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O'Brien v Queensland Building and Construction Commission[2015] QCAT 105

O'Brien v Queensland Building and Construction Commission[2015] QCAT 105

CITATION:

O'Brien v Queensland Building and Construction Commission [2015] QCAT 105

PARTIES:

Craig O'Brien

(Applicant)

v

Queensland Building and Construction Commission

(Respondent)

APPLICATION NUMBER:

OCR348-12

MATTER TYPE:

Occupational regulation matters

HEARING DATE:

14 March 2014

HEARD AT:

Rockhampton

DECISION OF:

Member Beckinsale

DELIVERED ON:

8 April 2015

DELIVERED AT:

Brisbane

ORDERS MADE:

  1. The decision of the Queensland Building and Construction Commission refusing to categorise Craig O'Brien as a permitted individual is confirmed.

CATCHWORDS:

PERMITTED INDIVIDUAL – whether applicant should be categorised as a permitted individual – whether took all reasonable steps – (failure to satisfy requirement to keep proper books and records, failure to satisfy requirement to seek appropriate financial advice, failure to put in place appropriate credit management for amounts owing and taking reasonable steps for recovery of the amounts, failure to make adequate provision for taxes)

Queensland Building and Construction Commission Act 1991 (Qld) ss 56AC, 56AD

Queensland Civil and Administrative Tribunal Act 2009 (Qld) s 20

Younan v QBSA [2010] QDC 158 followed

Gary Morrison Constructions Pty Ltd v QBSA [2012] QCATA 77 referred

APPEARANCES:

APPLICANT:

Craig O'Brien represented himself

RESPONDENT:

Queensland Building and Construction Commission represented by Susan Van Eyk

REASONS FOR DECISION

Application

  1. [1]
    Mr O'Brien holds a licence as a Builder-Low Rise and Carpentry with the Queensland Building Services Authority (as it was then).
  2. [2]
    On 16 August 2012, the Authority sent a notice to Mr O'Brien advising that the Authority considered him to be an excluded individual by reason of his entering into bankruptcy on 29 February 2012. Under the current Queensland licensing system for builders, an excluded individual’s building licence is cancelled for five years.[1]
  3. [3]
    An excluded builder can apply to be a permitted individual allowing the builder to retain the building licence if the builder can satisfy the Commission that all reasonable steps were taken to avoid the coming into existence of the circumstances that resulted in the happening of the relevant event, in this case, bankruptcy.[2]
  4. [4]
    On 25 September 2012, the Authority refused an application by Mr O'Brien to be categorised as a permitted individual under section 56AD(1) of the then Queensland Building and Services Authority Act 1991.
  5. [5]
    Mr O'Brien seeks a review of that decision.

Legal Framework

  1. [6]
    The Tribunal must conduct a fresh hearing on the merits[3] as to whether Mr O'Brien took all reasonable steps to avoid the circumstances of the bankruptcy and may have regard to evidence not available to the original decision maker. The Tribunal must stand in the shoes of the decision maker and make the correct and preferable decision under section 56AD in relation to the bankruptcy event.
  2. [7]
    The Queensland Building and Construction Commission Act 1991 (the Commission Act) sets out the matters the Commission (and therefore this Tribunal) must have regard to when examining any action by the excluded builder to show that he took all reasonable steps to avoid the coming into existence of the circumstances that resulted in the happening of the relevant event.[4]
  3. [8]
    The list of factors to be considered is not exhaustive and the decision maker may also have regard to other matters when deciding whether all reasonable steps were taken.[5] 
  4. [9]
    The leading decision of Judge McGill[6] identifies a four step process when determining a permitted individual:
    1. identify the relevant event;
    2. identify the circumstances that resulted in the happening of the relevant event:
    3. determine whether the applicant took all reasonable steps to avoid the coming into existence of those circumstances; and
    4. if the threshold test is satisfied, consider whether discretion should be exercised to classify the applicant as a permitted individual.
  5. [10]
    His Honour observed that the legislation is ‘concerned with the prudent management of a company as an ongoing business’.[7]
  6. [11]
    His Honour continued

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 might have not 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 benefit of hindsight.[8]

  1. [12]
    It is for the applicant to satisfy the decision maker that he took all reasonable steps to avoid the coming into existence of the circumstances that resulted in the happening of the relevant event.[9]
  2. [13]
    On review the Tribunal may confirm or amend the decision; set aside and substitute its own decision; or set aside the decision and return the matter for reconsideration by the decision maker.[10]

Background

  1. [14]
    Mr O'Brien commenced work in the building industry in Melbourne as an apprentice aged 16. He left to play football professionally for around twelve years, in Melbourne and later in Sydney where he also built and sold a number of houses.
  2. [15]
    He and his wife Samantha O'Brien then moved to the Gold Coast where they bought residential properties, some of which they lived in, which they renovated and sold for profit. Mr O'Brien said he also worked as a carpenter for various companies from time to time and as a coach for a football club.

Sale of Coobowie Street to DKR Investments Pty Ltd

  1. [16]
    Mr O'Brien and his wife purchased and renovated a property at 5 Coobowie Street Broadbeach Waters which they sold by contract of sale dated 31 May 2007 to DKR Developments Pty Ltd for $1,325,000. The purchase price was to be paid by way of $1,000 deposit, $944,000 at settlement, another $331,250 (25%) after 12 months and the balance after 24 months. Interest on the outstanding balance was to be paid by the purchaser each quarter. Security on the loan to the purchaser comprised a second mortgage to the O'Briens as vendors and a personal guarantee from the director of DKR Developments, Glen Duker.
  2. [17]
    On the recommendation of a representative of DKR Investments the O'Briens engaged David Evans principal of Del Lawyers to act on their behalf in relation to the sale. Mr O'Brien said Del Lawyers cost ten times the cost of a conveyancer but Mr O'Brien had no experience of a second mortgage and wanted to be sure it was done properly. He said he specifically asked what would happen if the balance was not paid and that David Evans reassured him that he had Glen Duker’s personal guarantee and that Mr Duker also had an extensive property portfolio. Mr O'Brien also knew Glen Duker was the pastor of a local church and a solicitor with his own practice.
  3. [18]
    In response to a question as to whether he sought financial advice about the Coobowie Street sale as well as legal advice, Mr O'Brien said Mr Evans’ firm went by the description “Del Lawyers & Corporate Advisors” which he appeared to take as meaning they were financial advisors as well. 
  4. [19]
    Documentation provided by Mr O'Brien[11] indicates the net amount paid to Mr and Mrs O'Brien at settlement on 11 July 2007 was $37,060 although Mr O'Brien’s oral evidence at one point was that it was around $100,000. In any event, most of the settlement sum of $944,000 from Coobowie Street paid the O'Brien’s mortgage on that property.

TE Peters Drive

  1. [20]
    The O'Briens contracted on 30 April 2007 to purchase a house at 85 TE Peters Drive, Broadbeach Waters for the sum of $1,060,000 with settlement on 30 July 2007.[12] Mr O'Brien gave contradicting oral evidence as to whether the sale proceeds from Coobowie Drive were applied to buy TE Peters Drive or whether he had $100,000 from another source. He said they borrowed more than they usually did to buy TE Peters Drive, intending to rely on the interest they expected to receive from DKR Developments to pay the mortgage. In oral evidence Mr O'Brien said he thought he had purchased TE Peters Drive for $850,000. 
  2. [21]
    Mr O'Brien’s oral evidence was that he spent $50,000[13] on TE Peters Drive to make it liveable before moving in. He said being able to rely on the interest payments from DKR Developments to pay the mortgage gave he and his wife a chance to “rest and recharge” for 12 months. Once they received the further $331,250 due 11 July 2008 from DKR Developments he planned to refinance the loan at a better rate and commence the more major renovations which he said would result in a substantial profit being made on the sale.
  3. [22]
    Mr O'Brien was asked from whom he sought financial advice in relation to the loan to purchase TE Peters Drive. He replied ‘the real estate guy from whom we bought properties’ and being ‘involved with the footy club there I asked the banks what they thought because it was a quick settlement for only a short period of time. It would cost thirty grand but I was happy to wear that because it was a good buy’. 
  4. [23]
    After settlement of Coobowie Street on 11 July 2007 when $944,000 was paid, sums totalling a further $20,000 only were received from DKR Developments. Mr O'Brien and his wife attempted to contact Glen Duker to seek payment. David Evans assisted them with preparing a letter of demand dated July 2008 which Mr or Mrs O'Brien delivered to Mr Duker’s home and office but Mr Evans later declined to represent the O'Briens further in the matter.
  5. [24]
    Without the payments from DKR Investments Mr O'Brien said they used all their savings. They began using money from the business and became behind with payments to suppliers and contractors. Once it became clear DKR Investments were not going to pay what was owed Mr O'Brien said they were forced to sell the property without making the planned renovations which resulted in a shortfall on the mortgage due to a higher sale price not being achieved. Mr O'Brien’s documents indicate TE Peters Drive was sold 8 December 2008 for $1,130,000.[14]
  6. [25]
    Although Mr O'Brien claimed that TE Peters Drive was valued at $1.3 million after he completed initial renovations, given the purchase price and cost of renovations total $1,125,000, it seems the O'Briens had minimal equity in this property at any time.
  7. [26]
    DKR Developments and Mr Duker and his wife became bankrupt in January 2009.

Claim against Del Lawyers

  1. [27]
    Around mid 2009 the O'Briens sought legal advice from Gary Scott of Southern Gold Coast Lawyers. That firm filed a statement of claim on their behalf on 6 July 2010 claiming damages of up to $2,670,000 from David Evans for negligence and breach of contract, essentially for his failure to ensure security for the vendor finance was adequate when Mr Evans knew, or ought to have known, that Glen Duker may have been in financial difficulty and further that he acted in the matter for both the O'Briens and Mr Duker.
  2. [28]
    Gary Scott provided a statement and gave oral evidence on Mr O'Brien’s behalf. He recalled that the O'Briens had sought advice in about mid 2009 regarding the claim against Del Lawyers but did not recall why it was not until mid 2010 that a statement of claim was filed. He confirmed the firm had accepted instructions on a speculative basis and he considered there had been good prospects of succeeding with the claim which he recalled as being in excess of $2 million. He had ceased working for Southern Gold Coast Lawyers in about August 2011. He confirmed Mr O'Brien’s evidence that the O'Briens requested he continue to represent them but that Southern Gold Coast Lawyers would not release the file.  
  3. [29]
    Mr O'Brien said that after Mr Scott left Southern Gold Coast Lawyers the lawyer who took over the file advised that the amount they could expect to receive was much less than what had been claimed and that they had been considering an offer of $130,000 to settle. He said once he was bankrupt only his wife could proceed with the claim and that she was pursuing her half entitlement only. He was unable to explain the current status of the claim. Mr O'Brien’s Trustee in Bankruptcy notes in the Report to Creditors that Samantha O'Brien did not accept a proposal to accept assignment of Mr O'Brien’s right to claim against Del Lawyers and no explanation was given by Mr O'Brien.

Palm Beach Units and claim against Donald Reynolds

  1. [30]
    Mr O'Brien had also purchased a property comprising three units at 9 Eighth Avenue, Palm Beach in October 2007 for $450,000. He said his mother moved from Melbourne to live in one of the units and that she contributed $100,000 to the purchase. He said he spent $50,000 or $60,000 ‘cash from footy’ on renovating the units. When they began experiencing financial difficulty he decided to sell this property and repay his mother the $100,000. Mr O'Brien said they entered into a contract for the sale of the Palm Beach units which fell through because the property was not registered as units and subsequently could only sell the property as a house. Although Mr O'Brien gave differing figures in oral evidence, copies of correspondence between lawyers which has been provided by Mr O'Brien states the contract which had been due to settle on 17 June 2010 was for $710,000 and the sale which proceeded on 10 November 2010 was for $495,000.
  2. [31]
    Solicitor Donald Reynolds had acted on the O'Briens’ behalf when they purchased the units but Mr O'Brien said Mr Reynolds failed to carry out council searches which would have revealed the property was not legally units. The O'Briens engaged Southern Gold Coast Lawyers (which was confirmed by Gary Scott) to pursue a claim for negligence against Mr Reynolds also. A draft statement of claim against Mr Reynolds for breach of contract and negligence is included amongst Mr O'Brien’s documents.
  3. [32]
    Mr O'Brien said Mr Reynolds admitted his negligence to him but copies of correspondence from that firm provided by Mr O'Brien state that as Mr O'Brien had advised he was redeveloping the property, council notices were redundant.
  4. [33]
    As regards the claim against Mr Reynolds, the evidence of Mr O'Brien was that they had been in negotiations with Reynolds’ insurers. They were told that a sum of $45,000 would need to be contributed by Mr Reynolds himself. Mr O'Brien said Mr Reynolds had gone bankrupt but Mr O'Brien was unable to explain why he had not continued negotiations with the insurer simply saying it was not his “focus”.

14 Andrea Avenue 

  1. [34]
    Additionally to the buying and selling of properties undertaken by Mr O'Brien and his wife, Mr O'Brien said he had also been involved in a partnership with Adrian Hill carrying out renovations, including renovations at a property owned by Valia Stephens at 14 Andrea Avenue, Broadbeach Waters in 2008.
  2. [35]
    Mr O'Brien’s oral evidence was that Ms Stephens may have owed him an amount as much as $130,000 which he was unable to recover.
  3. [36]
    Mr O'Brien provided a copy of an Application for Domestic Building Dispute to the then Commercial and Consumer Tribunal in relation to this job. The applicant is Adrian Hill t/as New Look Home Improvements and payment claimed is $14,337.75.
  4. [37]
    Mr O'Brien gave evidence that a lawyer represented him in this matter and that Mr O'Brien paid $13,000 for the matter to go to mediation. Mr O'Brien said at the mediation Ms Stephens said she had no money to pay the claim so he did not pursue it. How he was intending to recover a sum as much as $130,000, which he said was owed, when a claim for only $14,000 was made, Mr O'Brien was unable to explain, nor why he would pay $13,000 for a mediation.
  5. [38]
    Mr O'Brien admitted one of the difficulties with the claim against Ms Stephens was that he had not always obtained in writing the numerous variations to the contract.
  6. [39]
    Mr O'Brien’s evidence was that although Adrian Hill’s business, New Look Home Improvements received payments from Ms Stephens for this job, he had a verbal agreement with Mr Hill that he was responsible for the work and ultimately would receive a share of the profit. Mr O'Brien’s evidence was that he took responsibility for all the costs of materials for the job, including the cost of timber from Mid Coast Timber which was the trade creditor which ultimately proceeded with Mr O'Brien’s bankruptcy for a debt of a little over $14,000.
  7. [40]
    Mr Hill did not give evidence on Mr O'Brien’s behalf nor did the lawyer who acted in relation to the claim against Ms Stephens.

Repayment Arrangements with Creditors

  1. [41]
    Gary Scott confirmed evidence given by Mr O'Brien that in addition to pursuing negligence cases against Del Lawyers and Mr Reynolds, Southern Gold Coast Lawyers also had instructions to deal with the O'Briens’ creditors by keeping them informed and negotiating payments as required. Mr Scott expressed the view that had the creditors been able to await the outcome of the professional negligence claims, which he considered likely to succeed, they would have received payment in full in due course. Correspondence setting out Mr Scott’s dealings with creditors on behalf of the O'Briens was produced.
  2. [42]
    Mr O'Brien said that after Gary Scott left Southern Gold Coast Lawyers they were not kept adequately informed regarding their creditors and the bankruptcy proceedings by Mid Coast Timber went ahead despite the owners of that firm agreeing to accept small regular payments. Mr O'Brien said the owner did not advise the debt collection firm of the payments but he did not adequately explain why he did not communicate with the collection agency or the court as proceedings progressed. Mr O'Brien said he would have paid Mid Coast Timbers in full had he known that he would be bankrupted but there was no evidence to suggest he was not duly served with notices at all stages of the proceedings.

Evidence of Mr O'Brien’s Accountant

  1. [43]
    Mr O'Brien’s current accountant, Jason Simmonds, provided a letter and gave oral evidence on Mr O'Brien’s behalf. His letter (dated 14 February 2013 in error having been written 14 February 2014) stated he had been engaged by Mr and Mrs O'Brien to ‘help them move forward and to get their books and records in order as the last three years book work and financial records have suffered due to hardship and this unfortunate and stressful times (sic)’.
  2. [44]
    Mr Simmonds recalled that he may have first been engaged by the O'Briens around the time of the bankruptcy or a bit before ‘at the point of not being able to pay his previous accountant’. Mr Simmonds agreed that the financial records he had been working on included reconstructing books and records which had generally been done from bank statements and notations to bank statements. He said it had taken time because he worked on it sporadically and the records generally had been disorganised. He had also been trying to work out what the previous accountant had done. The period for which the financial records related he said was ‘a bit before the bankruptcy and probably going up to 12 months ago’.
  3. [45]
    Before that time he said the records were handled by the O'Briens previous accountant and ‘generally prepared quite well’. He said he had ‘no reason to believe they wouldn’t have been prepared adequately’.
  4. [46]
    Mr Simmonds thought the O'Briens’ business had been profitable. He said he at no time provided financial advice to Mr O'Brien and he was not qualified to do so.
  5. [47]
    Mr Simmonds said he had completed BAS statements for Mr O'Brien as part of getting his records in order but these were not lodged when due.

The Relevant Event

  1. [48]
    There was no disagreement that the relevant event was Mr O'Brien’s bankruptcy on 29 February 2012.

The Circumstances that Resulted in the Happening of the Event       

  1. [49]
    Mr O'Brien identified what he considered to be the main causes of the relevant event in his application to be categorised as a permitted individual received by the then Authority 14 September 2012 which can be summarised as follows:
    1. fraudulent property and investment scams by DKR Developments Pty Ltd and Mr Glenn Duker and consequent legal proceedings;
    2. legal proceedings against former solicitors; and
    3. failed repayment arrangements with creditors.
  2. [50]
    Other significant contributing causes identified by Mr O'Brien in his application were:

a) excessive interest payments on loan monies or capital losses on repayments;

b) economic conditions affecting industry; and

c) money owed to related entities.

  1. [51]
    Additionally in oral evidence Mr O'Brien referred to the failed investment of the Palm Beach units and Valia Stephens not paying him as ‘tipping us over the edge’.
  2. [52]
    In the Commission’s view, the circumstances which led to the happening of the relevant event were DKR Developments Pty Ltd’s default on vendor finance, undercapitalisation of assets, failing to keep accurate records, failed repayment arrangements with creditors and failing to put in place appropriate credit management for amounts owing and failing to take reasonable steps for recovery of the amounts.
  3. [53]
    Having regard to the evidence which I have summarised above, I find that the circumstances that resulted in the happening of the relevant event were: DKR Developments Pty Ltd’s default, the failed investments in TE Peters Drive and in the Palm Beach Units, undercapitalisation of assets, failure to be paid for work performed at 14 Andrea Avenue and failed repayment arrangements with creditors.

Did Mr O'Brien take all reasonable steps to avoid the coming into existence the circumstances which resulted in his bankruptcy?

  1. [54]
    Mr O'Brien represented himself. I found his written and oral evidence disorganised. He contradicted his own oral evidence. He had a poor grasp of dates or amounts. He did not provide one comprehensive, chronological written account of the circumstances in detail, which could have been supported by many of the documents he did produce. He blamed a lack of paperwork on his stressful situation, a lack of time given his long working hours away from his family, the number of years which have elapsed since the events occurred and a lack of money to pay for professional assistance. He clearly had not recently reviewed his evidence in any depth. He often referred to information he was asked about as being ‘all in the documents’.
  2. [55]
    Ms Van Eyk in discharging the Commission’s role as model litigant attempted in questioning Mr O'Brien, as she put it, ‘to try and piece together that information so the Tribunal can have a good understanding of what happened’.
  3. [56]
    I do not believe Mr O'Brien was being deliberately unhelpful nor dishonest, but in a proceeding where he has the onus of satisfying the Tribunal of the matters which would indicate he is a competent manager of his business, he did his case a disservice by not presenting himself as informed.
  4. [57]
    In considering the matters required by section AD(8A) as to whether Mr O'Brien took all reasonable steps to avoid the coming into existence the circumstances which resulted in his bankruptcy, I have had regard to the documents provided by Mr O'Brien and by the Commission as well as oral evidence of Mr O'Brien and his witnesses.

Section 56AD(8A)(a): Did Mr O'Brien keep proper books of account and financial record?

  1. [58]
    The evidence of Mr Simmonds is somewhat confusing. He said that he was dealing with financial records going back about 12 months, that before that they were handled by the previous accountant with ‘no reason to believe they wouldn’t have been prepared adequately’, yet he described the book work and financial records as having suffered ‘the last three years’.
  2. [59]
    Mr O'Brien asserted in giving his evidence that ‘before I lost the money, my paperwork was impeccable’. Earlier in responding to Ms Van Eyk he agreed his record keeping ‘could have been better but I didn’t have to worry about every cent because we always had money’.
  3. [60]
    He did not produce copies of financial records for these proceedings and provided no adequate explanation for his failure to do so.  He said his ‘focus’ was ‘trying to get my money back’ and paperwork was something he could improve on. 
  4. [61]
    I conclude from what has been stated by Mr O'Brien, that prior to his losing money through the default of DKR Investments he gave no priority to keeping records as he felt there was no need and subsequently, he did not have the time nor money to do so properly. The evidence of his current accountant is that financial records were not in order for the prior period of three years, that is, through 2011 to 2014, with the bankruptcy occurring 29 February 2012.
  5. [62]
    I am not satisfied that Mr O'Brien has kept proper books of account and financial records.

Section 56AD(8A)(b): Did Mr O'Brien seek appropriate financial and legal advice before entering into financial or business arrangements or conducting business?

  1. [63]
    I find that Mr O'Brien sought appropriate legal advice in relation to the sale to DKR Developments Pty Ltd and the purchase of the Palm Beach Units and that it was reasonable that he rely on that legal advice.
  2. [64]
    Mr O'Brien’s current accountant, Jason Simmonds, said he had not provided financial advice to Mr O'Brien and he was not qualified to do so.  Mr Simmonds was not involved in advising Mr O'Brien at the time of the circumstances resulting in his bankruptcy but Mr O'Brien did not provide evidence of any financial advice being obtained by him. Asserting that in relation to the sale of Coobowie Street, Del Lawyers were styled as “corporate advisors” does not establish that financial advice was obtained. 
  3. [65]
    In response to a question as to whether he had regularly reviewed his business to ensure he had enough capital to cover liabilities Mr O'Brien said

yes I would always have a couple of hundred thousand here or there I could always call on so it wasn’t a major concern for me. I’ve always been lucky enough to have cash… (and I) never really had to look at rainy days because I had money until this one thing hit me.

  1. [66]
    When asked how often he reviewed his financial position Mr O'Brien replied

we didn’t really have to because we knew what we were trying to make every time we sold a property 80 to 100,000. I came up here from Sydney with cash. We made good money down there so I wasn’t having to sit down with my finances because I always had money.

  1. [67]
    I do not know whether the real estate agent Mr O'Brien sought advice from was the agent for the vendor for this property or whether the ‘banks’ he talked to were the lenders at the high rate, but I do not find financial advice from those sources appropriate to the conduct of Mr O'Brien’s business nor the kind of financial advice contemplated by this section.
  2. [68]
    I am not satisfied that Mr O'Brien generally sought appropriate financial advice in relation to the conduct of his business. Such advice is quite distinct from merely keeping proper books of record although I was not satisfied in that regard either. Mr O'Brien may have avoided undercapitalising his assets if he had sought and taken financial advice.

Section 56AD(8A)(c): reporting fraud or theft to police

  1. [69]
    The evidence does not indicate fraud or theft as contemplated by this section was a cause or contributing factor.

Section 56AD(8A)(d): ensuring guarantees provided were covered by sufficient assets to cover the liability under the guarantees

  1. [70]
    The evidence does not indicate guarantees as contemplated by this section were a cause or contributing factor.

Section 56AD(8A)(e): Did Mr O'Brien put in place appropriate credit management for amounts owing and take reasonable steps for recovery of the amounts?

  1. [71]
    As regards the default of DKR Investments Mr O'Brien’s evidence was that he had to chase payment of even the first interest payment which was due in October 2007. He did so by phone calls to Mr Duker and his office. In July 2008 after DKR Investments failed to pay the amount of $331,250 due on 10 July 2008, a letter of demand only was delivered to Mr Duker. No legal proceedings were commenced against DKR Investments or Mr Duker although his bankruptcy did not occur until January 2009.
  2. [72]
    Mr O'Brien’s account of what occurred in relation to the renovation work he carried out at Andrea Avenue for Valia Stephens raises concerns about his business practices for ensuring he receives proper payment.
  3. [73]
    I find that Mr O'Brien has failed to provide sufficient evidence to establish that proper credit management policies existed or that reasonable steps were taken to recover monies owing.

Section 56AD(8A)(f): Did Mr O'Brien make appropriate provision for Commonwealth and State taxation debts?

  1. [74]
    The Report to Creditors states Mr O'Brien disclosed a debt of $2,255 as owed to the Deputy Commissioner of Taxation. That is not a large sum but Mr O'Brien has not produced evidence that he made appropriate provision for Commonwealth and State taxation debts. There was also evidence that BAS lodgements were not timely.

Discussion

  1. [75]
    Mr O'Brien, understandably has expressed frustration and distress with his experience and the fact that he feels “doubly punished” by bankruptcy and then the threatened loss of his licence which he says will help his and his family’s financial recovery. He says he has done nothing wrong with building work. However the consequences to Mr O'Brien are not a relevant consideration, whatever sympathy the Tribunal might have.
  2. [76]
    Part 3A of the Commission Act was designed to exclude individuals from the building industry for a five year period if they demonstrate their “incapacity to manage” their own finances or the finances of a company of which they are a director, secretary or influential person.[15] As has been observed by Member Brabazon QC:

It is well known, that Queensland homeowners, and subcontractors, have suffered serious losses because of the failures and bankruptcies of some builders. It is clear that the …Act now sets out to deal sternly with bankrupt builders.[16]

  1. [77]
    I find that Mr O'Brien has not taken all reasonable steps to prevent the coming into existence of the circumstances resulting in his bankruptcy. He has failed to show that he kept proper books of account and financial records. He has not produced evidence of having sought appropriate financial advice before entering into financial or business arrangements or conducting his business. He has not shown that he put in place appropriate credit management or that he took reasonable steps for recovery of amounts owing.
  2. [78]
    If I am wrong in that conclusion, however, a matter I would have taken into account in not exercising discretion to classify him as a permitted individual is Mr O'Brien’s evidence about a recent venture.
  3. [79]
    Mr O'Brien said he had entered into an arrangement with Landtrak Investments Pty Ltd who had 150 – 200 blocks of land at Mt Morgan. He said Landtrak had put one of these vacant blocks in his name showing a purchase price of $85,000 on a contract of sale and given him $50,000 to construct a dwelling on that block. He said this was done to make it appear there had been a sale at arms length and to put the sale price up. He said there was nothing in writing other than the contract of sale and he was not required to actually make repayments. He said Landtrak needed to ‘use his licence’ and when other blocks sold he expected to build more houses. Although at the hearing Mr O'Brien maintained that he was never required to pay Landtrak, that the block was a gift for building the first house to get the development moving, the Report to Creditors reports Landtrak has a registered mortgage over the block for $135,000. The block remains vacant and it would appear Mr O'Brien is in dispute with Landtrak.
  4. [80]
    In my view this type of approach to business arrangements does not lead to a conclusion that discretion should be exercised in Mr O'Brien’s favour.

Order

  1. [81]
    The decision of the Queensland Building and Construction Commission refusing to categorise Craig O'Brien as a permitted individual is confirmed.

Footnotes

[1] Queensland Building and Construction Commission Act 1991 s 56AC.

[2] Ibid s 56AD.

[3] Queensland Civil and Administrative Tribunal Act 2009 (QCAT Act) s 20.

[4] Queensland Building and Construction Commission Act 1991 s 56AD(8A).

[5] Ibid s 56AD(8B).

[6] Younan v QBSA [2010] QDC 158.

[7] Ibid [24].

[8] Ibid [26].

[9] Ibid [37].

[10] QCAT Act s 24(1).

[11] Statement of Claim filed 6 July 2010 in the Supreme Court Brisbane Registry 6997/10 O'Brien v Evans trading as Del Lawyers & Corporate Advisors (BN18297470).

[12] Ibid.

[13] Statement of Claim states the amount was $65,000.

[14] Ibid.

[15] Explanatory Notes to Bill introducing part 3A of the then Queensland Building Services Authority Act 1991.

[16] Gary Morrison Constructions Pty Ltd v Queensland Building Services Authority [2012] QCATA 77.

Close

Editorial Notes

  • Published Case Name:

    Craig O'Brien v Queensland Building and Construction Commission

  • Shortened Case Name:

    O'Brien v Queensland Building and Construction Commission

  • MNC:

    [2015] QCAT 105

  • Court:

    QCAT

  • Judge(s):

    Member Beckinsale

  • Date:

    08 Apr 2015

Appeal Status

Please note, appeal data is presently unavailable for this judgment. This judgment may have been the subject of an appeal.

Cases Cited

Case NameFull CitationFrequency
Gary Morrison Constructions Pty Ltd v Queensland Building Services Authority [2012] QCATA 77
2 citations
Jump To
Cite 1 - [2012] QCATA 77
Cite 2 - [2012] QCATA 77
Younan v Queensland Building Services Authority [2010] QDC 158
5 citations
Jump To
Cite 1 - [2010] QDC 158
Cite 2 - [2010] QDC 158
Cite 3 - [2010] QDC 158
Cite 4 - [2010] QDC 158
Cite 5 - [2010] QDC 158

Cases Citing

No judgments on Queensland Judgments cite this judgment.

1

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