Deregistering your building company does not shield you from personal liability for building defects, QBCC claims, or outstanding contractual obligations. Queensland courts have repeatedly confirmed that directors can remain personally accountable for company conduct long after deregistration — and QBCC’s licensing framework adds an additional layer of risk that many directors underestimate.
The Misconception: Deregistration as an Exit Strategy
It is a common — and costly — mistake. A building company faces claims for defective work, an outstanding statutory demand, or a QBCC complaint. The director deregisters the company, assuming that kills the liability. It does not.
Under the Corporations Act 2001 (Cth) and Queensland’s building and construction legislation, personal exposure for directors survives deregistration in ways that many people do not anticipate until they receive a claim directly.
QBCC: The Excluded Individual Framework
The Queensland Building and Construction Commission Act 1991 (Qld) (QBCC Act) contains one of the most powerful director liability regimes in Australian building regulation. Under section 56AF of the QBCC Act, QBCC can issue a direction to pay against an individual (including a former director) where:
- a company licensee has failed to meet a financial obligation (e.g., pay a subcontractor or owner); and
- the individual was a director, secretary, or influential person in that company at the relevant time
If a direction to pay is not complied with, QBCC can declare the individual an excluded individual, which prevents them from being a director, shareholder, or influential person in any QBCC-licensed company. This effectively bars them from the building industry — even if the original company has been deregistered.
The Case That Illustrates the Risk
A Queensland District Court decision confirmed how far this exposure can extend. A director deregistered their building company following a QBCC dispute. The QBCC pursued the director personally under the excluded individual provisions of the QBCC Act, seeking a direction to pay and ultimately an exclusion order. The court upheld QBCC’s power to pursue the former director, notwithstanding the deregistration of the company.
The consequences were significant: the director faced an industry ban, personal liability for the company’s outstanding obligations, and the costs of contested litigation. Deregistration had bought nothing.
Director Personal Liability Under the Corporations Act
Separately from the QBCC framework, directors of deregistered companies can face claims under the Corporations Act. Key exposure points include:
- Insolvent trading (s 588G) — if the company was insolvent when it incurred certain debts, a liquidator can pursue the director personally even after deregistration. ASIC can also apply to have the company reinstated for the purpose of pursuing insolvent trading claims.
- Reinstatement of deregistered companies (s 601AH) — ASIC, a liquidator, a creditor, or any person with an interest can apply to reinstate a deregistered company. Once reinstated, the company and its outstanding liabilities are fully revived.
- Director Penalty Notices — the ATO can issue director penalty notices for unpaid PAYG withholding and superannuation guarantee charges, regardless of whether the company has been deregistered.
What Directors Should Do Instead
If you are a director of a building company facing financial difficulty, creditor claims, or QBCC complaints, the right approach is to take legal advice early — before the situation becomes unmanageable. Options that preserve more value and carry less personal risk include:
- Creditor negotiation and structured settlement of outstanding claims
- Voluntary administration with a view to a Deed of Company Arrangement
- Creditors’ voluntary liquidation with proper records and legal advice
- Engaging with QBCC proactively before a direction to pay escalates to an exclusion determination
What Boss Lawyers Does in These Matters
We advise directors of building companies on their exposure under both the QBCC Act and the Corporations Act, and we defend directors facing exclusion proceedings and personal liability claims. We also advise creditors — including subcontractors, suppliers, and home owners — pursuing claims against building company directors.
Frequently Asked Questions
Can QBCC pursue me personally after my company has been wound up?
Yes. QBCC’s powers under the excluded individual framework apply to individuals, not just companies. If you were a director or influential person in the company at the relevant time, you can be personally subjected to a direction to pay and, if that direction is not complied with, an exclusion determination.
What is a QBCC exclusion determination?
An exclusion determination is a formal decision by QBCC that an individual is an “excluded individual” under the QBCC Act. Being declared an excluded individual prevents you from being a director, shareholder above certain thresholds, or influential person in any QBCC-licensed company. It effectively bars you from the Queensland building industry.
Can I challenge a direction to pay or exclusion determination?
Yes. Both decisions are subject to internal review within QBCC and external review in the Queensland Civil and Administrative Tribunal (QCAT). Grounds for challenge include disputing the underlying debt, demonstrating that you were not an influential person, or relying on a “reasonable steps” defence. Time limits apply — act promptly.
Can a deregistered company be brought back to life?
Yes. Under section 601AH of the Corporations Act, ASIC or any interested party (including a creditor) can apply to the court to reinstate a deregistered company. Once reinstated, the company is treated as if it had never been deregistered — including all its liabilities.
Related Reading
This is general information only and is not legal advice. You should obtain professional advice specific to your circumstances.
Speak to Boss Lawyers
If you are a director of a building company facing QBCC proceedings, creditor claims, or personal liability exposure, contact Boss Lawyers for direct, commercially focused advice. Call 1300 267 711 or complete our contact form.
