Bemportato v Queensland Building and Construction Commission [2015] QCAT 338

CITATION: Bemportato v Queensland Building and Construction Commission [2015] QCAT 338 PARTIES: Augusto John Bemportato (Applicant) v Queensland Building and Construction Commission (Respondent) APPLICATION NUMBER: OCR135-12 MATTER TYPE: Occupational regulation matters HEARING DATE: 24 June 2015 HEARD AT: Brisbane DECISION OF: Member Favell DELIVERED ON: 27 August 2015 DELIVERED AT: Brisbane ORDERS MADE: The decisions under review are confirmed. CATCHWORDS: Excluded individual – whether individual should be a permitted individual – whether individual took all reasonable steps - ss 56AD, 56AD(AA), 56AD(8)(a), 56AF of the Queensland Building Services Act 1991 (Qld) (now the Queensland Building and Construction Commission Act 1991 (Qld)) s 20 of the Queensland Civil and Administrative Tribunal Act 2009 (Qld) Augusto John Bemportato v QBCC [2014] QCAT 464 Laidlaw v Queensland Building Services Authority [2010] QCAT 70 Kehl v Board of Professional Engineers of Queensland [2010] QCATA 58 Queensland Building Construction Commission v Miroslav Mudri [2015] QCATA 078. Younan v Queensland Building Services Authority [2010] QDC 158. -- 1 of 7 -- 2 APPEARANCES and REPRESENTATION (if any): APPLICANT: Augusto Bemportato RESPONDENT: Malcolm Robinson Solicitor from Robinson Locke Litigation Lawyers REASONS FOR DECISION [1] The Queensland Building Services Authority (as it then was) on 16 March 2012 determined that the applicant Mr Augusto Bemportato was an excluded individual pursuant to section 56AF of the Queensland Building Services Act 1991 (now the Queensland Building and Construction Commission Act 1991) as a result of the appointment of administrators on 14 March 2012 to each of the following companies: (a) Cavalier Homes Brisbane Pty Ltd, (“Cavalier”); (b) Style Built Homes Australia Pty Ltd, (“Style Built”); (c) Universal Steel Framing Systems Pty Ltd, (“Universal”); (d) Steel Built Kit Homes Australia–Wide Pty Ltd, (“Steel Built”).1 [2] Mr Bemportato had also commenced a separate application to be categorised as a permitted individual. That proceeding was stayed pending the outcome of the determination of the question whether Mr Bemportato was an excluded individual in relation to events on 14 March 2012 whereby administrators were appointed to each of the four companies set out above. This is now the hearing of that stayed application. [3] Previously the parties agreed to the following facts: (a) the applicant has been a builder, registered with the Queensland Building Services Authority since 1 July 2004 under license number 47661; (b) at all material times the applicant has been a director of Cavalier, Style Built, Universal and Steel Built; (c) at all material times, Cavalier, Style Built, Universal and Steel Built have had the same shareholders and directors and have traded from the same address; (d) on 14 March 2012 administrators were appointed to Cavalier, Style Built, Universal and Steel Built; 1 Augusto John Bemportato v QBCC [2014] QCAT 464 at [4]. -- 2 of 7 -- 3 (e) on 16 April 2012 at a concurrent second meeting of creditors, Cavalier, Style Built, Universal and Steel Built were placed into liquidation. [4] Mr Bemportato contends that the decision not to categorise him as a permitted individual made on 11 May 2012 was wrong because in relation to each of the decisions he took all reasonable steps to avoid the coming into existence of the circumstances that resulted in the happening of the event including keeping proper books of account and final records, seeking appropriate advice, putting in place appropriate credit management for accounts owing and taking reasonable steps for recovery of the amounts and making appropriate provision for taxation debt both Commonwealth and State. [5] In each of the companies there were two directors one of which was Mr Bemportato. There were also two shareholders one of which was Mr Bemportato. Mr O’Dare was the other shareholder and director. [6] Mr Bemportato ran Cavalier Homes Brisbane Pty Ltd and Mr O’Dare ran the other companies. Mr Bemportato told me that he did not know the position of two of the companies until the receivers were appointed. He first found out that there was some difficulty when contacted by Ian Jennings the General Manager of the Building Services Authority enquiring as to why Cavalier was not doing well. He also received a complaint from Anna Brown the Westpac bank manager about the quality of financial information coming from Mr O’Dare. [7] Mr Bemportato says that Mr O’Dare withheld information from him about the financial circumstances of the companies and withheld access to computer systems operated by Mr O’Dare in the companies he controlled. [8] Mr Bemportato in his affidavit2 gave evidence of the extent of control over Universal Steel Frames, Steel Built Kit Homes and Style Built Homes by Mr O’Dare. At one stage each of those businesses was run out of Commerce Drive Clontarf. He said he that he had no involvement in the running of those businesses and they were businesses that had been and were run by Mr O’Dare. [9] In the application Mr Bemportato described other facts that he thought was important as follows: “In relation to each of the decisions, the main cause of the event was the improper imposition of condition on Cavalier Homes Brisbane Pty ltd license. The cause of the event was not as a result of the group’s failure to take or reasonable steps but rather the event was crystallised by the respondent’s decision to impose a condition on CHB’s license that prevented the group from trading. Simply, the group was prevented from carrying on its business, and the publication of that decision strangled its cash flow, destroying the company’s goodwill and its ability to continue 2 Exhibit 1. -- 3 of 7 -- 4 trading in the relevant market place. But for the condition the event would not have occurred.” [10] On the 15 September 2014 the tribunal confirmed the decision of the commission dated the 16 March 2012 that Mr Bemportato was an excluded individual in relation to events on the 14 March 2012 where by administrators were appointed to each of the companies. That decision in the course of reasons recognised that on 2 February 2012 the commission imposed a special condition on Cavalier’s builders license. The special condition was that Cavalier Homes Brisbane Pty Ltd was not to provide tenders or quotes or enter into any contracts for the performance of building work until it was notified in writing by the BSA that the BSA was satisfied that it had the financial capacity to undertake new work. [11] The tribunal made findings in respect of each of the four companies. The tribunal found that the demise of the four companies was not readily attributed to just one or two events. It was readily apparent that the demise was due to poor financial systems, sales neglect and essentially poor management. The tribunal noted that in the course of his cross examination Mr Bemportato made concessions to that effect. The tribunal found that the winding up of each company was due to separate and distinct financial difficulties they were undergoing at the time although there was some interrelationship between the causes. [12] The tribunal on review stands in the shoes of the QBCC as a decision maker to arrive at the correct and preferable decision.3 The tribunal must decide the review by way of a fresh hearing on the merits. There is no requirement to identify an error in either the process or the reasoning that lead to the decision and there is no presumption that the original decision was correct.4 [13] As said in Laidlaw v Queensland Building Services Authority,5 there is no formal onus of proof in a merits review but the tribunal must be satisfied that the provision under consideration can be invoked on the information or material before it.6 The tribunal said: “Consideration has been given to the issue of onus in merits review proceedings in the federal arena before the administrative appeals tribunal, where simply the AAT Act does not deal with the issue of onus of proof. Generally there is no onus…however, practically, a party will want to adduce evidence which supports the party’s case, since the tribunal can only make its decision on the materials before it…in the absence of appropriate evidence the tribunal will not be free to make the decision sought by the party. This has sometimes been described as an evidentiary burden…but there is no formal onus of proof. The question is whether the 3 Queensland Civil and Administrative Tribunal Act 2009 (Qld) (QCAT Act) s 20. 4 Kehl v Board of Professional Engineers of Queensland [2010] QCATA 58, [8]. 5 [2010] QCAT 70. 6 Ibid [23]. -- 4 of 7 -- 5 tribunal is satisfied that the provision under consideration can be invoked on the information or material before it.7 [14] The tribunal must in performing a function on review identify the issues in determining whether Mr Bemportato should be categorised as a permitted individual. He has the “evidentiary burden” to adduce or present evidence to support his application so that the tribunal could make the correct and preferable decision. [15] Section 56AD requires consideration of whether the “individual” applying to be categorised as a permitted individual “took all reasonable steps to avoid the coming into existence of the circumstances that resulted in the happening of the relevant event”. [16] In deciding whether the individual took all “reasonable steps,” section 56AD(8A) provides the QBCC or the tribunal on review must have regard to “action” taken by the individual in relation to certain matters as provided under section 56(8A) and may have regard to other matters for deciding whether an individual took all reasonable steps. [17] In Younan v Queensland Building Services Authority8 McGill DCJ said that, in determining whether all reasonable steps were taken, consideration should be given to what action was taken at the relevant time and what was reasonable in all of the circumstances without benefits of hindsight. He said: “The section speaks about taking reasonable steps to avoid the coming into existence of the circumstances that resulted in the happening of the relevant event. The test in section 56AD(8) requires first, the identification of the relevant event; second, the identification of the circumstances that resulted in the happening of the relevant event; third, a consideration of whether the relevant individual took all reasonable steps to avoid those circumstances coming into existence; and if satisfied that; fourth, a decision whether to categorise the individual as a permitted individual. What were reasonable steps depended on what was reasonable for the individual concerned in the circumstance in which he found himself, with such information as he then had…is not a question of whether he did everything possible to prevent the circumstances arising, or whether they would not have arisen if he had acted differently. The reasonableness of his behaviour must be assessed by what was known by him at the time, without the benefit of hindsight…” [18] In Building and Construction Commission v Mudri,9 the appeal tribunal identified the tasks in applying the test in section 56AD as: (a) the identification of the relevant event; 7 Queensland Building Construction Commission v Miroslav Mudri [2015] QCATA 078 [12]. 8 [2010] QDC 158. 9 [2015] QCATA 078. -- 5 of 7 -- 6 (b) the identification of the circumstances that resulted in the happening of the relevant event; (c) identification of the steps taken by the relevant individual; (d) consideration of whether the relevant individual took all reasonable steps to avoid those circumstances coming into existence, which involved a consideration of whether the steps were reasonable; (e) if satisfied of that, a decision as to whether to categorise the individual as a permitted individual. What was the relevant event? [19] The relevant event was the appointment of liquidators. What are the circumstances that resulted in the happening of the relevant event? [20] The circumstances that resulted in the happening of the relevant event are those circumstances as found by the tribunal on 15 September 2014 including that there were poor financial systems, sales neglect and essentially poor management. What were the steps taken by Mr Bemportato in all of the circumstances? [21] Mr Bemportato gave evidence as did Peter Gale in support of the application. Essentially the case put was Mr O’Dare ran the companies other than Cavalier in his own fashion and even when confronted would not follow courses recommended by Mr Bemportato. [22] In my view, at some stage before the companies were wound up Mr Bemportato became aware of the difficulties being experienced by each of the entities and in particular Cavalier. [23] I have been through all of the material that was filed by both sides including the material that was filed in on OCR124-12 and OCR125-12 the excluded individual applications and I am unable to see evidence of Mr Bemportato taking reasonable steps to avoid the circumstances which gave rise to the happening of the relevant events. [24] In that regard I have examined all of the evidence against the causes before the happening of the relevant events as found by the tribunal. [25] The commission submits that the relevant factors that appeared to be raised from section 56AD(AA) are: whether proper books of account and financial records were kept; whether appropriate financial and legal advice before entering into the financial for conducting business arrangements was obtained and whether there were any appropriate provisions for Commonwealth and State taxation debts. I am unable to find any evidence to support the proposition that all reasonable steps were taken to avoid the existence of those factors. -- 6 of 7 -- 7 [26] In fact the evidence given strongly suggested to me that Cavalier was being used to support some of the financial failings of the other companies. [27] In my view the evidence establishes the Mr Bemportato was a party to company meetings and correspondence between the key personnel of the Cavalier group of companies. He was also a party to communications from the group’s bankers. [28] I am satisfied that he had knowledge of the troubles affecting the financial and trading positions of each of the companies at a time when timely intervention was required. Mr Bemportato has not shown that he took all reasonable steps in the circumstances to avoid circumstances that resulted in the appointment of liquidators. [29] The decisions under review are confirmed. -- 7 of 7 --