CITATION:	Haywood v Queensland Building and Construction Commission [2015] QCAT 392	

PARTIES:	Jonathon Nicholas Haywood
(Applicant)	
	v	
	Queensland Building and Construction Commission
(Respondent)	

APPLICATION NUMBER:	OCR261-14	

MATTER TYPE:	General administrative review matters	

HEARING DATE:	21 July 2015 & 27 August 2015	

HEARD AT:	Brisbane	

DECISION OF:	Member Grant	

DELIVERED ON:	29 September 2015	

DELIVERED AT:	Brisbane	

ORDERS MADE:	1.	The decision of the QBCC dated 23 October 2014 to refuse to categorize Jonathon Nicholas Haywood as a “permitted individual” under s 56AD(8) of the Queensland Building and Construction Commission Act 1991 is set aside;
2.	Jonathon Nicholas Haywood is categorised as a “permitted individual” under s 56AD(8) of the Queensland Building and Construction Commission Act 1991.	

CATCHWORDS:	ADMINISTRATIVE REVIEW – OCCUPATIONAL REGULATION – PERMITTED INDIVIDUAL – relevant event - whether applicant took all reasonable steps to avoid circumstances leading to relevant event - Queensland Building and Construction Commission Act 1991, ss 56AC & 56AD

Queensland Building and Construction Commission Act 1991 (Qld) ss 56AC, 56AD
Queensland Civil and Administrative Tribunal Act 2009 (Qld) s 20

Fogg v Queensland Building Services Authority [2010] QCAT 203
Higgins Coatings Pty Ltd v Cure-It Chemical Applicators Pty Ltd [2014] QDC 130
Laidlaw v Queensland Building Services Authority [2010] QCAT 70
Queensland Building and Construction Commission v Mudri [2015] QCATA 78 
Vuu v Queensland Building Services Authority [2010] QCAT 335
Younan v Queensland Building Services Authority [2010] QDC 158
Younan v Queensland Building Services Authority [2011] QCA 1	

APPEARANCES:

APPLICANT:	Ms McNeil of counsel for the applicant	

RESPONDENT:	Mr Robinson, solicitor, for the respondent	

REPRESENTATIVES:

APPLICANT:	represented by Cranston McEachern Lawyers	

RESPONDENT:	represented by Robinson Locke Litigation Lawyers	

REASONS FOR DECISION

[1]	This matter is an application for review of a decision of the Respondent Queensland Building and Construction Commission (QBCC) to refuse an application by the Applicant Jonathon Nicholas Haywood (Mr Haywood) to be categorised as a permitted individual pursuant to s56AD of the Queensland Building and Construction Commission Act 1991 (the QBCC Act).
Background
[2]	The larger majority of factual background to this matter was agreed between the parties. While lengthy, it is appropriate to set out these facts, given the submissions as to what may be the circumstances to be taken into account. Issues requiring factual findings by the Tribunal are dealt with in the reasons below.
[3]	Prior to 2007, Mr Haywood had built up a business involving sales and application of chemical concrete coatings and treatments in domestic and commercial settings (“the business”). Importantly, Mr Haywood was one of the few manufacturer-approved applicators in Australia of one particular product, Euco Diamond Hard (“EDH”). Mr Haywood had attended training in the United States of America (USA) in relation to the products the business used.
[4]	Following accountancy advice, in May 2007 the company Cure-it Chemical Applicators Pty Ltd (“Cure-it”) was registered, with Mr Haywood as the sole director.  Cure-it then conducted the business. For the entire life of Cure-it, Mr Haywood was the sole shareholder of Cure-it.
[5]	The business involved the application of specialist chemicals to concrete surfaces and structures. As a result, Mr Haywood was required to hold a licence under the QBCC Act, through the QBCC and its predecessor.
[6]	In May 2009, Cure-it entered into a subcontract with Higgins Coatings Pty Ltd (“Higgins”) in relation to cleaning surfaces within a town house development and then supplying and applying EDH to those surfaces. The work was completed, but the body corporate of the town house development was not satisfied with the result, described as being a lack of “any visible seal” and “wet look”.
[7]	When advised of the body corporate’s concern, Mr Haywood attended the premises in July 2009 and performed a clean of the area, as well as resealing one portion. The result was still considered to be unsatisfactory by the body corporate. 
[8]	The evidence of Mr Haywood is that, in September 2009, both Mr Haywood and Ms Zinco met with Higgins’ representatives to discuss the issue, and as he described it “the lack of sheen”. Mr Haywood attests that, in an effort to resolve the issue, he offered on behalf of Cure-it to share any rectification costs if it could be shown the work was defective, as well as offering to supply a different product to EDH which would leave a shinier finish. These offers were not accepted.
[9]	In November 2009, Cure-it wrote to Higgins rejecting Higgins’ offer requiring Cure-it to pay for the application of a different type of coating at a cost of $134,500 + GST. In that correspondence Cure-it requested evidence from Higgins demonstrating the claims made by Higgins that the EDH was not performing as warranted by Cure-it, and denying any misrepresentation.
[10]	On 24 June 2010 proceedings were commence by Higgins against Cure-it in the District Court of Queensland. Higgins sought an amount of $55,686, being the profit it was to make from its contract with the body corporate, on the basis of a breach of contract by Cure-it. On 9 September 2010 a Notice of Intention to Defend and Defence was filed on behalf of Cure-it. On 16 September 2010 the Defence was amended. What followed was, on the documents before the Tribunal, a protracted series of pleadings and gathering of evidence. 
[11]	On 14 October 2010 Higgins filed an Amended Statement of Claim. The amendment to the Statement of Claim introduced a claim for misleading and deceptive conduct under the (then) Trade Practices Act 1974 (Cth). On 25 November 2010 the Defence was further amended to deny this new claim. A Reply was provided by Higgins on 21 January 2011.
[12]	On 28 July 2011, Cure-it filed a Further Re-amended Defence, which included a counter-claim for payment of money retained by Higgins under the contract. On 9 August 2011, Higgins filed an Amended Reply and Answer to that pleading. 
[13]	On 23 November 2011, Higgin made an Offer to Settle under the relevant rules of court. The offer was for payment of the entire amount of the claim plus costs.
[14]	Expert evidence, on the suitability of EDH and its application by Cure-it, was accepted by the Court from two individuals: a Mr Haig and a Mr May. Higgins also attempted to lead evidence from an officer of Tremco Pty Ltd (who had recommended Mr Haywood/Cure-it to Higgins) in relation to the application, but this was ruled inadmissible.
[15]	Mr Haig provided reports dated 30 April 2012 and 14 November 2012 in support of Higgins, that is, some 5 months after Higgins made the offer to settle. Mr May provided reports dated 22 April 2013, 10 May 2013 and 27 May 2013 in support of Cure-it.
[16]	Trial of the matter commenced on 16 May 2013, but was adjourned on 17 May due to the ill health of counsel representing Cure-it. The matter resumed on 27 May 2013, with new counsel having been briefed, and proceeded for a further 5 days, with a final day on 5 June 2013. The original estimates of trial length were two days.
[17]	On 4 March 2014, McGill DCJ handed down judgement in the matter, finding against Cure-it and awarding $74,116.23 including interest of $20,148.10, to Higgins. The Court found that Cure-it had breached its contract with Higgins in relation to undertaking the works in a professional and workmanlike manner, on the basis the EDH had not been applied properly. The Court rejected the claim for misleading and deceptive conduct. 
[18]	Following this, Cure-it made two offers to settle. The evidence of Mr Haywood was that he would have been able to borrow an amount of $50,000 from a family member, but was unable to obtain any other finance.
[19]	The first offer was made on 5 March 2014 for an amount of $48,000. This offer was rejected on 17 March 2014, with a counter made for an amount of $203,515.49, being for the judgment and legal costs. On the evidence of both Mr Haywood and his solicitor, the level of costs claimed was considered excessive.
[20]	At around this time, Mr Haywood contacted Mr Barrington Darley, an accountant, on the advice of his solicitor, to discuss the impact of the judgement on Cure-it, with particular regard to corporate governance and insolvent trading. 
[21]	Mr Darley states that, following consideration of Cure-it’s financial affairs, he advised that if the company continued to trade there could be a “trading while insolvent” allegation made against the company.  Mr Darley advised that a second company should be incorporated for all future work, and this was done on 18 March 2014.  Cure-it did not trade from a time shortly after the judgement was handed down.
[22]	Mr Darley stated in oral evidence that, having considered the circumstances of Cure-it’s company structure, its lack of assets, and the work flow, the second company was incorporated and commenced trading without any “phoenix” activity.
[23]	Cure-it made the second offer on 27 March 2015. The offer was in the amount of $50,000, which was also rejected by Higgins.
[24]	On 26 May 2014, Mr Haywood resigned from the position of director of Cure-it. Mr Haywood states he resigned on the advice of Mr Darley, which appears supported by Mr Darley’s evidence.
[25]	In August 2014, Higgins delivered a Creditors Statutory Demand on Cure-it. On or about 25 August 2014, on the advice of Mr Darley, relevant documentation was filed with an insolvency firm for Cure-it to go into liquidation on a Creditors Voluntary Basis.
[26]	On 3 September 2014, liquidators were appointed to Cure-it. In the Report to Creditors issued by the liquidators dated 10 September 2014, Cure-it had two creditors only – the debt claimed by Higgins and a debt owed to Mr Haywood of $16,350. No other evidence is provided of any other debts being owed by Cure-it at that time. 
[27]	On 25 September 2014, the QBCC advised Mr Haywood in writing that the QBCC considered Mr Haywood to be an “excluded individual” for the purposes of the QBCC Act.  The QBCC must cancel any licence held under the QBCC Act by an excluded individual unless that person applies to become, and is categorised as a “permitted individual” by the QBCC. 
[28]	On 17 October 2014, Mr Haywood made an application to be categorised as a “permitted individual” under s 56AD of the QBCC Act.
[29]	On 23 October 2014, Ms Dennis of the QBCC refused Mr Haywood’s application. Mr Haywood has made application to review the decision of Ms Dennis to the Tribunal.
What must the Tribunal do?
[30]	The process required of the Tribunal in reviewing applications made under s 56AD of the QBCC Act, was recently affirmed by the President and Acting Senior Member in the matter of Queensland Building and Construction Commission v Mudri [2015] QCATA 78.
[31]	In particular, the Tribunal is not to engage in a review of the decision of the QBCC’s representative to find any fault. Rather, the Tribunal is to undertake a fresh hearing of the application of Mr Haywood to be categorised as a “permitted individual”, with the Tribunal to reach the correct and preferable decision on the merits of the matter before it. 
[32]	Mr Haywood is under no formal onus of proof in relation to the material presented in support of the application. However, it is for the Tribunal to be satisfied that “the provision under consideration can be invoked on the information or material before it”. The role of the QBCC is to assist the Tribunal in testing the evidence relied on in support of the application. 
[33]	The Appeal Tribunal in Mudri outlined the relevant test under s 56AD of the QBCC Act in the following terms –
	[14] Section 56AD requires a consideration of whether the ‘individual’ 	(applying to be categorised as a permitted individual) ‘took all 	reasonable steps to avoid the coming into existence of the 	circumstances that resulted in the happening of the relevant event’. In 	deciding whether the individual took ‘all reasonable steps’, s 56AD(8A) 	provides that the QBCC or the Tribunal on review must have regard to 	‘action’ taken by the individual in relation to certain matters (as provided 	under s 56(8A)) and may have regard to other matters for deciding 	whether an individual ‘took all reasonable steps’.
(references removed, my underlining)
[34]	Further, following reference to the four step process outlined by McGill DCJ in Younan v Queensland Building Services Authority [2010] QDC 158, the Appeal Tribunal in Mudri went on to provide a slightly reformed series of tasks required to be undertaken in applying the test. In particular, the Appeal Tribunal stated at [16] –
	As we see it the tasks involved in applying the test in s 56AD are:
	a) the identification of the relevant event;
	b) the identification of the circumstances that resulted in the happening 	of the relevant event;
	c) identification of the steps taken by the relevant individual;
	d) consideration of whether the relevant individual took all reasonable 	steps to avoid those circumstances coming into existence, which 	involved a consideration of whether the steps were reasonable;
	e) if satisfied of that, a decision whether to categorise the individual as a 	permitted individual.
[35]	Finally, the Appeal Tribunal in Mudri confirmed and adopted the correct question to be asked in applying the test under s 56AD as that framed by McGill DCJ in Younan – 
	…the question is not whether Mr Mudri ‘did everything possible’ to 	prevent these circumstances from arising or whether the circumstances 	would 	not have arisen if he ‘had acted differently’. The question is 	whether Mr Mudri has taken ‘all reasonable steps’ in the context of all of 	the circumstances as they were ‘known to him’ at the relevant time, 	without the benefit of hindsight.
[36]	The Tribunal is therefore required to consider pursuant to s56AD of the QBCC Act whether Mr Haywood took all relevant steps, on the basis of the facts known to him at the relevant time, to avoid the circumstances that resulted in the happening of the relevant event.

What is the relevant event?
[37]	Mr Haywood and the QBCC agree in their submissions that the relevant event is the appointment of liquidators to Cure-it on 3 September 2014 which is a caught by s 56AC(2) of the QBCC Act. 
[38]	Pursuant to s 56AC(2), a relevant event in relation to a company will occur in circumstances where –
	(a) after the commencement of this section, a company, for the 		benefit of a creditor—
		(i) has a provisional liquidator, liquidator, administrator or 			controller appointed; or
		(ii) is wound up, or is ordered to be wound up;…
[39]	On the ASIC records for Cure-it, on 3 September 2014 liquidators were appointed to Cure-it to undertake a creditor’s voluntary winding up. The fact that the winding up was a creditor’s voluntary winding up is confirmed by the Report to Creditors issued by the liquidators dated 10 September 2014 and the evidence of Mr Darley. I am therefore satisfied the appointment of the liquidators was for the benefit of a creditor and thereby a “relevant company event” under s 56AC(2)(a).
[40]	Further, until 16 May 2014 Mr Haywood was the sole director and secretary of Cure-it. That date is within the period of 1 year of the appointment of the liquidators, and therefore Mr Haywood is within the terms of s 56AC(2)(c), so as to be an excluded individual under s 56AC(4). 
[41]	I therefore find that the relevant event was the appointment of the liquidators to Cure-it.
Identification of the circumstances that resulted in the happening of the relevant event
[42]	The QBCC has submitted that three circumstances are relevant to the consideration of the Tribunal –
a)	the loss of the District Court litigation against Higgins;
b)	the decision to defend the litigation, rather than resolve it; and
c)	under capitalisation.
[43]	Mr Haywood agrees the first two circumstances identified by the QBCC resulted in the occurrence of the relevant event. However, Mr Haywood rejects the argument that “under capitalisation” resulted in the relevant event.
[44]	There can be no doubt that the loss of the District Court litigation is one circumstance. The debt which Cure-it was unable to satisfy, and relied on in the creditors statutory demand, was the debt owed to Higgins as a result of the judgment.
[45]	In relation to the second circumstance put forward of “the decision to defend the litigation, rather than resolve it”, this would appear to refer more to the steps that brought about the first circumstance, rather than a circumstance within the meaning of the legislation. Following the reasoning of McGill DCJ in Younan,  it appears more appropriate to ask whether Mr Haywood “took all reasonable steps to avoid the coming into existence of the order of” the Court as part of the next step in the Tribunal’s process. This includes consideration of steps taken to prevent the litigation coming into existence. 
[46]	I therefore decline to find that “the decision to defend the litigation, rather than resolve it” is a circumstance that resulted in Cure-it becoming insolvent.
[47]	In relation to the third circumstance of “under capitalisation”, it is useful to first recognise that the concept has a number of different meanings.  In plain terms, to “under capitalise” means “to provide insufficient capital for a business venture”, with “under capitalisation” reflecting “the action or fact of undercapitalising a business; the provision or possession of inadequate capital” and “the financial condition of a firm that does not have enough capital to carry on its business”. 
[48]	From these definitions it is clear there are two concepts, one an action and the other a consequence. In the factual matrix of this matter, the relevant circumstance is the fact Cure-it did not possess enough capital at the time of the statutory demand to pay Higgins. As a result, the decision to enter Cure-it into liquidation could be made. The actions that are said to have led to this state of affairs fall to be considered as part of the steps taken.
[49]	Accordingly, I find the under capitalisation of Cure-it is a circumstance that resulted in Cure-it becoming insolvent. 
Identification of the steps taken by the Mr Haywood to prevent the circumstances occurring
[50]	It is convenient to deal with the steps taken to prevent the loss of the District Court litigation briefly, given the detail provided in these reasons above.
[51]	I find that the steps taken by Mr Haywood to prevent the loss of the District Court litigation, having regard to the process endorsed by McGill DCJ in Younan, to be as follows –
a)	attending the premises of the body corporate in July 2009 after being advised of there being an issue, performing a clean of the area and resealing a portion of the area;
b)	meeting with Higgins’ representatives in September 2009, and making two offers in relation to dealing with the issues;
c)	writing in November 2009 to Higgins’ legal representatives seeking evidence in demonstration of Higgins’ claims;
d)	engaging legal representatives on commencement of the action by Higgins in June 2010;
e)	conducting the litigation pursuant to advice of the legal representatives, including – 
i)	rejecting the offer made by Higgins on 23 November 2011; and
ii)	obtaining expert evidence in response to Higgins’ expert evidence, despite the experience and qualifications of Mr Haywood;
f)	engaging counsel to conduct the trial of the matter.
[52]	In relation to the steps taken to prevent the under capitalisation, this requires a broader consideration of how the business of Cure-it was conducted.
[53]	The QBCC submitted that Cure-it became insolvent over a relatively small amount of money as a result of having insufficient capital. It centred its submissions around the draft financial statements for Cure-it, and the conduct of Cure-it and Mr Haywood in the period 2009 to 2013. In making such submissions, the QBCC focused on the financial reports indicating that the business continually required funding injection from Mr Haywood, had a continual shortfall of net assets, and submitted no attempt was made to ensure sufficient capital existed or was retained.
[54]	The statements for 2009 to 2011 were produced by a firm of accountants, in 2012. A member of that firm had originally advised Mr Haywood to form Cure-it. The oral evidence of Ms Zinco was that these statements were then used to rectify the taxation status of the company.   Ms Zinco had taken over management of the finances in 2009 and it took until 2012 to sought through the records and obtain the statements. Cure-it then decided to change to another firm of accountants as it was becoming increasingly difficult to get work out of the first firm following a merger of firms.
[55]	The 2012 and 2013 statements were produced in 2014 by this second accountancy firm. The second firm had taken over the provision of accountancy services for Cure-it in 2012. The evidence of both Mr Haywood and Ms Zinco was that this second firm proved to be just as difficult to work with, if not more so. Contact with the firm was by e-mail or phone, as the firm was in New South Wales. However, attempts to speak with the accountant appear to have almost continually frustrated.  The 2012 and 2013 statements were supplied only after repeated requests of Mr Darley.
[56]	Ms Zinco, an officer of the company, maintained the financial records for the company.  This was said to be initially in a spreadsheet, and later within a MYOB system.  None of these records were provided in evidence, but the fact is not disputed. During the period when the first accountants were engaged, Ms Zinco stated she would periodically ask “Are we on track?” to which the response was invariably that everything was ok. Ms Zinco would prepare the company BAS statement from her records, and forward those to the accountants. After the second firm was engaged, the process was basically the same, except that Ms Zinco and Mr Haywood both said in evidence they could never get to speak with the accountant, with his staff always saying he was away or out of the office.
[57]	Mr Haywood and Ms Zinco both described the conduct of the business. Generally, the process was simple, with each job undertaken by Cure-it being relatively short in duration. While some work was on-going, this was described by Mr Haywood as being on a rolling basis, meaning a portion of work would be completed, and Cure-it would then be asked to undertake a further portion. Products were ordered from the USA, requiring pre-orders to be made 3 months in advance. The evidence of Ms Zinco was that, as a result of her knowledge of the company work history, the pre-orders were able to be made with a fair amount of certainty despite not having any actual contracts in place. Everything was purchased on credit card, with debts paid as they became due. 
[58]	Mr Haywood and Ms Zinco agreed that Mr Haywood had injected funding into Cure-it at various times when it was required to cover debts. In 2009, following a number of the company’s debtors becoming insolvent as a result of the global financial crisis, Mr Haywood re-mortgaged his personal property in order to inject a large amount of money into the business. It is on this basis that Cure-it came to owe Mr Haywood.
[59]	A final factor that should be outlined is repayment of the funds to Mr Haywood. On the first set of financial records, for 2009 to 2011, the loan varied from $44,101 in 2009, to $104,574 in 2010 and back to $12,798 in 2011. On the second set, for 2012 and 2013, the loan increased to $118,044 in 2012 and then reduced to $16,350 in 2013. The evidence of Ms Zinco and Mr Haywood is that the second set is incorrect, in that between 2012 and 2013 Mr Haywood was not paid an amount of $101,694. 
[60]	On the evidence before the Tribunal, at the time of the statutory demand, Cure-it had two creditors only – Mr Haywood and Higgins.  Mr Haywood and Ms Zinco were clear in their evidence that the company owed no other money. The QBCC invited consideration of the fact that, should the 2012 and 2013 financial statements only be in draft, then no taxation debt would have arisen as they have not been filed. However, given the 2009 to 2011 accounts were finalised, and Cure-it had been lodging BAS returns, it would be surprising if the Australian Taxation Office were in some way unaware of money being outstanding. In the absence of direct evidence that taxation was owed, I decline to make such a finding.
[61]	The QBCC’s submissions as to under capitalisation, it is acknowledged by the QBCC, are dependent upon acceptance of the veracity of the draft financial statements provided. The submission is that, by paying down the amount owed to Mr Haywood in the 2012-2013 period, the company was deprived of $101,694 with which it could have negotiated toward paying out Higgins. It is further submitted that, given the $50,000 that was able to be borrowed, this would have left a figure close to what Cure-it’s legal representative considered an appropriate amount for payment of both the damages plus legal costs of Higgins.
[62]	Given the evidence as to the history between Cure-it and the second firm of accountants, I consider it more probable that the draft statements provided by them are unreliable. Ms Zinco and Mr Haywood both stated in their oral evidence and written evidence that the repayments to Mr Haywood were made by way of regular payments by Cure-it against the loan account, and that there was no increase in the value of payments made during the 2010-2013 period. I accept the evidence of Mr Haywood and Ms Zinco on this point. While the loan amount may have varied at different times through injection of funding, there is no evidence that Mr Haywood specifically increased payments or diverted funds to reduce the loan amount.
[63]	Mr Haywood stated in response to questions in cross-examination that, while he considered he would have been able to borrow the $50,000, in relation to the $100,000 costs estimated as owing to Higgins his intention was to negotiate a payment program that allowed Cure-it to trade out of the debt.
[64]	The solicitor for the QBCC referred the Tribunal briefly in oral submissions to the matter of Ernst v Building Services Authority [2011] QCATA 155. In that case the applicant had formed a rival company to the one that ultimately went into liquidation, and then allowed both to trade within a group of companies.  The applicant also made a number of substantive managerial decisions that resulted in the company that failed being unprofitable to the benefit of the rival. In my opinion, the factual matrix of that case differs substantially from that of Cure-it and is to be distinguished.
[65]	In the matter before the Tribunal, the second company was formed on the advice of an external accountant, Mr Darley. Mr Haywood sought advice from Mr Darley immediately after the handing down of the judgment. The purpose of seeking the advice was to ensure the company, and Mr Haywood, complied with their legal obligations in relation to insolvent trading. Cure-it did not take on any further work after the advice that it may result in insolvent trading.  The company continued to fulfil its contractual obligations otherwise. 
Whether Mr Haywood took all reasonable steps
[66]	In relation to the steps taken by Mr Haywood to prevent the decision of the Court, I am satisfied that Mr Haywood took all reasonable steps in firstly attempting to deal with the body corporate’s concerns, making offers to resolve the issues in dispute with Higgins, and in defending the proceedings commenced by Higgins.
[67]	Having had regard to the matters listed in s 56AD(8A), Mr Haywood sought appropriate advice in relation to the proceedings, and acted in accordance with that advice. I am not of the opinion there is a requirement that a party must make an offer to settle legal proceedings so as their conduct maybe viewed as reasonable under s 56AD(8). None of the other matters listed in s 56AD(8A) are relevant to the reasonableness of Mr Haywood’s conduct in attempting to prevent the order of the Court.
[68]	In relation to the steps taken by Mr Haywood to avoid the under capitalisation of Cure-it, having had regard to the matters listed in s 56AD(8A), I am also satisfied that Mr Haywood took all reasonable steps.  
[69]	Mr Haywood sought expert advice from Mr Darley immediately upon delivery of the judgement, and prevented any further debts being incurred. At the time of entering liquidation, Cure-it had not operated for some months on the direct advice of Mr Darley to prevent insolvent trading. The only substantive debt proven was that to Higgins, which arose out of the court decision. Until that time it appears that Cure-it had paid its way.
[70]	While the two sets of financial statements were provided late, I am not of the opinion that this had any impact on the under capitalisation that resulted.  This again is supported by the fact that only two debts were noted by the liquidators, and all other evidence pointed to payment of debts as and when they became due.
[71]	If I am wrong in relation to the veracity of the 2012 and 2013 financial statements, I would still be of the opinion that to engage in the exercise of considering what funds would have been available should no payments have been made to Haywood in the 2013 year (as invited by the QBCC) would be too hypothetical. This is on the basis – 
a)	the level of debt sought by Higgins exceeded the sum that may have been available by some degree; and 
b)	the statements of Mr Darley and Cure-it’s legal representative were that Higgins was not willing to compromise and was aggressively seeking payment of the entire debt. 
[72]	The QBCC submitted that, Mr Haywood having previously injected funding into Cure-it for its operational purposes, that he should have done so in the circumstances. This submission in my mind goes directly against what was stated by McGill DCJ in Younan. The point was also referred to by the Court of Appeal. I am of the opinion that nothing in the facts of this case made it incumbent upon Mr Haywood to inject further funding into Cure-it. 
Decision whether to categorise My Haywood as a “permitted individual”
[73]	The QBCC made submissions that the creation of the second company was relevant to the exercise of discretion by the Tribunal in deciding whether to categorise Mr Haywood as a “permitted individual”. This submission was based on the statement in the Second Reading Speech introducing the provisions that a concern to be dealt with by provisions was the use of phoenix companies.  It was further submitted that the reference to “phoenix companies” in the speech, and therefore the Explanatory Note to the provisions, was not to unlawful transactions under the Corporations Act, but to business that re-emerge after being cleansed of creditors.
[74]	On the circumstances before me, the second company was formed on the advice of Mr Darley, who carefully considered whether there would be any “phoenix” activity. Mr Haywood took appropriate advice from an independent professional on the appropriate way to conduct activities given the circumstances that had arisen. In my opinion these circumstances do not weigh against exercise of the discretion.
[75]	Mr Haywood submits in favour of exercise of the discretion that the new company now employs 6 staff (3 full time and 3 part time). Failure of Mr Haywood to attain permitted individual status would result in their loss of employment (in addition to Mr Haywood and Ms Zinco). It was also submitted that a number of ongoing contracts would be unable to be completed without the necessary licence.
[76]	Having considered all of the above factors, including the actions taken by Mr Haywood, I am of the opinion that it is appropriate for Mr Haywood to be categorised as a “permitted individual” pursuant to s 56AD of the QBCC Act.
Orders
[77]	The decision of the QBCC dated 23 October 2014 to refuse to categorize Mr Haywood as a “permitted individual” under s 56AD(8) of the QBCC Act is set aside.
[78]	Jonathon Nicholas Haywood is categorised as a “permitted individual” under s 56AD(8) of the QBCC Act.