Dinsey v Queensland Building Services Authority [2013] QCATA 225

CITATION: Dinsey v Queensland Building Services Authority [2013] QCATA 225 PARTIES: Mr Greg Thomas Dinsey (Appellant) V Queensland Building Services Authority (Respondents) APPLICATION NUMBER: APL188-12 MATTER TYPE: Appeals HEARING DATE: On the papers HEARD AT: Brisbane DECISION OF: Hon J B Thomas AM QC, Judicial Member DELIVERED ON: 22 July 2013 DELIVERED AT: Brisbane ORDERS MADE: 1. Leave to appeal is granted 2. The appeal is allowed. 3. The order of 22 May 2012 is set aside. 4. It is determined that the answer to the question “can section 56AC(6) of the Queensland Building Services Authority Act 1991 have application where the first event relates to one company and the other event or events relates to a different company or companies?” is “yes”. CATCHWORDS: Professions and trades – builders – licences and registration – building contractor's license – "excluded individual" – "permitted individual" – whether benefit of section 56AC(6) of Queensland Building Services Authority Act 1991 available when relevant company events flowing from the one set of circumstances relate to two different companies - interpretation of statutes -- 1 of 12 -- 2 Acts Interpretation Act 1954 (Qld), ss 4, 32C Queensland Building Services Authority Act 1991 (Qld), ss 56AC, 56AE, 58, 59, 60, 86(1)(k) APPEARANCES and REPRESENTATION (if any): This matter was heard and determined on the papers pursuant to section 32 of the Queensland Civil and Administrative Tribunal Act 2009 (QCAT Act). REASONS FOR DECISION [1] This is an appeal against an interlocutory judgment which decided a preliminary point of law relevant to the determination of five QCAT reviews namely OCR019-12, OCR036-12, OCR037-12, OCR038-12 and OCR039-12. [2] Mr Dinsey is the applicant in those pending reviews. He seeks to reverse determinations by the Queensland Building Services Authority (―the QBSA‖), including its determination that he is permanently excluded from holding a building contractor's license. [3] The basis of the QBSA's determinations was that as the group of seven companies of which Mr Dinsey was a director had gone into external control, administration or liquidation, Mr Dinsey was therefore a seven times "excluded individual for a relevant event‖ under s 56AC of the Queensland Building Services Authority Act 1991 (―the QBSA Act‖). [4] As Mr Dinsey was regarded as at least twice excluded for relevant events he was regarded as a ―permanently excluded individual‖ under s 58 of the QBSA Act. [5] The QBSA rejected Mr Dinsey’s consequential applications under s 56 AD to be a ―permitted individual‖ for the relevant events,1 and confirmed its view that he was an excluded individual for the relevant events. [6] Mr Dinsey applied to QCAT review of the QBSA's determinations. Directions were made in QCAT for the listing of the reviews in the one proceeding, and that a preliminary question be determined, namely: Can s 56AC(6) of the Queensland Building Services Authority Act 1991 have application where the first event relates to one company and the other event or events relates to a different company or companies? [7] That issue was determined on the papers by a QCAT Member with the answer ―No‖, contrary to Mr Dinsey’s contentions. [8] The present proceeding is Mr Dinsey’s appeal against that determination. 1 QBSA Act s 56AD. -- 2 of 12 -- 3 Jurisdiction [9] The jurisdiction of the Member to review the relevant QBSA decisions arose under s 86(1)(k) of the QBSA Act. The directions for determination of the preliminary point were obviously designed to narrow the issues for the ultimate determination of the reviews, and were presumably given under s 62 of the Queensland Civil and Administrative Tribunal Act 2009 ("the QCAT Act"). [10] My jurisdiction to determine the present appeal arises under ss 26 and 142 of the QCAT Act. [11] The Member's determination of the preliminary point was not ―the Tribunal’s final decision in a proceeding‖. Under s 142(3) of the QCAT Act Mr Dinsey needs leave to bring the present appeal. [12] The issue raised before the Member, and now in this application, involves the proper construction of a statutory provision. It is clearly a question of law. No issues of fact are involved. If it is clear that the Member’s determination was erroneous, leave will be granted. It is also worth noting that the answer to the relevant question affects any case where relief is sought on the basis of s 56AC(6), and that it raises a question of general importance the ventilation of which would seem to be to the public advantage. [13] It is therefore appropriate to proceed to consider the question, and to determine whether or not the Member’s determination was correct. Background [14] At relevant times Mr Dinsey was the director and controller of a group of 7 companies namely Wimmer (NSW) Pty Ltd, Cooroy Mountain Services Pty Ltd, Cooroy Mountain Distribution Pty Ltd, Cooroy Mountain Spring Water Pty Ltd, Cooroy Mountain Manufacturing Pty Ltd, Cooroy Mountain Transport Pty Ltd and Cooroy Mountain Group Pty Ltd. Their principal business was the production and distribution of soft drinks. [15] Mr Dinsey also personally held a building contractor's license under the QBSA Act in the class of builder – medium rise. [16] On 12 June 2011 liquidators were appointed to Wimmer (NSW) Pty Ltd and Cooroy Mountain Services Pty Ltd. Subsequently, on 1 September 2011 administrators were appointed to each of the other 5 companies in the group. [17] The QBSA then gave notice to Mr Dinsey that it proposed to cancel his license by reason of the various ―events‖ under s 56AC. [18] Mr Dinsey applied to be a ―permitted individual‖ under s 56AD of the Act, but on 31 October 2011 the QBSA rejected his applications, and subsequently gave further notice of proposed cancellation. -- 3 of 12 -- 4 [19] Mr Dinsey then applied to QCAT to set aside the QBSA’s decisions. [20] As indicated above, directions were given for the determination of a preliminary question of law. [21] It is Mr Dinsey’s claim that the liquidation of the Wimmer company occurred without fault on his part and that he ―took all reasonable steps to avoid the coming into existence of the circumstances that resulted in the happening of the relevant event‖. On that basis the QBSA should regard him as a ―permitted individual‖ under s 56AD. Whether or not he is eventually successful in those contentions, he claims that the appointment of liquidators and administrators to each of the other companies was the direct result of the failure of the Wimmer soft drink business, which was caused by events beyond his control, and which created a ―domino effect‖, leading to the failure of the entire group. On that basis he contends that it is wrong for the QBSA to hold that he also became an excluded individual for additional company events, and that to do so is contrary to s 56AC(6) of the Act. Relevant sections of the Act [22] The relevant sections were introduced by amendments in 1999 and 2003. They need particular consideration in order to give meaning to the relevant provision (s 56AC(6)). It is convenient to include them in this statement of reasons. 56AC Excluded individuals and excluded companies (1) This section applies to an individual if— (a) after the commencement of this section, the individual takes advantage of the laws of bankruptcy or becomes bankrupt (relevant bankruptcy event); and (b) 5 years have not elapsed since the relevant bankruptcy event happened. (2) This section also applies to an individual if— (a) after the commencement of this section, a company, for the benefit of a creditor— (i) has a provisional liquidator, liquidator, administrator or controller appointed; or (ii) is wound up, or is ordered to be wound up; and (b) 5 years have not elapsed since the event mentioned in paragraph (a)(i) or (ii) (relevant company event) happened; and (c) the individual— (i) was, when the relevant company event happened, a director or secretary of, or an influential person for, the company; or (ii) was, at any time after the commencement of this section and within the period of 1 year immediately before the relevant company event happened, a director or secretary of, or an influential person for, the company. (3) If this section applies to an individual because of subsection (1), the individual is an excluded individual for the relevant bankruptcy event. -- 4 of 12 -- 5 (4) If this section applies to an individual because of subsection (2), the individual is an excluded individual for the relevant company event. (5) An excluded individual for a relevant bankruptcy event (the first event) does not also become an excluded individual for another relevant bankruptcy event (the other event) if the first event and the other event are both consequences flowing from what is, in substance, the one set of circumstances applying to the individual. (6) An excluded individual for a relevant company event (the first event) does not also become an excluded individual for another relevant company event (the other event) if the first event and the other event are both consequences flowing from what is, in substance, the one set of circumstances applying to the company. (7) A company is an excluded company if an individual who is a director or secretary of, or an influential person for, the company is an excluded individual for a relevant event. 56AD Becoming a permitted individual (1) An individual may apply to the authority, in the form approved by the Board, to be categorised as a permitted individual for a relevant event if the individual has been advised by the authority, or has otherwise been made aware, that the authority considers the individual to be an excluded individual for the relevant event. (2) However, if as a result of the application the individual is not categorised as a permitted individual for the relevant event, the individual may not, while the individual is an excluded individual for the relevant event, again apply to be categorised as a permitted individual for the relevant event. (3) If the individual applies, the application must include the reasons why the authority should categorise the individual as a permitted individual for the relevant event. (4) If the individual is a director or secretary of, or influential person for, a company that is a licensee, the company is taken to be a party to the application, and may make submissions to the authority about the application. (5) The authority must give its decision on the categorisation within 28 days, or a longer period agreed between the individual and the authority. (6) If the authority does not give its decision within the time required under subsection (5), the authority is taken, for section 86(1)(j) to have decided not to categorise the individual as a permitted individual for the relevant event. (7) Nothing in subsection (6) stops the authority, after the time required under subsection (5) has elapsed, from confirming the authority’s refusal to categorise the individual as a permitted individual for the relevant event. (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; -- 5 of 12 -- 6 (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. (9) If an individual is categorised as a permitted individual for a relevant event, the individual is taken not to be an excluded individual for the relevant event. 56AE Exclusion from licence The authority must not grant a person a licence if the person is— (a) an excluded individual for a relevant event; or (b) an excluded company. 58 Meaning of permanently excluded individual (1) A permanently excluded individual is an individual— (a) who has twice been an excluded individual for a relevant event; and (b) who for each relevant event has been given written notice by the authority stating— (i) particulars identifying the relevant event; and (ii) why the authority considers the individual is an excluded individual for the relevant event; and (iii) that the individual has the right to apply to be categorised as a permitted individual for the relevant event within 28 days of being given notice; and (c) who for each occasion the individual has been given notice, either— (i) did not apply to be categorised as a permitted individual within the time stated in the notice; or (ii) applied to be categorised as a permitted individual within the time stated but had the application refused. (2) Notice under subsection (1)(b)— (a) must be given while the individual is an excluded individual for the relevant event to which the notice relates; and (b) if the notice is the second or a subsequent notice the individual has been given about being an excluded individual for a relevant event— (i) must state the effect of the individual becoming a permanently excluded individual; and (ii) may be given at any time after an earlier notice was given. (3) An excluded individual who is a licensee is taken to have been given notice under subsection (1)(b) if— (a) the individual has been given notice under section 56AF(2); and (b) for a second or subsequent notice, the notice also includes the information required under subsection (2)(b)(i). (4) A second or subsequent notice may be given for a relevant event whether the event happened before or after another event for which the authority has already given notice under subsection (1)(b). -- 6 of 12 -- 7 (5) However, subsection (1) applies only if an individual became an excluded individual for at least one of the relevant events after the commencement of this section, irrespective of when the circumstances resulting in the relevant event arose. (6) If a second or subsequent notice does not include the information required under subsection (2)(b)(i) another notice containing the information may be given. (7) It is declared that in deciding whether 2 relevant events as mentioned in subsection (1) have happened, a relevant event must be counted— (a) whether the relevant event happened before or after the other relevant event; and (b) whether or not the notices under subsection (1)(b) for the relevant events were given in the order the relevant events happened; and (c) regardless of the length of time between the giving of the notices under subsection (1)(b) for the relevant events; and (d) whether the relevant event happened before or after the commencement of this section, subject to subsection (5). Example for subsection (2)(a)— The authority gives a licensee a notice under this section for a relevant event for which the licensee is currently an excluded individual. The authority later discovers that the licensee was, before the grant of the licensee’s licence, an excluded individual for a previous relevant event. However, the licensee is not currently an excluded individual for this relevant event because 5 years have elapsed since the event happened. It may not give the licensee a notice for this event. Example for subsection (7)(a), (b) and (d)— The authority gives a licensee a notice under this section for a relevant event that happened after the commencement of this section. It later discovers that the licensee is an excluded individual for another relevant event that happened before the grant of the licensee’s licence and before the commencement of this section. It may give the licensee a notice for this relevant event. Also, it is the later notice, about the earlier relevant event, that must state the effect of the individual becoming a permanently excluded individual. Examples for subsection (7)(c)— 1 The authority becomes aware that a person who is an applicant for a contractor’s licence is currently an excluded individual for 2 relevant events one of which happened after the commencement of this section. The authority may give the person a notice for one of the relevant events and immediately give a notice for the other relevant event. Also, it is the later notice that must state the effect of the individual becoming a permanently excluded individual. 2 A licensee becomes an excluded individual for a relevant event. The individual’s licence is cancelled under section 56AF and the individual is given notice complying with this section for the relevant event. More than 5 years later the licensee applies for and is granted a contractor’s licence. Ten years after this, the licensee becomes an excluded individual for another relevant event. The authority gives a notice complying with this section for the latest relevant event. This notice includes the information required for a second or subsequent notice under subsection (2)(b)(i) and the individual becomes a permanently excluded individual. 59 Exclusion from licence The authority must not grant a person a licence if the person is— (a) a permanently excluded individual; or (b) a company for which a permanently excluded individual is a director, secretary, influential person or nominee. 60 Permanently excluded individual not fit and proper A permanently excluded individual is taken not to be a fit and proper person for part 3, division 2. -- 7 of 12 -- 8 Discussion [23] To make sense of this legislation one needs to examine its context and purpose. [24] One of the main purposes of the principal act was to create and organise a licensing scheme for building contractors. Its key provision is s 42 under which a person must not carry out, or undertake to carry out, building work unless that person holds a contractor's license. [25] Seen in the broader context of the Act, parts 3A to 3E2 provide for the exclusion of various categories of individuals from holding a contractor's license. These parts were inserted by amendments in 1999 (part 3A) and 2003 (parts 3B, 3C, 3D and 3E). They identify various classes of persons as ―excluded individuals‖, ―permitted individuals‖, ―excluded companies‖, ―permanently excluded individuals‖, ―convicted company officers‖, ―banned individuals‖ and ―disqualified individuals‖. The amendments were directed at a variety of situations which the legislature in its wisdom considered as indicating that a person or company should not be entrusted with a building contractor's license. The situations range from the accumulation of demerit points to failure to satisfy judgments. [26] The category with which we are here concerned (part 3A) is not directly related to building matters or building companies. It touches and concerns commercial competence or reliability. [27] The explanatory notes for the legislation reveal a concern over the re- emergence of ―phoenix‖ companies following cancellation of a license. The following statement appears: A major deficiency with the existing regulatory structure has been the ability of defaulting contractors to restructure their corporate structure and re-emerge as a ―phoenix‖ company following cancellation of a license. This new part is designed to remove individuals who have demonstrated their incapacity to manage finances from the building industry for a five year period.3 [28] The Minister's second reading speech was also referred to by the parties in legal argument. It expresses similar sentiments in more colourful language, including a reference to the removal of "shonks". [29] To bring these purposes into effect the legislators have adopted a rather oblique system of words and terms. [30] The scheme of this part of the legislation seems to be to define the terms ―excluded individuals‖ and ―excluded companies‖ in s 56AC. Persons who have taken advantage of the laws of bankruptcy within the preceding 5 years, and persons who have been directors, secretaries or influential persons in companies which have undergone specified forms of 2 Sections 56AD to 67AZM. 3 Explanatory notes pages 18-19. -- 8 of 12 -- 9 administration, control or liquidation are to be excluded from the capacity to hold a license. The only escape hatches are in s 56AD(8) (individuals who take all reasonable steps to avoid the circumstances etc) and section 56AC(6) which limits the occasions upon which additional exclusions may be counted. [31] Apart from these ameliorating provisions, anyone who controls their own or their company's or companies' affairs in such a way as to lead to bankruptcy or insolvency is automatically disqualified from ability to hold a licence, and he or she may not reapply for a period of 5 years. If the person has 2 or more such ―events‖ he or she is permanently disqualified.4 [32] The term ―event‖ describes the procedure of appointment of the administrator etc of the company. The Act declares the person to be an ―excluded individual for the relevant company event‖. [33] Section 56AC is primarily a definition section, and in subsection (6) it includes a specific means of avoiding the status of ―excluded individual‖. The consequences to persons who satisfy the definition are prescribed elsewhere, principally in ss 56AE, 58, 59 and 60. [34] The QBSA actuates the exclusion by giving what is in effect a ―show cause‖ notice under s 56AF. [35] As indicated above, the only escape routes are through ss 56AD(8) and 56AC(6), the latter of which requires interpretation in the present matter. [36] In the circumstances relied on by Mr Dinsey, seven relevant company events occurred. Exclusion is prima facie automatic upon any of them. The occurrence of the event brings about the exclusion. Causation of the event is not an element. The external administration of each company is a separate event, producing automatic exclusion for each event unless the individual becomes a ―permitted individual‖ for each under section 56AD. [37] Apart from the possible operation of s 56AC(6), unless he succeeds in obtaining "permitted individual" status in a sufficient number of matters he will be at least ―twice .. an excluded individual for a relevant event‖ under section 58. It follows that unless section 56AC(6) can save him from that consequence, he is permanently excluded. [38] The learned Member placed some weight on the fact that subsection 56AC(2)(a) ―refers to an event occurring to a company‖ (emphasis added). He continued: Subsection 56AC(6) then raises the possibility of two or more relevant company events which flow from one set of circumstances applying to the 4 Section 58(1). -- 9 of 12 -- 10 company. The use of the definite article indicates that it is referring to one company that is the subject of more than one relevant company event.5 [39] The learned member then posited a sequence of events occurring to the one company, such as company itself appointing an administrator, followed by appointment by a creditor of a controller, and then appointment by a court of a liquidator.6 That is certainly an example where s 56AC(6) could apply to protect a relevant company officer from adverse consequences in respect of the sequential events. But the question is whether it is the only example where such a result may follow. [40] It may readily be accepted that the ―first event‖ must refer to a particular and therefore single company event. But there is then reference to ―another company event (the other event)‖ (emphasis added). This easily brings into reckoning an event in relation to a second company. ―Another relevant company event‖ is by no means limited to an event affecting the company involved in the first event. There is no good reason why the ―first event‖ may not apply to one company, and ―the other event‖ to a second company. There is equally no good reason in logic or fairness why the final words of the section (―applying to the company‖) should be confined to a single company, namely the company involved in the first event. [41] Indeed s 32C of the Acts Interpretation Act 1954 suggests otherwise. It states: 32C Number In an Act - (a) words in the singular include the plural; and (b) words in the plural include the singular. [42] Such an interpretation of course may be displaced, wholly or partly, ―by a contrary intention appearing in any Act‖.7 But when one reads s 56AC(6) as a whole, and in context, I do not think that any intention is shown contrary to inclusion of the plural in the final words of the section ―applying to the company‖. If anything, the context suggests that the plural was intended. The section makes perfect sense if the final words ―the company‖ are read as including ―companies‖. [43] I note with respect to the contrary view of the learned Member8 and the submissions of the QBSA that the ―first event‖ and ―the other event‖ should be taken to refer to one company that has suffered more than one company event. The QBSA submission was succinctly stated as follows: 5 Member's Reasons for Judgment at [21]. 6 Op cit [22]. 7 Acts Interpretation Act 1954 s 4. 8 Succinctly stated at paras [21] and [22] of the reasons for judgment. -- 10 of 12 -- 11 It is the reference to the singular "company" and the use of the definite article "the" in the words "the one set of circumstances applying to the company" (emphasis added) that makes it plain that the first event and the other event referred to earlier in s.56AC(6) of the Act must be in relation to relevant company events affecting the one company. [44] On that view (acceded to by the learned member) the section would be limited to cases where different forms of control were consecutively imposed on a company. But I see no good reason to limit the section to that particular situation. If proper effect is given to the normal construction contemplated by the Acts Interpretation Act, the subsection is quite sensibly read as applicable to a person who runs the business through a group of companies where more than one company event flows from the one set of circumstances. There is no good reason why the section should not be read as applicable to both types of situation. [45] It is a mistake to look at the word "company" which appears three times in s 56AC(6) and to assume that if it has a singular number on the first occasion, it is likely to bear the singular number on the other occasions of its use. On the first and second occasions it is an adjective, qualifying the noun "event", and its singular character derives from the singular number of the particular event to which it relates. Clearly the events are different events, and the real question is whether they might reasonably be events involving different companies. In my view there is no indication that they should not. Situations like that of Mr Dinsey – running a business through a group of companies with ultimate failure of the group – are not uncommon or unforeseeable. The section might reasonably be speaking of events involving different companies in the same group. Then, in the final words of the condition9 upon which an excluded individual may obtain the benefit of the section, "the company" is used as a noun. It should, in accordance with the Acts Interpretation Act include the plural unless the context otherwise indicates. The use of the definite article signifies little when the preceding use of the word to which it is attached might cover different events involving different companies. In its context reference to "the companies" is just as open as to "the company". [46] Having regard to the fact that the acts of a director may consist of acts in relation to a group of companies, there is nothing odd or contextually awkward in reading the final reference in s 56AC(6) to ―the company‖ as including ―companies‖. [47] The subject matter of the subsection is a limitation upon the universality of a declared status that affects an individual's right to earn a living as a builder. But it is also a part of legislation that is intended to protect the public. In these circumstances I do not think that much assistance is to be had from submissions suggesting on one side that a liberal interpretation 9 The conditional clause is "… if the first event and the other event are both consequences flowing from what is, in substance, the one set of circumstances applying to the company". -- 11 of 12 -- 12 should be given to the provision, or from the other that a restricted approach should be taken in its interpretation. [48] The meaning seems plain from ordinary grammatical interpretation, the apparent purpose that the legislation is entitled to achieve, the ―mischief‖ which it was designed to avoid, them from ordinary use of the Acts Interpretation Act. None of the above considerations require it to be read down to the situation of consecutive events to the one company. [49] I do not think that the alleged ―mirroring‖ by subsection 6 of subsection 5 (which refers to an excluded individual for a bankruptcy event) affords any sufficient reason to demand a singular interpretation of subsection 6. Bankruptcy is necessarily concerned with an individual while corporate conduct by directors may involve multiple companies and involves many complex situations and combinations. [50] Mr Dinsey's situation is that in order to avoid "excluded individual" status he must succeed in raising s 56AD(8) as applicable to all 7 company events. He has submitted that it is oppressive that he be required to deal with each company separately, but I note that all proceedings are currently listed together. It may reasonably be expected that all matters will be heard together, that Mr Dinsey’s conduct in relation to his control of the group may be the central issue in each matter, and that the one set of evidence might reasonably cover all matters. [51] Even if he fails to bring himself within s 56AD(8) with respect to the first event, he may still avoid the consequences of permanent exclusion (under section 58) if he succeeds in obtaining a finding that the circumstances satisfy the requirements of s 56AC(6). The effect of this decision is that such a finding is open when the first event relates to one company and the other events relate to other companies. Orders 1. Leave to appeal is granted 2. The appeal is allowed. 3. The order of 22 May 2012 is set aside. 4. It is determined that the answer to the question ―can section 56AC(6) of the Queensland Building Services Authority Act 1991 have application where the first event relates to one company and the other event or events relates to a different company or companies?‖ is ―yes‖. -- 12 of 12 --