Law.   This publication considers legal and technical issues in a general way. It is not intended to be legal advice. Any legal advice is qualified on the basis that the reader should immediately confirm the information relied upon with Merlo Law. We look forward to being of assistance.

Every moment you waste, could be the difference between a small fine or a large fine at best, and at worst a large fine and jail time. Have you ever heard the phrase “you never get a second chance to make a first impression?“. Well that is the case with the law. With proper help I can get you through your circumstances. On 6 October 2016, a milestone tragedy occurred which changed QLD legislation – seriously. Two workers were crushed to death by 28-tonnes of precast concrete panels during construction of a foul water drainage reservoir at the Eagle Farm Racecourse. During construction, a sewage pipe was used as a makeshift brace for the precast concrete panels and a ladder positioned against one of the slabs was the only escape route located inside the excavation. Authorities also identified that two workers designated as health and safety co-ordinators were not aware of their nominated roles. Work health and safety law in Queensland Work health and safety law in Queensland are a serious matter and now impose criminal liability for certain failures. A breach to work health and safety law in Queensland occurs when: a person conducting a business or undertaking (PCBU), or its senior officers' conduct, negligently causes the injury or death of a worker; or an action is taken that places any person at risk of injury, illness or death; steps are not taken to avoid a risk from occurring; and there is a failure to comply with regulatory requirements. Categories of offences The WHS Act sets up a ‘health and safety duty of care’. There are 4 categories of offences for failing to comply with a health and safety duty under the WHS Act depending on the degree of seriousness or liability involved. Industrial manslaughter The highest penalty under the WHS Act is for industrial manslaughter where a PCBU, or a senior officer, negligently causes the death of a worker. If a PCBU, or senior officer, commits the offence of industrial manslaughter, a maximum penalty of 20 years imprisonment for an individual or $10 million for a body corporate applies . In the Eagle farm tragedy, Principal contractor, Criscon was responsible for safety and management of the site, and after being charged with two counts of a category 1 offence (reckless conduct), Criscon elected to plead guilty to two counts of the lesser category 2 offence of failing to comply with a health and safety duty. In sentencing Criscon, the Magistrate found that despite a safe work method statement (SWMS) being in place the SWMS was not appropriate for the nature of the work and was not being implemented by the subcontractor. Criscon was fined $540,000, which was reduced to $405,000 for the early guilty plea, plus costs. Both Criscon’s site manager and director still face separate charges regarding individual breaches of their duties as officers. The manager of the subcontractor, Claudio D’Alessandro is facing separate criminal manslaughter charges in relation to the fatalities. Consequences and your next step This decision is a cold reminder that safety is everybody’s business and of what can happen principal contractors officers of a company, and subcontractors and employees for unsafe practices. This publication considers legal and technical issues in a general way. It is not intended to be legal advice. Any legal advice is qualified on the basis that the reader should immediately confirm the information relied upon with Merlo Law. We look forward to being of assistance.

The Legislature are preparing for surgery - in the 20 odd years since its inception, the Security of payment laws have ruptured and spread like a tumour throughout the various state jurisdictions causing confusion and inefficiencies. The ‘Murray Report’ of December 2017 made 86 recommendations to improve security of payment, including that Australia should implement a nationally consistent legislative model because of confusion and inefficiencies. In QLD the government commenced its new Building Industry Fairness (Security of Payment) Act 2017 (Qld) (BIF Act) on 17 December 2018). Meanwhile the New South Wales Government proposed further changes to its security of payment regime under the Building and Construction Industry Security of Payment Amendment Bill 2018 (NSW) (NSW Bill). Some time ago, in an effort to encourage subcontractors to use the Security of Payment regime, the NSW government decided to remove the requirement to endorse payment claims as being made under Security of Payment Act. The thought behind that was that head contractors were ‘refusing’ to hire ‘litigious’ subcontractors. Removing the need for subcontractors to endorse their payment claims supposedly addressed that bias. Despite emphasis that the changes are to provide greater payment protection for subcontractors, in a strange turnaround, the NSW government has reintroduced the requirement for subcontractors to endorse their payment claims. Other proposed reforms under the NSW Bill: Other proposed reforms under the NSW Bill include creating an entitlement for claimants to make: a payment claim at least once per month;  reducing the maximum time period for head contractors to pay subcontractors after receiving a payment claim from 30 business days to 20 business days; and creating the right for final payment claim after a contract is terminated. Watch out! the sheriff of Nottingham has the right to enter your castle at any time If you operate from your home you might like to be aware draconian incursions on your civil liberty are on the horizon with the NSW government increasing the compliance and enforcement powers of NSW Fair Trading so that an “authorised officer” can physically enter premises (yes even your home), and inspect documents - without a search warrant. Be very careful what you do and say The current penalty of up to 3 months imprisonment remain. Current fines are proposed to increase to from 200 penalty units to 1000 penalty units (which equates to $110,000) for serving a payment claim without a supporting statement which declares all subcontractors have been paid and providing a supporting statement knowing that the statement is false or misleading. What the? If you are in NSW, we recommend you keep your ear to the ground and invest in debtors insolvency insurance now because it appears liquidators will be explicitly excluded from serving payment claims or taking any action to enforce a payment claim. What now for QLD? It is clear that in the throws of the COVID19/corona Virus, the Commission will certainly move to tighten existing laws. This publication considers legal and technical issues in a general way. It is not intended to be legal advice. Any legal advice is qualified on the basis that the reader should immediately confirm the information relied upon with Merlo Law. We look forward to being of assistance.

From November 2017, the Building Industry Fairness (Security of Payment) Act 2017 (BIF Act) introduced reforms to ensure Queenslanders in the building and construction industry are paid for the work they do. The BIF Act repealed the Building and Construction Industry Payments Act 2004 (BCIPA) and the Subcontractors Charges Act 1974 on 17 December 2018. On 17 December 2018, BIF Act provisions commenced that relate to: Requirements for retention monies and security (to be included in the Queensland Building and Construction Commission Act 1991). Subcontractors’ charges Progress payments Adjudication What this means for you These changes affect payments for construction work and supply of related goods and services in Queensland. New provisions were also introduced to the Queensland Building and Construction Commission Act 1991 via the BIF Act from 17 December 2018. These introduce new penalties for withholding retentions past the end of the defects liability period without a reasonable excuse. The current situation The BIF Act has changed the requirements for payment claims, subcontractors’ charges and adjudication. The BIF Act adopts the same framework and principles of BCIPA but still uses the definitions of ‘construction work’ and the ‘supply of related goods and services’. However, the requirements of the legislation now apply to all payment claims In other words a contractor no longer has to endorse a payment claim with the wording of the Act. The current situation is more a streamlined adjudication process where disputes arise. This is good news if you are a contractor chasing money, but is even more difficult if you are a contractor disputing payment of money as timelines are now even more constricted. Summary All claims for payment (Including actual or merely alleged entitlement) are the subject of the BIF Act - Whether the claim says so on its face or not. If not paying a claim in full by the due date, a payment schedule needs to be issued within 15 business days from receiving a payment claim (Unless required earlier under your contract). All claims for payment must still be paid on time. Strict penalties now apply. You should be aware that these requirements apply to all payment claims, not only those issued from 17 December 2018, But also these requirements apply to existing contracts entered into before the BIF Act was in force. This publication considers legal and technical issues in a general way. It is not intended to be legal advice. Any legal advice is qualified on the basis that the reader should immediately confirm the information relied upon with Merlo Law. We look forward to being of assistance.

What’s a default judgement? A court will issue a default judgement where a defendant has failed to file a defence.  Once the plaintiff/creditor obtains a default judgement, they will then have twelve years to enforce payment of the judgement debt. It will go on your credit record too. No surprises there. But did you know that if you don’t address the situation enforcement action could be taken against you without your notice? Imagine if payments to you were suddenly redirected to someone else without your knowing? Or what if someone turned up to take your possessions? What can I do for you? Don’t standby and let your credit record be destroyed or watch as your possessions are repossessed. Call me today, let’s get started! Step 1: Lets confirm details of the default judgement You will likely not have the full details of the case and default judgement against you, for example because you only fo​und out about it when the sheriff came to your place or money was missing from your bank account. Step 2: Let’s get the forms ready Step 3: I’ll need to prepare an application and affidavit which will at the least: ​​ Ask the court to set aside the default judgement and allow you to file a defence Ask the court to stay enforcement until at least the hearing of your motion State how costs should be dealt with. The affidavit will: Explain why a defence was not filed; Explain any delay in applying to set aside the default judgement; Contain details of your defence to the claim; You need to sign the affidavit  Step 4: I will file your forms Your application and the affidavit will need to be filed at the same court where the statement of claim was filed and the default judgement entered. There may be filing fees too.  Step 5: we will need to file the original plus a copy of the application and affidavit.  The court will keep the original and give us back a stamped copy. I will then need to make a copy of the documents and serve them on the plaintiff or their lawyer. Step 6: The court will give you a hearing date.  Step 7: We will go to court. At the hearing the registrar or magistrate will consider your application and affidavit and any submissions from you and the plaintiff.  If the court did not set aside the default judgement, you may be able to apply to have that refusal reviewed. You must do this within 28 days of the decision.  If we win If the court sets aside the default judgement, the registrar will make orders for you to file a defence within a certain time (usually within 14 days). If you do not follow these orders the plaintiff can apply to have the judgement re-entered.  ​Costs If the court finds that the failure to file a defence within 28 days is your own fault, the court will normally order you to pay the plaintiff's 'costs thrown away'. This is the cost of them attending the hearing, as well as the cost of any enforcement action they may have already taken.  If you are able to prove that you did not receive the statement of claim or that the plaintiff did not serve it properly, the plaintiff may be ordered to pay your costs. The court may instead order: ​'costs in the cause'. This means that the costs of the application to set aside judgement will be dealt with at the end of the case. 'each party bear their own costs'. This means that you and the plaintiff each have to pay your own costs. The court may also order a party to pay any disbursements as well as professional costs. Other types of cost towards can also be made in certain circumstances. Don’t delay! Time is of the essence! Call me today to discuss. This publication considers legal and technical issues in a general way. It is not intended to be legal advice. Any legal advice is qualified on the basis that the reader should immediately confirm the information relied upon with Merlo Law. We look forward to being of assistance.