DISTRICT COURT OF QUEENSLAND
CITATION:
Queensland Building and Construction Commission v Smith [2024] QDC 101
PARTIES:
QUEENSLAND BUILDING AND CONSTRUCTION COMMISSION
(Plaintiff)
V
DAMIEN JOHN SMITH
(Defendant)
FILE NO/S:
1967/21
DIVISION:
Civil
PROCEEDING:
Application
ORIGINATING COURT:
District Court
DELIVERED ON:
26 April 2024 (ex tempore)
DELIVERED AT:
Brisbane
HEARING DATE:
26 April 2024
JUDGE:
Judge Porter KC
ORDER:
1. THE SEPARATE QUESTION OF ‘WHETHER THE COMPANY’S DEREGISTRATION PREVENTS LIABILITY FOR THE DEBT CLAIMED IN THIS PROCEEDING FROM ATTACHING TO THE DEFENDANT PURSUANT TO SECTIONS 111C(3) AND (6) OF THE ACT’ IS TO BE ANSWERED ‘NO, THE COMPANY’S DEREGISTRATION DOES NOT PREVENT LIABILITY FROM ATTACHING TO MR SMITH PURSUANT TO SECTIONS 11C(3) AND (6) OF THE ACT.’
2. THERE BE NO ORDER AS TO COSTS OF THE PLAINTIFF’S APPLICATION.
3. THE DEFENDANT IS TO FILE AND SERVE AN AMENDED DEFENCE BY 24 MAY 2024.
CATCHWORDS:
STATUTES – ACTS OF PARLIAMENT – INTERPRETATION – Particular words and phrases – Generally – where the plaintiff seeks to recover from the defendant as a director of a building contractor – where the building contractor is deregistered – where the plaintiff primarily relies on sections 71 and 111C of the Queensland Building and Construction Commission Act 1991 (Qld) to take proceedings against the defendant personally – where the defendant is not personally liable under section 71 of the Act – whether the company’s deregistration prevents liability for the debt claimed in this proceeding from attaching to the defendant pursuant to sections 111C(3) and (6) of the Act
LEGISLATION: Corporations Act2001 (Cth) s. 601AD
Queensland Building and Construction Commission Act 1991 (Qld) ss. 71(1), 111C
CASES: Mahony v Queensland Building Services Authority [2013] QCA 323
Re Austral Family Homes Pty Ltd (in Liq) (1992) 28 NSWLR 247
Russian & English Bank v Baring Brothers & Co Ltd [1936] A.C. 405
COUNSEL:
M. B. Ambrose KC & H. Clift for the applicant (plaintiff in the proceedings)
SOLICITORS:
Dentons for the applicant (plaintiff in the proceedings)
The respondent (defendant in the proceedings) appeared in person
Introduction
This is a proceeding between the plaintiff, the Queensland Building and Construction Commission (the Commission), and the defendant, Damien John Smith, whereby the Commission seeks to recover from Mr Smith, as a director of a incorporated building contractor, a sum paid on the statutory insurance scheme created by the Queensland Building and Construction Commission Act 1991 (Qld) (the Act) on a claim against the corporate contractor. A question has arisen as to whether, on the proper construction of the relevant provisions, Mr Smith can be liable as director where the corporate building contractor has been deregistered. That question was ordered by me to be dealt with as a preliminary point. For the reasons which follow, I find that Mr Smith can be liable in those circumstances.
The statutory context
The Commission relies on two provisions, primarily, to take proceedings against Mr…
Keep reading for free
Create a free CaseChat account to read Queensland Building and Construction Commission v Smith and more:
- Read every judgment in full
- Ask AI and get answers linked to paragraphs
- See how each paragraph was cited in later cases
- Download judgments as PDF or Word
One click creates your free account or signs you in.
By continuing you agree to the Terms and Privacy Policy.
- Case
- [2024] QDC 101
- Decision Date
CaseChat Overview and Summary
The court examined the effect of deregistration on corporate liability, referencing section 601AD of the Corporations Act 2001 (Cth) and established common law principles. According to the court, the dissolution of a company upon deregistration extinguished its debts, as per authoritative interpretations of section 601AD. However, the court noted that the statutory language in sections 71(1) and 111C(3) of the Act, which refer to the recovery of debts from a building contractor, appeared to conflict with this principle. Nevertheless, section 111C(7) of the Act explicitly provided that a liability to pay an amount applied regardless of the company's status, including if the company was being or had been wound up. This provision effectively resolved the conflict, allowing the Commission to hold the director liable despite the company's deregistration.
The court concluded that the deregistration of the company did not prevent the Commission from attaching liability to the director under sections 111C(3) and (6) of the Act. The court also noted that there would be no order as to costs for the plaintiff's application and required the defendant to file and serve an amended defence by a specified date.
Orders
Orders of the court
1. THE SEPARATE QUESTION OF ‘WHETHER THE COMPANY’S DEREGISTRATION PREVENTS LIABILITY FOR THE DEBT CLAIMED IN THIS PROCEEDING FROM ATTACHING TO THE DEFENDANT PURSUANT TO SECTIONS 111C(3) AND (6) OF THE ACT’ IS TO BE ANSWERED ‘NO, THE COMPANY’S DEREGISTRATION DOES NOT PREVENT LIABILITY FROM ATTACHING TO MR SMITH PURSUANT TO SECTIONS 11C(3) AND (6) OF THE ACT.’
2. THERE BE NO ORDER AS TO COSTS OF THE PLAINTIFF’S APPLICATION.
3. THE DEFENDANT IS TO FILE AND SERVE AN AMENDED DEFENCE BY 24 MAY 2024.
Background
Background to the litigation
Full text does not contain this section.
Evidence
Evidence Before The Court
Full text does not contain this section.
Decision
Reasons for decision
Full text does not contain this section.
Ratio Decidendi
Legal Principle Established
The point made in paragraph 25(e) of the Defence is beguilingly persuasive. Section 601AD(1) of the Corporations Act2001 (Cth) (the Corporations Act) deals with the effects of deregistration of a company. This section provides that a company ceases to exist upon deregistration. The Corporations Act then contains a note under sub (1) that says: Section 601AD of the Corporations Act then proceeds to deal with some specific questions relating to property; rights, powers, and so on, that the company may have post-deregistration. It does not have anything special to say about liabilities. However, it has long been the accepted position at common law that the effect of a company ceasing to exist upon deregistration is that no action can be brought to which the company would be a necessary party, and the dissolution extinguishes all claims by or against the company. It is sufficient to refer to Re Austral Family Homes Pty Ltd(in Liq) (1992) 28 NSWLR 247 at 249, about point D, and the cases cited there. The foundational statement seems to be articulated in Russian & English Bank v Baring Brothers & Co Ltd [1936] A.C. 405 at 427, where Lord Atkin (originally from Brisbane) adopts a statement from Blackstone that, “[t]he debts of a corporation either to or from it are totally extinguished by its dissolution …”. Section 601AD Corporations Act has been authoritatively construed in that way. Under the present scheme, by which constitutional power is conferred on the Commonwealth Parliament to legislate for corporations, that section is a valid act of the Commonwealth Parliament; and, to the extent a State Act is inconsistent with it, it would be invalid under s. 109 of the Commonwealth Constitution. When one then looks at the language used in the relevant provision of the Act, it seems to invite the argument advanced in Mr Smith’s pleading. Section 71(1) speaks of recovering the amount of the payment as a debt from the building contractor. Section 111C(3) of the Act provides that it applies “if a company owes the Commission an amount”. Applying s. 601AD, authoritatively construed in the way I have outlined above, it seems, on a literal reading of s. 71(1) and s. 111C(3) of the Act, on the dissolution of a corporate building contractor, it cannot owe the Commission an amount, because on dissolution its debts are extinguished. Those charged with drafting the Act might not have thought of that possibility when they chose the language for s. 111C. If the statutory scheme stopped there, the Commission may have had a difficulty with that s. 111C(3) applying in circumstances where the company in question had been deregistered, for the reasons I have already articulated. However, the Commission has the very considerable advantage of s. 111C(7) of the Act, set out above, which relevantly provides that a liability under subsection (6) to pay an amount applies regardless of the status of the company, including, for example, that the company is being, or has been, wound up.