After the liquidation of the INNOVARE group of companies in 2009 and Mr D’Arro’s own bankruptcy in 2010, the QCAT upheld the decision of the Queensland Building and Construction Commission to impose a permanent ban on Mr D’Arro on the basis that Mr D’Arro had been involved in more than one event of default (bankruptcy or insolvency) in a three-year period.
At the time of the QCAT’s decision, a QBCC-licensed builder (or a director of a QBCC-licensed company) was entitled to rely on a defence under the Queensland Building and Construction Commission Act (Cth) (‘Act’) known as the ‘permitted individual’ defence. The defence enabled an individual or company facing exclusion to argue either:
- the events of default arose from one set of circumstances; or
- that all reasonable steps to avoid the events of default were taken.
QCAT found that Mr D’Arro did not take all reasonable steps to avoid the circumstances resulting in the events of default. QCAT did not, however, consider any potential connection between the events of default because it considered that the ‘reasonable steps’ part of the defence was the only argument available at that time.
Prior to QCAT’s decision, the Act was amended to expand the test to allow consideration of the common circumstances surrounding the defaults. QCAT did not apply this new test as it considered it would be applying legislation retrospectively if it did so. Instead, QCAT chose to rely on the old, more restrictive ‘permitted individual’ test.
Mr D’Arro appealed QCAT’s decision to the Queensland Supreme Court who later held that QCAT erroneously applied the ‘permitted individual’ test. The Supreme Court found that QCAT should have applied the provisions of the QBCC Act at the time of the decision and, therefore, should have considered whether to grant Mr D’Arro ‘permitted individual’ status by reason of the common circumstances from which the events of default arose. It was not relevant that the relevant events of default occurred prior to the introduction of the new test. The Supreme Court set aside Mr D’Arro’s permanent ban and sent the matter back to the QCAT for reconsideration.
Important changes to building licensing laws from 1 July 2015
On 1 July 2015, the QBCC Act was amended again and the ‘permitted individual’ defence was removed entirely from the provisions of the Act. In light of the decision in D’Arro, the ‘permitted individual’ defence is therefore unlikely to be available. Furthermore, with the QBCC now cracking down on building offences, the new changes to the QBCC Act also mean an increased number of demerit offences as well as an increase in the number of demerit points attached to these offences.
As a QBCC licence holder, or a director of a QBCC-licensed company, it is important to know that the QBCC is entitled to apply the stricter post-1 July 2015 QBCC Act provisions when determining whether or not to exclude an individual or company from holding a QBCC licence.
Our specialist litigation lawyers are experienced in disputes of this nature. If you require assistance or would like advice in respect of your options under the QBCC Act or more broadly, please contact us and one of our experienced litigation lawyers will be able to assist.