3 October 2018
Building licences and insolvency – will I lose my licence?
“My company has gone into liquidation/I have just got bankrupt and I hold the QBCC licence – HELP!”
We often receive emails like one of the above.
A common situation is a creditor has been trying to wind up a company after non-compliance with a statutory demand, the company has ended up in liquidation, the director held the Queensland Building and Construction Commission (“QBCC”) licence and then a letter arrives from the QBCC advising that the director’s licence has been cancelled and he or she has been excluded from holding a QBCC Contractor or Nominee supervisor license or from being in a position of influence or control for a QBCC-licenced company.
We at JHK Legal appreciate that the above situation is stressful and without proper advice items such as the above can slip through the cracks.
What does it all mean, you ask?
What does it mean to be an excluded individual or company?
Generally, a person is an ‘excluded individual’ under the Queensland Building and Construction Commission Act 1991 (Qld) if they are a director, secretary or influential person for a construction company within the period of two years before the company appoints a provisional liquidator, liquidator, administrator or controller or is wound up or ordered to be wound up for the benefit of a creditor.
A person will also be considered an ‘excluded individual’ if they become bankrupt or takes advantage of bankruptcy laws by entering into a Part IX or Part X agreement under the Bankruptcy Act 1966 (Cth).
The period of exclusion to apply for another licence is 5 years from the date of the insolvency event that occurs prior to 1 July 2015 and 3 years from 1 July 2015 onwards. If a person is involved in 2 separate insolvency events then they may face a life exclusion (there are a number of scenarios that may not result in life exclusion, including when a person becomes bankrupt as a result of company insolvency or two related entities go into liquidation).
Note: if you are an excluded individual not only can you not hold a Contractor or Nominee Supervisor licence during the exclusion period but you also cannot run a QBCC licensed company or be in partnership with a QBCC licensee.
Exclusions can also affect other companies as a company becomes an excluded company if an excluded individual is a director, secretary or influential person for the company. The effect of this is that the excluded company will be unable to reapply for another licence until the exclusion period ends unless the excluded individual stops being a director, secretary or influential person.
Note that for post 1 July 2015 insolvency events, a failed company will only lead to exclusion if the company was a construction company (directly or indirectly carried out building work or building work services within 2 years of the insolvency event).
Influential person
In the company sphere, an influential person is someone that is not a director or secretary of a company but they are in a position to control or substantially influence the company’s conduct.
In our experience, the QBCC takes a wide view of who may be considered an influential person and as such we stress that you contact our office for advice if you are faced with this situation.
How can you minimise the risk of losing a licence?
Careful consideration is required when setting up companies and talking through the worst case scenarios with your trusted advisors is necessary to try to minimise risk.
Can you appeal a QBCC decision?
You can appeal a QBCC decision made under section 56AF or 56AG of the QBCC Act that a person is an excluded individual or excluded company or an individual is still a director or secretary of, or an influential of a company. An internal review with the QBCC or Queensland Civil and Administrative Appeal (QCAT) must occur within 28 days. We often suggest both is necessary, on the basis that you do not miss the time frame for QCAT should the outcome of the internal QBCC appeal process is found not to be in your favour.
Are you in a similar situation as that outlined above? Please give Alicia Auden or Michelle Kelly of our Brisbane office a call on 07 3859 4500 for a confidential conversation.
Alicia Auden – Legal Practitioner Director