QBCC licensing implications in the event of a director or nominee’s death
What happens to your contracting business if you die?
Sadly, we have recently had another case in Queensland where the “owner” of a contracting business died unexpectedly.
It is always terribly tough on those left behind but when the business is QBCC licensed, there are additional issues which the family and those attending to the affairs of the deceased will need to deal with.
The deceased’s Will is important, but it is not the whole story
Ultimately what happens to the business in terms of ownership is likely to depend on what is in the deceased’s Will. So, one of the first things to do is to find the Will and give it to your lawyer.
QBCC licensing issues
With a QBCC licensed business however, there are licensing issues which are going to have to be attended to pretty well straight away. Because of this, it is likely that you will be better off making sure the lawyer handling the estate of the deceased is also experienced with QBCC licensing issues and understands the contracting industry more generally.
For a QBCC licensed business to continue to hold its licence and operate the business, even if it is merely to wind that business down, the requirements under the Queensland Building and Construction Commission Act and its Regulations still need to be complied with.
Commonly, the nominee of the contracting business, for QBCC purposes, is the sole director and if that is the person who has died, these issues will need to be dealt with quite quickly.
Like any QBCC licensed business operating through a company structure (as most do), there must be a nominee with the appropriate trade qualification. If that was the deceased, a new nominee needs to be appointed. If a new nominee is not appointed within 28 days:
- QBCC can suspend/cancel the company’s licence; and
- The company will be taken to have committed an offence.
Secondly, if the business is operating through a company, and the deceased was the sole director, a new director will also have to be appointed.
Thirdly, if the deceased had given a Deed of Covenant and Assurance to the QBCC in support of the licensed entity’s financial position, this will need to be considered as well. Exactly who can give a Deed of Covenant and Assurance has been tightened up with the recent changes to the Act. So, this issue needs to be fully examined by the executors of the deceased together with a lawyer who understands QBCC licensing issues.
Fourth, it will be necessary to ensure that the business continues to comply with the Minimum Financial Requirements of the QBCC. If the executors of the deceased’s estate decide they are going to close down or wind down the business, this can pose a challenge. A business in wind down mode will not have the same cash flow as one which is operating as per normal. So, one of the first steps has to be to consider what the cash flow effect will be on the business moving forward, particularly if the decision has been made to wind it down or close it.
Generally, the QBCC is sympathetic in such unfortunate circumstances but nevertheless, the requirements of the Act and the Regulations must be complied with.
In addition, the practical considerations of running jobs currently underway, existing tenders, retention monies or bank guarantees held, all have to be dealt with.
Consider the effect on any replacement nominee, director, secretary or “influential person”
Another very important thing to bear in mind, is that if the business ends up going into administration or liquidation, any person who has been a director, secretary or an “influential person” (such as a nominee or possibly general manager for example) of the company, could end up becoming an excluded individual, losing their own QBCC licence and being banned from obtaining a new one for the next 3 years.
This would happen if the business goes into administration or liquidation whilst a director or nominee who replaced the deceased was still in one of those positions or if the business went into administration or liquidation within 2 years after they ceased to hold those offices. The only exception is if the person who held that position can prove that when they ceased to hold office, the business was solvent (s56AC (4) QBCC Act).
The Building and Construction team at Cornwalls is experienced with all aspects of Queensland licensing issues and indeed the southern states. If you or your family have to deal with the sad reality of the death of the “owner” of the business, we can assist you with the licensing aspects whilst also ensuring that the administration of the estate is properly attended to.
This article is general commentary on a topical issue and does not constitute legal advice. If you are concerned about any topics covered in this article, we recommend that you seek legal advice.
For further information please contact the author or any member of our Building and Construction team.