In Queensland, building licensing is strictly regulated by the Queensland Building and Construction Commission (“QBCC”) under the Queensland Building and Construction Commission Act 1991 (“QBCC Act”).  

Under the QBCC Act, the QBCC may exclude an individual (an “excluded individual”) or a company (an “excluded company”) from holding a QBCC licence^[1] if the person^[2], or company connected to the person, is involved in a relevant bankruptcy or insolvency event.

If the individual is excluded twice, they may be permanently excluded from holding a QBCC licence.

This article briefly outlines the legislative regime regulating individuals and companies involved in bankruptcy and insolvency events, the process by which the QBCC excludes individuals and companies from holding a QBCC licence, and the implications of exclusion if it takes place.

Part 1: Excluded Individuals

Relevant Bankruptcy Event

Under the QBCC Act, an individual^[3] becomes an “excluded individual” if they have been involved in a "relevant bankruptcy event" within the last three years.^[4]

Involvement in a "relevant bankruptcy event" is defined to mean that the person took advantage of the laws of bankruptcy or became bankrupt.^[5]

Relevant Company Event

An individual can also be excluded from holding a QBCC licence if involved in a “relevant company event” involving a “construction company”.

An individual will be deemed to be an excluded individual if:

• a “construction company” was involved in a “relevant company event”, and 3 years have not elapsed since the “relevant company event”; and

• the individual was a director or secretary of, or an “influential person”^[6] for, the construction company, either at the time of the relevant event or up to two years prior to the event.^[7]

What is a “construction company”?

The definition of "construction company" is deceptively broad.  It is defined to mean a company that directly or indirectly carries out “building work” or “building work services” in Queensland or another State,^[8] or has done so within 2 years immediately before a "relevant company event" for the company.^[9]  The terms “building work” and “building work services” are themselves defined terms given very broad meaning beyond the normal use of those terms.

What is a “relevant company event”?

The term "relevant company event" is defined as the situation where a “construction company” has had a provisional liquidator, liquidator, administrator, or controller appointed, or it has been wound up or ordered to be wound up by a court, and this was done for the benefit of a creditor.^[10]

Statutory defence

The QBCC Act provides a statutory defence to an individual for avoiding being deemed an “excluded individual” if they can satisfy the QBCC that they had ceased being an influential person, director or secretary for the construction company, and that at the time they so ceased, the company was solvent.^[11]  

QBCC’s procedure for excluding an individual licensee

If the QBCC considers that an individual who is a licensee is an excluded individual for a relevant event, then the QBCC must give the individual a written notice identifying the relevant event and stating the following:^[12]

• why the QBCC considers the individual is an excluded individual for the relevant event;

• that the individual may make a submission to the QBCC about the relevant event within the reply period of 28 days from the time that the QBCC gives the individual the notice; and

• the circumstances, in which the QBCC must cancel the individual’s licence.

If the individual does not make a submission about the notice within the reply period, then the QBCC must cancel the individual’s licence by written notice given to the individual.^[13]

Likewise, the QBCC must cancel the individual’s licence by written notice given to the individual, if the individual does make a submission about the notice within the reply period, but after considering the submission, the QBCC still considers the individual is an excluded individual for a relevant event.^[14]

Further, the general requirement under section 49 (that the QBCC must give a licensee notice of its reasons for its decision to cancel the licence and allow the licensee 21 days to respond) does not apply to the cancellation of an excluded individual’s licence.^[15]

The effect is that the QBCC is not required to prove that the individual is an excluded individual before cancelling the person’s licence.  Instead, the onus of proof is shifted onto the individual to prove that they are not an excluded individual, with exclusion otherwise automatically arising if the individual's submissions are not lodged within time or are considered inadequate.

Consequently, it is critical that in the event a QBCC licensee receives a notice relating to exclusion from the QBCC, they immediately seek competent legal advice.

Procedure for excluding an individual non-licensee

Non-licensees are also subject to exclusion under the QBCC Act, although the procedure is slightly different.

The procedure in that case is that the QBCC may give the individual a written notice (a “show cause notice”) identifying the relevant event and stating the following:

• why the QBCC considers the individual is an excluded individual for the relevant event;

• that, within 28 days after the QBCC gives the show cause notice, the individual may give the QBCC a written submission to show why the individual is not an excluded individual for the relevant event.

The QBCC may publish the individual’s details on its website if:

• the individual does not make a written submission within the reply period; or

• the individual does make a submission about the show cause notice within the reply period, but after considering the submission, the QBCC still considers the individual is an excluded individual for a relevant event.

What are the consequences of being an excluded individual?

The consequences of being deemed an excluded individual specified in the QBCC Act include:

• The QBCC must cancel the individual’s licence by written notice.^[16]

• The excluded individual is not entitled to a contractor’s licence,^[17] nominee supervisor’s licence,^[18] or site supervisor’s licence^[19] during the exclusion period.

• Other people will lose their entitlement to a contractor’s licence if the person carries on, or intends to carry on, business under the licence in partnership with an excluded individual.^[20]

• Licensed contractors are prohibited from carry on a business under a QBCC licence in partnership with an unlicensed person if the unlicensed person is an excluded individual.^[21]

• If any excluded individual is a director or secretary of, or an “influential person” for, a construction company, the company will be deemed to be an “excluded company”.^[22]

• The QBCC is required to publish the name of each licensee^[23] and non-licensee^[24] who is an excluded individual, a note of the person’s exclusion and details of the circumstances that led to the exclusion in the public register.

Further, as a person is prohibited from carrying out building work without the appropriate QBCC licence, exclusion can often result in a sudden loss of income and an inability to complete contractual obligations under building contracts and subcontract agreements leading to contract breach liability affecting various commercial agreements including building contracts, subcontract agreements, trade creditor accounts, and finance agreements.

How long does the exclusion last?

A person will be excluded for a period of 3 years from the date of the relevant bankruptcy event.^[25] However, even after exclusion period ends, it still counts towards permanent exclusion if the person is deemed to be an excluded person a second time.^[26]

Part 2: Excluded Companies

The QBCC will exclude a construction company from holding a QBCC licence (an "excluded company") if it is of the view that the company has an excluded individual as its director or secretary, or as an “influential person” for the company.^[27]

Procedure if the licensee is an excluded company

The first step in the QBCC's procedure is to give the company a written notice stating the following:^[28]

• particulars identifying the individual (the "relevant individual") who is a director or secretary of, or an influential person for, the company and who is an excluded individual for a relevant event;

• particulars identifying the relevant event; and

• that within 28 days after the QBCC gives the company the written notice, the relevant individual must stop being a director, secretary or influential person, or the QBCC must cancel the company’s licence.

The QBCC must then cancel the company’s licence by written notice given to the company if, within the 28 days the relevant individual does not stop being a director or secretary of, or an influential person for, the company.^[29]

‍

The statutory process for exclusion of a company does not invite submissions and does not state that the QBCC will consider any submissions.  

However, the decision that a person is an excluded individual or excluded company, and the decision that an individual is still a director or secretary of, or an influential person for, a company, are both reviewable decisions for the purposes of QBCC internal review or Queensland Civil and Administrative Tribunal (“QCAT”) review.^[30]

What are the consequences of being an excluded company?

The consequences of being deemed an excluded company specified in the QBCC Act include the following:

• The QBCC must cancel the company’s licence;^[31]

• An excluded company is not entitled to a contractor’s licence^[32] and the QBCC must not grant a licence to an excluded company;^[33]

• Another company is not entitled to a contractor’s licence if it carries on, or intends to carry on, business under the licence in partnership with an excluded company.^[34]

• A licensed contractor cannot carry on business under a licence in partnership with an unlicensed person if the unlicensed person is an excluded company.^[35]

• the QBCC can publish the company’s business address and details on its website, naming it as an excluded company and providing details of the circumstances that led to the exclusion.^[36]  Such details can remain published until the director, secretary, influential person or nominee is no longer a director, secretary, influential person or nominee for the company, or for up to 10 years.^[37]

Further, as a company is prohibited from carrying out building work without the appropriate QBCC licence, exclusion can result in loss of revenue and an inability to complete contractual obligations under building contracts and subcontract agreements leading to contract breach liability in such contracts as building contracts, subcontract agreements, trade creditor accounts, and finance agreements.

How long does the exclusion last?

The QBCC Act is silent on the period of exclusion for an excluded company and contains no automatically lapsing provision.

The Act states that “a company is an "excluded company" if an individual who is a director or secretary of, or an influential person for, the construction company is an excluded individual for a relevant event”.^[38]  Exclusion then occurs upon the failure to comply with a written notice to the company for the person the relevant individual to stop being a director or secretary of, or an influential person for, the company,^[39] resulting in licence cancellation.

Consequently, it seems that upon the excluded individual being removed as a director or secretary of, or an influential person for, the construction company, the company ceases being an excluded company, but must now apply for afresh licence.

Part 3: Permanently excluded Individuals

An individual will be deemed to be a “permanently excluded individual" if they have been an excluded individual for a relevant event two or more times^[40] for which they were given written notice by the QBCC,^[41] but not if the events are “related events”.^[42]

In deciding whether 2 relevant events have happened, a relevant event must be counted irrespective of:

• the sequencing or order of relevant events;^[43]

• the length of time between the giving of the different notices for the relevant events;^[44]

• whether a relevant event happened before or after the commencement of this section^[45], but only if the individual became an excluded individual for at least one of the relevant events after the commencement of this section (i.e., 1 July 2003^[46]),irrespective of when the circumstances resulting in the relevant event arose.^[47]

• whether the companies were construction companies in different state jurisdictions.^[48] 

"Related Events" are not included

The QBCC Act specifies that an excluded individual for a relevant event does not also become an excluded individual for another relevant event if the QBCC is satisfied that both events are consequences flowing from what is, in substance, the one set of circumstances.^[49]

This means (for example), if a director of a construction company that is wound up, and they bankrupt as a result of guaranteeing loans to the company, the bankruptcy will be considered to be a related event and will not count as a separate insolvency event.

Procedure for permanently excluding an individual ^[50]

As a permanently excluded individual is an individual who has twice been an excluded individual for a relevant event, they should have received a Notice from the QBCC in respect of each exclusion,^[51] as such notice is a prerequisite to being deemed an excluded individual.^[52]

In the case of a second or subsequent Notice being given to the person, that further notice must state the effect of the individual becoming a permanently excluded individual.  If the individual is not a licensee, the Notice must include details of the provision relating to publication of relevant details of permanently excluded individuals.^[53]

If the second or subsequent notice does not include that information, then another notice containing the information may be given.^[54]

Consequences of being a permanently excluded individual

The consequences of being a permanently excluded individual include the following:

• the QBCC is prohibited from granting a licence to a permanently excluded individual;^[55]

• the QBCC is prohibited from granting a licence to a company for which a permanently excluded individual is a director, secretary, influential person, or nominee.^[56]

• the person is taken not to be a fit and proper person to hold a licence;^[57] and

• the QBCC can publish the person’s business address and details on its website, naming them as a permanently excluded individual and the details of the circumstances that led to the exclusion.^[58]  Such details remain permanently on the register.^[59]

How long does the permanent exclusion last?

The Queensland Court of Appeal has confirmed that the status of permanent exclusion is of indefinite duration - it does not expire upon effluxion of time.^[60] This means that the exclusion will indeed be permanent, unless overturned by a tribunal or court.

Conclusion

The above provisions have been the centre of much controversy, litigation and legislative amendment.  As such, this can be a complex area of law which can have a devastating effect on your ability to operate in the building industry in Queensland.

Given the serious consequences involved, if you receive a QBCC Notice you should immediately obtain competent independent legal advice regarding your particular circumstances, the validity of any adverse decision made against you, and the options that may be available to you.

For practical legal advice, support and assistance regarding your particular circumstances, contact Law Force Lawyers on 1300 445 000, or by email to info@lawforce.com.au. We are ready to step in and assist you to assert your rights and protect your interests.

‍

Footnotes

[1] This does not apply to a fire protection occupational licence; or a mechanical services occupational licence: QBCC Act section 56AB.

[2] Note: the term “person” means legal person, which includes companies.

[3] This does not apply to an individual in the case of a fire protection occupational licence or a mechanical services occupational licence: QBCC Act section 56AB.

[4] QBCC Act section 56AC(3).

[5] QBCC Act section 56AC(1).

[6] QBCC Act Schedule 2 Dictionary: An “influential person”, for a company, means an individual, other than a director or secretary of the company, who is in a position to control or substantially influence the conduct of the company’s affairs, including, for example, a shareholder with a significant shareholding, a financier or a senior employee.

[7] QBCC Act section 56AC(2); 56AC(4).

[8] QBCC Act section 56AC(7)(a). See also: Vickers v Queensland Building and Construction Commission & Ors [2019] QCA 66, [83]. 

[9] QBCC Act section 56AC(7)(b).

[10] QBCC Act section 56AC(2).

[11] QBCC Act section 56AC(4).  

[12] QBCC Act section 56AF(2).

[13] QBCC Act section 56AF(3)(b).

[14] QBCC Act section 56AF(3)(a).

[15] QBCC Act section 56AF(4).

[16] QBCC Act section 56AF(3).

[17] QBCC Act section 31(1((e).

[18] QBCC Act section 32(1)(c).

[19] QBCC Act section 32AA(1)(d).

[20] QBCC Act section 31A(a).

[21] QBCC Act section 56(d)(i).

[22] QBCC Act section 56AC(6).

[23] QBCC Act section 99(3)(h). Such notes remain on the register for up to 5 years: section 102(1)(d).

[24] QBCC Act section 56AI; section 56AK. Such notes remain on the register for up to 10 years: section 56AI(4)(b).

[25] QBCC Act section 56AC(1) & (3).

[26] QBCC Act section 58(7)(c). Prior to 1 July 2015, the exclusion period for a relevant Insolvency or Bankruptcy Event was 5 years from the date of the event.  From 1 July 2015, the exclusion period has been 3 years from the date of the event. 

[27] QBCC Act section 56AC(6).  

[28] QBCC Act section 56AG(2).

[29] QBCC Act section 56AG(3).

[30] QBCC Act section 86(1)(k).  I.e., a decision under section 56AF or 56AG.

[31] QBCC Act section 56AG(3).

[32] QBCC Act section 31(2)(d); section 31A.

[33] QBCC Act section 56AE(b).

[34] QBCC Act section 31A(f).

[35] QBCC Act section 56(1)(d)(vi).

[36] QBCC Act section 99(3)(i) (licensee).

[37] QBCC Act section 102(1)(c).

[38] QBCC Act section 56AC(6).

[39] QBCC Act section 56AG(3).

[40] QBCC Act section 58(1)(a).

[41] QBCC Act section 58(1)(b).

[42] QBCC Act section 56AC(5).

[43] QBCC Act section 58(7)(a) and (b).

[44] QBCC Act section 58(7)(c).

[45] QBCC Act section 58(7)(d).

[46] This part was introduced under the Queensland Building Services Authority and Other Legislation Amendment Act 2003 Act No. 1 of 2003, section 31, to commence on a day to be fixed by proclamation: namely 1 July 2003.

[47] QBCC Act section 58(5).

[48] Vickers v Queensland Building and Construction Commission & Ors [2019] QCA 66, [94].

[49] QBCC Act section 56AC(5). This follows amendment under the Building Industry Fairness (Security of Payment) and Other Legislation Amendment Act 2020 No. 24.

[50] Note: this part does not apply to a fire protection occupational licence; or a mechanical services occupational licence: QBCC Act section 57.

[51] QBCC Act section 58(1), and 58(2)(a).

[52] QBCC Act sections 56AF(2) (individual); 56AG(2) (company); and 56AJ(2) (non-licensee).

[53] QBCC Act section 58(2)(b).

[54] QBCC Act section 58(6).

[55] QBCC Act section 59(a).

[56] QBCC Act section 59(b).

[57] QBCC Act section 60.

[58] QBCC Act section 99(3)(h) and (i) (licensee); QBCC Act section 61A (non-licensees).

[59] QBCC Act section 102(4).

[60] Queensland Building & Construction Commission v Meredith [2014] QCA 62, [7].

‍

Disclaimer – Reliance on Content

The material distributed is general information only. The information supplied is not and is not intended to be, legal or other professional advice, nor should it be relied upon as such. You should seek legal or professional advice in relation to your specific situation.

‍

‍

‍

‍

‍