Samimi v Queensland Building Services Authority
[2011] QCAT 564
•4 November 2011
| CITATION: | Samimi v Queensland Building Services Authority [2011] QCAT 564 |
| PARTIES: | Mr Kamran Samimi |
| v | |
| Queensland Building Services Authority |
| APPLICATION NUMBER: | OCR089-10 |
| MATTER TYPE: | Building matters |
| HEARING DATE: | 25 January 2011 |
| HEARD AT: | Brisbane |
| DECISION OF: | Ann Fitzpatrick, Member |
| DELIVERED ON: | 4 November 2011 |
| DELIVERED AT: | Brisbane |
ORDERS MADE: | 1. Kamran Samimi be categorised as a permitted individual for a relevant event being the winding up of Spectrum House and Land Pty Ltd ACN 115772426 on 24 February 2010. 2. The applicant file and serve any submissions in relation to costs by 14 November 2011. 3. The respondent file and serve any submissions in reply in relation to costs by 21 November 2011. 4. The issue of costs will be determined on the papers. |
| CATCHWORDS: | Permitted individual – influential person Queensland Building Services Authority Act 1991, s 56AD |
APPEARANCES and REPRESENTATION (if any):
| APPLICANT: | Kamran Samimi represented by Rod Freeman of Counsel, instructed by Peter Ryan of Hemming and Hart Lawyers |
| RESPONDENT: | Queensland Building Services Authority represented by Malcolm Robinson of Forbes Dowling Lawyers |
REASONS FOR DECISION
Background
This is an application to review the decision of the Queensland Building Services Authority (QBSA), made on 26 March 2010, to refuse the application of the applicant, Mr Samimi to be categorised as a permitted individual, following notification by the QBSA to him on 4 March 2010 under section 56AF of the Queensland Building Services Authority Act 1991 (QBSA Act), that it considered him to be an excluded individual for a relevant event.
At the hearing Mr Samimi relied upon:
(a) a statement of evidence of Mojgan Samimi, filed 22 December 2010, bearing amendments made at the hearing;
(b) an amended statement of evidence of Kamran Samimi, filed 24 January 2011;
(c) a statement of evidence of Kamran Samimi, filed 6 August 2010; and
(d) extracts of a contract between Spectrum and Samaray Holdings Pty Ltd.
Mr Samimi and his wife Mojgan Samimi gave evidence at the hearing.
The respondent, QBSA relied upon:
(a) a statement of reasons for the decision dated 21 May 2010;
(b) an amended statement of reasons dated 13 October 2010;
(c) lists of documents dated 21 May 2010, 29 June 2010 and 21 January 2011;
(d) a statement of evidence of Leean Tyler, dated 25 June 2010.
Ms Tyler gave evidence for the respondent at the hearing.
Facts
Based upon the evidence before me I find the following facts are established.
On 4 March 2010, the QBSA wrote to Mr Samimi, giving notice under section 56AF of the QBSA Act that it considered him to be an excluded individual for a relevant event. The relevant event was the appointment of liquidators to Spectrum House and Land Pty Ltd ACN 115772426 (Spectrum), on 24 February 2010 (the Event). Pursuant to section 56AC of the QBSA Act the QBSA considered Mr Samimi to be an excluded individual for the reason that he was a “director, secretary or influential person for the Company at the time of, or within one year of, the Event.”
On 23 March 2010, Mr Samimi lodged an application to be categorised as a permitted individual.
The application was refused. No statement of reasons was provided.
On 6 April 2010 an application to review the decision was filed in this Tribunal.
On 24 May 2010 Mr Samimi received a statement of reasons. Subsequently the QBSA has delivered an amended statement of reasons, dated 13 October 2010.
Mr Samimi ceased to be a Director of Spectrum on 17 August 2007.
He ceased to be a Secretary on 27 October 2009. Accordingly he held that role within one year of the Event.
He was not a shareholder in the company at the time of the Event or in the preceding 12 months.
At the time of the Event on 24 February 2010, Spectrum was not trading and had no assets.
Mr Samimi had been involved in running the company some years before the Event. He was the nominee for the company for the period 2005-2008. From 4 December 2008, the nominee was Kambiz Fartash.
Mr Samimi’s role in Spectrum from the end of 2007 was to negotiate building disputes, including a long running dispute against a Dr Dhemshidi for approximately $700,000.00 arising out of a residential building contract. Mr Samimi had been involved in the matter since 2006. Apart from that role he was not directly involved in running the company.
From the end of 2007, Mr Samimi was pursuing other interests including a business importing musical instruments, which was a fulltime role and involved travel to China, Malaysia and the Phillipines. He was also undertaking a residential development at Calamvale and house building in his personal capacity.
Spectrum employed a manager, Amir Shahbazi, for the whole period up to liquidation of the company. His responsibilities included dealing with subcontractors to obtain quotes. He obtained the quotes from Image Cabinets on the Samaray Holdings Pty Ltd contract for work to be performed at 10 Rathdonnell Street, Auchenflower. Obtaining these quotes was done without reference to Mr. Samimi. Mr. Samimi negotiated and signed the contract with Samaray Holdings Pty Ltd, in his capacity as nominee.
In 2007, Mr Samimi asked his wife to arrange his resignation from roles with the company and to transfer his shareholding. His resignation as secretary was not effected at that time, although Mr Samimi did not realize he remained secretary until October 2009. He then ensured his resignation was lodged and Mrs Samimi took on that role.
Mojgan Samimi is Mr Samimi’s wife. She was at the date of the Event the sole Director, Secretary and shareholder of Spectrum. Mrs Samimi holds the qualification of Chartered Accountant.
Spectrum experienced cash flow difficulties during 2008/2009 arising largely from the failure to receive payment from Dr Djamshidi.
Mrs Samimi sought advice from the company’s accountant, Robin Huston and Company, Charted Accountants of Toowong. Based on the accountant’s advice no further work was undertaken by the company because it was thought that it would be unable to trade out of its difficulties. Mrs Samimi caused Spectrum’s building licence to be cancelled.
Mr and Mrs Samimi lent the company money to pay out trade creditors and attempted to arrange finance for the company. That was unsuccessful.
Mr Samimi assisted the company by negotiating pay outs to trade creditors.
Mr Samimi attempted to negotiate a settlement with Image Cabinets on behalf of the company. He thought he had successfully compromised the dispute on the basis that $22,000.00 worth of variations would be paid (although not met by the owner of the property) and the subcontractor would return to site to finish the subcontract works. That course of action was intended to ensure payment from the owner, limit liquidated damages for delay and enable payment to the subcontractor. Unfortunately the fitter employed by Image Cabinets broke his arm and the work was not completed. As a result the final progress payment was not made. The company did not have the funds to litigate the issue.
As at the date of the liquidation, the only outstanding debt was to Image Cabinets. That debt was disputed on the basis that work was incomplete and unauthorized variations were claimed. Nevertheless Image Cabinets was the creditor who wound up Spectrum.
Mrs Samimi did not obtain legal advice in relation to Image Cabinets’ winding up application as she did not think the company could afford legal advice. She was unaware that it was necessary to apply to the Court to set aside Image Cabinets’ statutory demand.
Applicant’s submissions
The applicant submitted that the circumstance which led to the Event was the service on Spectrum by Image Cabinets of a Statutory Demand under the Corporations Act based on tax invoices, for work carried out on a residence of M & M Samaratunga at 10 Rathdonell Street, Auchenflower (the Samaray Holdings Pty Ltd contract).
Mr Samimi considered that the Image Cabinets’ claim had been compromised and that the compromise should have been sufficient to ensure Image Cabinets’ claim was paid. That is said to be the reasonable step taken by him to avoid the Event occurring. The desired outcome was not achieved for a reason beyond Mr Samimi’s control. That is, the injury of a key employee of Image Cabinets which prevented the work being completed and payment made.
Attempts were made to raise funds to pay Image Cabinets, including by loans and sale of real property. However those steps were unsuccessful. By the time the Statutory Demand was served the company was no longer trading having cancelled all licences, which limited its ability to pay the debt or to litigate the dispute.
It is submitted that Mr Samimi was not a Director of the company in the twelve months preceding the Event. He was not a person capable of influencing the affairs of the company in the twelve months preceding the Event. He was not a nominee of the company in the twelve months preceding the Event.
It is submitted that Mr Samimi did as he was asked by the Director of the company to try to resolve the claim by Image. Mr Samimi did so and but for the unforeseen event of injury, that strategy should have been successful to pay Image Cabinets and avoid delivery of the Statutory Demand.
It is said that others in the company were responsible for entry into the subcontract and managing the subcontract with Image Cabinets.
Finally, it is said that there does not appear to be any matter attributed to Mr Samimi directly, so that it could be said he was either the cause of the circumstances or the person who could have prevented the circumstances coming into existence. In applying the tests outlined by his Honour McGill DCJ in Younan v Queensland Building Services Authority[i], the applicant says that he should be considered a permitted individual.
Respondent’s evidence and submissions
The decision maker, Ms Tyler was called to give evidence. It was apparent that the evidence given at the hearing was more fulsome and relevant than the material provided to the QBSA at the time Mr Samimi applied to be categorized as a permitted individual.
Despite this Ms Tyler retained concerns. In particular that Mr Samimi entered the head contract without knowing the cost of the subcontractor. She also considered that Image Cabinets should have been held accountable for its delay and variations and that the concessions made to settle the Image Cabinets dispute were not reasonable.
Ms Tyler did agree under cross examination that:
·all quotes were dealt with by the company’s manager, Amir Shahbazi;
·Mr Samimi was not a Director and could not affect financial decisions;
·it was appropriate the financial controller, manager and Director deal with problems such as the Image Cabinet issue;
·Mr Samimi had a limited role in the company;
·it was reasonable to address the company’s problems by realizing assets and negotiating with and paying subcontractors;
·the role of Mr Samimi as a negotiator was successful for all claims except the Image Cabinets’ claim; and
·having regard to the company’s limited financial capacity, the company was reliant on the Director and Mr Samimi selling assets.
The QBSA conceded at the hearing that if the threshold issue as to whether the applicant took all reasonable steps to avoid the coming into existence of the circumstances that resulted in the happening of the Event, the decision maker’s discretion should be exercised in favour of the applicant to classify him as a permitted individual.
The QBSA contends that the Tribunal, standing in the shoes of the decision maker should have sufficient material before it to satisfy the test in section 51AD(8) of the QBSA Act.
Section 51AD (8) provides:
“The authority may categorise the individual as a permitted individual for the relevant event only if the authority is satisfied, on the basis of the application, that the individual took all reasonable steps to avoid the coming into existence of the circumstances that resulted in the happening of the relevant event.”
Section 51AD(8A) provides:
“In deciding whether an individual took all reasonable steps to avoid the coming into existence of the circumstances that resulted in the happening of a relevant event, the authority must have regard to action taken by the individual in relation to the following-
(a)keeping proper books of account and financial records;
(b)seeking appropriate financial or 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.”
Section 51AD(8B) provides:
“Nothing in subsection (8A) prevents the authority from having regard to other matters for deciding whether an individual took all reasonable steps to avoid the coming into existence of the circumstances that resulted in the happening of a relevant event.”
I accept the submissions of the QBSA at paragraph 10 of its closing submissions, including the authorities cited, as to the analysis necessary in a case such as this. In particular that:
·it is not a question of whether the applicant did everything possible to prevent the circumstances from arising; or whether they would have arisen if he had acted differently;[ii]
·“all reasonable steps” does not mean all possible steps, only reasonable steps;[iii]
·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.[iv]
·what steps are reasonable are to be considered from the position of a reasonable builder in the shoes of the applicant;[v]
·the reasonable steps are those to avoid the coming into existence of the circumstances that resulted in the relevant event, not the relevant event itself;[vi]
·what amounts to reasonable steps necessarily involves investigation of the nature of the harm, the foreseeability and degree of risk of its happening, and the measures reasonably available for preventing or averting it;[vii] and
·the reasonableness of his behaviour must be assessed by reference to what was known by him at the time, without the benefit of hindsight.[viii]
In summary, the respondent says and I agree, the issues for decision in relation to this application are:
(a) identification of the relevant event (Event);
(b) identification of the circumstances that resulted in the happening of the Event;
(c) whether the applicant took all reasonable steps to avoid the coming into existence of those circumstances; and
(d) if the threshold issue is satisfied, should discretion be exercised to classify the applicant as a permitted individual.[ix]
The parties are agreed, the Event was the winding up of Spectrum on 24 February 2010 upon application to the Supreme Court by Image Cabinets.
The respondent submits that to enable consideration of what steps would be reasonable from the position of the applicant, his role in the company and the degree of influence he exercised over its affairs, from time to time, needs to be considered.
The respondent says that:
(a) up to 28 October 2008 the applicant was nominee for the company and therefore very influential in its affairs up to that date;
(b) up to 27 October 2009 he was secretary for the company; and from 27 October 2009 until 3 March 2010 he in fact exercised a significant degree of influence over the affairs of the company by controlling litigation, funding, finance applications and paying its debts.
Drawing from the respondent’s submissions, it argues that:
(a) the debt, the subject of the winding up was claimed as owing prior to 28 November 2008;
(b) the debt included an amount for a claimed variation accepted by Mr Samimi, but rejected by the owner; and
(c) at the time the final invoice was completed Image Cabinets had not completed their work.
The respondent says the circumstances that resulted in the winding up occurring include:
(a) entry into the head contract with Mr Samaratunga and the entry into the subcontract with Image Cabinets;
(b) conduct of the building project, including handling of the variation claim from Image Cabinets and supervision and completion of the building works;
(c) failing to respond to the Statutory Demand and winding up application.
The respondent says that the Tribunal has not been provided with a copy of the head contract or the subcontract. As a result it is not possible to say whether the variations submitted by Image Cabinets were reasonable or not. If the variations were legitimate legal advice should have been taken to enforce the variation. If the variation was not legitimate then a reasonable step would be to oppose the variations and to obtain legal advice to enforce withdrawal of or to defeat the claim.
It was not reasonable to fail to take any positive step, thereby allowing the variation to stand, with no right to make a claim against the owner.
When Image Cabinets submitted the final claim at a time when it had not completed the work, it is anticipated that the subcontract would have allowed for a right to provide notices requiring them to complete and failing completion to have an alternative contractor complete the works. It would be a reasonable step to deliver such notices.
Finally, it is said Mr Samimi did not respond to a Building Construction Industry Payments Act 2004 (BCIPA) claim and did not take legal advice with respect to the Statutory Demand or winding up application. (I note the evidence was that Mr Samimi on behalf of the company successfully responded to the BCIPA claim.)
The respondent addresses the mandatory matters for consideration under section 56AD(8A) of the Act, as follows:
(a) the applicant has not provided any information or evidence to support that proper books of account and financial records were kept, that cashflow or working capital were reviewed at any stage.
(b) no appropriate legal advice has been obtained. No accountancy advice has been obtained in relation to review of financial aspects of the company such as cashflow and working capital.
(c) fraud or theft was not a contributing factor to the happening of the relevant event.
(d) guarantees were not a contributing factor to the happening of the relevant event. There is no detail showing that the extent of personal funding from the applicant was sufficient in accordance with any review of cashflow and necessary working capital.
(e) there are no details or supporting documentation in respect of the debt alleged to be owing from Dr Djamshidi, in the order of $700,000, including details of the debt and why adverse legal advice stopped the company from recovering against him.
(f) the applicant states there are no Australian Taxation Office Debts.
In all the respondent submits that the applicant has not established that he took “all reasonable steps” and therefore the decision under review should be confirmed.
Findings
I find that the Event in terms of the QBSA Act was the winding up of the company on 24 February 2010.
I find that the circumstances leading to the Event were:
(a) the company’s cash flow problems which resulted in it ceasing trading, arising out of a dispute with Dr Djamshidi;
(b) the dispute with Image Cabinets over its claims for payments including variations; and
(c) failing to adequately respond to the Statutory Demand and application for a winding up order by Image Cabinets.
I note that the applicant did not put into evidence the whole of the head contract with Samaray Holdings Pty Ltd nor the subcontract with Image Cabinets. It is impossible to draw any conclusions about the adequacy or otherwise of the applicant’s conduct in relation to those documents. However, I consider that the entry into those contracts was far enough removed in time from the occurrence of the Event for it not to be of prime relevance.
More important are the steps taken in the 12 months preceding the Event. From the applicant’s perspective that can only be judged by reference to the power he had to influence the company’s affairs at that time.
I find that the applicant had very little power to influence the company’s affairs. He was not a Director or nominee of the Company. He was a Secretary for a period, although he did not realize his instructions to be removed as Secretary had not been acted upon. In any event in that capacity he would have little power over the company. Mr Samimi was a negotiator on behalf of the company. He undertook that role at the request and on the instructions of the Director of the company. I do not consider that role gave him influence over the company in terms of being able to direct its conduct, given that his brief was only to negotiate disputes with creditors to achieve a favourable outcome for the company.
I agree with the applicant’s submissions and find that others in the company were responsible for entry into the subcontract and managing the subcontract with Image Cabinets.
The steps Mr Samimi took in relation to the circumstances giving rise to the Event were:
(a) to conduct litigation against Dr Djamshidi;
(b) to negotiate settlements with creditors and to make payments to them from personal funds; and
(c) to negotiate a settlement with Image Cabinets which involved acceptance of the amounts claimed in return for Image Cabinets returning to the site to complete the Works and thereby ensure payment of the final payment from the owner. But for Image Cabinets being unable to complete the work due to injury of its fitter, it is most probable that Image Cabinets would have been paid and the Event avoided. The injury to Image Cabinets’ fitter was beyond Mr Samimi’s control.
I find that these are all reasonable steps within the terms of the tests set out earlier in this decision.
I do not think it was unreasonable for Mr Samimi not to have sought legal advice in relation to the Statutory Demand or the application for a winding up order, given that he had no power to incur debt on behalf of the company and the company had no capacity to pay for legal advice.
Of the mandatory matters for consideration by the Tribunal I find that at the time of the Event and for the 12 months preceding the Event, Mr Samimi did not have any power in relation to the matters set out in section 51AD(8A) of the QBSA Act, because he was not a Director or influential person of the company. To the extent that he was a Secretary of the company, the administrative and compliance functions of the role of secretary would not seem to give a relevant power to Mr Samimi to influence the operations of the company.
I find that given his limited role in the company in the 12 months preceding the Event, Mr Samimi took all reasonable steps to avoid the coming into existence of the circumstances that resulted in the happening of the Event.
The respondent concedes the discretion should be exercised in favour of the applicant in the event that the threshold issue is satisfied. In this regard, I note that the respondent admitted during the hearing that there had been no phoenix like activity on the part of Mr Samimi, and that the respondent had been mistaken in relation to this earlier assumption. It is also relevant that Mr Samimi has paid a considerable sum from his own funds to creditors of the company. Finally, he is currently using his licence in order to support his family.
Accordingly, I find that Mr Samimi should be classified as a permitted individual.
Orders
In accordance with section 24(1) of the Queensland Civil and Administrative Tribunal Act 2009, I now set aside the decision of the Queensland Building Services Authority, made 26 March 2010 and substitute the decision of this Tribunal that Kamran Samimi be categorised as a permitted individual for a relevant event, being the winding up of Spectrum House and Land Pty Ltd ACN 115772426 on 24 February 2010.
The applicant sought costs of the proceedings in his application. I order that the applicant file and serve any submissions in relation to costs by 14 November 2011 and that the respondent file and serve any submissions in reply in relation to costs by 21 November 2011. The issue of costs will be determined on the papers.
[i][2010] QDC 158.
[ii]Younan v QBSA [2010] QDC 158 at [26] affirmed by Younan v Queensland Building Services Authority [2011] QCA 1.
[iii]Hyde v QBSA [2003] QBT 30 at [53].
[iv]Younan, op. cit at [26].
[v]Hyde, op. cit at [58] to [60]; Darvill v QBSA [2008] QCCTB 35 at [42]; Nation v QBSA [2006] QCCTB 114 at [55]; Delonga v QBSA [2004] QCCTB 26 at [33].
[vi]Dellaway v QBSA [2004] QCCTB 26 at [33].
[vii]Rich v State of Queensland & Ors; Samin v State of Queensland & Ors [2001] QCA 295.
[viii]Younan, op. cit at [26].
[ix]Younan, op. cit at [26].
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