Haack v Queensland Building and Construction Commission
[2014] QCAT 415
| CITATION: | Haack v Queensland Building and Construction Commission [2014] QCAT 415 |
| PARTIES: | Darren Anthony Haack (Applicant) |
| v | |
| Queensland Building and Construction Commission (Respondent) |
| APPLICATION NUMBER: | OCR304-13 |
| MATTER TYPE: | Occupational regulation matters |
| HEARING DATE: | 8 August 2014 |
| HEARD AT: | Brisbane |
| DECISION OF: | Member Howard |
| DELIVERED ON: | 28 August 2014 |
| DELIVERED AT: | Brisbane |
| ORDERS MADE: | 1. The decision of the Queensland Building and Construction Commission dated 14 November 2013 that Darren Anthony Haack is an excluded individual is confirmed. |
| CATCHWORDS: | OCCUPATIONAL REGULATION – EXCLUDED INDIVIDUAL – INFLUENTIAL PERSON – where person is not a director, secretary or beneficial shareholder – where person was nominee builder – where person was employed as project manager – where person held 100% shareholding as trustee for discretionary family trust – whether person in a position to control or substantially influence the conduct of the company’s affairs Queensland Building and Construction Commission Act 1991 (Qld), s 56AC Arthurs v Queensland Building and Construction Commission [2014] QCATA 155 |
APPEARANCES and REPRESENTATION (if any):
| APPLICANT: | Ms K Schwede, solicitor of Lawyers Qld Pty Ltd, represented Mr Haack. |
| RESPONDENT: | Mrs K Joyce, in-house solicitor, Queensland Building & Construction Commission appeared for the Queensland Building & Construction Commission. |
REASONS FOR DECISION
Following the liquidation of CPR Solutions Pty Ltd on 8 November 2013, Queensland Building and Construction Commission (QBCC) advised Darren Anthony Haack that it considered him to be an excluded individual for a relevant company event (that is, the appointment of the liquidator for the benefit of creditors on 8 November, 2013). It made this determination on the basis that he was an influential person for CPR, as provided for in s 56AC of the Queensland Building and Construction Commission Act 1991 (Qld) (QBCC Act).
Mr Haack has applied for review of the decision that he is an excluded individual.
The purpose of the review is to produce the correct and preferable decision.[1] For the review, the Tribunal stands in the shoes of the decision-maker (that is, in this case, the QBCC) and makes the decision afresh.[2] The Tribunal’s decision is then taken to be a decision of the decision-maker.[3]
[1]Queensland Civil and Administrative Tribunal Act 2009 (Qld) (QCAT Act) s 20.
[2]Ibid s 20.
[3]Ibid s 24(2).
It is uncontroversial that there was a relevant company event for the purposes of the s 56AC. The parties agree that the real issue for determination by the Tribunal is whether Mr Haack was an influential person at the time of the liquidation or within the previous one year period.[4] If he was, then he is an excluded individual.[5]
[4]QBCC Act s 56AC(2), esp s 56AC(2)(c)(ii).
[5]Ibid s 56AC(4).
An influential person is defined. It means an individual other than a director or secretary,
who is in a position to control or substantially influence the conduct of the company’s affairs, including, for example, a shareholder with a significant shareholding, a financier or a senior employee.[6]
[6]Ibid Schedule 2, Dictionary, influential person.
The circumstances
Darren Anthony Haack is a licensed builder. From November 2011 until 7 November 2013, he was employed by CPR as project manager and was also its nominee builder.
His wife, Nichole Haack, was the sole director and secretary from August 2011 until November 2013. They both suggest that she took on the role to ease some pressure on Mr Haack, who had suffered a serious accident several years beforehand. Following the accident, Mr Haack was out of work for some 12 months, but according to Ms Haack, still not up to running a company afterwards.
Mr Haack, as trustee for the Haack Family Trust, was at all times the sole shareholder in CPR (including when it earlier had a different company name). Mr Haack is the appointor (with power to appoint or remove trustee/s), trustee and (together with Ms Haack), a primary beneficiary of the discretionary family trust. The trust deed entitled him, among other things, to deal with the share as trustee in his discretion as if he was the beneficial owner. Mr Haack deposes to having been unaware of his powers as trustee under the trust deed.
Before August 2011, CPR was Car Parks R Us Pty Ltd. While it was Car Parks R Us, Mr Haack was director and secretary. However, he says, during that period the company did not trade or do anything at all. The company name was then changed. Ms Haack became the director and secretary. CPR began to trade as a mining construction (concreting and civil works, as well as maintenance on mine sites) and (construction) labour hire (for earth works and the like) company. It may also have built a couple of residential dwellings, but Mr Haack is uncertain about that.
Mr Haack and Ms Haack both say that once Ms Haack became the director and secretary of CPR, her role changed and she alone ran the company.
Ms Haack’s evidence is that while she was pregnant, in the months before she gave birth and afterwards when she had a newborn, she asked Mr Haack to do more, in particular, dealing with creditors. Ms Haack became director from 17 August 2011.The evidence is that the couple’s third child was born on 18 November 2011. Mr Haack became nominee builder from about 9 November 2011. Accordingly, it appears the company did not commence business until at least 9 November 2011, although no doubt there was a set up period.
Therefore, the period during which she says Mr Haack was asked to do more appears to coincide with the early months of Ms Haack’s term as director and secretary, and the period immediately after the business commenced operation. However, she says she was still in charge and did ‘some work’ while she was in hospital. She concedes that there were no contingency plans to cover when she was not in the office. Mr Haack was the project manager, and the only employee who was employed by CPR throughout the entire period of its operations. It is reasonable to infer from this, that when Ms Haack was unavailable, that Mr Haack took responsibility for performing what were otherwise Ms Haack’s functions.
Mr Haack and Ms Haack explain the tasks taken on by Ms Haack as director and secretary in similar terms. She typed up and ‘overlooked’ the quotes (prepared by Mr Haack), invoices, accounts receivable, did the bookwork and the banking. Ms Haack also says she did pay roll and tax returns. In a Questionnaire completed by Ms Haack for the liquidator, Ms Haack described her role as director as involving ‘office administration’ and stated that she was (solely) responsible for the day-to-day management of the company.[7] In that Questionaire, Ms Haack also said that the accountant, Jason Campbell, prepared the tax returns.[8]
[7]Exhibit 4, paragraph 2 and attachment NEH1 at item 8.
[8]Exhibit 4, paragraph 2 and attachment NEH1 at item 17.
She also chased up outstanding payments, although as will be explained, so did Mr Haack. She says that the arrangement was that she had to confirm any payment arrangements which Mr Haack discussed and tentatively arranged with creditors. She says that he only dealt with creditors as required, not constantly. Mr Haack says that he sometimes set up progress payments. Both of them had a company credit card.
Both say that Mr Haack was only the project manager, employed in the business, while she worked on the business. In the role of project manager, he sourced new work, worked on the tools, supervised work, coordinated the trades and subcontractors and suppliers, was responsible for the pricing, timing and progress of the works. He was the point of contact, for example, for subcontractors. He dealt with them about claims for extra payments and late payments because he was the person on the job. He says Ms Haack chased up late payments, although he did it in the lead-up to the liquidation because she was under a lot of pressure. He denied that his actions incurred the debts of the company, saying he was only the project manager.
Both say that Ms Haack queried quotes that Mr Haack had prepared on occasions. On these occasions, she questioned whether enough was quoted for particular jobs. Mr Haack’s explanation, was that she did this based on amounts charged in other quotes. On Ms Haack’s explanation she did this based on her ‘experience in being around the industry.’ She says that many of her family members are tradespersons. She says that Mr Haack explained to her how he worked out the quote and the budget for the job. However, she also acknowledged that he had free reign as project manager and that he determined profitability of the company.
There is little evidence about the liquidation itself. As far as a default judgment obtained by EH Watson is concerned, Ms Haack says that the documents related to the proceeding were forwarded to a previous registered address for CPR. Documentation about the debt from EH Watson and Sons, refers to Mr Haack as the contact person at CPR.[9] Ms Haack says that EH Watson should have contacted her and provides email from Morris Corporation, which did contact her about an outstanding account.
[9]Exhibit 5, pages 5, 8 and 9.
The Submissions of the parties
Mr Haack submits that the Tribunal has consistently held that simply being a shareholder is not enough to make someone an influential person, relying on Arthurs v Queensland Building and Construction Commission[10] (QBCC informed the Tribunal that this decision is under appeal, although no details about the appeal were able to be provided.) In any event, Mr Haack argues that he was not a beneficial shareholder and that the QBCC misunderstands the nature of a trust by suggesting that he nevertheless was an influential person. In essence, he submits that he was only a project manager and that there is no evidence that he had or exerted control over CPR. He suggests that if he was an influential person then so is every other project manager employed by a construction company.
[10][2014] QCATA 155.
Further, he argues that as a nominee, he provided only technical expertise. He says that the roles of nominee and project manager are one and the same task and that he just did the job he was employed to do. Unlike the situation in McClintock v Queensland Building Services Authority,[11] where Mr McClintock was negotiating with tax office and signing documents on behalf of the company, he points to having not done so. That said, ultimately, Mr McClintock was found to have been an influential person on the basis of his shareholding. His 99% shareholding, was considered, in the circumstances, to render him able, if he chose, to control the affairs of the company and therefore, an influential person.
[11][2011] QCATA 310.
The QBCC argues that Mr Haack was in a position to control or substantially influence the conduct of the company’s affairs by virtue of 3 things. Firstly, it argues that his 100% shareholding (even though held in trust) meant he was in a position to control the company. Secondly, it argues that because he controlled the work of the company (securing new work; costing new projects; controlling building costs associated with projects; timing the commencement and duration of projects; and supervising and coordinating the trades, subcontractors and suppliers; and generating the profit associated with costing) he was able to do so.
Thirdly, it submits that as nominee his influence was considerable. He performed work for it; he was the technical expert; and he influenced the way technical work was done by contractors through supervision of the work. QBCC argues McClintock is the most analogous decision, submitting that the Appeal Tribunal held it need only be shown there was an ability to influence.
Was Mr Haack an influential person when CPR went into liquidation or within the previous one year period?
Mr Haack says that no weight should be placed on the documentation of EH Watson because no-one from EH Watson was made available by the QBCC for cross-examination regarding it. I accept this submission and have placed no weight on that material.
I accept Mr and Ms Haack’s evidence as generally truthful, with some exceptions explained below.
As discussed above, it seems plain that when CPR commenced business, Mr Haack was responsible for almost all tasks for a period of months because of the timing of the birth of the couple’s third child. However, that is not within the 12 month period immediately before the liquidation and therefore of no consequence in determining whether Mr Haack was an influential person at the relevant time. Also, I am satisfied that it is more likely than not, on the basis of Ms Haack’s more contemporaneous statement in the Questionnaire completed for the liquidator, that the accountant, rather than she personally, prepared the tax returns. However, once again, this is of no real significance.
That said, it is uncontroversial that Mr Haack was the only project manager. He was responsible for all quoting and for either doing, or supervising, all of the work. Ms Haack may have typed the quotes for him, and pointed out any superficial issues that occurred to her based on other quotes she had typed with the quotes. However, she could do no more than that. I reject her suggestion that ‘being around the industry’ because her family members are by and large tradespeople, enabled her in any real sense to participate in overseeing the quotes. Consistently with this, she conceded that Mr Haack alone was responsible for profitability.
Also, the tasks which Ms Haack did were tasks of, in her own words, office administration. I find that she did type the quotes, invoices and accounts receivable and attend to the bookwork and banking, as well as pay roll. I also find that she chased up outstanding payments, as did Mr Haack. Further, I find that she did generally take more responsibility for chasing payments and making credit arrangements, at least until the months before the liquidation. However, in respect of this business which provided construction and maintenance services to the mining industry, that amounted to performing the office administration as she described, not running the business or company, other than in the most superficial sense.
I find that during the period that CPR operated, responsibility for the day-to-day running of the construction, maintenance and labour hire business of CPR and its overall profitability lay in the hands of Mr Haack, who did or supervised all of the work of the company, except for the bulk of the office administration tasks. I further find that he also did some of those administrative tasks, including arranging payment plans and discussing claims for extras, as well as chasing creditors.
Was Mr Haack an individual (other than a director or secretary) in a position to control and substantially influence the conduct of the company’s affairs at the relevant time?
Ms Haack did the administrative tasks and more often chased up outstanding payments and made credit arrangements, at least until the final months of the company’s operations until the liquidation. She queried quotes if they appeared to her to be inconsistent with others she had seen. Although she did these things, it does not take away at all from the very significant influence and control Mr Haack had over the conduct of the company’s affairs. In essence, Mr Haack, whether as project manager or nominee, obtained the work, quoted on it, did it either personally or supervised the subcontractors and employees who did it, dealt with clients on a daily basis, and dealt with creditors at least some of the time.
My task is to consider only whether Mr Haack was, on the facts as found based on the evidence presented, an influential person within the definition in the QBCC Act, at the relevant time under s 56AC(2). It is irrelevant which tasks he did as project manager and which as nominee. I reject the argument that if he is an influential person, so is every other project manager and that the roles of nominee and project manager are one and the same. I am not deciding those matters. I am only deciding this proceeding.
I am satisfied that Mr Haack by virtue of his intimate involvement in obtaining, quoting, doing and supervising the work of the company, and his acknowledged role in determining profitability of work done, was in a position to and did in fact substantially influence the conduct of the company’s affairs at the time of the liquidation and during the previous year.
Therefore, I am satisfied that Mr Haack was an influential person at the relevant time.
Accordingly, I make orders confirming the decision of the QBCC.
Having reached this conclusion on the basis explained, I do not need to decide whether as 100% shareholder as trustee for the Haack Family Trust, Mr Haack was an influential person. That said, I make the observation that I would consider it is irrelevant for the purposes of determining whether Mr Haack was an influential person that he was unaware of the terms of the trust deed. To be an influential person, an individual need only be in a position to control or substantially influence the operation of the company. For the same reason, I would consider it irrelevant that he was shareholder as trustee, rather than beneficially, because I would consider (as was held in McClintock concerning a 99% shareholder) that he was nevertheless, as 100% shareholder as trustee for the trust, in a position to control or influence the conduct of the company.
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