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  4. Flight Centre Travel Group Limited t/as Flight Centre v Queensland Building and Construction Commission - [2022] QCAT 307

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Flight Centre Travel Group Limited t/as Flight Centre v Queensland Building and Construction Commission[2022] QCAT 307

Flight Centre Travel Group Limited t/as Flight Centre v Queensland Building and Construction Commission[2022] QCAT 307

QUEENSLAND CIVIL AND ADMINISTRATIVE TRIBUNAL

CITATION:

Flight Centre Travel Group Limited t/as Flight Centre v Queensland Building and Construction Commission [2022] QCAT 307

PARTIES:

FLIGHT CENTRE TRAVEL GROUP LIMITED T/AS FLIGHT CENTRE

(applicant)

v

QUEENSLAND BUILDING AND CONSTRUCTION COMMISSION

(respondent)

APPLICATION NO/S:

OCR048-22

MATTER TYPE:

General administrative review matters

DELIVERED ON:

9 August 2022

HEARING DATE:

19 July 2022

HEARD AT:

Brisbane

DECISION OF:

Member Goodman

ORDERS:

  1. The application to stay the decision of the Queensland Building and Construction Commission dated 15 February 2022 is dismissed. 

CATCHWORDS:

PROFESSIONS AND TRADES – BUILDERS – LICENCES AND REGISTRATION – where builder’s licence suspended – where building is not the primary business of the licence holder – where licence holder in breach of Minimum Financial Requirements – stay application – relevant considerations   

Queensland Building and Construction Commission Act 1991 (Qld), s 35, s 48, s 49

Queensland Building and Construction Commission (Minimum Financial Requirements) Regulation 2018 (Qld), s 11C, s 12, s 13, s 14

Queensland Civil and Administrative Tribunal Act 2009 (Qld), s 22

Ericson v Queensland Building and Construction Commission [2014] QCA 297

Home Run Projects Pty Ltd v Queensland Building and Construction Commission [2019] QCAT 60

Pop v QBSA [2012] QCAT 388

APPEARANCES &

REPRESENTATION:

Applicant:

Ms Cunningham and Mr Novello

Respondent:

Ms Plasto, solicitor, and Ms Cook

REASONS FOR DECISION

  1. [1]
    Flight Centre is a travel agency which holds a building licence for the purpose of undertaking repairs and maintenance on leased premises, making good the premises at the end of occupancy, and fitting out leased premises at the commencement of occupancy. There is no evidence to suggest that Flight Centre carries out building work for the public.
  2. [2]
    On 15 February 2022, the Queensland Building and Construction Commission (QBCC) suspended Flight Centre’s building licence. Flight Centre has applied to the Tribunal for a review of the suspension decision, and a stay of the suspension decision pending final determination of the application. These are the reasons for decision of the Tribunal in relation to the stay application.
  3. [3]
    The decision to suspend was made pursuant to s 48 and s 49 of the Queensland Building and Construction Commission Act 1991 (Qld) which provides that the respondent (QBCC) may suspend or cancel a licence if a condition to which the licence is subject under s 35 is contravened.
  4. [4]
    s 35(3)(a) provides that a licence is subject to a condition that the licensee’s financial circumstances must at all times satisfy the relevant financial requirements contained in the Queensland Building and Construction Commission (Minimum Financial Requirements) Regulation 2018 (Qld) (‘MFR Regulation’).
  5. [5]
    The MFR Regulation contains the following provisions:

11C Information contained in MFR report must be current

(1) The information contained in an MFR report must be no more than 4 months old as at the day the report is signed by a qualified accountant.

(2) An MFR report must be signed by a qualified accountant no more than 30 days before the day the report is given to the commission.

12 Requirement to hold minimum amount of net tangible assets

(1) A licensee must hold net tangible assets, excluding any deed of covenant asset, of not less than $0.

(2) Also, a licensee must, at all times, unless the licensee has a reasonable excuse, hold at least the net tangible assets, including any deed of covenant asset, worked out for the licensee under schedule 1, part 2.

(3) A licensee for a builder contractor’s licence under the Queensland Building and Construction Commission Regulation 2018, must hold net tangible assets of at least $46,000.

13 Licensees must give commission information about particular decreases in net tangible assets

  1. (1)
    This section applies to a licensee if—

(a) the licensee has given the commission written notice of the licensee’s net tangible assets; and

Examples of how a licensee may have notified the commission—

A licensee may have notified the commission of the licensee’s net tangible assets in the licensee’s application for a licence or when complying with a requirement under an approved audit program or other requirement to give financial information under the Act.

  1. (a)
    the commission has given the licensee a written notice that the commission accepts the net tangible assets notified under paragraph (a) (the accepted NTA); and
  2. (b)
    the licensee’s net tangible assets decrease by more than—
    1. for a category SC1, SC2, 1, 2 or 3 licensee—30% below the licensee’s most recent accepted NTA; or
    2. for any other licensee—20% below the licensee’s most recent accepted NTA.
  1. (2)
    The licensee must, within 30 days after the licensee becomes aware, or ought reasonably to have become aware, of the decrease, give the commission—
    1. for a category SC1 or SC2 licensee—a declaration about the decrease in the approved form; or
    1. otherwise—an MFR report for the licensee.

Maximum penalty—20 penalty units.

14 Meaning of net tangible assets of a licensee

The net tangible assets of a licensee is the amount worked out by subtracting all of the following amounts from the total amount of assets of the licensee under section 15—

  1. (a)
    the total amount of the licensee’s liabilities;
  1. (b)
    he total amount of the licensee’s intangible assets worked out under the prescribed accounting standards;

Examples—

  • Australian Accounting Standard AASB 138
  • Australian Accounting Standard AASB 3
  • Australian Accounting Standard AASB 112
  • Australian Accounting Standard AASB 123
    1. (c)
      the total amount of the licensee’s disallowed assets under section 17.
  1. [6]
    It is common ground that Flight Centre does not meet the requirements of the MFR Regulations. Prior to 11 March 2021, the previous net tangible asset position was advised to be $659,505,000. As at 30 June 2020, its net tangible assets was advised to be $360,602,896. It had not complied with s 13 of the regulations and notified QBCC of the decrease in its net tangible asset position.
  2. [7]
    On 28 October 2021, Flight Centre provided QBCC with a MFR report and signed financial statements as at 30 June 2021 (not signed by a qualified accountant as required by s 11A of the MFR Regulation). These documents showed a net tangible asset position of -$124,757,000. It did not meet s 12(1) of the regulations. The evidence is that it has not met the requirements of s 12(1) since that date.
  3. [8]
    Further, Flight Centre breached s 11C by providing documents to QBCC on 7 December 2021, more than 4 months from the date of the source documents (30 June 2021).
  4. [9]
    It is agreed that s 48 of the QBCC Act allows for a discretion in the suspension of a licence.
  5. [10]
    On 11 April 2022, Flight Centre filed in the Tribunal material indicating that it was likely to return to a positive net tangible asset position within 12-24 months. At the hearing, a timeframe of a further two years was suggested. Flight Centre acknowledges that it has provided its “best guess” rather than any evidence on this point.
  6. [11]
    The QBCC submits that:
    1. (a)
      the review application does not have prospects of success where Flight Centre is in breach of the MFR Regulation by a significant amount and for an extended period;
    2. (b)
      it is not in the public interest, or the interests of the building industry generally, for a company in breach of the MFR Regulation to continue to hold a licence;
    3. (c)
      Flight Centre has not demonstrated any factors which compel the Tribunal to grant a stay of the suspension decision; and
    4. (d)
      there are reasonable grounds to conclude there is a real likelihood that serious financial loss or other serious harm will happen to relevant persons if the licence does not remain suspended.
  7. [12]
    Flight Centre submits that:
    1. (a)
      the licence is only used in the ways set out above, and its primary business is not as a building company, so there is no risk to the public in allowing it to continue to hold a licence; and
    2. (b)
      it has sufficient assets to pay for supplies, and has never been the subject of a complaint, unpaid adjudication amount, directions to rectify, disciplinary action, offences or demerit points against the licence since its issue in April 2010.
  8. [13]
    The review is conducted in accordance with the Queensland Civil and Administrative Tribunal Act 2009 (Qld), which provides: 

22 Effect of review on reviewable decision

  1. (1)
    The start of a proceeding for the review of a reviewable decision under this Act does not affect the operation of the decision or prevent the implementation of the decision.
  2. (2)
    However, subsection (1) does not apply—
    1. if an enabling Act that is an Act provides otherwise; or
    2. to the extent the operation of all or part of the reviewable decision is stayed by an order of the tribunal under this section that is still in effect.
  3. (3)
    The tribunal may, on application of a party or on its own initiative, make an order staying the operation of all or part of a reviewable decision if a proceeding for the review of the decision has started under this Act.
  4. (4)
    The tribunal may make an order under subsection (3) only if it considers the order is desirable after having regard to the following—
    1. the interests of any person whose interests may be affected by the making of the order or the order not being made;
    1. any submission made to the tribunal by the decision-maker for the reviewable decision;
    2. the public interest.
  1. [14]
    The Tribunal has previously found that s 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.[1] A consideration of those principles necessarily includes consideration of the s 24(4) factors.

PROSPECTS OF SUCCESS AND THE EFFECT OF ANY STAY ON THOSE PROSPECTS

  1. [15]
    QBCC submits that:
    1. (a)
      Flight Centre has not demonstrated that it has an arguable case, particularly given that its net tangible assets are significantly less than the legislated requirement of $0. The Tribunal has previously found that the applicant “appears to have limited prospects of success in its application for review of the decision of the QBCC to suspend its builder licence because it does not meet the requirements of the MFRP”;[2]
    2. (b)
      while there is a discretion attached to s 48, Flight Centre has not identified any error in the application of the QBCC Act or the MFR regulation. There is no dispute as to the calculation of the net tangible assets;
    3. (c)
      the current licence does not prevent Flight Centre from engaging subcontractors, raising a risk to those subcontractors;
    4. (d)
      there is no evidence before the Tribunal as to the amount or value of building work done under the licence, and the licence enables Flight Centre to undertake in excess of $240,000,000 of building work each year;
    5. (e)
      there remains a substantial risk to suppliers who contract with Flight Centre, and the objects of the QBCC Act, QBCC Regulation and MFR Regulation show an intention to protect suppliers as a building industry participant; and
    6. (f)
      it is not relevant that Flight Centre’s primary business is in the travel, rather than building sector.
  2. [16]
    Flight Centre submits that it has a reasonably arguable case for the reinstatement of the Licence because:
    1. (a)
      the QBCC has misinterpreted or failed to properly exercise its discretion under s 48(1)(f);
    2. (b)
      the QBCC has failed to consider (pursuant to s 49(2)) or give sufficient weight to Flight Centre’s written representations and otherwise have regard to all relevant circumstances;
    3. (c)
      the QBCC has failed to sufficiently set out findings of material questions of fact pursuant to s 157(2)(b);
    4. (d)
      the QBCC has failed to consider, or give sufficient weight to, its power under s 36 to impose conditions on the licence;
    5. (e)
      the QBCC has failed to consider, or give sufficient weight to, relevant QBCC policies, procedures, operational instructions and guidance statements and / or the objects of the Act;
    6. (f)
      Flight Centre has been honest and accurate in its dealings with the QBCC. It has incurred significant expense in preparing the MFR report, despite it being “out of date” pursuant to s 11C and it has explained to the QBCC the restrictions it has, due to it being an ASX listed entity (with respect to public disclosure of financial information);
    7. (g)
      it has no history of complaints, unpaid adjudication amount, directions to rectify, disciplinary action, offences or demerit points against the licence since its issue in April 2010;
    8. (h)
      the decrease in net tangible assets has no nexus to building works but is as a result of the impacts of the COVID 19 pandemic;
    9. (i)
      there has never been any threat to the building industry, any consumers or any suppliers;
    10. (j)
      the breach of the MFR is not “serious” in the context of the building industry as it does not, for example, relate to a failure to pay debts when due or satisfy a claim by a consumer;
    11. (k)
      the paramount purpose of the disciplinary action under s 48 is to protect the public and other persons with whom the licensee might deal.[3] There is no evidence that suspension or cancellation of the licence will protect anyone, and the action is being used as a form of punishment rather than a protective action;
    12. (l)
      there is no serious risk of harm to others in the industry if the licence remains current – Flight Centre does not deal with consumers or subcontractors and is able to pay for supplies from its cash reserves; and
    13. (m)
      it is acknowledged that external contractors could be engaged if the licence is suspended, but this would cause significant expense and Flight Centre would be at risk of breaching its contractual obligations due to an anticipated lack of available contractors to complete the work.

IS THERE ANY MATERIAL DETRIMENT TO THE APPLICANT IF THE STAY IS NOT GRANTED?

  1. [17]
    Flight Centre submits that it would be obliged to engage external contractors at market rates if a stay is not granted, and this would cause it to incur significant expense and add more pressure to the business. Further, it may be in breach of its contractual obligations if it is unable to engage contractors in a timely manner. 

BALANCE OF ADVANTAGE AND DISADVANTAGE

  1. [18]
    QBCC submits that:
    1. (a)
      it is acknowledged that suspension of a licence necessarily disadvantages a licensee;
    2. (b)
      it is not in the public interest, or the interests of the building industry generally, for a licensee that does not meet the MFR to be permitted to continue to hold a licence as an interim measure pending a review hearing;
    3. (c)
      the QBCC carries out a crucial function in applying the provisions of the MFR Regulation and the QBCC Act to ensure that individuals and companies with compromised financial capacity are prevented from holding licences. Strict application of the MFR Regulation is necessary to prevent participants (consumers, suppliers and building contractors and subcontractors) being caught in preventable insolvencies;
    4. (d)
      permitting Flight Centre to hold a licence where it has not evidenced the requisite financial capacity is contrary to the safeguards in place to protect consumers, suppliers and building contractors; and
    5. (e)
      contrary to the previous advices of Flight Centre, it has now provided a further MRF report which indicates that its financial has worsened, with a net tangible asset position as at 31 December 2021 of -$273,212,000.
  2. [19]
    Flight Centre submits:
    1. (a)
      it is not a commercial builder and makes no profit from the use of its licence;
    2. (b)
      it does not engage subcontractors and undertakes limited works;
    3. (c)
      all suppliers are paid in accordance with contract arrangements, noting that Flight Centre is an ASX listed global entity subject to stringent rules;
    4. (d)
      it has the financial resources to satisfy any possible liabilities or claims that could arise;
    5. (e)
      it does not undertake work for consumers (as defined), noting that an object of the Act is to regulate the building industry … to achieve a reasonable balance between the interests of building contractors and consumers;
    6. (f)
      there is no identified risk to industry participants arising out of the current net tangible asset position. Flight Centre has approximately $1 billion in cash reserves available to meet its liabilities;
    7. (g)
      as at 14 March 2022, it was anticipated that over the next 12 months, approximately 10 of its shops will be re-opened (from hibernation) requiring minimal refurbishment works and approximately 3 or 4 shops will be fully refurbished. If a stay is not granted it will be required to spend significant funds on external contractors, and risk not being able to meet essential terms of its contracts with landlords. I note that in submissions of 11 April 2022, Flight Centre indicated that it was “planning on undertaking several projects in Queensland” and listed 6 such projects. At the hearing on 19 July 2022, Flight Centre confirmed that these were potential projects, and it was unclear how many would in fact proceed;
    8. (h)
      while suspension of the licence will not result in the cessation of the business or other significant interruption to its ability to make income, that is not the sole consideration of the Tribunal. The Tribunal should consider whether Flight Centre has a special circumstance which justifies a stay;
    9. (i)
      the concerns espoused by the QBCC are greatly outweighed by the added operational and financial burden on, and potential risk to the business of, Flight Centre. The disadvantage to Flight Centre if the stay is not granted outweighs the disadvantage to the QBCC if the stay is granted;
    10. (j)
      the purposes of the Act will not be abandoned should the stay be granted, and conversely the purposes of the Act are not furthered by suspending or cancelling the licence. The sole outcome will be to impose substantial detrimental, unnecessary, and disproportionate financial burden on Flight Centre; and
    11. (k)
      it is open and agreeable to having conditions imposed upon its licence that would restrict it to completing the kind of building work which it currently engages in.
  3. [20]
    On 11 April 2022, Flight Centre submitted to the Tribunal that it “continues to improve its position, driven by operating cost reductions, increased total transaction value and revenue improvement”. At the hearing, Flight Centre advised that the worsening position of the Net Tangible Assets seen in the latest MFR report was as a result of deferred tax assets, which was the largest contributor to the negative net tangible asset position. There is no evidence available to the Tribunal to support that submission.
  4. [21]
    Flight Centre submits that the difficulties in the net tangible asset position, and the lateness of the filing of the financial information are as a result of the current business structure whereby the licence is held by the global business. It indicated that consideration had been given to setting up a separate business to run the building operation which would be able to provide timely financial information and comply with the MFR, but this option was rejected as too burdensome when it was anticipated that the larger company will be able to comply with all requirements in around two years.

FINDINGS OF THE TRIBUNAL

  1. [22]
    There are difficulties with the evidence presented by Flight Centre. There are some submissions but no evidence as to:
    1. (a)
      how many stores (if any) will require work over the next 12 – 24 months;
    2. (b)
      the extra cost to Flight Centre if work does proceed in the stores and an external contractor is engaged. There was no independent evidence to support a claimed extra expense of $146,250 if the projects did proceed;
    3. (c)
      the likelihood of being unable to engage independent contractors in a timely manner. It seems that a number of factors could influence that outcome, including location of the store, and the work that needs to be completed;
    4. (d)
      when Flight Centre will be in a position to comply with the MFR Regulations. It seems that the “best guess” is that it will be able to comply with s 12(1) in around two years;
    5. (e)
      why the net tangible asset position has continued to worsen; and
    6. (f)
      when Flight Centre will be in a position to comply with s11C of the MFR Regulation. I note submissions as to difficulties in compliance on account of its duties as a publicly listed company, but there is no explanation or proposal as to how and when those difficulties are to be overcome.
  2. [23]
    I accept that the circumstances in which a licence holder comes to breach a condition on their licence so as to enliven the discretion to suspend or cancel under s 48 may well be relevant to how that discretion is exercised[4]. I accept, on the evidence available, that the current financial position of Flight Centre is primarily as a result of the travel restrictions imposed due to the COVID 19 pandemic. That issue may be explored more fully at the substantive hearing. These proceedings relate to the application for a stay.
  3. [24]
    While I make no finding on the prospects of success of the substantive application, I find that failure to grant a stay will have no appreciable effect on the prospects of success or otherwise of the application.
  4. [25]
    I find that there is no material detriment to Flight Centre if the stay is not granted. The worst outcome, on their submissions, is that they will be required to engage external contractors if they decide to undertake building work while they are working back towards compliance with the legislative requirements. I have no particular evidence as to the ramifications of a refusal to grant a stay on the employee builder. I accept that there is a risk that he may lose employment, but there is nothing before me to indicate that is certain, or even likely. 
  5. [26]
    I have considered the submissions which relate to the objects of the Act. I accept that the objects provide an overarching guide and lens through which to consider the applications of particular sections. I note in particular the object to ensure the maintenance of proper standards in the industry, and to achieve a reasonable balance between the interests of building contractors and consumers. I accept that, in these unique circumstances, there is significantly less risk to building industry participants than is seen in many other cases involving builders contracting with consumers. However, the consequences for Flight Centre in refusal of the stay application are similarly limited, amounting to some possible inconvenience and possible (unquantified) expense if it decides to proceed with building work. It is conceded that the expense will not place the business at any risk.
  6. [27]
    I accept that this case differs in some respects from the more common example of a commercial builder holding a building licence. However, the MFR contains requirements that apply to all holders of licences. Flight Centre has now been in breach of the requirements for over a year, and it seems likely to remain in breach for at least another two years.
  7. [28]
    I note that the non-compliance with s 12(1) is significant (in the hundreds of millions), and that Flight Centre’s net tangible asset position has worsened in the latter half of 2021. It is not clear how or when Flight Centre will be able to comply with s 11C.
  8. [29]
    There is no compelling reason to issue a stay, and no irremediable harm will be suffered by Flight Centre if the application for a stay is refused. I find that the balance of convenience lies with the stay being refused.

Footnotes

[1] Home Run Projects Pty Ltd v Queensland Building and Construction Commission [2019] QCAT 60.

[2] Home Run Projects Pty Ltd v Queensland Building and Construction Commission [2019] QCAT 60.

[3] Pop v QBSA [2012] QCAT 388.

[4] Ericson v Queensland Building and Construction Commission [2014] QCA 297.

Close

Editorial Notes

  • Published Case Name:

    Flight Centre Travel Group Limited t/as Flight Centre v Queensland Building and Construction Commission

  • Shortened Case Name:

    Flight Centre Travel Group Limited t/as Flight Centre v Queensland Building and Construction Commission

  • MNC:

    [2022] QCAT 307

  • Court:

    QCAT

  • Judge(s):

    Member Goodman

  • Date:

    09 Aug 2022

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
Ericson v Queensland Building and Construction Commission [2014] QCA 297
2 citations
Jump To
Cite 1 - [2014] QCA 297
Cite 2 - [2014] QCA 297
Home Run Projects Pty Ltd v Queensland Building and Construction Commission [2019] QCAT 60
3 citations
Jump To
Cite 1 - [2019] QCAT 60
Cite 2 - [2019] QCAT 60
Cite 3 - [2019] QCAT 60
Pop v Queensland Building Services Authority [2012] QCAT 388
2 citations
Jump To
Cite 1 - [2012] QCAT 388
Cite 2 - [2012] QCAT 388

Cases Citing

No judgments on Queensland Judgments cite this judgment.

1

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