Queensland Building and Construction Commission v Macdonald
| CITATION: | Queensland Building and Construction Commission v Macdonald [2014] QCATA 353 |
| PARTIES: | Queensland Building and Construction Commission (Applicant) |
| v | |
| Jamie Christopher Rory Macdonald (Respondent) |
| APPLICATION NUMBER: | APL065-14 |
| MATTER TYPE: | Appeals |
| HEARING DATE: | 16 September 2014 |
| HEARD AT: | Brisbane |
| DECISION OF: | Presiding Member Favell Member Kanowski |
| DELIVERED ON: | 23 December 2014 |
| DELIVERED AT: | Brisbane |
| ORDERS MADE: | The Decision of The Tribunal dated 12 December 2013 is confirmed. |
| CATCHWORDS: | Excluded individual – whether shareholder an influential person – actual influence and control – potential to influence Queensland Building and Construction Commission Act 1991 ss 56AC(1)(a)(2), (4) Macdonald v QBCC [2013] QCAT 702 McClintock v Queensland Building Services Authority [2011] QCATA 310 |
APPEARANCES and REPRESENTATION (if any):
| APPLICANT: | Queensland Building and Consturction Commission represented by S.E. Seefeld of Counsel |
| RESPONDENT: | Jamie Christopher Rory Macdonald represented by A.C. Freeman of Counsel instructed by Gadens Lawyers |
REASONS FOR DECISION
MEMBER FAVELL
Mr and Mrs Macdonald operated a concreting business through Ozmac Concrete Constructions Pty Ltd (Ozmac Concrete). Mr Macdonald held a QBSA concreting licence as did Ozmac Concrete. Until 2012 Mr Macdonald was the nominee for Ozmac Concrete’s licence.
The relevant findings of fact by the learned Member at first instance are repeated in these reasons.[1]
[1]Macdonald v QBCC [2013] QCAT 702 at [1].
Mr and Mrs Macdonald became estranged in late 2010.
On 1 April 2011 Mr Macdonald ceased to be director of Ozmac Concrete which changed its name to ACN131999285 Pty Ltd on 17 June 2011. It had liquidators appointed on 22 May 2012.
The Queensland Building and Construction Commission (QBCC) determined the appointment of liquidators constituted a “relevant company event” pursuant to s 56AC(1)(a) of the Queensland Building and Construction Commission Act 1991.
At the time of liquidation Mr Macdonald retained a 50% shareholding in Ozmac Concrete.
The QBCC concluded that Mr Macdonald was accordingly an “influential person” as provided for in s 56AC(2)(c) of the Queensland Building and Construction Commission Act 1991.
By a decision made on 10 September 2012 the commission determined that Mr Macdonald was an “excluded individual” pursuant to s 56AC(4) of the Queensland Building and Construction Commission Act 1991.
Mr Macdonald applied to the tribunal for a review of that decision and on 12 December 2013 the tribunal ordered that the decision of the Commission of 10 September 2012 to categorise Mr Macdonald as an “excluded individual” pursuant to s 56AC(2) and s 56AC(4) of the Queensland Building and Construction Commission Act 1991 is set aside.
In reaching that decision the tribunal found that consequent to the estrangement of Mr and Mrs Macdonald it was decided to run separate businesses and Mrs Macdonald kept Ozmac Concrete and arranged small concreting jobs under $3,300.00 which was under the threshold value of building work[2] and therefore outside regulation by the Commission. She did not need any licence to do that work.
[2]Queensland Building and Construction Commission Regulation 2003 s 5. .
The learned Member found that on 1 April 2011 Mr Macdonald resigned as a director of Ozmac Concrete but continued to hold a 50% shareholding in Ozmac Concrete “for family reasons”, however, the couple intended Mr Macdonald would have no say in the running of the company. That was the course proposed by Mrs Macdonald’s accountant and she accepted that advice. Her accountant did not advise however that the retained shareholding could be viewed as retaining an influence over the company.
In June 2011 Mrs Macdonald arranged with an accountant to set up limited liability companies for her and her estranged husband, Ozmac Holdings Pty Ltd and Ozmac Constructions Pty Ltd, with a view to separating their business interests. Mr Macdonald engaged his own accountant and bookkeeper. Mrs Macdonald had been informed on 6 April 2011 by her accountant that the Australian Tax Office (ATO) was auditing Ozmac Concrete.
In or about July 2011 the ATO determined Ozmac Concrete owed tax of $262,250.19 due to the incorrect categorisation of employees as independent contractors. In September 2011 the ATO found a superannuation debt was also owed by the company to those people deemed employees.
Mrs Macdonald sought advice from a financial consultant on 17 November 2011 without involving Mr Macdonald and on 25 November 2011 Mr Macdonald applied for a corporate concreting licence for Ozmac Holdings Pty Ltd. The wrong fee was paid on Mrs Macdonald’s credit card. The application was returned to Ozmac Holdings Pty Ltd on 13 November requiring certain changes and full payment. The application was resubmitted to the Commission on 12 December 2011 with a change in payer to Ozmac Constructions but again bearing Mrs Macdonald’s signature.
In or about February 2012 the Macdonalds discovered their accountant had made an error setting up their respective corporate trading vehicles. They had intended “Ozmac Constructions Pty Ltd” to be Mr Macdonald’s company and “Ozmac Holdings Pty Ltd” Mrs Macdonald’s company. The accountant had reversed that order. The Macdonalds resigned from their erroneous directorships and exchanged shareholdings and were then appointed directors to the correct companies.
Ozmac Constructions then applied to the Commission for a corporate licence. Payment was by cheque drawn on the account of Ozmac Services Pty Ltd (Mrs Macdonald’s second company) signed by Mrs Macdonald.
Mrs Macdonald had instructed her accountant to challenge the decision of the ATO concerning the Ozmac Concrete tax liability but the challenge failed. In February 2012 the ATO gave notice that recovery steps would be implemented. Mrs Macdonald proposed a repayment plan but it was rejected by the ATO. Mr Macdonald took no part in the negotiations with the ATO.
On 28 April 2012 both Macdonalds signed a letter addressed to the QBCC requesting that Ozmac Concrete licence be cancelled “due to lack of trade and change of directors”.
In May 2012 Mrs Macdonald advised Mr Macdonald of her intention to liquidate Ozmac Concrete. Mr Macdonald opposed that course given the possible adverse consequences with respect to his BSA licence. He discussed the matter with a friend, a lawyer, and concluded his licence might be in danger and informed his wife that it was best to simply pay the ATO debt. The couple argued strongly about the matter but Mrs Macdonald decided she could not pay the ATO debt and decided to appoint liquidators on 22 May 2012.
The Commission seeks to appeal the decision of the tribunal.
The grounds of appeal are:
1.The learned member erred in failing to find that the applicant was an “influential person” in relation to Ozmac Concrete Constructions Pty Ltd during the 12 month period prior to 22 May 2012.
2.The learned member erred by failing to apply the correct test for determining whether a person is an influential person under s 56AC(2)(c)(ii) of the Queensland Building and Construction Commission Act 1991.
3.The learned member erred by failing to consider a relevant consideration, namely, that the applicant was the nominee for Ozmac Concrete’s licence during the 12 month period prior to 22 May 2012.
4.The learned member erred in finding at [43] that the decision by the applicant and his wife to restructure their companies because of a potential tax debt was of limited relevance and was otherwise irrelevant.
5.The learned member erred in finding that the applicant as a 50% shareholder was not in a position to influence Ozmac Concrete. At the Appeal hearing the Appeal Tribunal was informed this ground was not pressed.
FIRST GROUND OF APPEAL
The learned member erred in failing to find that the applicant was an “influential person” in relation to Ozmac Concrete Constructions Pty Ltd during the 12 month period prior to 22 May 2012.
The applicant contends that the learned Member decided the matter on the basis that Mr Macdonald did not actually influence decision-making in the company rather than whether he was in a position to do so if he wished.
Whilst it is correct to say that the learned Member did make comments which indicated that he had come to the view that Mr Macdonald had failed to exercise any share-holding influence[3] he also determined that Mrs Macdonald on the evidence was the sole influence in the affairs of Ozmac concrete.[4] The learned Member considered the scenario of what Mr Macdonald could do in circumstances where there was a deadlock in the company. He found that there was no material before him to suggest there was a mechanism whereby Mr Macdonald could substantially influence the outcome of any such deadlock.
[3]Macdonald v QBCC [2013] QCAT 702 at [56], [59].
[4]Ibid [58].
The applicant contended in their written submissions that this ground involves a question of law only. The respondent in written submissions submitted to the contrary in that it says the ground involves questions of mixed fact and law so that the applicant requires a grant of leave to appeal.
The simple question to be determined by the Tribunal at first instance was whether Mr Macdonald was in a “position to substantially influence” it was not whether he did actually influence.
In my view the learned Member has determined that as a question of fact Mr Macdonald was not in a position to substantially influence. I do not see that that is contrary to the evidence that was led.
In my view the learned Member did not seek to apply an incorrect test. He made a determination of whether Mr Macdonald was in a position to substantially influence on the facts.
Clearly in my view the learned Member appreciated that the relevant determination to be made was whether Mr Macdonald was an influential person.[5] In my view it was important to consider evidence about whether or not Mr Macdonald had the ability to substantially influence and the factual matters concerning Mr and Mrs Macdonald’s relationship and the dominance of Mrs Macdonald were relevant considerations above and beyond any shareholding.
[5]Ibid [44].
I do not agree that the learned Member has applied a test of actual influence rather than whether Mr Macdonald was in a position to substantially influence. He has not deviated from the test articulated in McClintock.[6]
[6]McClintock v Queensland Building Services Authority [2011] QCATA 310 (McClintock) at [40].
In my view the learned Member did apply the correct test in determining whether the respondent was an influential person for the company. Paragraphs [55], [56], [57], [58] and [59] in my view indicate that to be the case. In going beyond simply considering the fact that Mr Macdonald held a 50% shareholding in the company the learned Member was correct.
SECOND GROUND OF APPEAL
The learned member erred by failing to apply the correct test for determining whether a person is an influential person under s 56AC(2)(c)(ii) of the Queensland Building and Construction Commission Act 1991.
Schedule 2 of the QBCC Act defines “influential person”. The interpretation of “influential person” has been considered in McClintock which referred to the decision in Nation v QBSA. Both decisions consider whether a person was an influential person because of their shareholding. The important points for this case in McClintock are that a substantial shareholding does not, per se, deem the shareholder an influential person. Whilst Mr McClintock chose not to influence the company, he was in a position to do so if he wished and was thus caught by the definition of influential person (paragraphs [40] – [42]). This is submitted as the correct test.
In McClintock[7] the appeal tribunal in circumstances where Mr McClintock held 99% of the shares said:
generally there would need to be some evidence of the individual’s position within the company to establish they were in fact in a position to exercise the necessary control…in Nation v QBSA[8] the chair person said: ‘The BSA’s decision relied on the applicant being a substantial shareholder. The fact that the definition of influential person includes by way of example a person who has a substantial shareholding is not determinative of the issue. It does not mean that in every case a substantial shareholder is an influential person’.[9]
[7]Ibid [37], [39].
[8](2006) QCCTB 114.
[9]McClintock [37], [39].
It was submitted that the Member restricted his quotation of McClintock to paragraphs [37] and [39] – i.e. that a person with a substantial shareholding is not necessarily an influential person and the Member erred in failing to consider that Mr Macdonald was in a position to influence the affairs of Ozmac if he wished to do so. In my view the submission is not correct and the evidence was that Mr Macdonald was not in a position to influence the affairs of Ozmac.
It was submitted that the Member erred in applying a test of actual influence rather than whether Mr Macdonald was in a position to influence. I do not agree with that submission.
The critical part of the definition is whether the person ‘is in a position to control…etc’. It is not simply by showing whether the person had significant shareholding or was the company’s nominee. The question is whether the person in those circumstances also was in a position of control or substantial influence over the company.
The Member applied the correct test to determine whether Mr Macdonald was an influential person. The fact the Respondent held a 50% shareholding was not determinative of the matter. He neither understood he had the ability to control or substantially influence Ozmac nor influence his wife’s decisions. In those circumstances the Respondent was not an influential person for Ozmac because he was not in a position to substantially influence.
The Member made his decision on findings of fact based on the evidence of witnesses in a full hearing and it should not be lightly disturbed by an appeal tribunal.
Some hypothetical ability of a party to exert influence over a company, with nothing more, is not sufficient to satisfy the test for influential person. The Chairperson in Nation v QBSA noted that a substantial shareholding must be linked to an ability to influence a company i.e. that the ability of the person must be realistic in terms of the facts specific to the case. I agree with that.
McClintock’s case notes that there must be some evidence of the person’s position within the company to establish they were in a position to exercise necessary control. The Member’s findings show that the Respondent was not in such a position.
THIRD GROUND OF APPEAL
The learned member erred by failing to consider a relevant consideration, namely, that the applicant was the nominee for Ozmac Concrete’s licence during the 12 month period prior to 22 May 2012.
Mr Macdonald was nominee for Ozmac’s licence (since 2008) during 12 months prior to the appointment of liquidators to that company on 22 May 2012. The Commission contends that this issue played no part in the Tribunal Decision despite being a prominent issue at the hearing, and that the Member did not consider the additional avenues for influence available to Mr Macdonald as nominee. The respondent says that is an exaggeration.
It was submitted that the ability of a nominee to influence a company is considerable. These abilities include capacity to influence the technical aspect of the company’s operation, responsibility to ensure and ability to withdraw/limit/modify supervision of works by the company, and ability to restrain the company’s ability to perform licenced work by withdrawing as nominee. It is not necessary that Mr Macdonald actually exercised that influence, only that he had the ability to do so.
The Commission contended evidence from the hearing suggests that Mr Macdonald maintained a supervisory role after the date of he claimed to cease involvement (Feb 2011). He supervised a contractor at ‘a couple of’ Ozmac work sites on ‘one or two occasions’. Mr Macdonald threw out the documents evidencing this date after the breakdown of his marriage. It was submitted that this explanation is unsatisfactory given that the last date of Mr Macdonald’s involvement with the company is a fundamental issue for the hearing. QBCC submits a Jones v Dunkel inference should have been drawn.
Mr Macdonald submits that after separating with his wife, Ozmac was run by his wife and only performed jobs under the $3,300 limit for building work. Consequently Ozmac did not need a licence and Mr Macdonald could not have influenced as nominee.
QBCC submits that this argument should not determine whether Mr Macdonald’s nominee position deems him an influential person for two reasons:
1. Evidence of whether Ozmac restricted itself to projects under $3,300 during 12 months prior to 22 March 2012 is inconclusive and only supported by assertions from the Macdonalds (no documents produced). Further the Jones v Dunkel inference ought to have been applied.
2. Even if Ozmac did restrict itself to contracts under the $3,300 limit, Mr Macdonald was invariably the nominee until immediately prior to liquidation. As nominee Mr Macdonald had the ability to enforce the $3,300 restriction by refusing to provide technical supervision – which if exercised amounts to influencing the company by limiting the projects it can undertake.
In my view, they may be factors in determining whether Mr Macdonald was in a position to substantially influence the conduct of the company’s affairs. The relevant company event here is the liquidation of the company. There is evidence to support the finding of fact that Mr Macdonald was not in a position to so influence.
Although the Member did not expressly refer to the “nominee’ issue in the Decision, in my view there was no need in light of his general findings of the facts in the case.
These findings include:
· The Respondent and his wife were truthful witnesses;
· Mrs Macdonald operated the business after the marriage breakdown and jobs undertaken were outside the regulation of Mr Macdonald with no licence required;
· The Respondent asked his wife to remove his name as nominee of the Company (did not occur until around time of liquidation);
· The Respondent did not want Ozmac to be liquidated due to fears for his licence but his wife proceeded to do so; and
· The Respondent neither understood that he had the ability to control or substantially influence Ozmac nor had the capacity to influence his wife’s decisions regarding the affairs of Ozmac.
The matters raised of what the Respondent could have done (paragraph [22]) are hypothetical and not supported by facts as found by the Member (e.g. as the limited work by Mrs Macdonald did not require a licence, any withdrawal as nominee by Mr Macdonald was not shown to have had an effect on Ozmac’s operations).
It was not put to the Macdonalds in cross examination that their evidence regarding the value of the work being undertaken was untrue. In my view there is no scope to make any Jones v Dunkel inference in the circumstances. The Member accepted evidence from the Respondent on this point so any alleged failure to produce documents is irrelevant.
The liquidators noted that Ozmac had essentially ceased trading in the 12 months leading to liquidation and their reports to creditors demonstrate that no significant income was being generated.
FOURTH GROUND OF APPEAL
The learned member erred in finding at [43] that the decision by the applicant and his wife to restructure their companies because of a potential tax debt was of limited relevance and was otherwise irrelevant.
Paragraph [43] of the decision under appeal is as follows:
Any relevance that the Macdonalds decided to restructure their companies because of the potential ATO debt must be limited to its efficacy in showing or establishing that Mr Macdonald was an influential person during the period of 1 year prior to the relevant event. Other than that it is irrelevant, though if it was necessary to come to a conclusion on this point I would not subscribe to the contrivance proposition suggested by the Commission.
QBCC submits that the Member has incorrectly and too strictly narrowed circumstances to be considered as to whether Mr Macdonald was an influential person. Other relevant matters should be considered.
It submits that potential phoenix activity is a relevant matter for consideration in the overall determination of whether Mr Macdonald was influential for Ozmac.
I do not agree.
The Member considered the “phoenix activity” argument (in his Decision – “the contrivance”) as raised by the Applicant and rejected it. The Member found on the facts that the Macdonalds were honest people trying to deal with a marriage breakdown and get on with their lives.
The Member found that Mr Macdonald tried to stop his wife from liquidating Ozmac due to fear of what this would do to his licence.
The Respondent submits there is no evidence to suggest the Member did not fully and properly consider the “contrivance” argument in reaching his decision.
The Member considered that Mr Macdonald was not in a position to influence Ozmac, demonstrated by his inability to resist Mrs Macdonald’s decision as director to liquidate the company.
In my view the finding by the learned Member is not in error.
LEAVE AND EXTENSION
When the question of whether leave was required or not was raised and it was pointed out that if it was required the time for seeking such leave had passed the applicant sought to make an instanter application under section 61 of the QCAT Act.
Section 61 allows the Tribunal to order relief from procedural requirements. It allows the Tribunal to extend the time limit fixed for the start of a proceeding by the QCAT Act or an enabling act or extend or shorten a time limit fixed by the Act or an enabling act or the rules or waive compliance with another procedural requirement under the QCAT Act or an enabling act or the rules. It specifically allows an extension or waiver to be given even at the time for complying with the relevant requirement has passed. The Tribunal cannot extend or shorten a time limit or waive compliance with another procedural requirement if to do so would cause prejudice or detriment not able to be remedied by an appropriate order for costs or damages to a party or potential party to the proceeding.
A party may appeal on a question of law without the Appeal Tribunal’s leave, unless the decision falls into certain limited categories that do not apply in these proceedings.[10]
[10]Queensland Civil and Administrative Tribunal Act 2009 (QCAT Act) s 142.
Application for leave to appeal had not been made. To appeal from the question of fact only, leave is required.
Leave to appeal is required where the appeal involves a question of fact or mixed fact and law.[11]
[11]QCAT Act s 142(3)(b).
The principles to be considered on an application for leave to appeal include whether there is an arguable case, the prospects of the applicant, correction of substantial injustice and whether there is a question of general importance.[12]
[12]QBSA v Meredith [2013] QCATA 152 at [38].
Here the QBCC initially submitted that the grounds of appeal are questions of law and accordingly leave is not required. At the hearing it contended ground 2 was a question of law only.
The Commission in its written submissions submitted that to the extent the grounds might be considered mixed questions of fact and law it submits that leave should be granted because this appeal would consider questions of general importance which they say is a construction of the term “influential person” as defined in schedule 2 of the QBCC Act and used in s 56AC(2)(c)(ii) of the QBCC Act.
During argument the respondent contended that Ground 1 was a question of fact only and the remainder were questions of mixed fact and law.
In my view the appeal is with respect to a mixture of fact and law and the time had passed for the application to be made for leave.
The decision was made on the 12 December 2013 and the applicant Commission received it on the 8 January 2014. It filed its application on the 5 February 2014.
The question whether or not leave to appeal should be granted is usually addressed according to established principles: Is there a reasonably arguable case of error in the primary decision?[13] Is there a reasonable prospect that the applicant will obtain substantive relief?[14] Is leave necessary to correct a substantial injustice to the applicant caused by some error?[15] Is there a question of general importance upon which further argument, and a decision of the appellate court or tribunal, would be to the public advantage?[16]
[13]QUYD Pty Ltd v Marvass Pty Ltd [2009] 1 Qd R 41.
[14]Cachia v Grech [2009] NSWCA 232 at 2.
[15]QUYD Pty Ltd v Marvass Pty Ltd [2009] 1 Qd R 41.
[16]Glenwood Properties Pty Ltd v Delmoss Pty Ltd [1986] 2 Qd R 388 at 389; McIver Bulk Liquid Haulage Pty Ltd v Fruehauf Australia Pty Ltd [1989] 2 Qd R 577 at 578, 580.
The Commission requested leave to appeal. Application for leave was not sought until after the period in which to make such an application had expired.
Section 143(3) required an application for the tribunal’s leave to appeal be filed in the registry within 28 days after the relevant day.
The relevant day means that day ‘the person is given written reasons for the decision being appealed against’. Because of the requirements of s 143 of the QCAT Act any application for leave to appeal should have been lodged no later than 5 February 2014.
Section 61(1) of the QCAT Act provides that the tribunal may, by order, extend or shorten the time limit fixed by the QCAT Act. It may do so even when the time for complying with the relevant requirement has passed. The tribunal cannot extend or shorten a time limit if to do so would cause prejudice or detriment to a party to a proceeding, not able to be remedied by an appropriate order for costs damages.[17]
[17]QCAT Act s 61(3).
As was said in Coppens v Waterwise Design Pty Ltd:[18]
Based on the wording of s 61 of the QCAT Act, consideration of applications under s 61(1) is essentially a two stage process which includes:
(a)Consideration of whether s 61(3) applies: whether the making of an order under s 61(1) would cause prejudice or detriment not able to be remedied by an appropriate order for costs or damages to a party or potential party to a proceeding.
(b)In the absence of such prejudice or detriment, consideration of other factors which may be relevant to the exercise of the discretion contemplated by s 61(1).
[18][2014] QCATA 309 at [8].
In Coppens v Waterwise Design Pty Ltd[19] Justice Thomas said:
In circumstances where such a prejudice should not arise by the granting of an extension or shortening of a time limit or waiver of compliance with other procedural requirements, or where prejudice that does arise can be remedied by an appropriate order for costs or damages, other factors may be relevant.
[19]Ibid [10].
Other factors where identified in Crime and Misconduct Commission v Chapman & Anor[20] as:
(a)Whether a satisfactory explanation (or good reason) is shown to account for the delay.
(b)The strength of the case the applicant wishes to bring (assuming it is possible for some view on this to be formed on the preliminary material).
(c)Prejudice to adverse parties.
(d)Length of the delay, noting that a short delay is usually easier to excuse than a lengthy one.
(e)Overall, whether it is in the interests of justice to grant the extension. This usually calls for some analysis of the above factors considered in combination.”
[20][2011] QCAT 229 at [9].
As was noted by Justice Thomas:
The legislature must have had a good reason for fixing a time limitation period. Clear definition of time limits assist in achieving the object outlined in s 3(b) of the QCAT Act to deal with matters in a way that is accessible, fair, just, economical, informal and quick...each party is aware of the required time limits and the fair approach is to require the time limits to be complied with unless there is some compelling reason (such as those listed above) to the contrary. That is fair for all parties. Compliance with time limits also will lead to disposition of matters in the most efficient and quick way. Compliance with time limits is also consistent with the public interest in finality of litigation.[21]
[21]R v Twindale [2009] QCA 200 per Margaret Wilson J.
In my view a satisfactory explanation for the delay has not been shown. Further as is apparent from these reasons the strength of the appeal is not strong. The length of delay has been considerable and I am not satisfied that in the interests of justice it is necessary to grant the extension.
Finality in litigation is highly desirable because any further action beyond the hearing can be costly and unnecessarily burdensome on the parties.[22]
[22]See Fox v Percy (2003) 214 CLR 118 at 128 per Gleeson CJ, Kirby and Gummow JJ.
The distinction between questions of law and fact is not always clear, and courts have not found it easy to formulate a satisfactory test of universal application.[23] A concise and helpful summary appears, in my view, in a passage from a decision of the Supreme Court of Canada:[24]
[23]See Collector of Customs v Agfa-Gevaert Ltd (1996) 186 CLR 389 at 394.
[24]Canada (Director of Investigation and Research) v Southam Inc [1997] 1 SCR 748.
Briefly stated, questions of law are questions about what the correct legal test is; questions of fact are questions about what actually took place between the parties; and questions of mixed law and fact are questions about whether the facts satisfy the legal tests.[25]
[25]Canada (Director of Investigation and Research) v Southam Inc [1997] 1 SCR 748 at [35] per Iacobucci J.
Findings of fact by a Tribunal will not usually be disturbed on appeal if the facts inferred by the Tribunal, upon which the finding is based, are capable of supporting its conclusions, and there is evidence capable of supporting any inferences underlining it.[26]
[26]Dearman v Dearman (1908) 7 CLR 549 at 561; Fox v Percy (2003) 214 CLR 118 at 125 – 126.
An appellate tribunal may interfere, however, if the conclusion at first instance is ‘contrary to compelling inferences’ in the case.[27] As the High Court said in Fox v Percy:
[27]Chambers v Jobling (1986) 7 NSWLR 1 at 10.
In such circumstances, the appellate court is not relieved of its statutory function by the fact the trial judge has, expressly or implicitly, reached a conclusion influenced by an opinion concerning the credibility of witnesses. In such a case, making all due allowances for the advantages available to the trial judge, the appellate court must “not shrink from giving effect to” its own conclusion.[28]
[28]Fox v Percy (2003) 214 CLR 118 at 128 per Gleeson CJ, Gummow and Kirby JJ.
Whether a decision is based on findings of fact which are open on the available evidence, is a question of law.[29] The appeal jurisdiction is not generally the proper forum to receive evidence on disputed facts.[30]
[29]Kostas v HIA Insurance Services Pty Ltd trading as Homeowners Warrant (2010) 241 CLR 390.
[30]See discussion in Georgalis v Andoras (1993) 113 FLR 196; Doherty v Liverpool District Hospital (1991) 22 NSWLR 284.
The statutory regime under which Queensland Civil and Administrative Tribunal operates places obligations upon parties themselves: to take care in their dealings with Tribunal matters, and to act in their own best interests. QCAT resources for the resolution of disputes are in high demand and serve, as the High Court has recently observed in relation to court resources, ‘the public as a whole, not merely the parties to the proceedings’.[31]
[31]Aon Risk Services Australia Ltd v Australian National University (2009) 239 CLR 175, 217; Lida Build Pty Ltd v Miller and Another [2011] QCATA 219, [10].
In the context of an appeal, a party has an obligation to present an identifiable argument that an error has been made by the Tribunal in reaching its decision. It must be more than mere disagreement with the Tribunal’s finding on a contested issue. The primary function of the Appeal Tribunal is to correct errors made by the Tribunal. It is not to allow an applicant to have a second opportunity to present or argue their case in the hope that the Appeal Tribunal will consider the evidence differently and the party will achieve a different result on the issues appealed.[32]
[32]Lida Build Pty Ltd v Miller and Another [2011] QCATA 219, [11] – [12].
In this application the Tribunal’s sole duty is to determine whether there is in error in the primary decision. It is not its task to decide where the truth lay as between the competing versions given by the parties.[33]
[33]Fox v Percy (2003) 214 CLR 118 at 129 per Gleeson CJ, Gummow and Kirby JJ.
QBCC submits that Mr Macdonald could assert influence in other ways due to his position as 50% shareholder. These ‘other ways’ include:
· Mr Macdonald could prevent decisions requiring majority shareholder consent. The ability to prevent decisions being made amounts to ability to influence. The fact that shareholders are deadlocked in disagreement is not indicative of a lack of influence.
· Mr Macdonald held other powers under the Corporations Act 2001 (Cth) as holder of >5% shareholding including the ability to put resolutions forward in and require the holding of meetings of members; and the ability to apply to the Court to inspect company books.
In my view, for those matters to be considered in determining whether Mr Macdonald was in a position to influence it would have to be shown that he knew of those matters. There was no evidence to that effect. Even if there was such evidence it would not necessarily mean that Mr Macdonald was realistically in a position to influence.
The Member concluded that Mr Macdonald did not understand he had potential as a shareholder to exert influence over the affairs of Ozmac. The Member was open to finding this conclusion partly because he found that Mr Macdonald was not involved in the “paperwork” and relied on his wife in this regard.
In my view it was not reasonable for the Applicant to expect him to act on the ‘other ways’ (to assert influence) as suggested by the Applicant.
Leave to appeal should not be given. In any event as set out the application should be dismissed on a number of grounds.
In Arthurs v Queensland Building and Construction Commission[34] the QCAT Appeal Tribunal considered the question of influential person in circumstances where the applicant was a 50% shareholder in a company and whether that person was in a position to control or substantially influence the conduct of the company’s affairs.
[34][2014] QCATA 155 (Arthurs v QBCC).
In that decision the Commission submitted that merely by reason of the 50% shareholder holding a 50% shareholding in the company he was in a position to substantially influence the company’s affairs. The argument was that by virtue of such significant shareholding he was in a position to call a meeting of a company and had a substantial vote in the conduct of the company’s affairs. Accordingly it was said s 51AC(2) was triggered in making an individual an excluded individual.
In Arthurs v QBCC the Tribunal said:
[33] Those shareholders are the final beneficiaries of company’s profits. Share ownership in the management and control of the company’s business are not synonymous.
“It is idle to suggest that it is the shareholders who ordinarily control the business and activities of the company…important decisions whether involving questions of policy or not, are invariably taken by the directors who are ultimately responsible to the company in general meeting for the conduct of the company’s business operations.”[35]
[35]Federal Commissioner of Taxation v Commonwealth Aluminium Corporation Ltd (1980) 30 ALR 449 per Stephen, Mason and Wilson JJ at 460.
The Appeal Tribunal continued:[36]
[36]Arthurs v QBCC [34], [35].
A person with a shareholding of 5% or more in a company is entitled to require directors of the company to call a meeting of members.[37] There is no greater entitlement where 50% of shares are held. Both shareholders in MTS held 50% of the shares. Where the shareholders were in disagreement, Mrs Davidson as director had the casting vote. Accordingly the significance of the example of a “significant shareholding” used in the meaning of influential person in the Act surely cannot be the entitlement attached to a shareholding to call a meeting of members. Concomitant of any such proposition is that all individuals with a 5% shareholding or more in a company are also therefore, by such 5% holding, to be deemed an influential person for a company.
[37]Corporations Act 2001 s 249D(1)(a)..
[35] Hence previous decisions pointing out that shareholding entitlement may not by itself establish that a person is in a position to control or substantially influence the conduct of the company’s affairs.
A substantial shareholding must be linked to an ability to influence the affairs of the company.[38]
[38]Nation v QBSA (2006) QCCTB 114 at [61].
Each case must be considered on its own facts.[39]
[39]McClintock [40].
A person is not entitled to a Commission licence if he is an excluded individual for a relevant company event.[40] A person who is a director or secretary of or influential person for the company at the time of the relevant company event is an excluded individual.[41]
[40]QBCC Act s 31(1)(e).
[41]Ibid s 56AC.
Under the QBCC Act[42] “Influential person” for a company is defined as ‘an individual other than a director or secretary of the company, 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’.
[42]Ibid Schedule 2; s 56AC(j)(3) and (4).
The learned Member in the matter under appeal agreed that it is not every case that a substantial shareholding will, without more translate, to the shareholder being an influential person for the purposes of s 56AC(2)(c).
The learned Member found ‘Mr Macdonald clearly failed to exercise any shareholding influence in order to resist Mrs Macdonald’s decision as director to liquidate the company’. He found that Mrs Macdonald had a dominant position in the personal and business relationship between the martial partners. He found ‘all the evidence led in this matter in fact suggests, concerns and points to Mrs Macdonald’s sole influence in the affairs of Ozmac Concrete’.[43] He further concluded ‘that Mr Macdonald neither understood he had potential as a shareholder to exert influence or control over the affairs of Ozmac Concrete during the relevant period, nor had the relationship capacity to influence or oppose his wife, the directors, decisions concerning that company’.[44]
[43]Macdonald v QBCC [2013] QCAT 702 at [59].
[44]Ibid [58].
The learned Member then found that Mr Macdonald was not an influential person for the company during the period of the 1 year before the relevant company event. In my view he was correct.
In my view the fact that a person has 50% shareholding in the company does not of itself lead to a conclusion that person is in a position to control or substantially influence the conduct of the company affairs. This is made clear by the significant shareholding aspect being only an example used in the section.
The entitlement for a licence under section 31(1)(e) of the QBCC Act requires a determination of fact. Here the learned Member determined as a matter of fact that Mr Macdonald was not an influential person as defined. He was entitled to do so.
In my view he was entitled to take into account the matters he did and reach the conclusion he did.
The appeal should be dismissed.
MEMBER KANOWSKI
I agree with the order proposed, and the reasons given, by the Presiding Member.
Queensland Building and Construction Commission v Macdonald [2014] QCATA 353
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