Stevens v Queensland Building Services Authority
[2013] QCAT 424
| CITATION: | Stevens v Queensland Building Services Authority [2013] QCAT 424 |
| PARTIES: | Brent Leslie Stevens (Applicant) |
| V | |
| Queensland Building Services Authority (Respondent) |
| APPLICATION NUMBERS: | GAR305-11 OCR129-12 |
| MATTER TYPE: | General administrative review matters |
| HEARING DATE: | 28 March 2013 |
| HEARD AT: | Brisbane |
| DECISION OF: | Andrew McLean Williams, Member |
| DELIVERED ON: | 7 August 2013 |
| DELIVERED AT: | Brisbane |
| ORDERS MADE: | 1. The Respondent’s decision not to categorise the Applicant as a permitted individual is confirmed. |
| CATCHWORDS : | REVIEW - Becoming a “permitted individual” after a relevant company event/individual bankruptcy event - Requirement for satisfaction that the applicant took all reasonable steps to avoid the coming into existence of the circumstances that resulted in the happening of the relevant event. Queensland Building Services Authority Act ss 56AC, 56AD |
APPEARANCES and REPRESENTATION (if any):
| APPLICANT: | The Applicant, in person |
| RESPONDENT: | Ms Jodie Stroud, in-house counsel |
REASONS FOR DECISION
QCAT matters OCR129-12 and GAR305-11 although separate matters, were heard together, given that they each emanate out of closely related events. Each matter arises out of the financial demise of the applicant’s building company, B Stevens Builder Pty Ltd. Each application involves an application to review a decision by the respondent Queensland Building Services Authority, and is brought before QCAT as a reviewable decision, pursuant to ss 86 and 87 of the Queensland Building Services Authority Act 1991 (the QBSA Act).
On 12 September 2011, the respondent rejected Mr Stevens’ application to be categorised as a permitted individual after the appointment of liquidators to his company, B Stevens Builder Pty Ltd (‘the relevant company event’) meant that he was declared to be an excluded individual. An application to review that decision has now found its way to QCAT as matter GAR305-11. Later, on 19 March 2012, the respondent also rejected the applicant’s further application to be categorised as a permitted individual, this time due to his having been declared personally bankrupt, which occurred on 15 February 2012 (‘the relevant individual event’). The applicant’s personal bankruptcy happened as a ‘down-stream’ consequence of the company liquidation given that various personal guarantees had been given by Mr Stevens, as security for various liabilities incurred by his trading company. The application to review that decision has found its way to QCAT as application OCR129-12.
The Law
The relevant provisions are to be found in Part 3A of the QBSA Act.
Section 56AC(1) and section 56AC(2) provide that an individual who takes advantage of the laws of bankruptcy or becomes bankrupt (a ‘relevant bankruptcy event’); or a director or secretary or other influential person for a company that has a provisional liquidator, liquidator, administrator or controller appointed; or that is wound up, or ordered to be wound up (each of which is termed in section 56AC(2) to be a “relevant company event”), thereby becomes - by reason of the operation of ss 56AC(3) & 56AC(4) - an excluded individual, for a period of five years after the occurrence of that relevant event.
The practical effect of becoming so categorised is that the excluded individual thereby becomes ineligible to hold a QBSA licence,[1] and is unable to participate in the Queensland building industry in any licence holding capacity. As a result of the decisions made by the respondent on 12 September 2011 and 19 March 2012 the Applicant is now just such an excluded individual and is currently unable to hold a QBSA licence in the manner that he had done previously.
[1] QBSA Act s 56AE.
The very next section in Part 3A of the QBSA Act is s 56AD. It provides a mechanism by which an excluded individual may still apply to the QBSA to be categorised as a “permitted individual”, notwithstanding the fact of the occurrence of a relevant excluding event. In circumstances where such an application is made, the QBSA must then determine the application in accordance with the particular requirements of section 56AD(8), section 56AD(8A), and section 56AD(8B), which provide:
(8)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.
(8A)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.
(8B)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.
Having made decisions on 12 September 2011 and 19 March 2012 that the Applicant could not be categorised as a permitted individual, a right of review to this Tribunal was enlivened, because of s.86 and s. 87 of the QBSA Act. The nature of an Application for Review is by way of a hearing de novo, in other words a “fresh hearing on the merits” (QCAT Act s.20), and it is now the role of QCAT to consider all of the material (including any new materials filed by the Applicant), and to exercise the discretion originally conferred on the QBSA by ss.56 AD(8), (8A) and (9) in the QBSA Act,[2] in light of that evidence.
[2] Consider: Hyde v QBSA [2003] QBT 30 at [50]; Younan v QBSA [2010] QDC 158.
Although it is usually said to be inapposite to speak of either a persuasive or an evidential onus in the context of administrative review proceedings before a Tribunal such as this one,[3] analysis of s.56AD(8) reveals that sufficient evidence must still be put before the Tribunal by the Applicant in order for QCAT to be satisfied that the requirements of s.56AD(8) have been met. In particular, use of the expression “on the basis of the application” within s.56AD(8) has the result that some evidential onus, at least, is still imposed on Applicants. That observation is consistent with previous decisions of QCAT,[4] as well as with the observations of Woodward J in McDonald v Director-General of Social Security (1984) 1 FCR 354 (at 354), where his Honour observed:
It is possible to imagine a case where the Act which the administrator is applying places a requirement or onus on one or other of the parties to an issue to establish a particular state of facts on which the administrator’s decision would be based. If that were so, the same requirement or onus would apply before the [review tribunal].
[3]McDonald v Director-General of Social Security (1984) 1 FCR 354 at 356 per Woodward J; Szbel v Minister for Immigration and Muticultural and Indigenous Affairs (2006) 228 CLR 152 at [40] per Gleeson CJ, Kirby, Hayne, Callinan and Heydon JJ; Bushell v Repatriation Commission (1992) 175 CLR 408 at 424-425, per Brennan J.
[4] Fogg v QBSA [2010] QCAT 203 at [32]; Vuu v QBSA [2010] QCAT 335 at [15].
On the hearing of these Applications for Review the issues that require my determination[5] are:
[5] Younan v QBSA [2010] QDC 158 at [256], per McGill DCJ.
(a)identification of the “relevant event”;
(b)identification of the circumstances that caused the relevant event;
(c)to ascertain whether the applicant took all reasonable steps to avoid the coming into existence of those circumstances; and
(d)ultimately, whether the discretion to classify as a permitted individual should now be exercised in favour of the applicant.
The Relevant Company Event:
It is uncontentious that the relevant event in matter GAR305-11 was the appointment on 22 July 2011 of liquidators to the company, B Stevens Builder Pty Ltd.
The circumstances that resulted in the occurrence of the relevant event:
In his materials filed before QCAT the applicant has indicated that his company was placed into liquidation on 22 July 2011 by reason of a number of events:
·His having sustained a serious right arm and shoulder injury in November 2007, thus making it difficult for him to attend at site and properly supervise construction works on behalf of the company. A leading-hand carpenter performing the applicant’s role during his absence had then incorrectly approved a number of final payments to subcontractors on incomplete work, with the result that the company then had to pay extra sums to other contractors to complete these works, and the jobs then taking longer than they should have;
·His having separated from his wife in December 2007 and then getting divorced from her 12 months later, again with the result that the applicant was unable to give proper attention to his supervising the company until such time as his matrimonial dispute had been finalised.
·The company having cash flow difficulties in late 2010, essentially attributed by the applicant to the two foregoing reasons, thus necessitating that the company enter into several payment arrangements, commencing in about September 2010.
·Extreme weather events in early 2011 making it impossible to either start new jobs, or complete any existing jobs, thus making it difficult for the company to comply with the various payment arrangements that it had entered into;
·being unable to pay a statutory demand issued by Boral Resources Pty Ltd issued on 29 April 2011 in the total amount of $10,614.19. This demand was referable to three invoices issued by Boral Resources in August, September and October 2010;
·legal action in the form of a winding up application commenced by a firm of lawyers acting for Boral Resources Pty Ltd and Boral Window Systems Ltd. Although a suitable payment arrangement was negotiated in June 2011 that resulted in the withdrawal of that winding up application, the firm of lawyers then added legal costs onto the debt, which was then disputed by B Stevens Builder Pty Ltd. Boral’s lawyers then recommenced the winding up application, and used it to take the company into liquidation.
Did the Applicant take all reasonable steps to avoid the coming into existence of the circumstances that caused the relevant company event?
On the hearing of this Application for Review QCAT may categorise the Applicant as a permitted individual for the relevant company event only if satisfied that the Applicant took ‘all reasonable steps’ to avoid the coming into existence of the circumstances that resulted in the appointment of liquidators to the company. In deciding whether the Applicant took all reasonable steps, QCAT must have particular regard to actions taken by the Applicant in relation to each of the matters specified in s.56AD(8A). Not all matters listed therein are germane to this application. The following do however appear relevant.
Keeping proper books of account and financial records
Although the Applicant has provided some financial data in support of his application for review, that information is very limited. The sheer paucity of that information means that I am unable to form any concluded view as regards the adequacy of the books of account and financial records kept by the applicant. This then creates something of a difficulty for the Applicant. As was observed by His Honour Judge McGill in Younan v QBSA [2010] QDC 158 at [37]:
….subsection (8) authorises the characterisation of an individual as a permitted individual only if ….satisfied of the relevant matter on the basis of the application, that is to say on the basis of the case made by the applicant, so that [if] the applicant fails to show in a relevant respect that he took all reasonable steps to avoid the coming into existence of the circumstances that resulted in the happening of the relevant event, then the application will fail.
Seeking appropriate financial or legal advice before entering into financial or business arrangements or conducting business
Although the applicant states financial advice was sought from his accountant through each trading year between 2004 and 2011 and that legal advice was sought from Garland Waddington in 2008 and 2009, from Greenhalgh Pickard Lawyers in 2010, and from Aitkin Legal in 2010-2011, the Applicant has not given any particulars as to the nature of the issues in respect of which these professional advices were sought; and nor has the applicant given any information as regards the steps that were taken by him and the company, in response to that advice. I am therefore unable to determine whether appropriate advice was sought as part of an effort by the applicant to take all reasonable steps to avoid the coming into existence of the circumstances that resulted in the company liquidation.
Putting in place appropriate credit management for amounts owing to the company and taking reasonable steps for recovery of those amounts
The Applicant told QCAT, again in entirely general terms, that advice was taken from Garland and Waddington, in relation to two clients outstanding debts that each arose in 2008. The tribunal was also told that proceedings were commenced against each of those clients, yet these proceedings ultimately came to nothing. Once again, the sheer brevity of the information provided by the Applicant does not enable any sufficient assessment to be made as regards the adequacy of the arrangements effectuated by the company for the recovery of amounts owing to it in order to determine whether all reasonable steps were taken by the applicant to prevent the fact of the company having been placed into liquidation.
Making appropriate provision for taxation debts
Although the applicant contends that the company was up to date with its taxation obligations for the first seven years of trading and that it received a tax refund in 2010, the liquidator has listed an amount still owing to the Australian Taxation Office after the company was placed into liquidation, of $77,869.07. Again, the applicant’s evidence and other information produced on this application for review just does not enable any proper assessment to be made by QCAT of the adequacy of the taxation arrangements put in place by the applicant, particularly during the 2010-2011 financial year when this debt to the ATO has accrued. At least prima facie, the very fact that monies remain owing to the ATO suggests that the taxation provision arrangements within the company were inadequate.
Should the discretion to classify as a permitted individual be exercised in favour of the Applicant?
On the hearing of the Application for Review and on the basis of all the materials put before QCAT I just cannot be satisfied, as a matter of evidence that the Applicant took all reasonable steps to avoid the coming into existence of the circumstances that resulted in the relevant company event.[6].
[6] QBSA Act s 56AC(4).
The Relevant Individual Event:
On 17 February 2012, a sequestration order was made by the Federal Magistrates Court (as it was then known), against the Applicant. The petitioning creditor was Boral Window Systems Ltd. The company was unable to pay a judgement debt obtained by Boral Windows in the sum of $7,218.83 and Boral Windows looked to the applicant personally to pay that sum, in circumstances wherein he had guaranteed the debts of the company to that creditor.
The report to creditors issued by the Trustee in Bankruptcy provides that the total liabilities of the Applicant are $419,534.00. That same report indicates a debt to the Australian Taxation Office (ATO) of $25,751.00.
Apart from some limited information provided by the Applicant in relation to the debt owing to Boral Resources and Boral Window Systems, no information has been provided by the Applicant in relation to any of the other monies owed to unsecured creditors. Monies owing to unsecured creditors are in excess of $329,000.00. Although the applicant contends that the main cause for his personal bankruptcy was due to personal guarantees having been given by him in his capacity as a director of the company, no information or evidence has been provided by the Applicant in relation to any of these personal guarantees, either. In addition, no information or evidence has been provided by the Applicant to establish that the Applicant had sufficient assets to cover the liabilities under these guarantees. In his final submissions the applicant contends that he had “at least 20% or more” equity in a number of residential properties. However, in the absence of information about the debts covered by his personal guarantees this assertion cannot be assessed in its proper context in order to see whether there were sufficient assets to cover the extent of any guarantees.
Equally, and in the same manner that now confronts the applicant in relation to the relevant company event, the applicant has not provided sufficient information by which to ascertain whether proper books of account or financial records were kept. Nor has the applicant provided any information or evidence by which to show that appropriate financial or legal advice was obtained by him prior to his entering into financial or business arrangements or conducting business.
Making Appropriate Provision for Taxation Debts
The Applicant has not provided any information or establish that appropriate provision was made by him to make allowance for taxation debts. Although the report to creditors reveals that a substantial sum of monies was owing to the Australian Taxation Office, the Applicant has not provided QCAT with any information in relation to how this debt was allowed to accumulate. In light of this it is difficult, if not impossible, to assess the reasonableness of any steps taken by the Applicant in relation to his taxation obligations.
Conclusion
In relation to the personal bankruptcy event QCAT cannot be satisfied that the Applicant has satisfied any of the criteria in s.56(AD)(8A) and in particular:
(i)ensuring guarantees were covered by sufficient assets to cover the liability under the guarantees;
(ii)seeking appropriate financial or legal advice before entering into financial or business arrangements or conducting business; or
(iii)making appropriate provision for Commonwealth and State taxation debts.
The QBSA decision to refuse to categorise the applicant as a permitted individual should now be confirmed upon this Application for Review. In relation to Application to Review OCR129-12 the decision of the Tribunal is that the Application should be dismissed.
Order
The Respondent’s decision not to categorise the Applicant as a permitted individual is confirmed.
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