Understanding Director Liability: Case Analysis of QBCC v Smith

By Damon Laffin, Director | Odyssey Legal | Queensland | Building & Construction

Key Takeaways

• Deregistering a company does not extinguish a director's personal liability for QBCC statutory insurance payouts under sections 71 and 111C of the Queensland Building and Construction Commission Act 1991 (Qld) (QBCC Act).
• This was first test in QBCC v Smith [2024] QDC 101, which was affirmed and supported in QBCC v P & K Smith [2026] QDC 103.
• That 2026 ruling only decided the legal question, whether the liability can exist at all. It is not a final finding against the directors. The case is proceeding to case management ahead of a trial, where the actual facts of the claim will still need to be proven.
• Directors should not assume winding up or deregistering a company closes off this avenue of personal exposure.

Free Consultation

The QBCC v Smith case highlights the stringent measures in place to protect consumers and ensure directors are held accountable for their companies' obligations.

If you have concerns over your liability as a director, schedule a free consultation with our expert building and construction lawyers today and let us help you take control of your situation.

Introduction

In the case of Queensland Building and Construction Commission v Smith [2024] QDC 101, the Queensland District Court addressed the liability of directors for debts incurred by a deregistered building company. This case has significant implications for directors in the construction industry, particularly regarding their personal liability under the QBCC Act.

Case Background

The Queensland Building and Construction Commission (QBCC) sought to recover amounts paid under the home warranty statutory insurance scheme from Mr Smith, a director of a deregistered building company. Within the proceedings, an application was brought under rule 483 of the Uniform Civil Procedure Rules 1999 (UCPR), to decide separately on the question of 'whether the company's deregistration prevents liability for the debt claim in this proceeding from attaching to the defendant pursuant to sections 111C(3) and (6) of the Act'.

The primary legal issue was whether Mr Smith could be held personally liable for these amounts despite the company's deregistration. 

Decision

The Court held that Mr Smith was indeed liable for the debts under sections 71 and 111C of the QBCC Act. and therefore, the answer to the separate question was 'no, the company’s deregistration does not prevent liability from attaching to Mr Smith pursuant to sections 11C(3) and (6) of the Act.’

Section 71 allows the QBCC to recover amounts from the building contractor responsible for the work, while section 111C extends this liability to individual directors at the time the work was carried out and when the payment was made by the QBCC.

An order was subsequently made at Trial on 26 September 2024.

Implications for Directors

The decision in QBCC v Smith serves as a crucial reminder for directors in the construction industry. It underscores that deregistration of a company does not shield directors from liability for debts incurred under statutory schemes like the QBCC's home warranty insurance.

Directors must remain vigilant about their ongoing responsibilities and potential liabilities even after a company's deregistration.

2026 Update: A Second Case Tests the Same Principle - QBCC v P & K Smith [2026] QDC 103

In July 2026, a separate case involving different directors and a different company, Phillip and Kathryn Smith of Platinum Construction Solutions Pty Ltd, put the 2024 reasoning directly to the test. The defendants argued the earlier decision had wrongly interpreted the QBCC Act, and that deregistration should extinguish their liability after all.

The District Court disagreed, and this time set out five separate reasons for rejecting that argument:

1. Context: The scheme created by sections 71 and 111C of the QBCC Act is a parallel liability structure. The company is liable first, and if the QBCC can't recover from the company, the former directors are made liable instead. That structure only makes sense if director liability survives the company's end.
2. The wording of section 111C(7) itself: This provision says liability applies "regardless of the status of the company, including, for example, that the company is being or has been wound up." If deregistration erased the liability entirely, this provision would have nothing left to do.
3. The directors' argument would defeat the obvious purpose of the QBCC Act: If a director could escape personal liability simply by deregistering their company, every director facing a claim would have an easy way out, which is plainly not what Parliament intended.
4. Section 71(1) creates a recovery mechanism, not the debt itself: The Court held that section 71(1) gives the QBCC a statutory entitlement that is enforced "as a debt," but is not, in itself, a debt in the traditional sense. Because it's a distinct statutory right rather than an ordinary debt, it isn't automatically wiped out by the usual rule that a company's debts are extinguished on deregistration.
5. Section 111C exists to protect consumers, and should be read generously: The provision was designed to replace an older system where directors had to personally guarantee this kind of liability upfront. Reading the QBCC Act narrowly would undercut that protective purpose, letting exactly the kind of recovery the provision was designed to preserve slip away.

The Court also resolved a procedural dispute in QBCC's favour, granting it leave to proceed despite a two-year gap in the litigation, and dismissed both parties' bids to end the case early. The matter is now heading to case management, a process used to move the case efficiently toward trial rather than a resolution in itself. The substantive facts are still to be tested.

For directors, the practical message is now stronger than it was in 2024. This isn't a single decision sitting untested. A second court, faced with a genuine challenge to the reasoning, has confirmed it applies, and given five independent reasons why. It's important to be clear about what that does and doesn't mean: the Court has only resolved the legal question of whether this kind of liability can exist. It has not made any final finding that Mr and Mrs Smith are actually liable. That will be determined at trial, once the facts are tested. What the decision does confirm is that the directors cannot avoid that trial by arguing the claim is legally hopeless from the outset.

Conclusion

The QBCC v Smith case highlights the stringent measures in place to protect consumers and ensure directors are held accountable for their companies' obligations.

Directors should seek legal advice to understand their liabilities fully and take proactive steps to mitigate risks and obtain peace of mind.

If you have concerns over your liability as a director, schedule a free consultation with our expert building and construction lawyers today and let us help you take control of your situation.

Contact Odyssey Legal:

• Phone: 07 5370 8759
• Email: info@odysseylegal.com.au
• Location: Servicing all of Queensland
• Book Your Free Initial Consultation: We offer a free initial consultation to assess your situation and provide clear advice on the best path forward.

Frequently Asked Questions

Does deregistering my company protect me from QBCC claims as a former director?
No. Two separate Queensland District Court decisions, in 2024 and again in 2026, confirm that a director's personal liability under section 111C of the QBCC Act survives the company's deregistration.

Why doesn't deregistration extinguish this liability, when it extinguishes other company debts?
The Court held that section 71(1) creates a distinct statutory entitlement that is recoverable "as a debt" rather than being an ordinary debt itself. Because of that, and because section 111C(7) expressly says liability applies regardless of the company's status, it isn't caught by the usual rule that a company's debts disappear when it's deregistered.

What does it mean that the 2026 case is "heading to case management"?
Case management is a process the Court uses to move a matter efficiently toward trial. The Court has only ruled on the legal question, whether the liability can exist at all, and on a separate delay dispute. It has not made any final finding on whether the directors are actually liable. That question remains open and will be determined at trial, once the underlying facts are tested.

Is this only relevant to directors of deregistered companies?
It's most relevant to former directors of deregistered or wound-up building companies with QBCC statutory insurance claims connected to their work, but the underlying lesson, that winding up a company doesn't automatically end personal exposure, is relevant to any director considering deregistration with outstanding QBCC-related risk.