Dinsey v Queensland Building Services Authority [2012] QCAT 690

CITATION: Dinsey v Queensland Building Services Authority [2012] QCAT 690 PARTIES: Gregory Thomas Dinsey (Applicant) v Queensland Building Services Authority (Respondent) APPLICATION NUMBER: OCR019-12 / OCR036-12 / OCR037-12 / OCR038-12 / OCR039-12 MATTER TYPE: General administrative review matters HEARING DATE: On the papers HEARD AT: Brisbane DECISION OF: Kenneth Barlow SC, Member DELIVERED ON: 22 May 2012 DELIVERED AT: Brisbane ORDERS MADE: The tribunal orders 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 “No.” CATCHWORDS: Professions and trades – Builders – Licences and registration – Other matters – Building contractor‘s licence – ―Excluded individual‖ – Whether section 56AC(6) of the Queensland Building Services Authority Act 1991 can apply where relevant company events flowing from the one set of circumstances relate to two different companies Queensland Building Services Authority Act 1991, ss 56AC, 56AE, 58 APPEARANCES and REPRESENTATION (if any): The proceeding was determined on the papers under s 32 of the Queensland Civil and Administrative Tribunal Act 2009. -- 1 of 11 -- 2 REASONS FOR DECISION Introduction [1] Since August 2003, Mr Dinsey has held a building contractor‘s licence pursuant to the Queensland Building Services Authority Act 1991 (the QBSA Act) in the class of Builder-Medium Rise. [2] On 22 September 2011, the respondent (the QBSA) decided that Mr Dinsey is an ―excluded individual‖ for each of seven ―relevant events‖, and that he is a ―permanently excluded individual‖ in respect of seven of those events.1 [3] As a permanently excluded individual, Mr Dinsey is ineligible to hold a licence under the QBSA Act and is taken not to be a fit and proper person for part 3, division 2 of that Act.2 [4] Mr Dinsey has applied for the Tribunal to review each of the QBSA‘s decisions. The Tribunal has directed that the following preliminary question be determined in each matter: ―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?‖ [5] For the reasons set out below, I consider that the answer to that question is ―no‖. [6] For simplicity, for the purposes of determining the question I shall refer only to the facts in proceeding number OCR019-12. In that application, Mr Dinsey seeks a review of three decisions of the QBSA which relate, respectively, to his directorship of Wimmer (NSW) Pty Ltd, Cooroy Mountain Services Pty Ltd and Cooroy Mountain Distribution Pty Ltd. The other proceedings are applications by Mr Dinsey to review the QBSA‘s decisions relating to his directorship of 4 other companies, each of which was placed into voluntary administration on 1 September 2011. Factual Background [7] Mr Dinsey was a director (and in most cases the sole director) of the relevant companies. On 12 June 2011, liquidators were appointed to each of Wimmer and Cooroy Mountain Services, in creditors‘ voluntary liquidations. [8] On 1 September 2011, administrators were appointed to Cooroy Mountain Distribution upon a resolution by that company to that effect. [9] Mr Dinsey contends (and I shall assume, for the purposes of determining the preliminary question, that he would prove) that: 1 The terms in inverted commas are relevantly defined in ss 56AC and 58 of the QBSA Act. 2 Sections 59 and 60. -- 2 of 11 -- 3 a) all of the companies of which he was a director were members of the same group of companies and their affairs and operations were interrelated; and b) the appointment of liquidators and administrators to each of the companies resulted from the failure of Wimmer and its business, which was caused by events beyond the control of Mr Dinsey, and which created a ―domino effect‖ leading to the failure of the entire group. [10] In making its decisions, the QBSA determined that the liquidation or administration of each of the companies of which Mr Dinsey was a director was a relevant company event.3 In relation to Wimmers, it determined that Mr Dinsey was an excluded individual for a relevant company event comprising the appointment of liquidators to Wimmers. [11] In the case of Cooroy Mountain Services, the QBSA determined that Mr Dinsey was an excluded individual for the relevant company event, also comprising the appointment of liquidators to that company. It went on to inform Mr Dinsey that, as an excluded individual for that event as well as for the Wimmer event, he would be considered a permanently excluded individual. [12] The QBSA also considered that Mr Dinsey was an excluded individual for a relevant company event in respect of Cooroy Mountain Distribution, the event being the appointment of administrators to the company. In that case also, it informed Mr Dinsey that, as an excluded individual in respect of that event, he would be a permanently excluded individual having regard to his status as an excluded individual in respect of each of the first two relevant company events. [13] Similar decisions were made in respect of each of the other four companies. [14] This is, broadly speaking, the context in which the question now posed must be answered. Relevant legislation [15] Section 56AC falls within part 3A of the QBSA Act, which is headed ―Excluded and permitted individuals and excluded companies‖. Both part 3A and part 3B (headed ―Permanently excluded individuals‖) are relevant to the construction of s 56AC. [16] For convenience, I set out below the sections of the Act which, to my mind, are particularly relevant in determining the preliminary question: “56AC Excluded individuals and excluded companies (1) This section applies to an individual if— 3 That term is defined in s56AC(2)(b) by reference to the events mentioned in paragraphs (a)(i) and (a)(ii) of that subsection. -- 3 of 11 -- 4 (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) 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 -- 4 of 11 -- 5 considers the individual to be an excluded 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. 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. … (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 -- 5 of 11 -- 6 (d) whether the relevant event happened before or after the commencement of this section, subject to subsection (5). 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. Schedule 2 company means any body corporate. excluded individual, for a relevant event, see section 56AC(3) and (4). relevant company event see section 56AC(2)(b).‖ [17] Part 3A was inserted into the QBSA Act by the Queensland Building Services Authority Amendment Act 1999 (Act No. 43 of 1999). In his submissions, Mr Dinsey refers to certain parts of the explanatory note for the Bill that became that Act and parts of the Minister‘s second reading speech upon the introduction of that Bill. For convenience, I shall set out the relevant parts of those documents. ―Explanatory note (pages 18-19) A major deficiency with the existing regulatory structure has been the ability of defaulting contractors to restructure their corporate structure to re-emerge as a ‗phoenix‘ company following cancellation of a licence. This new part is designed to remove individuals who have demonstrated their incapacity to manage finances from the building industry for a 5-year period. … -- 6 of 11 -- 7 S56AC sets up the concept of how individuals and companies become defined as ―excluded individuals‖ and ―excluded companies‖ in terms of relevant events. S56AC(1) establishes the concept for individuals, on the basis that the relevant event relates to their own financial circumstances. In this case, the relevant event happens when they take advantage of the laws of bankruptcy or become bankrupt. S56AC(2) similarly establishes the concept for an individual where the relevant event arises from their role in a company, tying the relevant event to the appointment of a provisional liquidator, liquidator, administrator or controller, or winding up for the benefit of creditors. S56AC(3) establishes that an individual is an excluded individual in respect of a relevant event if the requirements set out in subsection (1) are met. S56AC(4) does the same thing in respect of subsection (2). S56AC(5) and (6) establish that an excluded individual‘s status as an excluded individual is tied to a single relevant event.‖ Second Reading Speech (Hansard, 21 July 1999, page 2772) ―The Bill introduces a range of enhancements to the existing licensing system for the benefit of consumers and industry participants. Ultimately, they will improve public confidence in the integrity of the system. First, the Bill contains provisions to prevent bankrupts and persons associated with bankruptcy from holding or being associated with a building contractor‘s licence for a period of 5 years. This will prevent the re-emergence of shonks through the device of ‗phoenix‘ companies. The scheme introduced by the Bill provides for ‗excluded individuals‘, who may not hold a licence. These are bankrupts or individuals who take advantage of the laws of bankruptcy, such as through entering into a ‗part 10 arrangement‘ with creditors, or who are associated with a failed company. They will be ‗excluded individuals‘ for 5 years from the relevant event. So as to prevent injustice, a person who becomes an excluded individual may apply to the Building Services Authority to have that status expunged. To do so, they will have to prove that they could not have avoided the relevant financial catastrophe. This is intended to mean that the cause of the relevant event was entirely outside the responsibility of the individual concerned.‖ Submissions and consideration Summary of Mr Dinsey’s contentions [18] Mr Dinsey submits that, if he is an excluded individual for a relevant company event arising from the liquidation of Wimmers, then he cannot become an excluded individual for a relevant company event concerning Cooroy Mountain Services or Cooroy Mountain Distribution because all three events are consequences flowing from what was in substance the one set of circumstances applying to all the companies, namely the collapse of the entire group of companies, which had interrelated accounts and operations. His submission is that this falls within the circumstances described in s 56AC(6). He sets out seven reasons for that submission. I shall consider them each individually. Singular includes the plural [19] First, he relies upon s 32 of the Acts Interpretation Act 1954 (the AIA) for the proposition that the reference in subsection (6) to the one set of -- 7 of 11 -- 8 circumstances applying to ―the company‖ means the one set of circumstances applying to ―the company or companies‖. He submits that the meaning of ―the company‖ is not limited to one company, but includes all companies within the one company group in respect of which there may have been a relevant company event. In other words, if a number of companies in one group fail as a result of one set of circumstances, then a director of those companies cannot be an excluded individual for more than one relevant company event. [20] Section 32 of the AIA provides that, in an Act, words in the singular include the plural and words in the plural include the singular. However, that is not an inflexible rule, as s 4 of that Act provides that the application of the Act may be displaced, wholly or partly, by a contrary intention appearing in any Act. The question is whether a contrary intention appears in the QBSA Act. In my opinion it does, for a number of reasons. [21] Subsection 56AC(2)(a) refers to an event occurring to a company. The various events referred to are then each defined in paragraph (b) as being a ―relevant company event‖. Subsection 56AC(6) then raises the possibility of two or more relevant company events which flow from one set of circumstances applying to the 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. [22] It is notable that a number of the events defined as relevant company events could occur sequentially to one company. For example, the company might appoint an administrator; before or after that happens, a secured creditor may appoint a controller (such as a receiver and manager); a court may appoint a provisional liquidator; a court may then order that the company be wound up and that a liquidator be appointed; and finally the company may be wound up in the sense that the winding up is completed. Each of those steps would be a relevant company event. If each of them arose from the one set of circumstances applying to that company, then the effect of subsection (6) is that a director of the company could only be an excluded individual for the first of those events to occur. Section 58(1)(a) would then not apply to that person. [23] It is also notable that subsection (6) mirrors subsection (5), which refers to an excluded individual for a relevant bankruptcy event. That subsection also says that an excluded individual does not become an excluded individual for another relevant bankruptcy event if both events are consequences flowing from what is in substance the one set of circumstances applying to the individual. It is clear that that subsection can only apply to the one individual, who may have, for example, entered into a part 10 arrangement and then declared himself or been declared bankrupt. The use of exactly the same phraseology in subsection (6) indicates that it is intended to have the same effect and to refer only to one company. [24] For these reasons, I consider that a contrary intention appears in s 56AC and that the reference in subsection (6) to ―the company‖ is to a single company the subject of two or more events. -- 8 of 11 -- 9 No application to winding up [25] Mr Dinsey‘s second submission is that, because one of the relevant company events is winding up, and winding up is a final and once only event for a company, if one company were wound up and the person were an excluded individual for that event, that same company could not be wound up again or have any other relevant company event occur to it and therefore subsection (6) would have no application. Therefore, he contends, subsection (6) must apply to separate companies. [26] I do not agree with this submission. Even though the completion of the winding up of a company may be the only relevant company event that could occur to that company, that does not mean that there is no operation for subsection (6). It may not apply to that particular circumstance, but there are many circumstances in which it could apply, as I have outlined above in paragraph [22]. “Company” means “group of companies” [27] Mr Dinsey‘s third submission is that the term ―company‖ includes related entities under the same banner. He relies in particular on s 206F of the Corporations Act 2001 (Cth), which requires that the Australian Securities and Investments Commission consider whether companies are related before disqualifying a person from acting as a director as a result of acts of insolvency by each of a number of companies of which the person is a director. Mr Dinsey submits that the interrelationship between the companies is a relevant consideration under the QBSA Act because the Corporations Act 2001 forms the basis for the operation of the regulatory regime in the QBSA Act. [28] I do not agree with this submission. The Corporations Act 2001 regulates companies, but the QBSA Act relevantly regulates licences to companies and individuals. The QBSA Act sets out the circumstances relevant to whether a person is an excluded individual. The circumstances which must be considered by the ASIC in determining whether to disqualify a person from being involved in the management of a company are entirely different, and are irrelevant to the interpretation of the QBSA Act. Consequences require a broad construction [29] Mr Dinsey‘s fourth argument is that, because of the serious consequences of becoming a permanently excluded individual, a broad construction of s 56AC(6) is required. He also notes that s 58(7) authorises a decision that a person is a permanently excluded individual by reference to events which may be a long time apart. He submits that that subsection suggests that the events may relate to two separate companies and therefore the events referred to in s 56AC(6) must also be able to relate to two separate companies. [30] I do not accept that submission. Subsection 58(7) allows for separate events relating to separate companies (or the same company) to have occurred years apart and yet be relevant to determining whether an individual has been an excluded individual twice, but it also allows for the events to have been close together. -- 9 of 11 -- 10 [31] Furthermore, permanent exclusion does not apply if a person is categorised as a permitted individual and therefore the potential consequences of a person becoming a permanently excluded individual are ameliorated by later sections of the Act and are not, in my view, relevant to the construction of s 56AC. Corporate structures penalised [32] Mr Dinsey‘s fifth submission is that, if s 56AC(6) does not apply to companies within a corporate group, that appears to penalise persons such as Mr Dinsey who have a corporate group structure where the entire group, or several companies within it, collapse. [33] That may be the case, but that appears to be the legislative intention arising from the wording of the subsection. The fact that the subsection may have that effect does not permit me to construe the provision in a manner which its words do not allow. Reference to extrinsic material [34] Mr Dinsey‘s sixth submission is that, when one refers to the explanatory notes and the second reading speech for the Bill that introduced part 3A, it is clear that the part was directed at ―phoenix companies‖; that is, a company that has been formed by an individual who was a director of an earlier company that has gone into liquidation owing considerable funds to its creditors, where the later company effectively takes over the business of the earlier company. In other words, it was intended to apply to sequential companies owned and operated by the same persons, rather than to companies in a group owned and operated at the same time by the same persons. Mr Dinsey submits that that is how s 56AC(6) should be construed. [35] The purpose to which Mr Dinsey refers is certainly what is indicated in the explanatory note and the second reading speech. But the effect of the words of the Act is broader, and the words of the Act are what I must construe. As the High Court has said, the task of statutory construction must begin with a consideration of the text itself. Historical considerations and extrinsic materials cannot be relied on to displace the clear meaning of the text. The language which has actually been employed in the text of legislation is the surest guide to legislative intention.4 In other words, whatever such extrinsic material says about a proposed provision of an Act, if the words of the provision are themselves clear, or do not in fact provide for the meaning apparently intended, then whatever was said about the provision does not assist in construing it, nor can the extrinsic material extend or alter the meaning of the enacted words. [36] Subsection (6) is an exception to subsection (4), which declares that an individual is an excluded individual for a relevant company event if the section applies because of subsection (2). The section applies to an individual who was, when the relevant company event happened, a director or secretary of, or an influential person for, the company. The 4 Alcan (NT) Alumina Pty Ltd v Commissioner of Territory Revenue (2009) 239 CLR 27 at [47]. -- 10 of 11 -- 11 scope of the section is therefore very broad: anyone who falls within subsection (2) is an excluded individual for a relevant company event unless two relevant company events apply to the one company arising out of the one set of circumstances. Subsection (6), as well as subsection 58(7), makes it very clear that the creation of sequential ―phoenix‖ companies is not necessary to the potential for a person to become a permanently excluded individual. Objects of the Act [37] Mr Dinsey‘s final submission is that, in order to achieve the objects of the QBSA Act set out in s 3, s 56AC(6) should be construed broadly. To construe the term ―the company‖ as meaning one company rather than several companies in a group serves to prejudice a builder without any benefit to, or protection of, consumers. [38] This may be so, but ―company‖ means ―company‖. It is even defined in Schedule 2 as meaning ―any body corporate‖. A body corporate is an individual company, not a group of companies. Parliament could easily have worded the section to apply to related companies if it chose, but it did not. As the QBSA has said in its submissions, if Parliament intended the subsection to apply to a group, it could simply have omitted the words ―applying to the company‖. That would have allowed for the subsection to apply where relevant company events occurred to a number of companies flowing from one set of circumstances. [39] If that is not how Parliament wants the provision to operate, and the subsection applies more restrictively than Parliament intended, then it is a matter for Parliament to correct by amendment. Conclusion [40] Having regard to all these matters, it seems to me clear that the answer to the question posed is ―no‖. -- 11 of 11 --