Baker v Queensland Building Services Authority [2013] QCAT 175

CITATION: Baker v Queensland Building Services Authority [2013] QCAT 175 PARTIES: Mr Alan Baker (Applicant) v Queensland Building Services Authority (Respondent) APPLICATION NUMBER: OCR096-12 MATTER TYPE: Occupational regulation matter HEARING DATE: 22 October 2012 HEARD AT: Brisbane DECISION OF: Ann Fitzpatrick, Member DELIVERED ON: 17 April 2013 DELIVERED AT: Brisbane ORDERS MADE: The decision of the Queensland Building Services Authority to refuse to categorise the applicant as a permitted individual be confirmed. CATCHWORDS: PERMITTED INDIVIDUAL Queensland Building Services Authority Act 1991, s 56AD Younan v Queensland Building Services Authority [2010] QDC 158 Younan v Queensland Building Services Authority [2011] QCA 1 APPEARANCES and REPRESENTATION (if any): Applicant: Self represented Respondent: Queensland Building Services Authority represented by Mr Malcolm Robinson of Robinson Locke Litigation Lawyers Pty Ltd REASONS FOR DECISION -- 1 of 6 -- 2 [1] By notice dated 3 November 2010 the respondent Queensland Building Service Authority (QBSA), informed the applicant, Mr Baker, that the QBSA considered him to be an “excluded individual” pursuant to s 56AC of the Queensland Building Services Authority Act 1991 (QBSA Act) as a result of him entering into bankruptcy on 7 September 2009. The effect of Mr Baker being an excluded individual is that he cannot for a period of five years from the date of his bankruptcy hold a licence as a contractor in the class of Plastering Drywall, which he had previously held. [2] Mr Baker applied to the QBSA on 25 November 2010 to be categorised as a Permitted Individual pursuant to s 56AD(1) of the QBSA Act. [3] This is an application to review a decision of the QBSA to refuse to categorise Mr Baker as a “Permitted Individual” for a “relevant event” within the meaning of s 56AD of the QBSA Act. [4] The application is made pursuant to s 86(1)(j) and s 87 of the QBSA Act and relies on the powers of this Tribunal pursuant to s 24(1)(c) of the Queensland Civil and Administrative Tribunal Act 2009 (QCAT Act) to set aside the decision and substitute its own decision that Mr Baker be categorised as a permitted individual. [5] Under s 20 of the QCAT Act the Tribunal must hear and decide a review of a reviewable decision by way of a fresh hearing on the merits. This Tribunal must be satisfied on the material before it that the test in s 56AD(8) of the QBSA Act is satisfied before it sets aside the QBSA’s decision and substitutes its own. The Evidence [6] At the hearing of this matter Mr Baker gave evidence. He relied upon his application filed in this Tribunal on 29 March 2012. He filed no other material. [7] The QBSA relied upon the affidavit of Ms M Lockton, Senior Compliance Officer, sworn 14 June 2012. Ms Lockton reviewed and processed Mr Baker’s Permitted Individual Application. [8] It also referred to the bundles of documents filed by it which included the QBSA’s statement of reasons for refusing Mr Baker’s application, dated 14 February 2012. The Law [9] Section 56AD of the QBSA Act provides that the QBSA may categorise a person as a permitted individual if it is satisfied that the individual took all reasonable steps to avoid the coming into existence of circumstances that resulted in the happening of a relevant event. [10] Section 56(8A) sets out matters to which the QBSA and now the Tribunal must have regard in determining whether a person took all reasonable steps. -- 2 of 6 -- 3 [11] In Younan v Queensland Building Services Authority1 upheld by the Queensland Court of Appeal2, his Honour Judge McGill made the following points as to how the indicia in s 56AD(8A) should be interpreted: [12] At (26): The test outlined in s 56AD(8) requires: 1. the identification of the relevant event, 2. the identification of the circumstances that resulted in the happening of the relevant event; 3. a consideration of whether the relevant individual took all reasonable steps to avoid those circumstances coming into existence, and if satisfied of that, 4. a decision whether to categorise the individual as a permitted individual. [13] At (26): 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. [14] At (37): [s]ubsection (8) authorizes the characterization of an individual as a permitted individual only if the Authority was 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. The Event [15] It is not disputed that the relevant event for the purpose of s 56AD of the QBSA Act was Mr Baker entering into bankruptcy under the Bankruptcy Act 1966, on 7 September 2009. Circumstances giving rise to the Event [16] Mr Baker holds a Contractor’s licence issued pursuant to the QBSA Act in the class of Plastering Drywall. [17] At the time of his bankruptcy Mr Baker was indebted to a number of creditors. The most significant debt being in the sum of $214,197.00 to the Australian Taxation Office. 1 [2010] QDC 158. 2 Younan v Queensland Building Services Authority [2011] QCA 1. -- 3 of 6 -- 4 [18] Mr Baker gave evidence that he started plastering work as a young man in Western Australia. He started his own business in 1999, having undertaken a business management course for licensed contractors conducted by the Queensland Master Builders Association in 1998. [19] Mr Baker attributed the cause of his bankruptcy as an inability to pay GST, income tax and PAYG tax. The inability was said to have arisen because: a) he was being overcharged by trade suppliers; b) the high hourly rate of tradesmen needed to assist him; c) underpricing for a number of years up to 2007 in order to compete for work. [20] As to the factors under s 56(8A) of the QBSA Act which I am bound to consider: a) Keeping proper books of account and financial records Mr Baker admitted that he did not keep proper records and agreed that was a cause which contributed to his bankruptcy. He agreed in evidence that he did not keep up to date with costings and that his ledgers and journals were not in order. He said he was not looking at incoming invoices to check prices because he wrongly trusted his suppliers. He agreed that if he had kept better records he could have worked out what tax was due to the Australian Taxation Office. Mr Baker said that a lot of suppliers will not wait for 30 days to be paid, yet builders will not pay in that time. He agreed that he needed accurate records of cash flow to manage that problem. I accept the submissions of the QBSA and apart from his admissions find that Mr Baker’s evidence is unsatisfactory because:  no documents were tendered by Mr Baker in relation to his own financial position. The partnership returns provided to the QBSA are of limited assistance;  a book-keeper was engaged to bring the accounts up to date, however no further information was given as to when the book- keeper was appointed and the results of their work;  Mr Baker did not review his financial position regularly to determine the progress of his business;  no adequate explanation was given as to why accurate books and records were not kept or when they ceased to be kept. I find that no proper books of account and financial records have been kept by Mr Baker. I note Mr Baker’s evidence that his wife has taken over responsibility for the records of the business on the basis that she is better able to do so. I find that it would have been -- 4 of 6 -- 5 reasonable in Mr Baker’s circumstances to keep and review cash flow records in order to manage his creditors including the Australian Taxation Office and to keep and review other journals and ledgers which would enable him to determine the financial viability of his business at the rates he was charging. b) Seeking appropriate financial or legal advice before entering into financial or business arrangements or conducting business Mr Baker gave evidence that he engaged an accountant on an annual basis to prepare income tax returns up to 2005. Thereafter when he and his wife moved to Chinchilla, his wife took over some of the books of the business and a book-keeper was engaged. However, Mr Baker gave evidence that he did not seek any business advice from his accountant prior to 2005. He did not give any evidence of having sought financial or legal advice in relation to the conduct of the business at any time. In particular he said that he did not seek advice in relation to the debt to the Australian Taxation Office which had been in existence from 2005. I find that Mr Baker did not seek appropriate financial or legal advice in relation to the conduct of his business. I find that it would have been reasonable for Mr Baker to seek professional advice in relation to setting profit margins and reducing costs, in order to maintain adequate cash flow. I find it would have been reasonable for Mr Baker to seek professional advice once a taxation debt had been incurred in relation to means of reducing that debt. c) Reporting fraud or theft to the police Nothing in the evidence is relevant to this factor. d) Ensuring guarantees provided were covered by sufficient assets to cover the liability under the guarantees Nothing in the evidence is relevant to this factor. e) Putting in place appropriate credit management for amounts owing and taking reasonable steps for recovery of the amounts Nothing in the evidence is relevant to this factor. f) Making appropriate provision for Commonwealth and State taxation debts. Mr Baker gave evidence that he submitted a Business Activity Statement quarterly, that he maintained a register of invoices for work done and receipts for expenses and that he calculated how much needed to be retained to pay GST. However, his evidence was that whilst attempting to pay other creditor’s moneys owing to the Australian Taxation Office were not paid. Mr Baker said that there was unpaid taxation from 2005 which continued to increase. He said that around 2007 he knew that it was beyond remedy because business was slow and income was insufficient to pay current debt as well as old debt. -- 5 of 6 -- 6 I find that Mr Baker did not make appropriate provision for Commonwealth taxation debts. There was no evidence given of attempts to enter into a payment arrangement with the Australian Taxation Office or to seek advice in relation to the matter at any time prior to the bankruptcy. It would have been reasonable for Mr Baker to do so in the circumstances. g) I note the evidence of Mr Baker that he made attempts to reduce his workers, to increase cash flow and to reduce costs however he was unsuccessful. Further, his wife has entered into a payment arrangement with the Australian Taxation Office. Conclusion [21] On the basis of all these matters I find that Mr Baker has not shown that he took reasonable steps to avoid bankruptcy and that his application must fail. In these circumstances it is not necessary to consider whether the discretion should be exercised to categorise Mr Baker as a permitted individual. [22] I therefore order that the decision of the Queensland Building Services Authority to refuse to categorise the applicant as a permitted individual be confirmed. -- 6 of 6 --