Construction Law - Excluded Under the QBCC Act?

How can the 2014 and 2015 amendments to the Queensland Building and Construction Commission Act 1991 (the Act) lead to a person whom was previously determined to be an "excluded individual” or a “permanently excluded individual”, now being eligible to apply for a QBCC licence now???

Under the current version of the Queensland Building and Construction Commission Act 1991 (the Act), if:

• you are or have been a bankrupt (defined as a relevant bankruptcy event according to a bankruptcy attorney) or,
• within 1 year of a construction company being placed into receivership, administration or liquidation or wound up, you were a director or secretary, or an influential person for that construction company (defined as a relevant company event),

(both of which are defined as a ‘relevant event’), you are an excluded individual under Part 3A of the Act for that relevant event and you cannot hold a licence for 3 years from when the relevant event occurred.

If you become an excluded individual for a second relevant event, you become a permanently excluded individual under Part 3B of the QBCC Act.

Being deemed an excluded individual can have a serious impact upon your ability to make a living in the construction industry. If your career involves performing work for which a QBCC licence is required, you can only work as an employee of a licenced person or company and only in a position where you are not an influential person for a construction company.

Unsurprisingly then, if you have experienced the unhappy circumstances of being forced into bankruptcy or your company being wound up, the duration of your time in the wilderness will be of great importance to you.

The current version of Part 3A of the QBCC Act has been significantly amended since the version that was in force prior to 10 November 2014 including:

1. Subsections (5) and (6) of section 56AC were replaced by a single subsection (5) the effect of which is to count more than one relevant event as a single relevant event when they all arose out of the same circumstances.

For example, the director of a company wound up in liquidation is forced into bankruptcy due to personal guarantees of the debts of the company. That is seen as 1 event, not 2 separate events;

2. How long a person is an excluded individual for the first relevant event was reduced from 5 years to 3 years;
3. For the receivership, administration, liquidation or winding up of a company to be a relevant company event, the company now has to be a construction company.
4. It is no longer possible to apply to the QBCC to be classified as a permitted individual since Part 3A division 2 was omitted.

But that is old news now. It has been that way since 2015.

However, what about those individuals who became an excluded individual or a permanently excluded individual before those amendments to the QBCC Act came into effect?

Using the example in paragraph 1 above, we will say the winding up of the company and the personal bankruptcy occurred in June of 2014. Those two separate but related events could have been counted as 2 relevant events before the amendments and the director (we’ll call her Jill) could have become a permanently excluded individual as a result. At the very least Jill would be an excluded individual for 5 years.

Whereas, if those events had happened in July 2015, Jill would likely not be a permanently excluded individual because the winding up of the company and the personal bankruptcy can be counted as a single relevant event and Jill would be an excluded individual for only 3 years.

On 12 May 2017 the Queensland Court of Appeal handed down their decision in the matter of D’Arro v Queensland Building and Construction Commission [2017] QCA 90 (D’Arro). That case was an appeal from a decision of the Queensland Civil and Administrative Tribunal Appeal Tribunal. The Court considered whether section 56AC(5) of the QBCC Act as in force at 10 November 2014 (which replaced sections 56AC(5) and (6) in the previous version) should apply to events that took place prior to the 10 November 2014 amendment. The Court held that even though section 56AC(5) of the QBCC Act (as at 10 November 2014) did not have retrospective effect, it still has to be applied to the assessment of a person as an excluded individual even when the relevant event occurred before the amendment.

That is because, the term excluded individual is not a designated status that arises upon the occurrence of the relevant event. The designation of an excluded individual is used for the express purposes under the Act, being for the purposes of deciding whether a licence that is held must be cancelled and deciding whether a person applying for a licence, is entitled to be given that licence.

The assessment of a person as an excluded individual has to be undertaken at the time the QBCC is considering the matter to which a person’s status as an excluded individual is relevant. So let’s look at various scenarios, for example:

Scenario 1 - Our unfortunate friend Jill has a licence and suffers a relevant event in June 2014. The QBCC must assess whether Jill is an excluded individual for the relevant event and if they do, they must cancel Jill’s licence under section 56AF(3) of the Act. In assessing Jill as an excluded individual, the QBCC had to apply the version of section 56AC that was in force at the time of the assessment.

Scenario 2 – It is now July 2017. It has been just over 3 years since Jill had her licence cancelled because she was assessed as an excluded individual. Jill applies to the QBCC for a new licence. The QBCC must assess Jill again at that time of her application and decide whether she is an excluded individual by applying the version of section 56AC that is in force at that time. The QBCC cannot look at Jill’s records and say, well we deemed her to be an excluded individual back in June 2014 and at that time she was an excluded individual for 5 years, so she still is until June 2019. Applying the current version of section 56AC Jill would not be an excluded individual because 3 years has passed since the relevant event.

Scenario 3 – In June 2014 Jill was declared bankrupt. Jill’s business was a QBCC licenced builder but she was also a director and investor in ABC Restaurant Pty Ltd. Jill’s bankruptcy was a direct result of personal losses she suffered when ABC Restaurant Pty Ltd went into liquidation and was wound up 3 months earlier.

At the time:

• The winding up of ABC Restaurant Pty Ltd was a relevant company event for which Jill was designated an excluded individual and had her license cancelled;
• Jill’s bankruptcy was a relevant bankruptcy event and it was regarded by the QBCC as a second relevant event which meant Jill was designated as a permanently excluded individual.

However, it is July 2017 and Jill applies for a new licence. The QBCC must assess Jill for the purposes of her application using section 56AC as in force at the time of her application, in that:

• ABC Restaurant Pty Ltd was not a construction company and therefore under the Act as in force now,
• The winding up of ABC Restaurant Pty Ltd was not a relevant company event and therefore not a relevant event; and
• Jill could not be assessed as a permanently excluded individual for the purposes of her licence application.

Of course, these scenarios are fictional and designed to highlight some examples of what we consider is the effect of the decision in D’Arro. Whether your personal circumstances are affected needs to be assessed after full consideration of all the relevant facts. However, the point is, if you have previously been designated an excluded individual or permanently excluded individual by the QBCC, you may wish to consider what an assessment of your status would now be after applying the law currently in force.

Losing your contractor’s license and the right to hold a license can have a devastating effect on a person’s ability to make a living in the construction industry. Undoubtedly the legislation is there to protect consumers and the construction industry as a whole. It has been said that having a contractor’s license is a privilege not a right. That may be the case however, a person has a right to be properly assessed in accordance with the law as to whether or not they are entitled to that privilege.

Active Law’s construction team are very experienced in all aspects of construction law including in licencing, statutory compliance and reviews of QBCC decisions as well as all other aspects of law affecting the construction industry.

Builders and subcontractors, look out for our free workshops held monthly. Contact us on reception@activelaw.com.au and ask to be put on our mailing list.

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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.