Younan v Queensland Building Services Authority
[2010] QDC 158
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- Unreported Judgment
- Appeal Determined (QCA)
- Younan v Queensland Building Services Authority[2010] QDC 158
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Younan v Queensland Building Services Authority[2010] QDC 158
Younan v Queensland Building Services Authority[2010] QDC 158
DISTRICT COURT OF QUEENSLAND
CITATION: | Younan v Queensland Building Services Authority [2010] QDC 158 |
PARTIES: | ANTHONY YOUNAN Appellant AND QUEENSLAND BUILDING SERVICES AUTHORITY Respondent |
FILE NO/S: | Appeal 1464/09 |
DIVISION: |
|
PROCEEDING: | Appeal |
ORIGINATING COURT: | District Court, Brisbane |
DELIVERED ON: | 22 April 2010 |
DELIVERED AT: | Brisbane |
HEARING DATE: | 9 March 2010 |
JUDGE: | McGill DCJ |
ORDER: | Leave to appeal; appeal allowed; decision of the Commercial and Consumer Tribunal annulled; case remitted to the Queensland Civil and Administrative Tribunal for rehearing in accordance with these reasons. |
CATCHWORDS: | APPEAL AND NEW TRIAL – Error of Law – failure of tribunal to apply correct statutory test – remitted for rehearing Queensland Building Services Authority Act 1991 s 56AD(8) Ace Property Holdings Pty Ltd v Australian Postal Corporation [2010] QCA 55 – cited. Alcan (NT) Alumina Pty Ltd v Commissioner of Territory Revenue (2009) 239 CLR 27 – applied. Australian Finance Direct Ltd v Director of Consumer Affairs (2007) 82 ALJR 202 – applied. Century Metals and Mining NL v Yeomans (1989) 40 FCR 564 – cited. Friend v Brooker (2009) 239 CLR 129 – cited. Hegarty v Queensland Ambulance Service [2007] QCA 366 – cited. N v State of Queensland [2004] QSC 290 – cited. NF v State of Queensland [2005] QCA 110 – cited. Randel v Brisbane City Council [1984] 2 Qd R 276 – cited. Rich v State of Queensland [2001] QCA 295 – cited. Roads and Traffic Authority of NSW v Dederer [2007] QCA 42 – cited. Royal North Shore Hospital v Henderson (1986) 7 NSWLR 283 – cited. |
COUNSEL: | R.M. Derrington SC and L.D. Bowden for the appellant N. Andreatidis for the respondent |
SOLICITORS: | Nicholas Radich for the appellant The respondent was not represented |
- [1]This is an application for leave to appeal from a decision of the Commercial and Consumer Tribunal dated 1 May 2009. The appellant was a director of a company, Cavalier Homes (Gold Coast) Pty Ltd (“the company”), which was ordered to be wound up and to which liquidators were appointed on 25 June 2007. As a result, pursuant s 56AC of the Queensland Building Services Authority Act 1991 (“the Act”), the appellant became an excluded individual.[1] The appellant applied to the Queensland Building Services Authority under s 56AD of the Act to be categorised as a permitted individual, which application if successful would have meant that he was no longer to be treated as an excluded individual for the purposes of the Act. That application was refused by the authority. Subsequently, the appellant applied to the Tribunal to review that decision of the authority, but by the decision under appeal the Tribunal confirmed the decision of the authority.
- [2]Leave is required to appeal under s 100 of the Commercial and Consumer Tribunal Act 2003, and the appeal can be only on error of law or excess or want of jurisdiction. The test laid down by Wilson DCJ in Clements v Flower [2005] QDC 50, that the appellants must show there is a reasonable prospect of demonstrating error of law on the part of the learned member who constituted the tribunal and that it could have materially affected the decision, has frequently been followed, including by me in Poiner v Quirk [2007] QDC 299, where I noted that it may also be relevant in a particular case to consider the gravity of the case, the amount in dispute, any public interest in the result of the particular case, or whether any question of law raised is one of wider importance than between the parties to the immediate dispute. As is my preferred practice, and I understand the usual practice in the court, the application for leave was argued together with the appeal.
- [3]It is sufficient to say that an examination of the reasons was sufficient to demonstrate that there were reasonable prospects of demonstrating an error of law. The appellant submitted that the Tribunal had misapplied the relevant provision of the Act, namely the test in s 56AD(8). That is a matter of some general importance in relation to the operation of these provisions, and apparently there is no other decision of this court (or the Court of Appeal) on that point. In addition, for reasons given below, I consider that the approach of the Tribunal member to this issue was not correct. It is therefore appropriate to give leave to appeal.
Background
- [4]There was no real dispute as to the background facts relevant in relation to this matter. The appellant is and has been for some time a licensed builder, and has for some time been a shareholder in, and the sole director of, a company T&T Building Pty Ltd. That company holds a corporate licence, and has been and continues to be a thriving builder. On 6 July 2001 Cavalier Homes (Gold Coast) Pty Ltd was incorporated. The appellant was a shareholder of the company and became its sole director, although the majority shareholder was T&T Building Pty Ltd.
- [5]On 20 December 2002 the company entered into a franchise agreement with Cavalier Homes (Aust) Pty Ltd, a company not associated with the appellant. Cavalier Homes assigned to the company 35 contracts to build residential homes, and between January and September 2003 the company entered into an additional 49 similar contracts. It appears that under the franchise agreement the design of the homes, and presumably the specifications under the building contracts, were determined by the franchisor, as were the prices under the contracts. The appellant found that the prices fixed by the franchisor became insufficient to enable homes to be built profitably, because of an increase in building costs at about this time. The appellant took advice from the company’s financial controller, the accountant general manager, and a lawyer, and decided that the franchise venture had not been successful and that the operations of the company would be wound down. This was found by the Tribunal to have been a reasonable step for the appellant to have taken, although this finding was predicated by the circumstance that any shortfall, including maintenance commitments, was to be met by additional funding being provided by T&T Building Pty Ltd: para 17.
- [6]It appears that this decision was taken prior to June 2004; from that time the company entered into no new building contracts, and it was released from the franchise agreement by a deed of settlement entered into on 2 June 2004: para 8. In order to maintain the solvency of the company, loans in excess of $500,000 were made by T&T Building Pty Ltd. Much of this money was repaid from the proceeds of the building contracts, but that the venture was not viable was confirmed by the fact that ultimately there was an amount of $114,278 still owing by the company to T&T Building Pty Ltd at the time when the company went into liquidation.
- [7]The appellant said and the Tribunal accepted that, except in respect of one contract, all of the work required under the contracts entered into by the company was carried out and all maintenance commitments were met. Unfortunately, there was one owner with whom the working relationship became unhappy. After the decision had been taken to wind down the business of Cavalier Homes, the company received on 20 July 2004[2] a claim brought in the New South Wales Trader and Tenancy Tribunal by the owner in respect of a property constructed on land at Lennox Head, seeking compensation of $400,000. That claim was based on the proposition that the building was so poorly constructed that it should be demolished and rebuilt from scratch.
- [8]The appellant and the company defended the claim in the New South Wales Tribunal. The Tribunal member found in relation to the response to this claim that (para 18), “legal advice [was] obtained upon the claim, and offers made based upon a 2004 valuation of the subject house property. Mr Siebert’s claim was defended and a counterclaim made by Cavalier for the balance allegedly outstanding against the contract sum. All of the above seems [sic] to me to have amounted to reasonable steps taken by the applicant towards avoiding a judgment debt accruing to Cavalier. However, the Tribunal’s decision did not favour Cavalier.”
- [9]Everything, I suppose, is relative; the amount awarded by the New South Wales Tribunal was very much less than the amount claimed, and the proposition that the house ought to be demolished and rebuilt was rejected. That Tribunal accepted the evidence of the expert witness retained by the company as to the cost of rectification works necessary to the property,[3] and found that the amount payable by way of rectification costs was $61,111, a decision which the appellant appears to have been willing to accept. The New South Wales Tribunal also found that the defects were sufficiently extensive that the building works had not reached practical completion, so that there was a significant liability under a contractual provision for liquidated damages for delay, assessed at $36,750. After deducting an amount payable but unpaid under the building contract ($20,107.40), the New South Wales Tribunal on 19 July 2006 gave judgment in favour of the claimant for the net amount of $77,753.60.
- [10]One aspect of the decision of the New South Wales Tribunal seems curious in the absence of more information than I have about that dispute. The Tribunal Member noted at para [11] that the amount recovered was less than the balance due under the contract, because of the finding that the work had not reached the stage of practical completion. Since I expect it was the company’s case that it had, I would have expected the assessment of rectification work by the company’s expert to have been based on the assumption that the work when done would have fully rectified a house which had achieved practical completion. If the company is liable to rectify the house to a state of practical completion, I would expect the owner to be liable to pay the amount payable under the contract at that stage.[4] Since no amount was allowed on an alternative claim for quantum meruit, the effect of the decision of the NSW Tribunal appears to have been that Mr Siebert got part of his house for nothing.
- [11]By this time the company had long since ceased to trade, and had no assets, although it had a substantial debt to T&T Building Pty Ltd. It had no means of satisfying the judgment from its own resources. There was some attempt at settlement with Mr Siebert, but he was not prepared to accept any compromise on such success as he had had, and he applied to have the company wound up, which led to the winding up order and the appointment of a liquidator. I suppose the judgment was ultimately satisfied out of some insurance fund.
The test
- [12]The test to be applied on the review was that set out in s 56AD(8), which provides:
“The authority may categorise the individual as a permitted individual for the relevant event only if the authority is satisfied, on the basis of the application, that the individual took all reasonable steps to avoid the coming into existence of the circumstances that resulted in the happening of the relevant event.”
Approach of the Tribunal Member
- [13]The Tribunal Member produced reasons which appear to run to 30 pages, but after two and a half pages of introduction and summary of the evidence, the Tribunal Member then set out in full written submissions by the applicant and written submission by the respondent, after which there were two pages of “decision” which contained the only real explanation of the decision arrived at by the member. Merely quoting at length submissions made by the parties is not helpful in the process of preparing reasons for judgment, because it does not indicate what submissions were accepted or rejected and why. It is helpful when preparing reasons to identify the major arguments advanced on behalf of the unsuccessful party and to indicate why those arguments have been rejected,[5] but there has been no systematic attempt to do that in these reasons. There was, however, no ground of appeal as to inadequacy of reasons. There are some findings in the reasons, and it is ultimately clear enough why the Tribunal Member arrived his decision, but this approach to giving reasons is in my opinion unhelpful and inappropriate.
- [14]The Tribunal Member found that the decision to wind down the company’s business was a reasonable step to have taken, although subject to the consideration that any shortfall would be met by T&T Building Pty Ltd: [17]. This strikes me as a curious qualification, since one wonders what the situation would be if the appellant had had only the company and had not had any related building company upon whose resources he could fall back. If he had simply started up a new company and entered into the franchise agreement, and then it emerged that the business was unprofitable, it could hardly have been reasonable for him to have continued to trade, getting into more and more of a hole. The appropriate course in those circumstances would surely have been still not to take on any new business, and to try to extract the maximum value from existing contracts.
- [15]The Tribunal Member then referred to the claim of Mr Siebert, to which I have already referred, and noted that after judgment was given by the Tribunal in New South Wales the appellant did not indicate that he took any advice. The Tribunal Member said that there was no satisfactory or acceptable evidence as to appropriate legal or financial advice taken by the appellant subsequent to the Tribunal’s decision: [19]. I wonder what advice the Tribunal Member had in mind? He certainly did not identify any. Given the situation that the company was in, where it had no assets and substantial debts already, being confronted with a judgment debt which it plainly could not satisfy does not seem to me to be a situation which calls for any particular accounting or legal advice. It is not helpful simply to say that it was unreasonable not to take advice without identifying the substance of the advice which would have been received had advice been taken and identifying how that would have been of benefit to the company in that situation.
- [16]The Tribunal Member then found that the offer to settle made after the Tribunal’s decision was not a reasonable step to have taken, because of the amount of the offer and the absence of any appeal against the Tribunal’s decision. It was probably excessively optimistic, and unsurprisingly did not succeed. Had it succeeded, of course it would have been very helpful. It is difficult to see, however, that trying something which does not work but which would have been helpful if it had worked is an unreasonable step to take. In any event, making the offer which was not accepted did not cause the company to go into liquidation. Paragraph 20 of the reasons which dealt with this point was simply irrelevant to the real issue the Tribunal had to decide.
- [17]The same applies to paragraph 21, which was concerned with the reasonableness of a further offer to settle. The offer did not work, but I cannot see how making it did any harm. Certainly, the making of this offer cannot be said in any rational sense to have been a cause of the winding up. Again, this issue was really irrelevant to what the Tribunal had to decide.
- [18]The Tribunal’s reasons were essentially summarised in paragraph 22:
“In the above circumstances then, there was not so much the taking of reasonable steps to avoid the relevant circumstances, namely the continuation of an unsatisfied judgment and an unchallenged statutory demand, which gave rise to the liquidation of [the company], but moreover, a persistent intent on the part of the applicant, as evidenced by the offers, to avoid the reasonable steps, in terms of s 56AD, which became necessary as a result of the Tribunal’s decisions. Those reasonable steps post the Tribunal’s decision were either an appeal against that decision or payment of the amount of the Tribunal’s award to Mr Siebert. In my view, the applicant cannot rely on the offers made subsequent to the Tribunal’s award as being reasonable steps to avoid the relevant circumstances. Further, the applicant’s withdrawal of the financial support of the T&T Building was clearly not a reasonable step towards avoiding such circumstances, the corollary being that a reasonable step in terms of the subsection, would have been to have continued financing [the company’s] liabilities from other profitable companies within the group, namely T&T Building.”
- [19]There was no legal obligation imposed either under the legislation regulating companies, or under the Act, for the appellant or for T&T Building Pty Ltd or for anyone else to put any additional money into the company. The fact that T&T Building Pty Ltd had provided financial support in the past did not mean that it was under any obligation to provide further financial support, which is the real situation contemplated by the member; it was not a question of withdrawal of financial support. There was no evidence of any obligation on the part of T&T Building Pty Ltd to provide further financial support which was not met by that company.
Analysis
- [20]The fundamental flaw in this reasoning is that it assumes that in circumstances where a company becomes insolvent there is an obligation on the shareholders to pay the company’s debts. That is the antithesis of limited liability, which is the basis of all limited companies, in practice the overwhelming majority of corporations which exist in the modern world. There is nothing in the Act which involves any departure from that principle and no indication that the intention of the legislature in these provisions was to do away with the system of limited liability of shareholders enshrined in the Corporations Act.[6]
- [21]Indeed, there are numerous provisions of that law, the whole basis of which is the assumption that companies do have limited liability, and which impose various duties and obligations on directors as a consequence. One of the obligations on directors is to act in the interest of the company, rather than in their personal interests. In those circumstances, if T&T Building Pty Ltd had provided additional financial support to the company in order to preserve the building licence of the appellant, and T&T Building Pty Ltd had subsequently gone into liquidation, the appellant could have found himself in difficulties because, as a director of T&T Building Pty Ltd, he had acted in a way which was contrary to the interests of that company, that is by advancing money to a related company which had no means of ever repaying it, in order to protect his personal interest in retaining his builders licence. Such a payment by T&T Building Pty Ltd would appear to be an uncommercial transaction for the purpose of s 588FB of the Corporations Act 2001, and may be an unreasonable director related transaction within s 588FDA. As well, if the company had borrowed money when it was insolvent and the appellant as a director of the company knew this, he would appear to have been in breach of s 588G of the Corporations Act 2001. The Tribunal Member has simply ignored the wide range of statutory obligations which would apply to the appellant in his capacity as director of T&T Building Pty Ltd.
- [22]The approach of the Tribunal Member also has the effect of rendering s 56AD futile. When a company becomes insolvent, it will presumably always be possible for the directors or shareholders or somebody to put in extra money so as to meet the obligations and in that way to avoid the insolvency. The approach of the Tribunal Member appears to imply that any failure to do so will be unreasonable, at least in the absence of evidence that the relevant individual, or perhaps all relevant individuals and related companies, lacked the financial capacity to do so. One wonders how far that would have to go; is a builder expected to sell his house?
- [23]In my opinion, this is plainly not what s 56AD was directed to. This is shown most clearly by the terms of subsection (8A), which provides a number of matters to which attention must be paid when 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.”[7] The authority is required to have regard to action taken by the individual in relation to the following:
“(a) keeping proper books of account and financial records;
- (b)seeking appropriate financial or legal advice before entering into financial or business arrangements or conducting business;
- (c)reporting fraud or theft to the police;
- (d)ensuring guarantees provided were covered by sufficient assets to cover the liability under the guarantees;
- (e)putting in place appropriate credit management for amounts owing and taking reasonable steps for recovery of the amounts;
- (f)making appropriate provision for Commonwealth and State taxation debts.”
- [24]It is immediately apparent that these are all concerned with the prudent management of a company as an ongoing business, or even, in the case of (b), something which is to be done before one conducts business or enters into financial or business arrangements.[8] In other words, the focus of this subsection is on prevention rather than dealing with problems after they have arisen, except in the case of (c), which is obviously concerned with a situation where a problem has arisen outside the control of the individual in question. When dealing with the issues relating to the winding down of the business, it seems that the Tribunal Member did adopt essentially the correct approach, though as I have said earlier I do not consider that the provision by a related company of additional funds to prop up the company was necessarily a prerequisite for a conclusion that reasonable steps were taken.
- [25]In relation to the New South Wales Tribunal judgment, the Tribunal Member seems with respect to have missed the point. Once the judgment existed, particularly in circumstances where the company’s business had otherwise been wound up, and the company had no assets, there really was not anything that the company could do;[9] it was plainly insolvent, it had no control over the matter, and liquidation depended simply on whether the creditor pressed that step.[10]
- [26]The section speaks about taking reasonable steps to avoid the coming into existence of the circumstances that resulted in the happening of the relevant event. The test in s 56AD(8) requires first, the identification of the relevant event; second, the identification of the circumstances that resulted in the happening of the relevant event; third, a consideration of whether the relevant individual took all reasonable steps to avoid those circumstances coming into existence; and, if satisfied of that, fourth, a decision whether to categorise the individual as a permitted individual. 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.[11] It is not a question of whether he did everything possible to prevent these circumstances from arising, or whether they would not have 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 the benefit of hindsight.[12]
- [27]The relevant event was the appointment of the liquidator, and the circumstances which resulted in the happening of the relevant event were the order of the New South Wales Tribunal being made in the context where the company’s business had been wound down and the company had no assets to meet it. The Tribunal Member has approached the issue as though the question was whether the appellant had taken all reasonable steps to deal with the circumstances that resulted in the happening of the relevant event, but that is not the test.[13] What is required by subsection (8) is a consideration of whether the individual took all reasonable steps to avoid the coming into existence of those circumstances. The Tribunal Member considered whether the appellant acted reasonably in winding down the company’s business and concluded that he did. What the Tribunal did not address thoroughly was whether the appellant took all reasonable steps to avoid the coming into existence of the order of the New South Wales Tribunal.
- [28]To be fair to the Tribunal Member, that was because, as was conceded by senior counsel for the appellant during the hearing, the appellant did not attempt to make a case before the Tribunal that he had taken all reasonable steps to prevent that dispute from coming into existence.[14] But it does seem strange that the Tribunal Member seems not to have examined this question more closely. The Tribunal Member did consider whether the appellant acted reasonably in the conduct of the proceedings in the New South Wales Tribunal, and found that he did: para 18. But, somewhat surprisingly, since I assume that the Commercial and Consumer Tribunal was essentially the Queensland equivalent of the New South Wales Tribunal, the Tribunal Member then seems to have treated the outcome of the Tribunal proceedings in New South Wales as something that simply happened, almost as if it were an act of God. I would have thought that a more appropriate approach was to assume that the Tribunal decision was based on what had happened in the course of the company’s dealings with Mr Siebert. At least, that should have been investigated.
- [29]The Tribunal in New South Wales, it appears, accepted the expert evidence led by the company as to the extent of the defects in the building, which suggests that there were fairly extensive defects, though nothing like what Mr Siebert was alleging. But there was no consideration of the question of whether it was reasonable for that situation to have developed, or rather whether the appellant had taken all reasonable steps to prevent a situation arising where the Tribunal could find that there were defects justifying an assessment of the order of $60,000 in damages against the company. Nor was there any evidence that the appellant had taken all reasonable steps to prevent a situation from coming into existence where the Tribunal could find that there was a liability for liquidated damages in a substantial amount, and no right of recovery of the final instalment under the contract.
- [30]The mere fact that the New South Wales Tribunal found this does not necessarily mean that there was an absence of reasonable steps to prevent such findings from arising. It seems to me that it is appropriate to address how the situation with Mr Siebert arose in order to satisfy the statutory test under subsection (8). It may be that the appellant was not personally involved in that aspect of the matter, but that it was left reasonably to someone else, or that what he did amounted to reasonable steps, even though ultimately the New South Wales Tribunal findings were adverse. In those circumstances the appellant may well have taken all reasonable steps personally to prevent the situation from arising and the situation may have arisen essentially because of the failings of others, for which the appellant should not be held responsible, or because of the actual decision of the Tribunal.
- [31]Accordingly, it seems to me that the Tribunal Member missed the point, and as a result did not deal with all the matters that really ought to have been dealt with in order properly to apply the test under subsection (8). I should also mention one other matter. The Tribunal Member in paragraph [24] referred to some of the things mentioned by the relevant minister in the second reading speech for the bill by which amendments to the Act were made in 1999 which introduced Part 3A containing relevantly s 56AC and s 56AD.[15] These were cited in the respondent’s submissions to the Tribunal in paragraph 32, that the new provisions were “to prevent the re-emergence of the shonks through the device of ‘phoenix companies’ … They will have to prove that they could not have avoided the relevant financial catastrophe. This is intended to mean that the relevant event was entirely outside the responsibility of the individual concerned. Examples might be that a spouse absconded with the individual’s assets, or that a financial calamity was due to a natural disaster, against which it was not possible to insure.”
- [32]The respondent had also relied before the Tribunal[16] on the explanatory note to that bill which stated in part:
“A major deficiency with the existing regulatory structure has been the ability of defaulting contractors to restructure their corporate structure to re‑emerge as a ‘phoenix’ company following cancellation of a licence. … The sole ground for categorisation as a permitted individual is set out in s 56(8) of the Act, namely the applicant can demonstrate all reasonable steps were taken to avoid the occurrence of the facts giving rise to the relevant event. The ground is intended to restrict classification as a permitted individual to instances where the applicant has been a victim of fraud or defalcation by, for example, a partner or spouse.”
- [33]This may be the sort of thing which politicians say when playing to a particular audience, but when it comes to interpreting the statutory provisions enacted by the legislature, attention must be focused on the words actually used by the legislature. In Alcan (NT) Alumina Pty Ltd v Commissioner of Territory Revenue (2009) 239 CLR 27 the majority of the High Court at [47] said:
“This court has stated on many occasions that the task of statutory construction must begin with a consideration of the text itself. Historical considerations and extrinsic materials cannot be relied on to displace the clear meaning of the text. The language which has actually been employed in the text of legislation is the surest guide to legislature intention. The meaning of the text may require consideration of the context, which includes the general purpose and policy of a provision, in particular the mischief it is seeking to remedy.” [citations omitted]
- [34]The same point was made in Australian Finance Direct Ltd v Director of Consumer Affairs (2007) 82 ALJR 202 at [34] per Kirby J:
“The starting point for statutory interpretation is always the text of the written law. It is in that text that the legislature expresses its purpose or ‘intention’. It is a mistake for courts to begin their search for the meaning of the law with judicial elaborations, ministerial statements or historical considerations. Moreover, in performing its function a court should never stray too far from the text, for it constitutes the authentic voice of the constitutionally legitimate lawmaker.” [citations omitted]
- [35]What has been enacted by the legislature in s 56AD(8) is not the test described in the explanatory note, or the test described by the minister. The test as enacted is not restricted in anything like the way contemplated by the note or the speech of the minister. The test enacted is perfectly clear, though its application may be a difficult and complex process. That will depend very much on what, in a particular case, were the circumstances that resulted in the happening of the relevant event. In one way the test is much wider than that contemplated by the minister, but in another way the legislation in its operation is much wider, since a situation could easily arise where the legislation will operate to block someone who could not reasonably be described as a “shonk”. Indeed, it seems to me that that has been the situation here.[17] The Tribunal should have disregarded the extrinsic material in these circumstances.
- [36]I am satisfied therefore that the Tribunal Member has misinterpreted the test laid down in subsection (8). There was no obligation on the appellant to put in additional funds to pay the judgment obtained from the New South Wales Tribunal, nor was there any obligation on the appellant to procure T&T Building Pty Ltd to do so, and the failure to take either of those steps cannot be characterised as unreasonable. That was not the issue, and the Tribunal Member has, in an important respect, failed to address the relevant issue, namely an important aspect of whether reasonable steps were taken to avoid the coming into existence of some of the relevant circumstances. The Tribunal Member approved the appellant’s approach to the winding down of the business generally, and his approach to the conduct of the proceedings in the New South Wales Tribunal, but has not addressed the issue of whether the appellant took reasonable steps to avoid the coming into existence of that judgment, in the sense of avoiding a situation from arising where the Tribunal would find that there was a liability in the company to this extent.
- [37]The question then is whether the matter should be sent back to the Tribunal (or rather the new Tribunal which has replaced it in Queensland), to enable the correct question to be addressed. I was concerned whether it necessarily followed from the concession made by senior counsel for the appellant, that an attempt was not made to address this issue before the Tribunal, that the appropriate course was simply to dismiss the appeal. An application to be categorised as a permitted individual must under s 56AD(3) include the reasons why the authority should categorise the individual as a permitted individual for the relevant event. Further, subsection (8) authorises the characterisation of an individual as a permitted individual only if the authority is satisfied of the relevant matter on the basis of the application, that is to say on the basis of the case made by the applicant. It follows that if relevant considerations are not addressed by the applicant, so that the applicant fails to show in a relevant respect that he took all reasonable steps to avoid the coming into existence of the circumstances that resulted in the happening of the relevant event, then the application will fail.
- [38]The Tribunal was bound to proceed in accordance with the principals of natural justice.[18] If the Tribunal considered that there was a gap in the applicant’s case, those principles do not ordinarily require the Tribunal to warn the applicant of that so as to give the applicant the opportunity of addressing that if he could.[19] I assume that was not done here, given the way in which the Tribunal dealt with the matter. However, in circumstances where the appellant has the benefit of favourable findings from the Tribunal in respect of such consideration as the Tribunal gave to the question of whether he had taken reasonable steps and the Tribunal then went on to determine the matter on the basis of the wrong approach to the statutory test, it is a difficult thing to say that, had the matter been determined properly, the result would have been the same. It may be that the appellant would not wish to address this issue further, but he should have the opportunity to do so. There is also the possible issue raised by the reasoning of the New South Wales Tribunal referred to earlier[20] which was before the Tribunal but which was not, I think, adequately addressed.
- [39]In the circumstances, the appropriate course is to send the matter back to the new Tribunal to hear and determine the review of the authority’s decision afresh in accordance with these reasons. The respondent should pay the costs of the appeal.
Footnotes
[1]That would lead to his being unable to hold a licence under the Act, nor could any company of which he was a director, secretary or influential person hold such a licence: s 56AF, s 56AG.
[2]The Tribunal’s reasons para 11 refer to the date as 20 June 2004, but it emerged at the hearing that this was a mistake.
[3]According to the submissions by the applicant to the Tribunal below, para 19(T); it is not clear that there was any dispute about this matter, although there was no express finding on it, nor does it appear that the Tribunal drew what appears to me to be the obvious inference, that before the New South Wales Tribunal the company did accept that there were significant defects in the property.
[4]I do not know what amount did not become payable to the company as a result; it may have offset the amount allowed on the claim.
[5]Soulemezis v Dudley (Holdings) Pty Ltd (1987) 10 NSWLR 247 at 279 per McHugh JA.
[6]See s 112; Friend v Brooker (2009) 239 CLR 129 at [88]; Ace Property Holdings Pty Ltd v Australian Postal Corporation [2010] QCA 55 at [87]. See also (2010) 84 ALJ 71.
[7]Other relevant factors may also be considered: s 56AD(8B).
[8]It does not in terms apply to a situation where a liability arising from a financial transaction which has been entered into has merged in a judgment against a company, because of the word “before”.
[9]Appealing against the judgment was a possible step but there were no reasons given by the Tribunal for the finding that it was a “reasonable” step. This also indicates that the Tribunal has misunderstood the test.
[10]Once that point had been reached, there were no reasonable steps available to the appellant: cf Rich v State of Queensland [2001] QCA 295 at [18] per McPherson JA.
[11]Randel v Brisbane City Council [1984] 2 Qd R 276 at 278; NF v State of Queensland [2005] QCA 110 at [29]; Royal North Shore Hospital v Henderson (1986) 7 NSWLR 283 at 299 per Mahoney JA; N v State of Queensland [2004] QSC 290.
[12]Roads and Traffic Authority of NSW v Dederer [2007] QCA 42 at [18]; Hegarty v Queensland Ambulance Service [2007] QCA 366 at [49], [109].
[13]The respondent’s submissions, which focused on the appellant’s response to the decision of the NSW Tribunal, fell into the same error.
[14]It was submitted that the section was not concerned with such details, but whether such a matter is merely one of inconsequential detail depends on what circumstances resulted in the liquidation. Here the judgment of the Tribunal was the major circumstance, so it is necessary to consider how it came into existence.
[15]Queensland Hansard 21 July 1999 p 2772.
[16]See Reasons p 23.
[17]It is certainly not a case of a phoenix company; T&T Building Pty Ltd preceded the company as well as surviving it.
[18]Commercial and Consumer Tribunal Act 2003 s 47(2).
[19]Century Metals and Mining NL v Yeomans (1989) 40 FCR 564 at 593. See, however, Re Griffiths ex parte Homestyle Pty Ltd (2005) 139 LGERA 178.
[20] Para [10] above.