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Home Run Projects Pty Ltd v Queensland Building and Construction Commission QCAT 60
QUEENSLAND CIVIL AND ADMINISTRATIVE TRIBUNAL
Home Run Projects Pty Ltd v Queensland Building and Construction Commission  QCAT 60
HOME RUN PROJECTS PTY LTD
QUEENSLAND BUILDING AND CONSTRUCTION COMMISSION
General administrative review matters
12 March 2019
On the papers
Application for a stay of the decision of the Queensland Building and Construction Commission made 12 October 2018 is refused.
PROFESSIONS AND TRADES – BUILDERS – LICENCES AND REGISTRATION – OTHER MATTERS – where builder’s licence suspended – where the basis of suspension was a failure to provide information to show the builder's financial affairs complied with the Minimum Financial Requirements Policy – where the builder applied in the tribunal to review the decision – where the builder applied to stay the decision to suspend its licence – where significant time expired between date of application for stay and hearing date – where despite the significant period of delay and time to supply information no information supplied – whether the builder had reasonable prospects of success in the action and whether it was in the public interest to stay the decision of the Queensland Building and Construction Commission
Queensland Building and Construction Commission Act 1991 (Qld), s 35(3), s 48
Deputy Commissioner Stewart v Kennedy  QCATA 254
Uysal v Queensland Building and Construction Commission  QCAT 367
Self-represented by J Burch
Self-represented by D McNulty
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
- The respondent (Home Run) is a builder. On 12 October 2017 the Queensland Building and Construction Commission (QBCC) suspended its builders licence.
- The decision to suspend the licence was made pursuant to s 48 of the Queensland Building and Construction Commission Act 1991 (Qld) which provides that QBCC may suspend or cancel a licence if a condition to which the licence is subject under section 35 is contravened.
- By section 35(3)(a) a contractor’s licence is subject to a condition that the licensee’s financial circumstances must at all times satisfy the relevant financial requirements stated in the board’s policies.
- QBCC considered that Home Run had failed to comply with sections 2.1, 2.4, 4.1 and 9.1 of the QBCC Minimum Financial Requirements Policy (“MFRP”). Those provisions provided:
2.1 Financial Requirement – Net Tangible Assets
It is a financial requirement that Applicants and Licensees must have sufficient Net Tangible Assets (NTA) in their own right sufficient for the higher of the level of Maximum Revenue or the actual Revenue being generated as stated in Table A. The Net Tangible Assets of an Applicant or Licensee must be at least $0.
2.4 Negative Net Tangible Assets
Licensees and Applicants must have an NTA position in their own right of not less than $0. Entities which have a negative (deficit) NTA position do not meet the Minimum Financial Requirements and are not permitted to rely upon a Deed of Covenant and Assurance to cover the deficiency.
4.1 Financial Requirement – Current Ratio
It is a financial requirement that Applicants and Licensees must meet the Current Ratio requirement at time of Application, and at all times whilst the licence is held.
9.1 Financial Requirement – Payment of Debts
It is a financial requirement that a Licensee must at all times pay all undisputed debts as and when the debts fall due and within industry trading terms. It is also a financial requirement that a Licensee or Applicant must pay all debts as ordered by a court or tribunal within 28 days of the order or a longer period if allowed by the court or tribunal.
- Home Run has applied to the tribunal to review the decision to suspend its licence. Home Run has applied for a stay of that decision, which application is now before me for determination.
- By s 22 of the QCAT Act the tribunal may make an order staying the operation of a reviewable decision only if the tribunal considers the order is desirable after having regard to the following:
- (a)the interests of any person whose interests may be affected by the making of the order or the order not being made;
- (b)any submission made to the tribunal by the decision-maker for the reviewable decision; and
- (c)the public interest.
- Section 22 does not exclude from consideration the application of standard curial principles and procedures associated with stay applications. Those standard principles include the prospects of success in the review proceedings, whether the applicant will suffer a disadvantage if the stay is refused and whether the balance of advantage or disadvantage favours a stay.
Prospects of success
- QBCC submit Home Run’s prospects of success in the review application are poor.
- In May 2018 QBCC gave a written notice to Home Run requiring Home Run to supply certain specified financial documents and information. On 17 June 2018 Home Run’s accountant provided QBCC with certain financial information regarding Home Run’s financial position. QBCC considered the information inadequate and required more. Home Run’s accountant sought additional time to provide information.
- Further information was supplied on 8 August 2018 but QBCC determined that information was also inadequate. On 27 August 2018 QBCC gave Home Run notice advising that they proposed to suspend Home Run’s licence on the grounds that Home Run had failed to comply with sections 2.1, 2.4, 4.1 and 9.1 of the MFRP. They put Home Run on notice that more information was required.
- It appears Home Run’s accountant was not made aware of the warning given on 27 August 2018 because on 21 September 2018 he sent an email to QBCC saying he was not aware that further clarification had been required. He added ‘As you discussed with Jeff Burch, his laptop was damaged and accordingly I will need further time to update Home Run’s position’.
- On 5 November 2018 Mr Burch filed in the tribunal a copy of an email from a police officer dated 25 September 2018 confirming that Mr Burch had reported an incident to Queensland Police on 19 September 2018 that he had had certain items stolen including computers and Microsoft Tablet and Apple iPad. The Microsoft Tablet was recovered but damaged beyond repair. The computers and iPad were recovered, apparently undamaged.
- This information was apparently in support of Mr Burch’s request of QBCC for more time to update his company’s financial position.
- On 12 October 2018 QBCC served Home Run with notice of its decision to suspend its licence. The reasons given for the suspension were identical to the notice given on 27 August 2018 proposing to suspend the licence, namely that Home Run had failed to comply with sections 2.1, 2.4, 4.1 and 9.1 of the MFRP.
- Home Run then made its application to the tribunal to review the decision to suspend its licence and also applied for a stay of that decision. In the application for stay at Part C of the application Mr Burch states, ‘The directors laptop was stolen which delayed responding to the QBCC (police report attached). The company requests a stay of suspension on the licence for 21 days to allow the company to lodge the required documents with the QBCC.’
- In the application for review at Part C Home Run also states:
The company Home Run Projects has sufficient equity to retain its builders licence. Home Run Projects has been awaiting an approval of a 14 lot subdivision for the operational works by Moreton May Council (sic) submitted 3 months ago. On the granting of the approval Home Run Projects will be debt free releasing any doubt over the QBCC decision.
We would like the licence to be reinstated, whilst this approval is coming, and that HRP is given an additional 14 days to respond to the QBCC show clause (sic) notice.
- Further information was filed in the tribunal on 17 December 2018. The covering email said Home Run’s position was not as per the audit carried out by QBCC. The email continues:
Home Run Projects at the time, we were awaiting final council approval and operational consent approval, and due to a clause in our mortgage documents, we were unable to access our construction funding. This put a huge cap in our cash flow, and caused accounts to go in to 90 days.
However these funds have been paid over as per the spread sheet attached…
As for the accountant being able to provide the balance of materials, we seek an extension until the middle of Feb 19.
- The middle of February 2019 has passed. There is no indication that the further material requested by QBCC to show Home Run is in compliance with the MFRP has been supplied.
- The material filed in the tribunal by Home Run on 17 December 2018 does not address the MFRP. Nothing in that material addresses the Minimum Financial Requirements that Home Run have Net Tangible Assets of at least $0, that the current ratio of assets to liabilities be at least 1 to 1 and that Home Run at all times pay all undisputed debts as and when debts fall due and within industry trading terms.
- Five months has passed since Home Run filed its application for review and the stay application (filed on 15 October 2018) and it has not supplied the requested information. That is despite being granted much more than the 2 weeks period of grace sought in its application for review to be allowed to do that.
- A reasonable conclusion to draw from that failure is that Home Run’s financial position does not meet the MFRP. This conclusion is not altered in any way by Home Run supplying selective information in a spreadsheet setting out payments received over the period 6 July 2018 to 7 December 2018 ($533,929.48) and invoices rendered by it from 13 July 2018 to 4 December 2018 ($356,190.03). The MFRP requires far more information than that to disclose an accurate assessment of the financial health of the builder.
- I conclude Home Run appears to have limited prospects of success in its application for review of the decision of the QBCC to suspend its builders licence because it does not meet the requirements of the MFRP.
Will the respondent suffer a disadvantage if the stay is refused?
- If a stay is refused Home Run will certainly suffer disadvantage. It will not be able to continue trading as a builder in its own right. Without a licence Home Run is prohibited from carrying out building work. This will include signing building contracts, providing quotes or tendering for work or completing building work currently in progress.
- QBCC submit it is not in the public interest or the interests of the building industry generally for a company that does not meet the requirements of MFRP to continue to hold a licence.
- In s 1.2 of the MFRP the objectives sought to be achieved by the policy are set out:
This policy is made by the Queensland Building and Construction Board and states the Minimum financial requirements for licensing under the Queensland Building and Construction Commission Act 1991.
The objectives of the minimum financial requirements in this policy are to promote financially viable businesses and foster professional business practices in the Queensland building industry.
To achieve these objectives and minimise the incidence of financial failure in the building industry, this policy requires all Applicants and Licensees to comply with the minimum financial requirements.
- The QBCC submit that permitting Home Run to hold a licence in circumstances where there is no evidence that it has the requisite financial capacity to safely continue trading is against the public interest. There is merit in the submission. Certainly the MFRP is in place to minimise failures in the building industry caused by financially stressed contractors.
- Where contractors fail the failure affects more than simply the building contractor concerned. It has significant detrimental flow-on effects to subcontractors, suppliers and home and commercial property owners who contract with the contractor. Those other parties are parties whose interests may be affected, perhaps severely so, if a stay is granted and Home Run fails.
- Taking these matters into account, particularly the time allowed Home Run to provide information to establish that it does comply with the MFRP and its failure to do that, and protecting the public interest by requiring builders to be financially viable, I conclude the balance of convenience lies with the stay being refused despite the adverse effect that may have on Home Run and its capacity to trade on pending the hearing of the review application.
- Published Case Name:
Home Run Projects Pty Ltd v Queensland Building and Construction Commission
- Shortened Case Name:
Home Run Projects Pty Ltd v Queensland Building and Construction Commission
 QCAT 60
12 Mar 2019