Queensland Building and Construction Commission v Casey
[2017] QCATA 100
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- Unreported Judgment
- Queensland Building and Construction Commission v Casey[2017] QCATA 100
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Queensland Building and Construction Commission v Casey[2017] QCATA 100
Queensland Building and Construction Commission v Casey[2017] QCATA 100
CITATION: | Queensland Building and Construction Commission v Casey [2017] QCATA 100 |
PARTIES: | Queensland Building and Construction Commission (Applicant/Appellant) |
| v |
| Timothy Gavin Casey (Respondent) |
APPLICATION NUMBER: | APL411-16 and APL412-16 |
MATTER TYPE: | Appeals |
HEARING DATE: | 8 August 2017 |
HEARD AT: | Brisbane |
DECISION OF: | Member Allen Member Olding |
DELIVERED ON: | 20 September 2017 |
DELIVERED AT: | Brisbane |
ORDERS MADE: |
|
CATCHWORDS: | PROFESSIONS AND TRADES – BUILDERS – LICENCES AND REGISTRATION – OTHER MATTERS – where respondent an “excluded individual” for an event - whether respondent an “excluded individual’ for other events - meaning of “both events are consequences flowing from what is, in substance, the one set of circumstances” ADMINISTRATIVE LAW – ADMINISTRATIVE TRIBUNALS – QUEENSLAND CIVIL AND ADMINISTRATIVE TRIBUNAL - where grounds of appeal include question of law and questions of mixed law and fact Queensland Building and Construction Commission Act 1991 (Qld), s 56AC Queensland Civil and Administrative Tribunal Act 2009, s 142, s 146, s 147 Professional Engineers and Other Legislation Amendment Act 2014 (Qld) D’Arro v Queensland Building and Construction Commission [2017] QCA 90 Ericson v Queensland Building Services Authority [2013] QCA 391 Haritos v Commissioner of Taxation (2015) 233 FCR 315 Harrison v Meehan [2016] QCATA 197 RCW Plumbing & Excavations v Camporeale Holdings Pty Ltd [2017] QCATA 48 Small v K & R Fabrications (W’gong) Pty Ltd [2016] NSWCA 70 |
APPEARANCES: |
|
APPLICANT: | Queensland Building and Construction Commission |
RESPONDENT: | Timothy Gavin Casey |
REPRESENTATIVES: |
|
APPLICANT: | represented by Mr N Andreatidis of Counsel with Ms R.M. de Luchi of Counsel, instructed by Robinson Locke Litigation Lawyers |
RESPONDENT: | represented by Mr G.D. Beacham of Queen’s Counsel with Mr M.C. Long of Counsel, instructed by TressCox Lawyers |
REASONS FOR DECISION
- [1]The Queensland Building and Construction Commission appeals on a question of law, and seeks leave to appeal on a question of mixed law and fact, decisions of a tribunal member (the Member) in the matter of Casey v Queensland Building and Construction Commission [2016] QCAT 424.
- [2]The decisions of the Member set aside decisions of the Commission that the Respondent, Mr Casey, was an “excluded individual” under s 56AC of the Queensland Building and Construction Commission Act 1991 (Qld) (the QBCC Act) in relation to certain company events.
- [3]
- [4]An “excluded individual for a relevant event” is unable to obtain a licence under the QBCC Act, and nor may a company if the excluded individual is a director, secretary or influential person for the company, unless the Commission categorises the person as a permitted individual.[3] Further, and of particular significance for Mr Casey, a person who has been an excluded individual for more than one event is a permanently excluded individual.[4]
- [5]However, an excluded individual for a relevant event does not become an excluded individual for another event if “both events are consequences flowing from what is, in substance, the one set of circumstances”: QBCC Act, s 56AC(5).
- [6]Whether the appointments of liquidators/administrators to three companies of which Mr Casey was a director are consequences flowing from what is, in substance, one set of circumstances is the issue in dispute in this case. If that question is answered positively, Mr Casey will be an excluded individual in respect of one of the events but not the others, with the consequence that he will not be a permanently excluded individual.
The facts
- [7]The following facts are not in contention and we find accordingly:
- The respondent was the founder of the St Hilliers group of companies, which was formed in or around 1989.
- That group included the following companies of which Mr Casey was a director at all relevant times:
- St Hillier Pty Ltd (SHPL);
- St Hilliers Construction Pty Ltd (Construction); and
- St Hilliers Ararat Pty Ltd (Ararat).
- Ararat was a wholly-owned subsidiary of Construction which in turn was a wholly-owned subsidiary of SHPL.
- SHPL was established to undertake a treasury function for the group. It had given guarantees and owed obligations under warranties, insurance bonds and other facilities.
- Construction was engaged in construction projects.
- In the course of construction projects, Construction caused bonds to given to customers to secure the performance of its work, through a bond facility provided by Vero Insurances. The Vero facility has been in place since around 2006. Construction’s potential obligations under the bonds exceeded its net asset value.
- Prior to the Ararat Prison project described below, Construction was trading with no hint of concern about its solvency.
- Ararat was incorporated on 11 September 2009 for the purpose of entering into an unincorporated joint venture with a New Zealand company for the construction of the Ararat Prison in Victoria.
- The State of Victoria had contracted with Aegis Correctional Partnership Pty Ltd (Aegis) for the delivery of the Ararat Prison. The Ararat joint venturers were the builders for the project.
- Bonds were issued by Swiss Re Bonds to guarantee the performance of the Ararat Prison project builders. The Swiss Re bonds were guaranteed by SHPL, Construction and Ararat.
- Construction gave a parent company guarantee of Ararat’s obligations in an amount exceeding the net assets of Construction.
- For various reasons, the Ararat Prison project did not proceed as planned.
- On 8 May 2012, Aegis advised that it would not meet the last payment claim made by the Ararat joint venture.
- Following that advice those controlling the St Hilliers group decided that the group would not inject any further money into the Ararat Prison project.
- Because of the non-completion of the prison project, Ararat became liable for payment of non-completion damages. The Swiss Re bonds were called upon, leading to Ararat, Construction and SHPL becoming liable, under the guarantees they had given, for the amounts paid out under the Swiss Re bonds. Construction also became liable to pay non-completion damages under the parent company performance guarantee it had given.
- Having now triggered these liabilities, Construction was in jeopardy in relation to some of its own building projects, leading to calls being made on the Vero bonds and consequently liability by Construction and SHPL to the Vero group.
- On 15 May 2012, at approximately 7:55pm, a liquidator was appointed to Ararat.
- Also, on 15 May 2012, at approximately 8:30pm, Construction went into administration.
- On 17 May 2012, the Commission’s predecessor determined that Mr Casey was an excluded individual in relation to Ararat and Construction.
- On 6 September 2012, SHPL went into administration.
- On 13 June 2014, the Commission determined that Mr Casey was an excluded individual in relation to SHPL.
- [8]In relation to SHPL’s administration, Mr Casey gave evidence that the company had given long-dated guarantees many years earlier and carried long-dated warrantees as well as insurance bonds and other facilities. He gave evidence that he wanted the company to trade out of administration (which it did) and wanted to be sure that it was not “blindsided down the track by claims . . . we couldn’t measure”, agreeing that the administration was to assist the company to “draw an line in the sand and move forward.”
Summary of grounds of appeal
- [9]In summary, the grounds of appeal set out in the Commission’s application were:
Ground 1: The Member erred in law at [27] of the reasons for decision by misconstruing s 56AC.
Ground 2: The Member erred in fact and law at [17] and [28] to [38] in finding that the facts set out in those paragraphs satisfy the legal test in s 56AC.
Ground 3:In the premises, the Member erred in finding that Mr Casey was not an excluded individual in respect of each of the relevant company events.
- [10]However, following the opening of the hearing of the appeal and application for leave to appeal, the Commission sought leave to add a new ground, namely:
Ground 1A: “The learned member erred in law at [8] by applying the wrong version of the QBCC Act”.
- [11]Leave to add the additional ground was sought as a consequence of the decision of the Queensland Court of Appeal in D’Arro v Queensland Building and Construction Commission [2017] QCA 90 delivered on 12 May 2017.
- [12]Although Mr Casey’s applications for review of the Commission’s decisions pre-dated the amendments, the D’Arro decision established that, contrary to the parties’ previous understanding, it is s 56AC as amended by the Professional Engineers and Other Legislation Amendment Act 2014 (Qld) that should have been applied by the Member.[5]
- [13]Accordingly, Mr Beacham, who appeared with Mr Long for Mr Casey, quite properly did not oppose leave being given to add the additional ground of appeal. We grant leave to add this ground.
- [14]Amended s 56AC(5), which is the provision we are required to consider, is as follows:
- An excluded individual for a relevant event does not also become an excluded individual for another relevant event if the commission is satisfied that both events are consequences flowing from what is, in substance, the one set of circumstances.
- [15]The pre-amendment section 56AC(6) considered by the Member, and to which the parties’ written submissions in this appeal were originally directed but adopted for s 56AC(5), was as follows:
- An excluded individual for a relevant company event (the first event) does not also become an excluded individual for another relevant company event (the other event) are both consequences flowing from what is, in substance, the one set of circumstances applying to the company.
The nature of the appeal
- [16]Under s 142 of the Queensland Civil and Administrative Tribunal Act 2009 (the QCAT Act), an appeal to the appeal tribunal on a question of law generally may be made without leave, but an appeal on a question of fact, or a question of mixed law and fact, may only be made with leave of the appeal tribunal.
- [17]Broadly speaking, in deciding an appeal on a question of law only under
s 146, the appeal tribunal must either confirm the decision or return the matter to the Tribunal for reconsideration, unless the appeal tribunal’s determination of the question of law is capable of resolving the matter as a whole.[6] By contrast, an appeal on a question of mixed law and fact under s 147 is decided by way of rehearing. - [18]The distinction between questions of law and fact, and in particular the meaning of a question of mixed law and fact, are not always clear and the courts have not formulated satisfactory tests of universal application.[7] However, it has been said that questions of law are about what is the correct legal test; questions of fact are about what actually took place; and questions about whether facts satisfy the legal test are questions of mixed law and fact.[8]
- [19]Grounds 1 and 1A of the Commission’s grounds of appeal clearly raise questions of law.
- [20]It was common ground that Grounds 2 and 3 of raise questions of mixed law and fact such that leave to appeal on these grounds is required.
- [21]Since the appeal grounds do not raise only a question of law, but also a question of mixed law and fact, the appropriate course is to consider whether to grant leave to appeal in respect of the appeal on the question of mixed law and fact. If leave is granted, rehearing of the matter under
s 147 will necessarily require consideration of the correct legal test. If leave is not granted, the Commission will be entitled to have the appeal on the question of law determined within the constraints of s 146.
Should leave to appeal be granted?
- [22]The issues to be considered in determining whether to grant leave to appeal are: Is there a reasonably arguable case of error in the primary decision?; Is there a reasonable prospect that the applicant will obtain substantive relief?; Is leave necessary to correct a substantial injustice to the applicant caused by some error?; Is there a question of general importance upon which further argument, and a decision of the appeal tribunal would be to the public advantage?[9]
- [23]In this case, there is unquestionably an error in the primary decision, due to the Member being led to apply the pre-amendment version of
s 56AC(6). Even putting that aside, there is a reasonably arguable case that the Commission’s construction of s 56AC(5) – discussed below - should be preferred and, if that construction were to be applied, there would be a reasonable prospect of coming to the decision urged by the Commission. - [24]There is no previous authority that provides any guidance on the construction of s 56AC(5). The application of this provision has serious implications both for industry participants and the public protection objects of the excluded individual provisions.
- [25]Mr Beacham argued that the Commission’s submissions on the proper application of s 56AC raised issues not raised before the Member. The Commission’s submissions below focused upon what were submitted to be different causes of the three appointments, which were said to constitute different sets of circumstances.[10] This is consistent with the Commission’s argument outlined below that it is necessary to determine and compare the sets of circumstances relevant to each appointment.
- [26]Having regard to the public interest considerations in particular, we grant leave to appeal.
Issues for the rehearing
- [27]In rehearing the matter, we consider two issues:
- What is the correct legal test for the application of s 56AC(5)?
- Is that test satisfied based on the factual findings in this case?
What is the correct legal test?
- [28]It is clear, with the benefit of hindsight through the lens of the D’Arro case, that the Member erred in applying the pre-amendment s 56AC(6) rather than the current s 56AC(5). The question for the rehearing, though, is how to apply the post amendment provision, s 56AC(5).
- [29]For that reason, and even though the pre-amendment s 56AC(6) and the current s 56AC(5) are similar (but not identical) in their terms, it is strictly unnecessary to determine whether the Member applied former s 56AC(6) correctly. Nevertheless, it may be instructive to refer to the error the Commission alleges is manifested in the Member’s approach.
- [30]The Commission says that the Member decided the matter on the basis that the failure of the Ararat Prison project led to the liquidation of Ararat and that that failure had a direct impact upon Construction and SHPL leading to the second and third events, that is, those companies going into administration.
- [31]It would indeed be an error to substitute for the test in s 56AC(5) a test of whether one circumstance had a direct impact on another.[11]
- [32]The Commission argues that the test in s 56AC(5) requires the decision-maker to:
- identify a relevant event (here the liquidation of Ararat);
- determine what circumstances led to the happening of that event, which necessarily involves an assessment as to the particular circumstances that were the cause of the event;
- identify the other event or events (here Construction and SHPL being placed into administration);
- determine what the circumstances were that led to the other event or each other event; and
- undertake a comparison of each “set of circumstances” to answer the ultimate question of whether or not they were, “in substance” or in a practical sense, “the one set of circumstances”.
- [33]Importantly, the Commission does not say that it is sufficient to identify that different circumstances existed in relation to each company. Rather, the Commission acknowledges that it becomes a question of fact and degree as to what the set of circumstances were for each event.
- [34]Applying the section in this way, the Commission accepts that the failure of the Ararat Prison project was the central cause of the liquidation of Ararat. However, it points to other circumstances it says are relevant to the fate of Construction and SHPL, in particular the incurring of liabilities in excess of their net assets.
- [35]The provision does not in its terms expressly require the Commission’s multi-step approach. What is required of the decision-maker is to identify whether the events “are consequences flowing from what is, in substance, the one set of circumstances”.
- [36]The decision-maker may legitimately consider whether, for one or more of the events, there were circumstances relevant to the event but which did not contribute to or cause another event or events. Not as a substitute for, but as part of the factual matrix against which to answer, the statutory question.
- [37]The Commission says it may be inferred that, if Construction and SHPL had assets greater than their liabilities, their administration would not have occurred (inferentially, regardless of the failure of the Ararat Prison project). Mr Casey says that Ararat’s liability for non-completion of the project and the liabilities under the Swiss Re and Vero facilities would not have occurred had it not been for the failure of the prison project.
- [38]Both assertions may be true, but again they do not answer the statutory test. It is important not to substitute a “but for” test for the more difficult and nuanced task s 56AC(5) requires.
- [39]The provision requires no more and no less than a determination of whether the events are consequences “flowing from” in substance the one set of circumstances. There is no escaping that the task inevitably involves a judgement by the decision-maker going to the substance of the matter. It cannot be performed merely by a mechanistic comparison of one set of circumstances against another. Section 56AC is cast in ordinary, non-technical language. Attempting to restate it in different words, or to superimpose a decision-making structure not found in the provision, is unlikely to be helpful and prone to lead to error.
- [40]A particular issue regarding the application of s 56AC arises out of the evidence of Mr Casey extracted above.[12] Mr Beacham submitted that Mr Casey’s state of mind at the time of placing SHPL into administration is not a “circumstance” that could form part of a relevant “set of circumstances” for the purposes of s 56AC(5).
- [41]As Mr Beacham pointed out, a director’s state of mind may be affected by such factors as their relative risk aversion. That does not prevent the existence of a particular state of mind being a “circumstance”. The more relevant point is whether the existence of a particular state of mind in respect of one event but not another prevents the events being characterised as flowing from in substance the one set of circumstances, which will depend on an overall assessment of the facts in each case.
Applying s 56AC in this case
- [42]It is appropriate to consider the Construction and SHPL events in turn.
- [43]It may be true that Construction would not have gone into administration if its liabilities had not exceeded its assets.
- [44]But the calls upon the company’s hitherto contingent liabilities flowed from the failure of the Ararat prison project. They were inextricably linked with the failure of the project and the appointment of a liquidator to Ararat clearly flowed from that failure.
- [45]In those circumstances, it is our view that, in respect of Construction, the case falls comfortably within the characterisation that the appointment of an administrator to Construction is a consequence flowing from failure of the Ararat project, the same set of circumstances from which the appointment of the liquidators to Ararat flowed.
- [46]In respect of SHPL, it is also true that an administrator may not have been appointed if its liabilities had not exceeded its assets, but the calls upon the guarantees that triggered the requirement to pay those liabilities arose from the failure of Ararat project. While, as we have observed, it is important not to substitute a “but for” test, it is not irrelevant that there is no evidence to which we were directed that would suggest that there was any contemplation of external administration before the failure of the prison project and the consequent calls upon the guarantees.
- [47]The evidence that Mr Casey wanted a “line in the sand” speaks to the motivation for the appointment of the administrator. Indeed, that may be a significant purpose of seeking to enter into a deed of arrangement. That Mr Casey gave evidence of such motivation in respect of SHPL but not Construction says little about whether the appointments flowed from in substance one set of circumstances.
- [48]Perhaps it might be said that the motivation for the appointment – to draw a line in the sand in relation to potential liabilities some of which are unrelated to the prison project – underlines that those other liabilities contributed to the decision to put SHPL into administration. However, appointment of an administrator may be a consequence “flowing from” a particular set of circumstances notwithstanding that other factors not forming part of that set of circumstances were also taken into account and even highly relevant to the decision.
- [49]In our view, this is such a case. The entry of SHPL into administration flowed from the failure of the prison project, which gave rise to the calls on the guarantees. It was not in contemplation before that occurred. Certainly, it would be expected that Mr Casey would have been alive to and would have taken into account the significant consequences from the deed of arrangement – the opportunity for a line in the sand. But the “set of circumstances” from which the decision flowed was, in our view, the failure of the prison project.
- [50]We consider that the appointment of the liquidator to Ararat and the administrators to Construction and SHPL are consequences flowing from the one set of circumstances, namely the failure of the Ararat Prison project and the consequent calling in of the St Hilliers group’s obligations under the various guarantees.
- [51]Accordingly, we confirm the Member’s decisions.
Footnotes
[1] Though nothing turns on it for this case, the period appears to be five years in relation to the decisions under review: QBCC Act, Schedule 1, item 57.
[2] QBCC Act, s 56AC.
[3] QBCC Act, s 56AE. The Commission advised that, at the time of the appeal hearing, there was a pending application by Mr Casey for permitted individual status. We do not consider that to be relevant to our task in this appeal.
[4] QBCC Act, Part 3B
[5] Neither party had urged the Member to apply the later version because, at the time of the hearing, it was their mutual understanding that the earlier version should be applied.
[6] Ericson v Queensland Building Services Authority [2013] QCA 391.
[7] Haritos v Commissioner of Taxation [2015] FCAFC 92; (2015) 233 FCR 315; (2015) 322 ALR 254; 66 AAR 403; 147 ALD 265 contains a detailed survey of the authorities.
[8] For a recent example, see RCW Plumbing & Excavations v Camporeale Holdings Pty Ltd [2017] QCATA 48.
[9] See, for example, Harrison v Meehan [2016] QCATA 197, [8].
[10] Commission’s closing submissions.
[11] In case we are wrong in considering that it is unnecessary to determine whether the Member erred in the approach taken to the equivalent, albeit incorrect, version of s 56AC, we make these observations: In our view, while the Member took into account that one event had an impact on another, it is tolerably clear from the various references to the wording of the provision – and particularly the reference to “looking at the overarching genesis of the ‘one set of circumstances’” at [37] - that the Member applied the test in the then s 56AC(6). That one event had an impact on another is not inconsistent with a conclusion that both events arose out of one set of circumstances. In so concluding, we are mindful of not unduly relying on what has been called “ the canonical statement” that “reasons for [a] decision under review are not to be construed minutely and finely with an eye keenly attuned to the perception of error” ( Small v K & R Fabrications (W’gong) Pty Ltd [2016] NSWCA 70), but consider that looking at the reasons fairly and as a whole the Member asked and endeavoured to answer the correct statutory question.
[12] Paragraph 8