The Dinsey effect: no licence relief for permanently excluded individuals

November, 2012

The failure of multiple companies from the same set of circumstances, even where they are related entities, may still lead to an licensee being classified as a permanently excluded individual under the Queensland Building Services Act 1991 (Qld) (‘QBSA Act’).

Previously, it was thought that due to section 56AC(6) of the QBSA Act, a licensee would not be classified as a permanently excluded individual where multiple company failures occur as a consequence of the same set of circumstances. However, the recent decision of Member Barlow SC in Dinsey v Queensland Building Services Authority [2012] QCAT provided only a narrow interpretation of section 56AC(6), which provides:

“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) if the first event and the other event are both consequences flowing from what is, in substance, the one set of circumstances applying to the company.”

Member Barlow SC determined that section 56AC(6) of the QBSA Act does not apply where the first relevant event relates to one company and the other event or events relates to a different company.

This decision has significant implications in relation to the use of group company structures, particularly where single licences under the QBSA Act are used across multiple entities. The failure of an entire group of companies or even several companies within it may be treated as individual events. As a result the Queensland Building Services Authority may determine that, as separate insolvency events (even where arising from the one set out circumstances), an individual may be an ‘excluded individual’ for each separate company that fails.

Under section 58 of the QBSA Act, multiple instances of being an excluded individual (may) result in being designated a ‘permanently excluded individual’. Industry participants will be aware that permanently excluded individuals are not entitled to hold a contractor’s licence under the QBSA Act.

Particularly given the current economic climate, licensed builders should review their corporate group and financial structures and consider the risks arising from using a licence for or being involved in multiple entities.

Contact Mills Oakley

For more information, please contact:

rechelle-brost-mills-oakley

Rechelle Brost | Partner
T: +61 7 3228 0421
E: rbrost@millsoakley.com.au

greg-richards-mills-oakley

Greg Richards | Partner
T: +61 7 3228 0443
E: grichards@millsoakley.com.au

 

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