Van Houdt v Queensland Building and Construction Commission
[2018] QCAT 230
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- Unreported Judgment
- Van Houdt v Queensland Building and Construction Commission[2018] QCAT 230
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Van Houdt v Queensland Building and Construction Commission[2018] QCAT 230
Van Houdt v Queensland Building and Construction Commission[2018] QCAT 230
QUEENSLAND CIVIL AND ADMINISTRATIVE TRIBUNAL
CITATION: | Van Houdt v Queensland Building and Construction Commission [2018] QCAT 230 |
PARTIES: | LUKE VAN HOUDT (applicant) v QUEENSLAND BUILDING AND CONSTRUCTION COMMISSION (respondent) |
APPLICATION NO/S: | OCR072-16 |
DELIVERED ON: | 10 July 2018 |
HEARING DATE: | On the papers |
HEARD AT: | Brisbane |
DECISION OF: | Member Paratz |
ORDERS: | The decision of the Queensland Building and Construction Commission made on 26 April 2016 to refuse to categorise Luke Van Houdt as a permitted individual pursuant to the Queensland Building and Construction Commission Act 1991 (Qld) is confirmed. |
CATCHWORDS: | PROFESSIONS AND TRADES – BUILDERS – LICENCES AND REGISTRATION – OTHER MATTERS – where the matter was returned by the Appeal Tribunal to the Tribunal for reconsideration– where the Tribunal was to reconsider with additional evidence relevant to the tax debt – where the further evidence did not show that adequate provision had been made for taxation – whether permitted individual Queensland Building and Construction Commission Act 1991 (Qld), s 86(1)(k) Queensland Building and Construction Commission v Vadasz [2014] QCATA 001 |
REPRESENTATION: |
|
Applicant: | Self-represented |
Respondent: | Robinson Locke Litigation Lawyers |
APPEARANCES: |
|
This matter was heard and determined on the papers pursuant to s 32 of the Queensland Civil and Administrative Tribunal Act 2009 (Qld). | |
REASONS FOR DECISION
- [1]This is a further decision in this matter.
- [2]I made a decision on 19 April 2017 confirming the decision of the Queensland Building and Construction Commission (‘QBCC’) to refuse to categorise Mr Luke Van Houdt (‘the builder’) as a permitted individual.
- [3]The builder appealed that decision, and the Appeal Tribunal made a decision on 27 October 2017 returning the matter for reconsideration with certain directions.
- [4]The QBCC and the builder filed further submissions in accordance with the directions of the Appeal Tribunal.
- [5]I gave Directions on 3 January 2018 as to the further hearing of the matter, and directed that the application would be determined on the papers unless either party requested an oral hearing. No application for an oral hearing was made.
- [6]This is the decision on the papers on reconsideration of the matter as directed by the Appeal Tribunal.
Decision of the Appeal Tribunal
- [7]The decision of the Appeal Tribunal was as follows:
- (1)Leave to appeal on the Applicant’s grounds 2 – 4 is refused.
- (2)The Appeal is allowed.
- (3)The decision of the Tribunal confirming the decision of the Queensland Building and Construction Commission to refuse to categorise the Applicant as a ‘permitted individual’ is set aside.
- (4)The matter is returned to the Tribunal for reconsideration with the hearing of additional evidence relevant to when the tax debt of Assured Builders Pty Ltd accrued and any payments were made to discharge the debt.
- (1)
- [8]The Appeal Tribunal directed that:
- (1)Each party must file in the tribunal two (2) copies and give to the other party one (1) copy of a statement of evidence it intends to rely upon in relation to when the relevant tax debt accrued, by:
- (1)
4.00pm on 8 December 2017
- [9]The Appeal Tribunal identified an error of law in relation to my findings as to Mr Van Houdt’s intentions as to payment to the Australian Taxation Office, and set aside the decision for the following reasons:[1]
[28] Ground 1 is expressed with an unfortunate lack of particularity, such that it might encompass either a question of law or a question of mixed law and fact. However, in its terms it alleges an error of law and it is uncontroversial that an error of law occurs if a finding of fact is made without relevant evidence.
[29] At paragraphs [65] and [66] of his reasons, the member states:
[65] I accept the statements of the builder [that is, Mr Van Houdt] that he would have been able to pay the tax owing by a combination of funds in the company, amounts owing by creditors, his personal funds, and his financing arrangement with his bank.
[66] The importance of the builder’s evidence is that he could have paid the outstanding tax liability, of which he was aware, if he had chosen to, but that he made a deliberate decision to not pay the tax until such time as he considered it absolutely necessary. (emphasis added).
[30] After the hearing of the appeal, we directed the parties to file a document identifying any evidence in support of the finding in paragraph [66]. Neither party identified any evidence to support the finding that Mr Van Houdt decided not to pay the tax until he considered it absolutely necessary to do so.
[31] We accept that an inference might be drawn from the conclusion at paragraph [65] of the reasons that Mr Van Houdt had made a deliberate decision not to pay the tax at that time. It may also be possible to draw an inference, from evidence regarding the discussions between Mr Van Houdt and the ATO and his efforts to sort out the correct amount of his tax liability, that he had decided not to pay the tax debt until he had determined the correct amount and the debt had been adjusted to reflect the correct amount.
[32] There is also evidence that Mr Van Houdt prioritised payment of other creditors over paying the ATO. However, we cannot identify any evidence to support the finding that Mr Van Houdt decided not to pay the tax ‘until such time as he considered it absolutely necessary’.
[33] A conclusion that Mr Van Houdt did not take ‘all reasonable steps’ to avoid the Company going into liquidation might more readily be reached if Mr van Houdt deliberately chose not to pay the debt until he had determined it absolutely necessary than if he chose not to pay the debt until he had determined the correct amount payable.
Submissions on reconsideration by the builder
- [10]The builder filed further submissions on 15 December 2017 in response to the directions of the Appeal Tribunal.
- [11]In those submissions, the builder recounted the history of the business, and the involvement of a joint director, Mr Thurgood. He said that, by mid-2013, negotiations were held with Mr Thurgood for his removal as a Director.
- [12]The builder went on to say that moneys promised by Mr Thurgood were not forthcoming and a decision was made in late 2013 to ‘wind back the company for repair was made’.[2]
- [13]The builder says that tax had been outstanding back to late 2013:[3]
14. Some of the accrued tax does date back to when the winding down process began and indeed formed part of the purpose to remedy. But to narrow down the decision to simply when the tax accrued removes all context and reference to the circumstances I found myself in. It does not give consideration to the state of the company at the point of the surprise event, almost completely repaired. The Report to Creditors shows only 2, one being the company’s bank that was within terms, the other being the incorrect tax amount.
- [14]The builder submits that the directions made by the Appeal Tribunal were unjust in their narrowness:[4]
35. With respect members, it seems unjust to narrow the focus of this appeal decision down to simply when the tax accrued, this completely removes all context of the circumstances at the time and importantly, what was already in process of remedy.
- [15]The builder submits that he was in discussion with the ATO and that he was ‘some 60 days out from the complete finalisation of its last hurdle in repair, being the outstanding ATO debt’.[5]
- [16]The builder submits that other steps could have been taken to avoid the event, but draws attention to the actions of the ATO:[6]
Perhaps there may have been other steps that could have been taken to avoid the event, but it certainly seemed like everything that could possibly be done at the time was either completed or well under progress. These things were openly communicated to the ATO and easily validated by the other parties involved in the remedy. The triggering of the actual event was due to the non response to a letter of demand and subsequent lack of response to the summons to Court. The Event was not triggered by any kind of inability or facility to satisfy what was required, or by any negligence by avoidance and delinquency, again referring to Younan v QBSA [2010] QDC at [26].
Submissions on reconsideration by the QBCC
- [17]The QBCC filed as submissions a ‘Timeline of Events’ on 19 October 2017, and a ‘Supplementary Bundle of Documents’ on 6 December 2017.
- [18]The timeline records the following items of interest.
- [19]On 4 January 2013, a long letter was sent from the builder to Mr Thurgood, which indicates that the builder was discussing a total GST debt of $76,000 as at 4 January 2013, of which $17,000 had been outstanding since 1 July 2011:[7]
I propose the following path… you honour your promise to pay GST from the past, the further $15k out of the $17k (pre 1/7/11). I purchase your 50% share for a dollar and take possession of Assured’s directorship, bank debt and GST component post 1/7/11 ($65k approx).
- [20]On 12 December 2013, a letter from the builder’s bookkeeper to the builder was sent which refers to the need to do something about paying down the tax owing, which was then $51,000:[8]
Email from Jewell “re tax” including:
“At $51k I implore you to pay $1,000 a week to bring it down to $20k at least. Who wants the drama they can bring to your life. What’s the plan Stan? What’s your earnings budget for the next 12 months. What’s your cash plan for the next 6 months. Let’s get some sort of plan on paper.”
- [21]On 23 February 2014, an email was sent from the builder to his bookkeeper which says that the builder would be paying the ATO an amount of $10k within the month:[9]
Curious this was lodged and recognised without a signature etc? Thanks for letting me know about the BAS amount. I expect to be forwarding them $10k within the month. It would be a little more but there is still a couple of other outstandings (sic) to settle.
- [22]The ATO Integrated Running Balance account showed a closing balance on 24 January 2015 of $75,301.92, and an amount on winding-up on 29 May 2015 of $75,747.31.
- [23]On 7 September 2015, the Return as to Affairs signed by the builder, showed an amount owing to the ATO of $35,559.22.
- [24]The supplementary bundle of documents includes a letter from the QBCC’s solicitors to the liquidator dated 23 November 2017 which asks:
For the purposes of the QCAT proceeding, it is necessary to ascertain the amount of tax debt that the company owed from time to time.
May we please inquire if the records of the insolvent company include a tax portal printout. We are seeking a copy of any such documentation.
- [25]The liquidator replied to that request by email on 4 December 2017 as follows:
I refer to your letter dated 23 November 2017 and advise that we were provided with very limited books and records of the company.
For your information, please find attached a copy of the Running Account Balance provided by the ATO shortly after our appointment.
- [26]The Running Account Balance shows an opening balance on 29 May 2013 of $33,783.59. General Interest Charges, self-assessed Goods and Service Tax, and Pay as You Go Tax withheld, then accrue, with only one single payment of $1,000.00 on 29 November 2013, resulting in an outstanding balance of $76,253.96 as at 24 June 2015.
Discussion
- [27]The builder acknowledged on the Return as to Affairs provided to the liquidator that there was an amount of $35,559.22 owing to the ATO at the time of winding-up.
- [28]The further material shows that the builder only paid $1,000.00 in tax in the approximate two-year period before the company was wound up.
- [29]The attitude of the builder to payment of tax to the ATO is recorded in the transcript of evidence of the hearing.
- [30]In cross-examination the builder was asked about paying the ATO and said that he paid other creditors in preference to the ATO, based on need, and that ‘The ATO is not going to starve tomorrow if you don’t pay them’:[10]
(Q): Right. So you paid out all of your employees but you didn’t pay out the ATO?
(A): …Well, when there’s a limited resource and, you know, I’m not an expert at this, but if you’re faced with a circumstance where Mr and Mrs Smith may not make their mortgage repayment next week or put food on the table for their children, but, yet, the amount of money that you owe the ATO is an immeasurable calculation difference on their monthly reconciliation in comparison – I exaggerate to – you know what I mean. I’m not discounting this, but you know, if you’ve got 10 bucks, you pay 10 bucks to the most likely – or the most needing person. The ATO is not going to starve tomorrow if you don’t pay them. Limited resources, two hands. Maybe that’s wrong, perhaps.
- [31]Similarly, the builder said in the course of closing submissions, and in a discussion with the representative for the QBCC, that ‘Whoever was going to suffer the worst gets paid first. Whoever’s going to suffer the least gets paid last.’[11]
Ms Roberts: So Assured wasn’t able to pay its debts, the ATO debt, when it fell due, which was…
Mr Van Houdt: Yes but…
Ms Roberts: …September 14.
Mr Van Houdt: … that is in the winding down process…
Ms Roberts: Yeah.
Mr Van Houdt: …which started in the beginning of ’14.
Ms Roberts: But it’s – the tax – you would’ve needed to provide for the tax leading up to when that letter was sent by the ATO.
Mr Van Houdt: Yes.
Ms Roberts: So the previous tax lodgements that were lodged with the ATO would’ve said how much the company’s income was, how much the expenses were, other details that the ATO need and you owe the ATO – sorry – the company owes the ATO a certain amount.
Mr Van Houdt: Agreed. If you don’t have it how do you pay it? And, as I said, the remedial process of the company was from January ’14. That’s where everything was getting fixed. From then, it wasn’t – it’s not like I had an infinite amount of resources available to do just whatever. It was prioritising the debts. Whoever was going to suffer the worst gets paid first. Whoever’s going to suffer the least gets paid last. I communicated, I spoke to them about the problems; they seemed cool.
- [32]In his closing submissions, the builder agreed that he had spent money which had been set aside for taxation on other debts, and said that he defined a ‘provision’ as an ability:[12]
The tax that I did set aside during the earlier parts of the company regrettably had to be touched up to fulfil other commitments here and there. So it’s not like it wasn’t as straightforward as that. And provisioning. The definition of provisioning. So provision in my mind is an ability. It’s not necessarily that you have or that its past tense, because you’ve paid it. It means that you can. You have an ability at that time. I mean, I know we’re arguing about paying tax and how bad it is that you don’t pay tax, but it seems unusual to not get the perspective of what was going on here. I think it wrote in one of my things that I’m sure most people that are facing this have gone headlong into a complete meltdown and couldn’t do anything, even on their day in court, and then they were made bankrupt and liquidated and whatever else. That would be the most common circumstance, I would imagine. Am I right?
- [33]The Appeal Tribunal raised the suggestion that, if the builder had not paid the tax because he chose not to pay the debt until he had determined the correct amount payable, that this would be a different consideration to the situation if the builder deliberately just chose not to pay the ATO until he had determined it absolutely necessary.
- [34]The material now shows clearly, and the builder has conceded in his further submissions, that tax was owed consistently prior to, and during the period, from late 2013 until the date of the event on 29 May 2015, and that further tax liability and interest continued to accrue.
- [35]In that latter period from late 2013 until the date of the event on 29 May 2015, the builder did not make any payment to the ATO, other than the sole payment of $1,000.00, or enter into any repayment agreement.
- [36]If the builder conceded that some tax was payable, but there was a genuine dispute or uncertainty as to the correct amount payable, then it would be expected that the builder would pay so much of the tax as he conceded, or at least make some contribution (as recommended to him by his bookkeeper in December 2013).
- [37]However, the builder concedes that he deliberately paid other creditors in preference to the ATO. His rationale was that the ATO did not need the money as much as the other creditors.
- [38]The material therefore shows that the builder chose not to pay any substantial amount of the tax assessed, not just because there was uncertainty as to the amount due, but because he deliberately chose to use the available funds to pay other creditors in preference to the ATO, and thereby did not have funds available to pay tax.
- [39]Section 56AD(8A) of the Queensland Building and Construction Commission Act 1991 (Qld) requires the QBCC, 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, to have regard to ‘(f) Making adequate provision for Commonwealth and State taxation debts’.
- [40]The meaning of the expression ‘provision’ was considered in Queensland Building and Construction Commission v Vadasz.[13] Senior Member Oliver said that ‘provision’ should be given its ordinary meaning, that there should be an existing fund or mechanism in place to ensure that payment of any tax liability could be made when required, and adopted the proposition that some form of priority should be given to tax debts:[14]
Although reference to “provision” does not necessarily mean actual payment of any tax liability, it should nevertheless be given its ordinary meaning. This would mean that there should be an existing fund or mechanism in place to ensure that payment of any tax liability could be made when required. To this extent, I agree and adopt what was said in Hyndman v Queensland Building Services Authority [[2009] QCCTB 240]:
That some form of priority being given tax debts by an entity, whether that be by setting aside a fund or an appropriate amount in cash flow arrangement, which will enable the settling of Commonwealth and State taxes when same fall due.
- [41]In a concurring judgment, Member Cullen expressed the view that more than the existence of a dispute with the ATO, which would eventually be paid, was required:[15]
Mr Vadasz should have considered the possibility that the taxation issues may not have resolved in his favour – there is no evidence before the Tribunal to suggest that his position in relation to the taxation issues was one of strength, and the intent of 56AD(8)(A)(f) must surely require more than the existence of a dispute with the ATO, self-assessed to be one that will result in the eventual debt being capable of being paid.
- [42]These descriptions of the meaning of ‘provision’ require far more than an ‘ability’ as submitted by the builder.
- [43]The further material does not show that proper provision was made by the builder for the payment of Commonwealth taxation debts.
- [44]It appears that the ATO became impatient and proceeded to enforcement proceedings on the basis that tax was outstanding. It is very unfortunate that the enforcement proceedings did not come to the attention of the builder due to the incorrect records of address held by the ATO, but this resulted from strict compliance with its records.
- [45]The Act is designed to ensure that builders exercise sound business judgment, keep proper records, and pay taxes. These requirements are seen as being in the public interest to protect the public, and the industry, from poor business practices by builders.
- [46]The builder submits that the provisions of the Act as to permitted individuals is aimed at removing ‘shonks’ from the industry. That is not the consideration in this matter. The findings in this matter are not that the builder was unscrupulous, or of poor character, but that he failed to exercise proper business practices, particularly in relation to provision for and payment of taxation.
- [47]Having regard to the original Hearing material, the comments of the Appeal Tribunal, and the further submissions received, I remain satisfied that all reasonable steps to avoid the coming into existence of the circumstances that resulted in the happening of the relevant event were not taken.
- [48]I find that the correct and preferable decision in this matter is that as made by the QBCC, and I confirm the decision of the QBCC made on 28 April 2016 to refuse to categorise the builder as a permitted individual.
Footnotes
[1]Van Houdt v Queensland Building and Construction Commission (Decision delivered 19 April 2017).
[2]Submissions Luke van Houdt, 15 December 2017, [8].
[3]Ibid [14].
[4]Ibid [35].
[5]Ibid [36].
[6]Ibid [38].
[7]Exh 5, p 120, [131].
[8]Exh 5, p 221.
[9]Exh 5, p 93.
[10]Transcript 1-73, Line 19.
[11]Transcript 1-115, Line 44.
[12]Transcript 1-121.
[13][2014] QCATA 001.
[14]Ibid [32].
[15]Ibid [46].