Polidano v Queensland Building Services Authority
[2011] QCAT 117
•5 April 2011
| CITATION: | Polidano v Queensland Building Services Authority [2011] QCAT 117 |
| PARTIES: | Mr Richard Polidano |
| v | |
| Queensland Building Services Authority |
| APPLICATION NUMBER: | GAR157-10 |
| MATTER TYPE: | General administrative review matters |
| HEARING DATE: | On the papers |
| HEARD AT: | Brisbane |
| DECISION OF: | Sandra Deane, Member |
| DELIVERED ON: | 5 April 2011 |
| DELIVERED AT: | Brisbane |
ORDERS MADE: | [1] The Authority’s decision is affirmed. [2] The application for review of the decision that Mr Polidano is an excluded individual is dismissed. |
| CATCHWORDS: | Excluded individual – whether winding up of company for the benefit of a creditor – consideration of “benefit” – whether winding up a members’ voluntary winding up Queensland Building Services Authority Act 1991, s 56AC McClintock v QBSA [2010] QCAT 340 |
APPEARANCES and REPRESENTATION (if any):
This matter was heard on the papers in accordance with section 32 of the Queensland Civil and Administrative Tribunal Act 2009.
REASONS FOR DECISION
Background
Mr Polidano was a director of Elite Building Services Pty Ltd (“the Company”). The Company carried on business performing building repairs and renovations.
On 9 December 2009 liquidators were appointed to the Company.
As a consequence, the Queensland Building Services Authority (“the Authority”) decided that Mr Polidano is an excluded individual pursuant to section 56AC of the Queensland Building Services Authority Act 1991 (‘QBSA Act”).
This is an application by Mr Polidano to review the Authority’s decision.
Mr Polidano submits that the liquidation was not “for the benefit of a creditor” within the meaning of section 56AC(2) of the QBSA Act and therefore section 56AC(4) of the QBSA Act does not apply so there is no basis for the Authority’s decision.
Legislation
Section 56AC of the QBSA Act relevantly provides:
“(2) This section also applies to an individual if—
(a) after the commencement of this section, a company, for the benefit of a creditor—
(i) has a provisional liquidator, liquidator, administrator or controller appointed; or
(ii) is wound up, or is ordered to be wound up; and
(b) 5 years have not elapsed since the event mentioned in paragraph (a)(i) or (ii) (relevant company event) happened; and
(c) the individual—
(i) was, when the relevant company event happened, a director or secretary of, or an influential person for, the company;
…………
(4) If this section applies to an individual because of subsection (2), the individual is an excluded individual for the relevant company event.”
Evidence
Mr Polidano relies upon the affidavit of Todd William Kelly sworn 15 November 2010. Mr Kelly is a liquidator of the Company.
Mr Kelly gave evidence that:
a)“At the time when the liquidation commenced, it appeared that the company may be insolvent, as the total of the claims against it appeared to be in excess of the value of its assets….the reason for this apparent insolvency was that the combined claims made by the two directors, Mr Campbell and the Applicant, and their respective related parties, exceeded the value of the assets of the company. Non-related “trade” creditors were only owed a small amount.”[1]
b)“As to the question of solvency, according to the results of our investigations the company had available cash at bank at the time of our appointment to clearly satisfy those creditors who we as liquidators believe have actual creditor claims against the company. Had Peter Morris and myself been aware of the actual financial position of the company at the time of our appointment, that being the company appears to have been solvent due to the reasons stated earlier in this affidavit, it would have been our recommendation that the directors sign a Declaration of Solvency and have the company wound up by way of a Members Voluntary Winding Up.”[2]
[1] Kelly affidavit, paragraph 5.
[2] Kelly affidavit, paragraphs 11 and 12.
Mr Polidano also relies upon his own affidavit sworn 18 November 2010.
[10] Mr Polidano gave evidence that:
a)The arrangement with Mr Campbell, the Company’s other director, was to work in effect as an incorporated partnership.[3]
b)The relationship deteriorated and there were some discussions about selling the business but a share sale agreement was not signed.[4]
c)From about 13 November 2009 Mr Campbell took no part in the Company’s business and because of the necessity for dual tokens (for internet banking) and dual signatures (for cheques) Mr Polidano states despite his efforts to secure Mr Campbell’s signature:
“it became impossible for me to pay creditors and suppliers using the business’ funds.”[5]
d)He paid some Company creditors from his own funds.[6]
e)He took advice as to how the deadlock could be resolved and consequently on 9 December 2009 the Company resolved that it be wound up.[7]
[3] Polidano affidavit, paragraph 6.
[4] Polidano affidavit, paragraphs 9, 10, 15.
[5] Polidano affidavit, paragraphs 11 and 12.
[6] Polidano affidavit, paragraph 14.
[7] Polidano affidavit, paragraphs 16, 17, 18.
[11] The Authority relies upon the Statement of Natasha Dennis dated 9 September 2010 and the Authority’s Statement of Reasons dated 16 August 2010.
[12] The Authority’s evidence is that:
a)Mr Polidano has held a ‘Builder Licence’ since 11 April 2007.[8]
b)The Relevant Company Event was the Company’s resolution for its winding up and the appointment of liquidators on 9 December 2009.[9]
c)By letter dated 26 March 2010 the Authority notified Mr Polidano that the Authority considered him to be an ‘excluded individual’ pursuant to section 56(AC) of the QBSA Act.[10]
d)Mr Polidano applied to the Authority for a review of the decision that he was an ‘excluded individual’. The Authority confirmed its decision and provided its Statement of Reasons dated 16 August 2010.
e)As at 9 September 2010 the liquidators had not received all the books and records of the Company.[11]
f)The liquidators have raised concerns in relation to the management and governance of the Company:
i) “we have serious concerns as to dealings between the company and specific related parties”.[12]
ii) “the company’s books and records were not maintained in accordance with the provisions of Section 286 of the Corporations Act 2001”.[13]
[8] Dennis statement, paragraph 4.
[9] Dennis statement, paragraph 5.
[10] Dennis statement, paragraph 17.
[11] Authority’s Submissions, paragraph 18 and Annexure B, Third Report to Creditors.
[12] Authority’s Statement of Reasons Annexure “SOR-10”.
[13] Authority’s Statement of Reasons Annexure “SOR-12”.
Submissions
[13] Mr Polidano submits that the ordinary and natural meaning of the phrase “for the benefit of a creditor” in section 56AC of the QBSA Act is to be determined by reference to:
“well recognised concepts in insolvency law. In the insolvency context, a winding up is conducted:
(i) for the benefit of creditors, where the company is insolvent;
(ii) for the benefit of shareholders, where the company is solvent.”[14]
[14] Polidano’s Submissions, paragraph 8.2.
[14] Mr Polidano submits that the Company was solvent when the liquidators were appointed and the fact that the winding up proceeding ‘erroneously’ as a creditors’ winding up ought not to deprive it of its ‘solvent winding up character’ and therefore “the liquidation cannot be said to have been for the benefit of creditors”.[15]
[15] Polidano’s Submissions, paragraphs 6.3 and 8.3.
[15] It is also submitted by Mr Polidano that the Tribunal ought to have regard to the “purposive approach” to statutory interpretation and to sections 14A and 14B of the Acts Interpretation Act 1954 and to section 3 of the QBSA Act, which sets out the purpose of the QBSA Act.
[16] Mr Polidano refers the Tribunal to a number of previous decisions relating to the interpretation of sections 56AC and 56AD of the QBSA Act[16] and submits that they are all distinguishable from the present circumstances and that none of them are inconsistent with Mr Polidano’s submissions.
[16]Laidlaw v QBSA [2010] QCAT 70; McClintock v QBSA [2010] QCAT 340; Delonga v QBSA [2010] QCCT B26; Gallagher v QBSA [2010] QCAT 383; Younan v QBSA QDC 158 (22 April 2010).
[17] The Authority also refers the Tribunal to the decisions in McClintock and Gallagher and submits that ‘if an external administrator is appointed to a company and the company has a creditor the appointment is “for the benefit of a creditor”.’[17]
[17] Authority’s Submissions, paragraph 10.
[18] The Authority submits that the Company’s “creditors have benefited by having the Liquidators investigate the Company’s accounts to ascertain if there are assets available to pay them”.[18]
[18] Authority’s Submissions, paragraph 19.
[19] The Authority notes that in addition to the objects of the QBSA Act referred to by Mr Polidano, the purpose of Part 3A of the QBSA Act is protection of creditors by identifying and excluding individuals from participating in the industry “who do not take reasonable steps to avoid appointment of external administrators to companies”.[19]
[19] Authority’s Submissions, paragraph 27.
Discussion and Decision
[20] It is not disputed that the Company’s liquidation proceeded on the basis of a creditors’ voluntary winding up.
[21] It is not disputed that at the time of the Relevant Company Event:
a)there were some ‘trade’ creditors of the Company;
b)Mr Polidano was a director of the Company;
c)claims by the Company’s directors and related parties, some of which have since been disallowed by the liquidators, meant that the total of the claims against the Company appeared to be in excess of the value of its assets.
[22] Mr Polidano contends that the Authority and now the Tribunal, standing in the Authority’s place in this review application, should retrospectively re-characterise the winding up because now that the liquidators have undertaken some investigations and disallowed many of the claims by the Company’s directors and related parties the total of the claims against the Company appear to be less than the value of its assets.
[23] It is therefore asserted that the winding up was (with the benefit of hindsight) in substance a members’ voluntary winding up and was ‘not for the benefit of creditors’.
[24] The Tribunal has previously considered the phrase “for the benefit of a creditor”.
[25] In Gallagher v QBSA [2010] QCAT 383 the Tribunal found that:
“Creditors can benefit in many ways as a consequence of the appointment of liquidators. It is obviously a benefit to creditors just to have liquidators investigate the company’s accounts to ascertain if there are any assets available to creditors, preference payments or debtors. In my view the very appointment of a liquidator can be said to be a benefit to creditors.”[20]
[20] At [61].
[26] In McClintock v QBSA [2010] QCAT 340 the Tribunal found that the appointment of the administrator was for the benefit of a creditor namely Mr McClintock.
[27] None of the cases to which the Tribunal was referred appear to involve a factual circumstance such as contended for by Mr Polidano ie the Company was originally thought to be insolvent at the time of the Relevant Company Event but through the investigations by the liquidators and rejection of some claims the Company subsequently appears to be solvent.
[28] Mr Polidano contends that section 56AC of the QBSA Act does not apply to a members’ voluntary winding up and that the substance (but not the form) of this winding up was a members’ voluntary winding up.
[29] The Authority contends that the words “for the benefit of creditors” is to distinguish companies with creditors from companies without creditors given the purpose of Part 3A, being the protection of creditors.
[30] I am not satisfied that the interpretation of section 56AC of the QBSA Act for which Mr Polidano contends is correct.
[31] Even if it is correct I do not consider that it is appropriate in the circumstances of this proceeding to retrospectively re-characterise the winding up.
[32] At the time of the Relevant Company Event it appeared that the Company was insolvent. Indeed given the state of the liquidation (ie all the books and records have not been delivered to the liquidators) the Company may yet be insolvent although it appears it may not. It was only as a result of the work performed by the liquidators that some claims were disallowed. I do not accept Mr Polidano’s submission that the Company was ‘abundantly solvent when the liquidators were appointed’.
[33] I am also not satisfied that the interpretation of section 56AC of the QBSA Act for which the Authority contends (set out at [29]) is correct, though in my view it is to be preferred to Mr Polidano’s interpretation given the creditor protection purpose of Part 3A.
[34] In the circumstances of this case it is unnecessary to make a final finding in this regard.
[35] I find that the decision to liquidate the Company was made so that its directors and shareholders could recover their investment in the business of the Company. I also find that the decision to liquidate the Company was made so that creditors could be paid.[21]
[21] Polidano affidavit, paragraphs 11 and 12.
[36] I accept the Tribunal’s view of benefit in Gallagher[22] and the Authority’s submission that the Company’s “creditors have benefited by having the Liquidators investigate the Company’s accounts to ascertain if there are assets available to pay them”.[23]
[22] Gallagher v QBSA [2010] QCAT 383.
[23] Authority’s Submissions, paragraph 19.
[37] I therefore find based on the ordinary and natural meaning of the phrase, ”for the benefit of a creditor” in section 56AC of the QBSA Act, that the Relevant Company Event was for the benefit of creditors.
[38] I find that the correct and preferable decision is to affirm the decision of the Authority.
Orders
[39] The Authority’s decision is affirmed.
[40] The application for review of the decision that Mr Polidano is an excluded individual is dismissed.
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