Fitness and propriety (builder licensing)

Fitness and propriety (F&P) is the test applied by state building licensing bodies to determine whether a person is suitable to hold a builder’s licence. Each state regulator (QBCC in Qld, NSW Fair Trading in NSW, VBA in Vic, similar bodies in other states) applies the test at:

Initial licence application (new builder).
Licence renewal (typically annual).
Licence restoration (after expiry or cancellation).
Following an investigation (complaint, incident).

A finding of unfitness can refuse, suspend, or cancel the licence.

What the test considers:

Factor	What the regulator looks at
Criminal convictions	Particularly fraud, dishonesty, violence; financial offences
Insolvency history	Personal bankruptcy, company liquidations, directorship of failed companies
Prior licence breaches	Suspensions, cancellations, conditions on previous licence
Disciplinary actions	From any building authority in any state
Outstanding judgments	Unpaid court orders, particularly building-related
Compliance history	Outstanding building work, defects orders, statutory directions
Tax compliance	Outstanding ATO obligations; some states check
Financial position	Some states (Vic specifically) require financial information to confirm capacity
Truth in application	Misleading statements on the application form
Insurance compliance	Current home warranty insurance, public liability

State-specific applications:

NSW (Home Building Act 1989): Section 33 sets the licence eligibility test. NSW Fair Trading applies F&P at application and renewal.
Vic (Building Act 1993): VBA assesses F&P plus financial capacity (the “financial requirements” component, layered with F&P).
Qld (QBCC Act 1991): Section 31 sets the F&P test plus the minimum financial requirements (MFRs) for builder licensing.
WA (Building Services (Registration) Act 2011): Building Services Board assesses F&P.
SA (Building and Construction Industry Long Service Leave Act 1987 + state licensing): assessed by Consumer and Business Services.
Tas, NT, ACT: similar frameworks under each state body.

Common builder issues leading to F&P findings:

Issue	Consequence
Director of a recently liquidated company	Likely refusal or conditions on the new licence
Outstanding building defects orders unaddressed	Renewal refused until resolved
Fraud conviction in last 5-10 years	Likely refusal
Insolvency in last 3-5 years	Conditions or refusal (varies by state and circumstance)
Misleading application	Cancellation if discovered; criminal offence in some states
Repeat building-act breaches	Cancellation or conditions

The 5-year insolvency rule (informal):

Most states treat insolvency in the last 5 years as a flag. A history of multiple directorships of liquidated companies (phoenixing pattern) is treated as a serious F&P issue and typically results in licence refusal or cancellation regardless of formal time elapsed.

For builders.

Disclose everything on the application: prior insolvency, prior licence breaches, prior convictions. Hiding them is worse than disclosing them.
Maintain compliance on prior builds: outstanding defects orders, statutory directions block renewal.
Resolve disputes before renewal date: VCAT / NCAT findings against you accumulate.
Maintain tax compliance: Qld specifically checks ATO.
If F&P concerns are flagged at renewal, engage a building lawyer immediately. The process has appeal pathways; getting them right requires expertise.

Note: this article is general information, not legal advice. If you’re facing an F&P concern, engage a specialist building lawyer.

Also known as: fit and proper test, fitness test builder licence, F&P assessment.

Category: Licensing / regulatory / builder.

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