Riddell v Queensland Building Services Authority
[2012] QCAT 226
•29 May 2012
| CITATION: | Riddell v Queensland Building Services Authority [2012] QCAT 226 |
| PARTIES: | Peter James Riddell (Applicant/Appellant) |
| v | |
| Queensland Building Services Authority (Respondent) |
| APPLICATION NUMBER: | OCR101-11 |
| MATTER TYPE: | General administrative review matters |
| HEARING DATE: | 10 April 2012 |
| HEARD AT: | Brisbane |
| DECISION OF: | Michelle Howard, Member |
| DELIVERED ON: | 29 May 2012 |
| DELIVERED AT: | Brisbane |
| ORDERS MADE: | 1. The decision of the Queensland Building Services Authority dated 21 April 2011 to refuse to categorise Peter Riddell as a permitted individual is confirmed. |
| CATCHWORDS: | GENERAL ADMINISTRATIVE REVIEW – PERMITTED INDIVIDUAL – whether individual took all steps to avoid the coming in to existence of the circumstances that resulted in the liquidation of the company – where significant conflict between directors and lack of cooperation by other director Queensland Building Services Authority Act 1991 Briginshaw v Briginshaw (1938) 60 CLR 336 |
APPEARANCES and REPRESENTATION (if any):
| APPLICANT: | Mr Riddell represented himself |
| RESPONDENT: | Ms Jodie Stroud, in-house legal officer, represented the Queensland Building Services Authority |
REASONS FOR DECISION
On 21 April 2011, the Queensland Building Services Authority (QBSA) made a decision to refuse an application from Mr Riddell seeking that he be categorised as a permitted individual for a relevant event under the Queensland Building Services Authority Act 1991 (the QBSA Act). Mr Riddell applied to the tribunal for a review of the decision made by QBSA.
It is uncontentious that Mr Riddell had been advised by QBSA that it considered him an excluded individual[1] under the QBSA Act following the appointment of liquidator for Titan Steelfixing Pty Ltd (Titan) for the benefit of a creditor. Mr Riddell was a director and secretary for Titan at the time of the appointment of the liquidator.
[1]QBSA Act, s 56AC provides for the circumstances in which a person becomes an excluded individual.
The applicable law
The purpose of a review conducted by the tribunal in its review jurisdiction is to produce the correct and preferable decision[2] following a fresh hearing on the merits.[3] The Tribunal must make its decision according to the applicable law, and based on the evidence presented to it.[4] In effect, the tribunal stands in the shoes of the original decision-maker, in this case the QBSA, and makes the decision anew.
[2] Queensland Civil and Administrative Tribunal Act 2009, s 20(1).
[3] Queensland Civil and Administrative Tribunal Act 2009, s 20(2).
[4]CCYPCG v Lister [2011] QCATA 87; Queensland Racing Limited v McMahon [2010] QCATA 73.
The relevant facts must be established to the reasonable satisfaction of the Tribunal, that is, on the civil standard of proof. Although it is commonly referred to as the 'balance of probabilities', in reality, this is a variable standard having regard to the seriousness of the issues concerned.[5]
[5]Briginshaw v Briginshaw (1938) 60 CLR 336, at 361-362 (per Dixon J). The civil standard has been held to be applicable in the federal merits review jurisdiction of the Administrative Appeals Tribunal: see for example, Minister for Immigration and Ethnic Affairs v Pochi (1980) 4 ALD 139 and Re Kirby and Collector of Customs (1989) 20 ALD 369.
An individual may apply to the QBSA to be categorised as a permitted individual for a relevant event under section 56AD of the QBSA Act.[6] The QBSA, and therefore in review proceedings, the Tribunal, may categorise the individual as a permitted individual
... only if .. .. satisfied, on the basis of the application, that the individual took all reasonable steps to avoid the coming in the existence of the circumstances that resulted in the happening of the relevant event.[7]
[6] QBSA Act, s 56AD(1).
[7] QBSA Act, s 56AD(8).
The District Court of Queensland considered the operation and effect of the relevant provisions of the QBSA Act in Younan v Queensland Building Services Authority.[8] It held that if an applicant applying to be categorised as a permitted individual does not address the relevant considerations so that he fails to show that he took all reasonable steps, then the application will fail.[9]
[8] Younan v Queensland Building Services Authority [2010] QDC 158.
[9] Younan v Queensland Building Services Authority [2010] QDC 158, [37].
In considering an application to be categorised as a permitted individual, the District Court articulated four steps. Firstly, identifying the 'relevant event'; secondly, identifying the circumstances that resulted in the happening of the relevant event; thirdly, considering whether the applicant took all reasonable steps to avoid the coming in to existence of those circumstances; and fourthly, if the threshold issue has been satisfied, whether the discretion should be exercised to classify the applicant as a permitted individual.
'All reasonable steps' does not mean all possible steps.[10] In Younan v Queensland Building Services Authority,[11] the Court said that:
What were reasonable steps depended on what was reasonable for the individual concerned in the circumstances in which he found himself, with such information as he then had. It is not a question of whether he did everything possible to prevent these circumstances from arising, or whether they would not have arisen if he had acted differently. The reasonableness of his behaviour must be assessed by reference to what was known by him at the time, without the benefit of hindsight.[12]
Relevant steps are those taken to avoid the coming in to existence of the circumstances that resulted in the relevant event, but not the relevant event itself.[13]
[10] Hyde v QBSA [2003] QST Q72-02 [52-53]; Laidlaw v QBSA [2010] QCAT 70.
[11] [2010] QDC 158.
[12] [2010] QDC 158, [26].
[13] Laidlaw v QBSA [2010] QCAT 70.
Further, the District Court considered that the focus of section 56AD is concerned with the prudent management of a company as an ongoing business, or prevention, rather than dealing with problems after they have arisen.[14] A wide enquiry is appropriate which includes the manner in which the applicant conducted the business.[15]
[14] [2010] QDC 158 [23-25].
[15] Laidlaw v QBSA [2010] QCAT 70.
Section 56AD(8A) sets out matters to which the Authority, and therefore the Tribunal on review, must have regard in deciding whether an individual took all reasonable steps to avoid the coming into existence of the circumstances resulting in the relevant event. Section 56AD(8B) provides that the authority is not prevented by section 56AD(8A) from having regard to other matters for deciding the question.
The matters set out in section 56AD(8A) are:
a)keeping proper books of account and financial records;
b)seeking appropriate financial and legal advice before entering into financial or business arrangements or conducting business;
c)reporting fraud or theft to the police;
d)ensuring guarantees provided were covered by sufficient assets to cover the liability under the guarantees;
e)putting in place appropriate credit management for amounts owing and taking reasonable steps for recovery of the amounts;
f)making appropriate provision for Commonwealth and State Taxation debts.
The evidence
Mr Riddell gave a written statement to the tribunal, together with copies of various documents. He also gave oral evidence at the hearing. Ms Natasha Dennis from QBSA provided a written statement which attached various documents. In giving his oral evidence, Mr Riddell was sometimes unspecific and vague about details and dates.
Mr Riddell gave evidence that he and a Mr Greg Hillman, as joint directors and equal shareholders of Titan, commenced business in 2007. They had known one another and previously worked together as employees for many years. Mr Riddell was the nominee licensee for the company. He also held a personal BSA licence.
Titan went into liquidation on 21 February 2011 following an application by BUSS (Queensland) Pty Ltd (BUSSQ) for outstanding compulsory employee superannuation amounts, accrued for the quarters to 30 June 2009; 30 September 2009; 31 December 2009; and 31 March 2010.
There was no formal business plan for Titan. Although he had wanted both himself and Mr Hillman to be 'hands-on', Mr Riddell explained that Mr Hillman had different ideas. Mr Riddell said that during Titan's operation, he was primarily responsible for tendering for and quoting on new jobs, and managing the administration for Titan. Mr Hillman was largely responsible for management of the crews on site. Regarding his responsibilities as nominee supervisor for Titan,[16] Mr Riddell's evidence was that he was not at the time aware of his responsibilities and further, was not now '100%' aware of them. He also conceded that he was unaware of the responsibilities of a company director.
[16] QBSA Act, s 43A.
From Mr Riddell's description, he costed jobs on the basis of a tonne of steel being fixed by each man employed per day as he considered this was the ratio required to make money from a job. However, he described Mr Hillman as disregarding the strategy, operating on a different basis, employing too many people, and people who were 'mates' who, according to Mr Riddell were lazy and did not work hard, but whom Mr Hillman refused to sack. He did concede that if he, as nominee licensee, had supervised the work on site, those problems would have been avoided. Also, he said, Mr Hillman would not take direction from Mr Riddell.
As Mr Riddell explained the situation, problems developed in the relationship between himself and Mr Hillman within months of Titan commencing to trade. He says that in about July 2007, Mr Hillman had made a cash injection into the business of some $40,000. However, over a short period and before 2008, Mr Riddell says Mr Hillman then withdrew an equivalent amount and more from the business. Also, he took Mr Hillman's keycard away in 2007, because of withdrawals being made at poker machines by Mr Hillman.
Mr Riddell says he did not know what to do as this situation developed. He found it difficult to refuse Mr Hillman the money given the initial cash injection he made.
Mr Riddell says that his bookkeeper told him on numerous occasions to 'get rid of' Mr Hillman. Mr Riddell said that he did not know how he could do so since Mr Hillman had put money into the business. He spoke of numerous discussions and agreements between himself and Mr Hillman about how things were to be done. He said essentially that Mr Hillman 'would agree' to do things in a particular way as requested by Mr Riddell, but following the discussions nothing in fact changed. After a while Mr Riddell then again raised the issues with Mr Hillman, but on each occasion the result was the same.
Mr Riddell says that the global financial crisis resulted in a significant reduction of work for Titan. He acknowledged in oral evidence that from some time 'probably' in 2009, Titan stopped putting money aside for superannuation and the money it had was whittled away, because there was no work and wages still had to be paid. He acknowledged that there were insufficient monies to pay for superannuation accruals at the times they were due from the 30 June 2009 quarter.
There was conflict between Mr Riddell and Mr Hillman over a job for a business entity named TI Concrete which was organised and carried out by Mr Hillman in 2008. Mr Hillman did not obtain a written contract as required, despite Mr Riddell's directions and urgings that he do so. Following an unpaid invoice for part of the works, Mr Riddell told Mr Hillman not to return to the site. However, Mr Hillman did return on several occasions and over a period completed the works. Ultimately, some $44,000 was owing and unpaid by TI Concrete. Mr Riddell says that although he generally took responsibility for collecting monies, that responsibility was left to Mr Hillman for this particular job.
However, in December 2008, when the account remained unpaid, Mr Riddell made a claim for the monies owing by TI Concrete under the Building and Construction Industry Payments Act 2004 (BCIPA). The claim was not paid. Then in 2010, Mr Riddell placed the matter in the hands of a collection agency and subsequently, a judgment was obtained in the Magistrates Court on 18 November 2010 for the unpaid amount plus costs and interest totalling $55,011.58. The judgment debt was not paid.
Mr Riddell says that on one occasion, probably in 2008, he sought advice from a solicitor about how to dissolve his relationship with Mr Hillman. However, he said that some weeks later, he and Mr Hillman were 'reconciled'.
From about October 2009 until May 2010, Titan was engaged in a job with Mel Bratt Builders. Following complaints, Mr Riddell told Mr Hillman to remove the foreman he had on the job, but he did not do so. This resulted in considerable conflict between Mr Riddell and Mr Hillman. Mr Hillman then withdrew the crew from the site altogether. Mr Riddell, operating another business entity, subsequently completed the job. He said that he took this step after seeking advice from the project manager for Mel Bratt, who told him to 'sort it out' if he wanted the job.
As a result of continued financial strain, Mr Riddell entered into a payment plan with the Australian Taxation Office (ATO) on behalf of Titan regarding its taxation liabilities. He was uncertain precisely when the agreement for payment of $10,000 each month was struck, but the first payment was made on about 14 January 2010. He thought that the agreement was probably reached at about that time. A payment arrangement was not sought regarding the superannuation owing.
In about May 2010, Mr Riddell then took steps to change the banking arrangements for Titan, so that the account from which Mr Hillman had been withdrawing funds could only be operated by both directors approving withdrawals. He said that he did this, because relations had deteriorated so far between them that he was concerned that Mr Hillman would remove the remaining monies from the account. Effectively, from the time this step was taken, Titan did not trade.
His application to the QBSA says he changed the banking arrangements because he believed that Mr Hillman had withdrawn the existing authority. However, during cross-examination, Mr Riddell revealed that he had been able to withdraw some significant funds, it seems in the vicinity of $20,000 from the account before instituting the arrangements requiring both signatures. He placed those funds withdrawn into a trading account which he was able to operate solely. He said that he subsequently used those funds to meet some of Titan's taxation debt.
Mr Riddell said that he wanted to wind Titan up 'properly'. He attempted to do so by continuing to meet Titan's outstanding obligations. He continued to make payments in accordance with a payment plan to the Australian Taxation Office. He wanted to make payment of the outstanding superannuation. He signed documentation to facilitate the payment. However, he says that Mr Hillman would not sign documentation allowing release of monies from the company account to pay outstanding superannuation. Mr Riddell says that about $20,000 was in the account at the time, which was about the amount owed to BUSSQ.
Further, he gave evidence that he had made an offer to Mr Hillman that he (Mr Hillman) just walk away from Titan and allow Mr Riddell to keep trading as Titan, on the basis that he would meet its outstanding debts. However, Mr Hillman refused. Mr Riddell considered that Titan could have traded out of its difficulties, and that 'one good job' could have effectively solved the problems experienced.
Mr Riddell provided an email from an employee of BUSSQ which stated that Mr Riddell had the necessary returns prepared and provided them to BUSSQ. Mr Riddell says he signed the withdrawal form to facilitate payment of the amount, but it was unpaid at the time of the liquidation because Mr Hillman refused to co-operate by doing the same. He also provided an unsigned letter from a person at AAA Accounting stating that Mr Hillman refused to co-operate to sign cheques for payment of liabilities, and that Mr Riddell had been diligent in trying to meet the obligations of the company and that Mr Hillman had not.
Mr Riddell provided a copy of the ATO Tax Agents Portal for Titan for 1 January 2010 to 17 May 2011. At 1 January 2010, there was a carry forward opening outstanding balance of $73,824.59. It records penalties and general interest charges imposed throughout. From January 2010 until August 2010, it shows some payments made against the debt mostly in $10,000 multiples. Mr Riddell says that he made all of those payments. He said that the last few instalment payments, made after May 2010 when the account withdrawal arrangements changed, were made from the monies transferred by Mr Riddell into the other account which he alone could operate, although he also suggested that he may have paid some of it from his own funds.
Mr Riddell asserts that Titan could have paid its tax debts and BUSSQ debts if Mr Hillman had co-operated, asserting that there was enough money in the account at May 2010 to do this. However, the ATO Portal indicates that at 6 May 2010, $32,202.59 was outstanding and that following two payments of $10,000 on 10 June and 1 July, only $12,202.59 was outstanding. However, later entries for self- assessments for the periods to the end of 31 January 2010, 28 February 2010, 31 March 2010, and 30 April 2010, together with penalties for late lodgement and general interest charge, culminate in a closing balance on 17 May 2011 of $59,790.47.
Mr Riddell provided the available financial statements for Titan. The 2008 and 2009 statements indicate that a loss was made in each those years respectively of $11,811.58 and $40,503.54. The 2010 statement indicates that a profit was made in that year of $30,706.80. However, the liquidator's report states that the statements are inaccurate and incomplete. Mr Riddell says the full records are unavailable because of a computer malfunction experienced by the company's previous bookkeeper. Subsequent to this event, back-up of information was undertaken. Mr Riddell personally left the preparation of the financial documentation to his bookkeeper and accountant.
The liquidators have reported that an amount of $25,143.47 was realised from Titan's bank account. Superannuation contributions of $20,671.58 plus legal costs of $1,340.40 were outstanding. A proof of debt had been received from the ATO for $75,905.18 for outstanding BAS amounts and the superannuation guarantee charges. The liquidators consider the debt owing to Titan of $55,011.58 not commercially viable to pursue due to the debtor's apparent inability to pay.
Their report refers to a Titan vehicle subject to a fixed charge which was disclaimed by them in March 2011. Mr Riddell clarified that he had purchased the vehicle in December 2010 or January 2011 after checking with the accountant that this was in order. He said that he was a guarantor and on this basis the liquidators had transferred it to him.
The liquidators formed the view that Titan had been unable to pay its debts when they fell due from at least June 2009, based on the financial statements of the company. The liquidator's attribute the reasons for Titan's failure to dispute amongst the directors; poor management of wages; poor management of labour; and inability to continue trading as company funds could not be released which led to the application by a creditor for its liquidation.
Discussion and decision
I accept the contents of the independent liquidator's report. Indeed, Mr Riddell made some concessions which are consistent with it. Mr Riddell's oral evidence supports the liquidator's conclusions that Titan could not pay its debts as they fell due from at least June 2009, notwithstanding Mr Riddell's assertions that if Titan could have done 'one good job' it could have traded out of the situation. Mr Riddell's concessions that the financial records provided are incomplete and his evidence about the loss of information as a result of a computer crash are consistent with the liquidator’s report that the financial statements are incomplete and inaccurate.
Some of Mr Riddell's evidence is supported by other documents provided, including the confirmations from BUSSQ and AAA Accounting respectively that Mr Riddell attempted to have the BUSSQ payments made, and that he attempted to meet the obligations of the company while Mr Hillman did not. The letter from AAA Accounting is however unsigned and no weight is accorded to it.
However, some of Mr Riddell's evidence is contradicted the other documentary evidence provided. Significantly, the ATO documents and the liquidator's report do not accord with his assertions that Titan could have paid out its debts from monies at hand if Mr Hillman had cooperated. Although sufficient funds were on hand to have paid the superannuation contributions to BUSSQ, but the taxation liability could not have been met by Titan.
That said, I accept the evidence of Mr Riddell, save in respect of the contradictions identified and discussed throughout these reasons.
Each of the four issues which must be considered by the tribunal as identified in Younan v QBSA is dealt with separately.
Identification of the relevant event
The relevant event was the appointment of liquidators for Titan on 21 February 2011 on the petition of BUSSQ, at which time Mr Riddell was a director and secretary of Titan.
Identification of the circumstances that resulted in the happening of the relevant event
In essence, Mr Riddell submitted that the event was caused by BUSSQ pursuing the monies owing and his inability to have Mr Hillman release the monies from the account to pay the superannuation. The QBSA submits that the circumstances leading to the liquidation of Titan were far wider. It submits that the circumstances included those matters identified by the liquidators namely, the dispute between the directors; poor management of wages; poor management of labour; and an inability to continue to trade as company funds could not be released. It also submits that overall poor management of Titan ultimately resulted in the liquidation.
Mr Riddell concedes that conflict developed between him and Mr Hillman very early in the operation of Titan, and that he felt largely unable to take steps to address this situation because Mr Hillman had made a cash injection into the business, apparently despite the unplanned withdrawal of the amount advanced and more within several months of operations commencing. He was concerned enough to seek legal advice in about 2008 about how to dissolve the relationship with Mr Hillman, although he did not act on that advice. Mr Riddell conceded that the problems regarding the jobs not being conducted on the basis that he had tendered for them could have been avoided if he had supervised the works done. He was required to supervise them in any event as the nominee supervisor for Titan.
Work dried up during the global financial crisis. According to Mr Riddell, the unsatisfied account owing by TI Concrete largely resulted from Mr Hillman's actions in continuing the job despite unpaid invoices and failing to have a written contract in place. He conceded that by 2009 that monies were not being put aside for superannuation, and it is clear, taxation liabilities. The liquidator concluded that proper provision was not made for debts from at least June 2009 and debts could not be paid when they fell due, from that time. The outstanding tax and taxation returns; failure to pay the superannuation amounts due; and the arrangements made by Mr Riddell for instalment payments to the ATO all support this conclusion.
On the evidence of Mr Riddell, it is reasonable to infer and I do draw the inference that poor management of labour resulted in less profitable or unprofitable jobs, because they were costed on a different basis than that which they were performed.
Matters came to a head for Titan during the job for Mel Bratt. Mr Riddell took action to complete the job, but through another trading entity which he personally formed. He also took actions at this time to ensure that Mr Hillman could not withdraw any more funds from the operating account without his agreement. He did this by firstly withdrawing funds and putting them into a trading account from which he could continue to meet some of Titan's outstanding liabilities, and then putting in place an authority requiring both directors to sign to withdraw monies from the operating account. I do not accept that he took this step because he thought Mr Hillman had withdrawn the existing authority as he stated in his original statement. I consider the explanation Mr Riddell gave at hearing, that is, that he changed the arrangements because of his concerns that Mr Hillman would remove the funds from the account, is more logical in the circumstances and more likely.
Mr Hillman's refusal to release funds from the operating account to pay BUSSQ and its subsequent application for liquidation of Titan were symptomatic of broader issues regarding the operation and management of Titan.
I find that the circumstances which ultimately resulted in Titan's eventual liquidation were overall poor business management and planning; poor management of labour; poor financial management; and ongoing conflict between the directors which eventually led to the inability to continue to trade.
Whether the applicant took all reasonable steps to avoid those circumstances coming into existence
In considering this issue, I must have regard to the action taken by Mr Riddell in relation to those matters set out in section 56AD(8A). They are as follows:
a) Keeping proper books of account and financial records
Some financial records were kept by Titan, and Mr Riddell's evidence was that he engaged a bookkeeper and an accountant to attend to record-keeping. However, the financial records of Titan were inaccurate and incomplete. From the evidence of Mr Riddell, it is reasonable to infer, and I draw the inference, that there was no backup of financial records before the computer crash experienced by the bookkeeper and that no hard copies of relevant documents and records were kept. Mr Riddell had responsibilities to ensure records were kept. Although he was entitled to rely for accounting advice upon those professionals engaged by Titan, he was not entitled to abrogate all responsibility for keeping proper books of account and financial records to them.
On the available evidence, I am not reasonably satisfied that Mr Riddell took reasonable steps to ensure that books of account and financial records were kept for Titan.
b) Seeking appropriate financial and legal advice before entering into financial or business arrangements or conducting business
Mr Riddell did not present evidence that he took legal and financial advice before Titan commenced business. This is consistent with his admissions that he did not understand his responsibilities either as a nominee licensee or as a company director.
He did retain an accountant and a bookkeeper for Titan during its operation.
Mr Riddell's evidence was to the effect that he took advice from a solicitor once in about 2008 about his options due to the conflict between himself and Mr Hillman, although he did not act upon it. Mr Riddell says that he and Mr Hillman were 'reconciled' some weeks later, and he therefore chose not to take action. Instead, he allowed the business to continue as it had since commencement despite the problems he had encountered.
With respect to the actions taken by Mr Riddell in May 2010 to complete the job with Mel Bratt Builders through another entity, advice was taken by Mr Riddell, not from an appropriate professional person, but it seems, from Mel Bratt's project manager. This person's qualifications are unknown, but he or she was not engaged to given legal and/or financial advice to Mr Riddell about Titan's future. At this stage, it would have been a reasonable step to take legal advice about how to move forward.
I am not reasonably satisfied on the evidence that Mr Riddell sought appropriate legal and financial advice before entering into business. I accept that he did seek some financial advice and support during the operation of the business, but other than seeking legal advice on one occasion in 2008 which he did not follow, did not seek appropriate legal advice.
c) Reporting fraud or theft to the police
There is no evidence to suggest fraud or theft.
d) Ensuring guarantees provided are covered by sufficient assets to cover the liability under the guarantees
The evidence is that Mr Riddell gave a guarantee in respect of a vehicle and that he honoured this guarantee. The liquidators relinquished the vehicle subject to a fixed charge to him.
I am satisfied on the evidence that the guarantee provided by Mr Riddell was adequate.
e) Putting in place appropriate credit management for amounts owing and taking reasonable steps for recovery of the amounts
Mr Riddell said that he usually followed up payments, but left it to Mr Hillman to do so in respect of the one large outstanding account for some $44,000 due from TI Concrete, which arose in circumstances when Mr Hillman organised and did the job contrary to the manner in which Mr Riddell directed it. However, after a period when the amount owing remained outstanding, he did make attempts to recover the monies through firstly a BCIPA claim.
Some 2 years later, Mr Riddell engaged commercial agents and a judgment was obtained from the Magistrates Court for the amount owing together with costs and interest. However, the funds still were not realised. Steps to recover the amount could have been taken more promptly in 2008. Of course, it is not known whether pursuing the debt earlier would have affected its recovery.
Although I am satisfied that Mr Riddell ultimately took appropriate steps for recovery of the debt, it was not done in a timely manner. I am not reasonably satisfied, because of the significant delays before steps were taken, that appropriate credit management and debt recovery arrangements were in place.
f) Making appropriate provision for Commonwealth and State taxation debts
Although it seems that provision was made earlier in the trading history of Titan for taxation and compulsory superannuation payments, the evidence from the liquidator and Mr Riddell is that by at least June 2009, this was no longer being done.
Mr Riddell entered into an arrangement with the ATO for payment of instalments in recognition of the financial difficulties being experienced by Titan. Superannuation payments were outstanding to BUSSQ for the quarters ending June 2009; September 2009; and 31 December 2009; and March 2010, when Mr Riddell was trying to have Mr Hillman sign documents to make payment after the business had effectively ceased trading from May 2010.
Although Mr Riddell took some steps to endeavour to deal with the outstanding amounts owing, this was after the liability to pay them had accrued. On the evidence available, I am not reasonably satisfied that Mr Riddell took steps to ensure that appropriate provision was made for these debts.
Other relevant factors
I may have regard to other relevant matters in determining whether all reasonable steps were taken by Mr Riddell.
There was a lengthy period of dispute between the directors, Mr Riddell and Mr Hillman. On Mr Riddell's evidence, conflict began soon after the commencement of the business. On the available evidence, Mr Hillman withdrew his initial capital contribution and more within months of operations commencing. Mr Riddell was unhappy about this, but felt unable to change it, save that he had a keycard removed from Mr Hillman's possession. No other limits were placed on his ability to draw funds. Subsequently in May 2010, Mr Riddell changed the manner of operation of the operating account to prevent withdrawal of the funds by Mr Hillman from that account.
On Mr Riddell's evidence, Mr Hillman's re-drawings of his director's loans and other funds from Titan were not managed through business planning and agreement between the directors, either before commencing the business or during its operation. I am not reasonably satisfied that Mr Riddell took steps to plan and put in place appropriate financial controls. I find that this was an objectively reasonable step which Mr Riddell failed to take.
Mr Riddell tendered for jobs on one basis, but Mr Hillman conducted them on another basis altogether. Mr Riddell was not aware of his responsibilities as nominee licensee for Titan to supervise works undertaken. He conceded that if he had supervised, the problem he described of Mr Hillman employing too many people on site who did not work hard enough would have been overcome. If the works had been done on the basis quoted by Mr Riddell and had been supervised by him as required under the QBSA Act, the business may have operated on a more profitable basis. It is a reasonable step in operating a business to quote for jobs on the basis on which they are to be undertaken. Mr Riddell did not ensure this was the case and also did not manage the labour to be used in performing the job, and thereby failed to take another objectively reasonable step.
Conclusions
In summary, I have identified a number of reasonable steps not taken by Mr Riddell. Mr Riddell did not seek appropriate financial and legal advice before Titan commenced trading. He did not seek appropriate legal advice during Titan's operation other than on one occasion in 2008 when he decided not to follow it. He failed to ensure proper financial records were kept. Mr Riddell failed to take steps to ensure that jobs were done on the basis he quoted for them and to manage labour accordingly. He failed to undertake business planning between himself and Mr Hillman, and to ensure that appropriate financial controls were in place. He failed to ensure that place appropriate credit management and debt recovery steps were taken in a timely manner. From about mid-2009, he failed to ensure appropriate provision was made for superannuation and taxation debts.
Accordingly, Mr Riddell did not take all reasonable steps to avoid the development of the circumstances which ultimately resulted in the appointment of a liquidator for Titan on BUSSQ's application.
If satisfied in relation to (3), a decision about whether to exercise the discretion to categorise the individual as a permitted individual
As I am not satisfied in relation to (3), it is unnecessary for me to consider this issue.
It follows that the decision of the QBSA is confirmed.
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