Burman v Queensland Building and Construction Commission [2015] QCAT 315

CITATION: Burman v Queensland Building and Construction Commission [2015] QCAT 315 PARTIES: Jason Burman (Applicant) v Queensland Building and Construction Commission (Respondent) APPLICATION NUMBER: OCR136-14 MATTER TYPE: Occupational regulation matters HEARING DATE: 15 April 2015 HEARD AT: Brisbane DECISION OF: Member Paratz DELIVERED ON: 4 August 2015 DELIVERED AT: Brisbane ORDERS MADE: 1. The decision of the QBCC made on 2 June 2014 not to categorise Jason Burman as a permitted individual is confirmed. CATCHWORDS: BUILDER – PERMITTED INDIVIDUAL – Whether a plumber took all reasonable steps to avoid the company being put into receivership – where the plumber had a serious gambling addiction – whether reasonable is to be applied as an external standard or is to be assessed on an individual basis Queensland Building and Construction Commission Act 1991 (Qld), s 3, s 56AC, s 56AD Hyde v QBSA [2003] QBT 30 Muir v Franklins [2001] QCA 173 Queensland Building Services Authority v Meredith [2013] QCATA 152 Queensland Building and Construction Commission v Meredith [2014] QCA 62 Younan v Queensland Building Services Authority [2010] QDC 158 -- 1 of 8 -- 2 APPEARANCES: APPLICANT: Ms Sweetapple of Counsel (Direct Brief) RESPONDENT: Ms Taylor (In-House Solicitor) REASONS FOR DECISION [1] Mr Burman held a licence as a plumber. He was a Director of Namreh Pty Limited (“the company”). Liquidators were appointed to the company on 6 December 2013. [2] The Queensland Building and Construction Commission (“QBCC”) advised Mr Burman on 2 May 2014 that it considered him to be an excluded individual pursuant to s 56AC of the Queensland Building and Construction Commission Act 1991 (Qld) (‘the Act’). [3] Mr Burman applied to the QBCC on 30 May 2014 to be categorised as a permitted individual pursuant to s 56AD(1) of the Act. The QBCC made a decision on 2 June 2014 refusing to categorise him as a permitted individual. [4] Mr Burman filed an Application to Review the decision of the QBCC in the Tribunal on 27 June 2014. The application was heard by an oral hearing on 15 April 2015. This is the decision on the Application. The situation [5] The facts in this matter, and the circumstances leading up to the liquidation are not in dispute. [6] The company was placed into liquidation by the Australian Taxation Office (‘ATO’) due to an unpaid tax liability. [7] A tax liability of $63,047.00 was notified to Mr Burman in August 2009. He negotiated a payment arrangement with the ATO, and started paying $300 per week towards the debt. Despite those payments, and including interest charges, the debt to the ATO increased to $92,910.00 by December 2010. Mr Burman borrowed an extra $90,000.00 from a bank in 2011 by taking out a second mortgage on his house, and paid $50,000.00 to the ATO and $40,000.00 to other creditors. However, he was unable to discharge the tax obligations, or reach further arrangements with the ATO by December 2013, and it placed the company into liquidation. [8] Mr Burman readily admits the tax liability, and concedes that his management of the company in the relevant period was poor. His essential submission is that he was a compulsive gambler, and was not able to do anything to prevent the events occurring, as the situation was out of his control. -- 2 of 8 -- 3 [9] The Act requires that for a person to be categorised as a permitted individual, that they must have taken all reasonable steps to avoid the coming into existence of the circumstances that resulted in the happening of the relevant event (‘the liquidation’). [10] The Act, by s 56AD, requires that in considering whether it is satisfied that all reasonable steps were taken to avoid the coming into existence of the circumstances that resulted in the liquidation, that the QBCC has to take certain factors into consideration: (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 commission 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. [11] McGill DCJ noted as to the test that:1 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 s 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 of 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 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] The central issue in this matter is as to whether Mr Burman took all reasonable steps, and as to the how the assessment of reasonable steps is to be made. Is what is reasonable to be determined from an objective test, or subjectively from the standpoint of the Applicant? 1 Younan v Queensland Building Services Authority [2010] QDC 158 at [26]. -- 3 of 8 -- 4 Mr Burman’s evidence [13] Mr Burman said that he had suffered a gambling addiction since he was 12 years old. He is now 41 years old. He said that he did not seek help for his gambling at the time the company was experiencing financial difficulty, as he did not think he needed help, and that he only later sought help at the insistence of his wife. [14] He said that fell behind in the company finances because of both poor book- keeping and his gambling addiction. [15] In his evidence, Mr Burman said that he was unable to say when he first realised that he was falling behind on the company tax payments, and did not have a clear date in his head as to the time. He said that he did not open the envelopes sent to him by the taxation office, and “chose to ignore” the notices sent to him by it. [16] He said that he did not seek any legal or accounting advice at that time, as he did not want to admit that he was a problem gambler, and did not want to restrict himself to funds and did not want to give up control. He said he was ignoring the taxation issues for about three years, from 2007 to 2010. [17] Mr Burman said that at the time he received the statutory notices from the taxation office that he was still struggling with the gambling addiction, that he was a “head-strong” person and ignored some advice. He said he was struggling because he was working really hard during the day and destroying himself at night when he would go gambling to the Casino, or bet on horses, or bet on anything really. He said that he did not have clarity of thought, and would not listen to anyone. [18] He said that in his own mind he created the illusion that he could pay the money back. He thought that if he worked harder and harder, or had a win, that somehow something would materialise. [19] He said that when he abstained from gambling, as he has done for the last three years, that he does live life as it is meant to be. Submissions of the QBCC [20] The QBCC submitted that it was not satisfied that Mr Burman had complied with the legislative criteria set out in s 56AF(8A) in the following respects: (1) S 56AD(8A)(a) – kept proper books of account and financial records (2) S 56AD(8A)(b) – sought appropriate financial or legal advice before entering into financial or business arrangements or conducting business (3) S 56AD98A)(f) – made appropriate provision for Commonwealth and State taxation debts [21] It submitted that the circumstances which led to the company being placed into liquidation were unclear. -- 4 of 8 -- 5 Submissions for Mr Burman [22] Mr Burman was represented by Ms Sweetapple of Counsel. She referred to the decision of Justice Brabazon QC in Queensland Building Services Authority v Meredith:2 [31] “All reasonable steps” does not mean all possible steps. Relevant steps are those taken to avoid the coming into existence of the circumstances that resulted in the relevant event, but not the relevant event itself. [32] The Act did not require Mr Meredith to take all possible steps. With hindsight, or if judged from the point of view of a spectator, one might conclude that there were steps which, if taken might have avoided the coming into existence of such circumstances. The test is not that high. See Hyde v QBSA.3 [23] She also referred to Hyde:4 In Hyde’s case, the Tribunal considered the circumstances leading up to the Applicant’s bankruptcy. The Applicant had gambled in the real estate market, and lost. The Tribunal considered the test to be applied when considering the meaning of the words “all reasonable steps”. The Tribunal adopted the test articulated by the Court of Appeal in Muir v Franklins5 where Thomas JA said at para 15: “Whether the claimant has taken all reasonable steps is to be determined from the viewpoint of a reasonable person endowed with the knowledge and experience of the plaintiff.” [24] She submitted that:6 The conclusion of the presiding Member Brabazon QC in Meredith’s case at first instance – that a contractor did not have to take all possible steps but only all reasonable steps in the circumstances – was upheld last year by the Court of Appeal.7 [25] She put forward the proposition,8 based on those cases, that: The applicant was not required to take all possible steps to prevent the liquidation. He was required to take all steps that were reasonable in his particular circumstance. [26] She submitted that: a) Mr Burmann’s failure to record in the accounts the growing gulf between his income and his expenditure did not contribute in any way to the liquidation. b) He knew that he was gambling, knew he wasn’t winning, and knew he was in the grip of an addiction. 2 [2013] QCATA 152. 3 2003 QBT 30. 4 Submissions for the Applicant, at [5]. 5 [2001] QCA 173. 6 Submissions for the Applicant, at [6]. 7 Queensland Building and Construction Commission v Meredith [2014] QCA 62. 8 Submissions for the Applicant, at [7]. -- 5 of 8 -- 6 c) No legal or financial advice would have ameliorated the effects of his addiction. d) The circumstances that he found himself in before he became insolvent were dire. e) Those circumstances stemmed from an addiction to gambling that he was powerless to control. [27] Her overall submission was that: [29] There was no other reasonable step that Mr Burman could have taken, in the circumstances leading up to his insolvency, that would have led to a different outcome. [30] The failure of the QBCC to consider his circumstances, and the QBCC’s failure to accept that Mr Burman did everything he reasonably could do in those circumstances to stave off the liquidation means that the QBCC’s decision to refuse to categorise the Applicant as a permitted individual was flawed. Discussion [28] What is the standard to be applied? Is the test of reasonableness to be determined having regard to the personal situation of, and capabilities of, the Applicant; or having regard to the reasonableness of a reasonable person in the Applicant’s position? [29] In Hyde the learned Member discussed what were reasonable enquiries that the applicant should have made. The question he was there investigating was whether the Applicant was required to seek outside advice, when he was a sophisticated and experienced builder and developer: [30] The sort of enquiries and investigations which the applicant should have made must be judged as to the reasonableness of doing or not doing so having regard to the circumstances of the applicant. Clearly if the applicant was involved in the construction of a large number of dwellings at any one time such as some of the well known large building firms then one can see circumstances where a person in that position might well seek the advice of marketing experts and the like. Perhaps even the advice of an economist in certain cases might be appropriate. [31] However, given the nature of the applicant’s business and his particular circumstances, including his apparently past successful building experience in the Townsville region that I am satisfied that the applicant did take such steps as were reasonable. [30] The expression that the Applicant in Hyde “gambled in the real estate market” is not comparable to the type of gambling that Mr Burman engaged in. Mr Hyde was engaged in commercial speculative development activity – that is a controlled and calculated risk that is routinely assumed by people engaged in that field. Mr Burman however was purely engaged in gambling in its basic form, in areas where the odds are very much in favour of the casino or the bookmaker. -- 6 of 8 -- 7 [31] I do not consider that Hyde is authority for a proposition that reasonableness is to be assessed only from the viewpoint of a reasonable person endowed with the knowledge and experience of the plaintiff. The real question being asked is whether the Applicant acted as a reasonable person. [32] The test cannot logically be assessed having regard only to the personal capabilities of an applicant – what if an Applicant had limited intellectual abilities, or suffered from a condition such as dementia, that prevented them from seeking proper financial and legal advice? The test cannot result that such an applicant is not required to seek legal and financial advice, simply because they lack the capacity to know that they should seek legal or financial advice. [33] The Act has implicit within it an element of consumer protection. The objects of the Act include: 3 Objects of Act The objects of this Act are – (a) To regulate the building industry – (i) to ensure the maintenance of proper standards in the industry; and (ii) to achieve a reasonable balance between the interests of building contractors and consumers [34] The provisions of the permitted individual criteria are clearly intended to ensure that licenced builders have, and display, a satisfactory level of proper legal and financial control of their businesses. The intent is obviously that consumers can deal with builders with confidence, and to attempt to avoid consumers being caught in financial collapses and potentially suffering significant losses. [35] If the test of reasonableness was given the construction that the applicant urges, consumers would not be protected from dealing with a person who does not have the requisite financial and legal safeguards in place, simply because that person individually, because of their personal capacities, cannot obtain and maintain them. That is an unsupportable proposition in logic, fairness or public policy. [36] Even if the test of reasonableness could be construed as the applicant urges, it would still have to be shown that a person having Mr Burman’s personal situation took all possible steps to prevent the happening of the event. In the case of Mr Burman those steps would revolve around his obtaining professional counselling and help for his gambling addiction. There is no evidence that he did seek any such help at the relevant times, and he said in his evidence that he did not think he had to. On that ground alone, failing to seek help for his acknowledged gambling addiction, he cannot be said to have acted reasonably. [37] There is no question in this matter that Mr Burman failed to obtain appropriate legal or accounting advice - he said that himself. There is no -- 7 of 8 -- 8 doubt that he did not make proper provision for taxation – he said that himself also. [38] I therefore consider that the test of reasonableness is one to be assessed on the basis of the expected actions of a reasonable person having capacity, in the circumstances in which that person finds themselves. [39] Applying that test as I have outlined, Mr Burman clearly cannot be said to have taken all reasonable steps as required by the Act, and his Application to be categorised as a permitted individual cannot succeed. [40] I order that the decision of the QBCC made on 2 June 2014 not to categorise Jason Burman as a permitted individual is confirmed. -- 8 of 8 --