Acting Commissioner for Consumer Affairs v McLean - [2011] SADC 154

DISTRICT COURT OF SOUTH AUSTRALIA
(District Court Administrative and Disciplinary Division)
ACTING COMMISSIONER FOR CONSUMER AFFAIRS v MCLEAN
[2011] SADC 154
Judgment of His Honour Judge Nicholson
30 September 2011
ADMINISTRATIVE LAW
Complaint against a building work contractor alleging various breaches of the Building Work Contractors Act 1995. Allegations found proved - need for disciplinary action - orders made.
Hughes & Vale Pty Ltd v The State of New South Wales (1955) 93 CLR 127; Australian Broadcasting Tribunal v Bond (1990) 170 CLR 321; Sobey v The Commercial and Private Agents Board (1979) 22 SASR 70; Craig v The Medical Board of South Australia (2001) 79 SASR 545; Carusi v Police [2002] SASC 240; Commissioner for Consumer Affairs v Sollars [2001] SASC 110, considered.

ACTING COMMISSIONER FOR CONSUMER AFFAIRS v MCLEAN
[2011] SADC 154
Introduction

The Acting Commissioner for Consumer Affairs laid a complaint against the respondent John Roger McLean in the District Court in its Administrative and Disciplinary Division, alleging a series of breaches of the Building Work Contractors Act 1995 (“the Act”).
Throughout the interlocutory processes for this matter the defendant has shown himself to be particularly difficult to contact. Ultimately, a Master of this Court made orders for presumptive service with respect to these proceedings. The order for presumptive service was conditional on the complainant preparing a book of documents and sending it to the defendant’s last known address. When the matter was called on before me I was satisfied, after examining the interlocutory history of the matter, the orders of the learned Master and various affidavits of service filed by the complainant that presumptive service as ordered had been effected and that it was appropriate for the matter to proceed before me ex parte. Nevertheless, it being a matter where the Court needs to consider whether there is proper cause for disciplinary action it was appropriate that the complainant be put to proof of each of the allegations made in its complaint. I also took the view that, in the circumstances of this matter and in the exercise of the discretion open to me under the legislation, there was no need to sit with assessors.
Previous Proceedings
In order to understand the nature of the complaint and the essential purpose of the proceedings brought on behalf of the Acting Commissioner it is helpful to briefly outline some history.
The defendant held a building work contractors licence and a supervisors registration pursuant to the Act from 9 March 2000 until 11 August 2006. That licence and registration was in limited form. They were both restricted to the erecting of pergolas and decking; fencing, excluding brick and brush; painting; and general repairs of a non-structural nature.
In 2005 the Commissioner of Consumer Affairs laid a criminal complaint against the defendant in the Magistrates Court. It alleged nine offences against the Act committed during the period 2003-2004[1]. This criminal complaint alleged illegal conduct in relation to 2 sets of consumers. In essence, it was alleged that the defendant breached the requirements of the Act by carrying on business as a building work contractor when he was not authorised to do so on the basis that, whilst he had a licence, he contracted to do work which was not permitted by his licence. It was also alleged that he undertook domestic building work without complying with the formal requirements for domestic building work contracts as prescribed by the Act, that he entered into domestic building work contracts in excess of $12,000 and accepted deposits which were not genuine progress payments and that he performed domestic building work without supplying the owner with a certificate evidencing the taking out of building insurance.
[1] See exhibit P2 and see generally exhibit P1 which is the complainant’s book of documents containing all of the documentary material relied up in this matter by the Acting Commissioner to prove its case.
The defendant pleaded guilty to all charges and on 2 December 2005 convictions were recorded and a fine of $8,000 imposed.
Not long after, in 2006, the Commissioner commenced disciplinary action against the defendant. In the complaint filed, on this occasion in the District Court, 13 grounds for disciplinary action were alleged. As it happened, on 13 February 2006 the defendant had been declared a bankrupt. The Act prohibits a person who has been declared a bankrupt from becoming a licensed contractor for a period of 10 years from the date of bankruptcy. Accordingly, the defendant was disqualified from obtaining a licence in his personal capacity for 10 years from 13 February 2006. The 13 grounds alleged as a basis for disciplinary action on this occasion are canvassed in some detail in the complainant’s book of documents (P2) and in particular in the judgment of his Honour Judge Lovell. The alleged misconduct included performing work outside the scope of the defendant’s licence, failing to complete work leaving consumers out of pocket, demanding payment to be made under a domestic building work contract when such payments were not authorised by the Act, failing to comply with the requirements of building work contracts with respect to insurance obligations, carrying on business as a building work contractor without being authorised by way of a licence, and receiving progress payment for work when no work had been done such that it was not genuine progress payment. The hearing of this complaint also had to be heard ex parte. The Court (his Honour Judge Lovell, sitting with assessors) was satisfied on the material tendered before it on behalf of the Commissioner that the complaint, as particularised, had been made out and that there was proper cause for taking disciplinary action against the defendant. Given that the defendant had been declared a bankrupt and had not sought to renew his licence, it was unnecessary for the Commissioner to seek any orders in relation to the defendant personally holding a licence. However, the Commissioner sought and orders were made that the defendant be prohibited from being a director of a body corporate that is a building work contractor and from being a director of a body corporate that is a building consultant, pursuant to s 25(f) and (i) of the Act. These orders were made “until further order”.
Not long after the determination by Lovell DCJ and assessors on 28 March 2007, the Commissioner filed a second disciplinary complaint in the Administrative and Disciplinary Division of the District Court. This time the allegations alleged that, contrary to s 6(1)(a) of the Act, the defendant had been carrying on a business as a building work contractor without a licence and that, contrary to s 6(1)(b), he had advertised or held out that he was a licensed building work contractor when this was not the case. It was also alleged that he had acted improperly in the course of conducting the business of a building work contractor. The particulars of this complaint are set out in some detail in the complainant’s book of documents (P2). Again, the matter had to be heard ex parte and on 18 April 2009 her Honour Judge Trenorden, sitting alone, made an order permanently disqualifying the defendant from being licensed or registered under the Act.
To this point, the situation had been reached where the defendant remained unlicensed and had been so for a number of years. Nevertheless according to the complainant, the defendant continued to do building work contrary to the provisions of the Act which, ordinarily, require a building work contractor to be licensed. Of course, the disciplinary proceeding provisions under the Act apply to any building contractor who does not observe proper standards whether or not that building contractor is licensed. However the maximum penalty for a breach of the s 6 obligation to hold a licence is a fine of $20,000. Given the defendant’s current status of bankruptcy, merely fining him from time to time is unlikely to operate as a particularly effective deterrent, given his history to this point.
There is power under s 25 of the Act for the District Court, if satisfied that there is proper cause for taking disciplinary action against a person, to prohibit that person from being employed or otherwise engaged in the business of a building work contractor (s 25(1)(e)). To this point such an order has not been sought against the defendant nor made. However, should such an order be made, any contravention of that order would invoke the provisions of s 26 of the Act which provides, inter alia, that any person who is employed or otherwise engages in the business of a building work contractor in contravention of an order of the District Court commits an offence for which the maximum penalty is a fine of $35,000 or imprisonment for 6 months.
In the present proceedings the Acting Commissioner complains that there is again proper cause for disciplinary action against the defendant and that an order pursuant to s 25(1)(e) is now appropriate and should be made.
The present proceedings
By complaint filed in this Court on 4 November 2010 the Acting Commissioner has alleged 7 grounds for disciplinary action to be taken against the defendant. In the accompanying summons the Acting Commissioner has sought “appropriate orders in accordance with s 25(1) of [the Act]”
Ground 7 of the complaint alleges that the defendant is not entitled to be licensed as a building work contractor pursuant to s 9(1)(f) of the Act because he is not a fit and proper person to be the holder of a licence by reason of grounds 1-6 of the complaint as filed and also by reason of, his convictions in the Magistrates Court on 2 December 2005, the finding on 28 March 2007 in the District Court that there was proper cause for disciplinary action on 13 grounds and the finding in the District Court of South Australia on 18 April 2008 that there was proper cause for disciplinary action on a further ground. In essence, ground 7 relies upon the results of the proceedings before the Magistrates Court, before Judge Lovell and before Judge Trenorden together with 6 further allegations of acting improperly in the course of conducting business as a building work contractor.
Ground 1 of the present complaint alleges that there is proper cause for disciplinary action on the basis of a breach of s 6(1)(a) in carrying on business as a building work contractor without a licence. This behaviour was engaged in in relation to three sets of consumers. Evidence tendered on behalf of the Acting Commissioner proved these allegations as particularised.
Ground 2 of the present complaint alleges conduct contrary to s 21(1)(c) of the Act by the defendant advertising himself as being entitled to carry on business as a building work contractor when he was not authorised by licence to do so. Evidence tendered on behalf of the Acting Commissioner proved this allegation as particularised.
Ground 3 of the present complaint alleges that the defendant engaged in false and misleading statements by quoting a builders licence number that wasn’t registered to the defendant at the time. It is alleged that the defendant falsely represented to the consumer in question that he had a valid and current building work contractors licence. Evidence tendered by the Acting Commissioner proved this allegation as particularised. I am satisfied that the defendant made a deliberate attempt to deceive the consumer in question so that she would continue to deal with him.
Ground 4 of the present complaint also alleges that the defendant engaged in false and misleading conduct by falsely representing that the defendant was entitled to carry on business as a building work contractor when not authorised by licence under the Act. Again, the evidence tendered proved the allegation as particularised.
Ground 5 of the present complaint alleged that the defendant acted improperly and negligently in the course of conducting his business as a building work contractor. It was alleged that building work contracted for with identified consumers was not completed when the defendant terminated the contract, that the defendant did not obtain building drawings or local council approval for the work performed, that on two occasions damage was caused by his performance of building work and that, whilst agreeing to refund a substantial sum to the consumers concerned, only a relatively small portion of that sum was in fact refunded. Again, the evidence tendered proved the allegations as particularised.
Ground 6 of the present complaint alleged that the defendant had acted improperly in the course of conducting his business as a building work contractor in that, with respect to additional identified consumers, work contracted for was not completed when he ceased performing work. In addition, no monies were refunded in relation to the building work and the consumers had to spend further monies to have the work completed by other persons. Again, evidence tendered on behalf of the Acting Commissioner proved the allegations as particularised.
I am satisfied, on a balance of probabilities, on the material submitted by the Acting Commissioner and tendered before the Court that each of the 7 grounds in the present complaint has been made out. In particular, I am satisfied that, in accordance with s 21(1)(c) of the Act, there is proper cause for disciplinary action against the defendant because the defendant has acted contrary to the terms of the Act and otherwise has acted unlawfully, improperly and unfairly in the course of conducting the business of a building work contractor. Disciplinary action, as contemplated by s 25 of the Act, is appropriate.
In coming to this conclusion, I have had regard to well known authorities in the area including Craig v The Medical Board of South Australia[2], Carusi v Police[3] and Commissioner for Consumer Affairs v Sollars[4].
[2] (2001) 79 SASR 545.
[3] [2002] SASC 240.
[4] [2001] SASC 110.
I accept the submissions put on behalf of the Acting Commissioner that disciplinary proceedings in the area of occupational and professional licensing are designed to protect the public and that to this extent they are to be distinguished from criminal and civil proceedings generally. Any order of the Court must reflect this purpose and not be designed to punish the defendant, although disciplinary action may incidentally have this effect. I accept the submission that a purpose of the Building Work Contractors Act is to protect the public from sub-standard dealings with building contractors both in relation to the quality of the work and the nature of the contracts that are entered into. It is important that public confidence in the integrity and competency of licensed contractors be maintained. The Acting Commissioner has also submitted that the defendant is simply not a fit and proper person to hold a licence as a building work contractor, independently of his present disqualification consequent on his bankruptcy. The term “fit and proper” has been considered by the High Court in Hughes & Vale Pty Ltd v The State of New South Wales[5], Australian Broadcasting Tribunal v Bond[6] and the South Australian decision of Sobey v The Commercial and Private Agents Board[7]. I accept the submission put on behalf of the Acting Commissioner that building work contractors are entrusted with access to the homes of consumers and with significant amounts of money in order to arrange the purchase of building materials and so on. In order to be a fit and proper person in this context such a person must not only have relevant building skills but be a person who can be trusted to perform their duties honestly and faithfully. In so far as it is necessary to make such a finding, I am satisfied that the defendant is not a fit and proper person to hold a licence under the Act. I am satisfied of this on the basis of the present complaint and also the history concerning the three successful complaints previously brought against the defendant as briefly summarised in these reasons.
[5] (1955) 93 CLR 127.
[6] (1990) 170 CLR 34.
[7] (1979) 22 SASR 70.
Orders for Disciplinary Action
As already indicated the defendant is presently ineligible to obtain a licence under the Act because of his bankruptcy. Nevertheless, her Honour Judge Trenorden previously disqualified the defendant from being licensed or registered under the Act. Further, his Honour Judge Lovell has prohibited the defendant from being a director of a body corporate that is a building work contractor (s 25(1)(f)) and has prohibited the defendant from being a director of a body corporate that is a building consultant (s 25(1)(i)). In these circumstances, the Acting Commissioner sought only an order in accordance with s 25(1)(e) of the Act; an order prohibiting the defendant from being employed or otherwise engaged in the business of a building work contractor. I am prepared to make that order.
However, I have also given consideration to making orders under sub-paragraphs (g) – prohibiting the defendant from carrying on business as a building consultant and under (h) – prohibiting the defendant from being employed or otherwise engaged in the business of a building consultant.
In my view, the behaviour of the defendant to this point has been so serious and has manifested such a complete disregard for the legislative regime, the obligations imposed on persons engaged in the building industry and the rights of consumers that orders in these terms are also warranted. This is particularly so with respect to an order made under s 25(1)(g) given that there is already in place an order pursuant to s 25(1)(i). I am conscious of the fact that the defendant has not been heard on the nature of any proposed orders and that orders pursuant to paragraph (1)(g) and paragraph (1)(h) might have a significantly restrictive effect on the defendant’s capacity to make a living working in the building industry. I am also conscious of the fact that it may be possible for the defendant to find employment with a suitable and reputable employer in the industry on terms of employment and with a level of supervisory control by that reputable employer, sufficient to enable the defendant to work in the industry whilst still providing appropriate protections for the public. For this reason I think it is appropriate that any orders made be “until further order” thus giving the defendant the opportunity to approach the Court to seek a variation of orders in the event that an employment arrangement can be put before the Court that will be seen to protect the public and otherwise satisfy the requirements of the Act. By making these comments I am not suggesting that any future Court will necessarily modify the orders I am about to make nor am I in any way understating the seriousness of the defendant’s breaches of the Act to this point. I am simply leaving the door open for an application to be made to vary the orders if circumstances so warrant.
I make the following orders:
1The defendant is prohibited from being employed or otherwise engaged in the business of a building work contractor, until further order.
2The defendant is prohibited from carrying on business as a building consultant, until further order.
3The defendant is prohibited from being employed or otherwise engaged in the business of a building consultant, until further order.