Allied Grain Systems P/L v Inheritance Capital Asset Management P/L

SUPREME COURT OF SOUTH AUSTRALIA
(Civil)
ALLIED GRAIN SYSTEMS P/L v INHERITANCE CAPITAL ASSET MANAGEMENT P/L
[2023] SASC 175
Judgment of the Honourable Justice Stanley
CONTRACTS - BUILDING, ENGINEERING AND RELATED CONTRACTS - REMUNERATION - STATUTORY REGULATION OF ENTITLEMENT TO AND RECOVERY OF PROGRESS PAYMENTS - OTHER MATTERS
PROFESSIONS AND TRADES - BUILDERS - LICENCES AND REGISTRATION - OTHER MATTERS
This trial was in relation to a preliminary issue in proceedings commenced by the applicant seeking relief under the Building and Construction Industry Security of Payment Act 2009 (SA) (the SOP Act).
Shortly after commencing those proceedings the respondent raised the question whether the applicant held a builder’s licence pursuant to the Building Work Contractors Act 1995 (SA) (the BWC Act). The applicant did not. As a result, the applicant abandoned its SOP Act claim and applied for and obtained a builder’s licence.
The applicant accepts that it was required to hold a builder’s licence in order to legally perform the building work the subject of these proceedings but failed to do so. The applicant seeks an order from the Court pursuant to s 6(2)(b) of the BWC Act that its failure to obtain a licence resulted from inadvertence only, such that it is entitled to recover monies claimed pursuant to the building contract.
Held:
The applicant’s failure to hold a builder’s licence resulted from its inadvertence and its inadvertence only.
Builders Licencing Act 1967 (SA); Builders Licencing Act 1986 (SA) s 39; Building and Construction Industry Security of Payment Act 2009 (SA); Building Work Contractors Act 1995 (SA) ss 3(1), 6(1) and (2); Companies (Acquisition of Shares) (NSW) Code; Companies (Queensland) Code s 205(3)(a); Corporations Act 2001 (Cth); Legislation Interpretation Act 2021 (SA) s 16(1) and (3)(a), referred to.
A1 Quality Concrete Tanks Pty Ltd v Civil & Allied Technical Constructions Pty Ltd [2014] VCC 1239; Bluewaters Power 1 Pty Ltd v The Griffin Coal Mining Company Pty Ltd [2019] WASC 438; Commonwealth Bank of Australia v HM Aircraft Holdings Pty Ltd (2021) 152 ACSR 63; Dumoine Holdings Pty Ltd v United & Commercial Holdings Ltd (1985) 13 ACLR 448; Hamilton v Property Investments Ltd [1983] WAR 317; Quality Roofing Services Pty Ltd v McIntyre [2017] SADC 62; Re Accolade Wines Australia Ltd [2016] NSWSC 1023; R v Marshall [2023] SASCA 105; Sanwa Australia Finance Ltd v Ground-Breakers Pty Ltd (In Liq) [1991] 2 Qd R 456; Taylor v Attorney-General (Cth) (2019) 268 CLR 224; Tea Tree Gully Builders Co Pty Ltd v Martin (1992) 59 SASR 344, considered.

ALLIED GRAIN SYSTEMS P/L v INHERITANCE CAPITAL ASSET MANAGEMENT P/L
[2023] SASC 175
Civil
STANLEY J:
Introduction

This is an application pursuant to s 6(2)(b) of the Building Work Contractors Act 1995 (SA) (the BWC Act).
In this matter the applicant, Allied Grain Systems Pty Ltd (the applicant), undertook building work for the construction of a grain storage facility pursuant to a building contract with the respondent, Inheritance Capital Asset Management Pty Ltd as trustee for the ICAM ACIF Land Trust (the respondent). The applicant commenced proceedings seeking relief under the Building and Construction Industry Security of Payment Act 2009 (SA) (the SOP Act). Shortly after commencing those proceedings the respondent raised the question whether the applicant held a builder’s licence pursuant to the BWC Act. The applicant did not. As a result, the applicant abandoned its SOP Act claim and applied for and obtained a builder’s licence.
The applicant accepts that it was required to hold a builder’s licence in order to legally perform the building work the subject of these proceedings[1] but failed to do so.
[1] Building Work Contractors Act 1995 (SA) s 6(1).
Section 6(2) of the BWC provides:
A person required by this Act to be licenced as a building work contractor is not entitled to any fee, other consideration or compensation under or in relation to a contract with another on whose behalf the person performed work as a building work contractor unless –
(a)the person was authorised to perform the work under a licence; or
(b)a court hearing proceedings for recovery of the fee, other consideration or compensation is satisfied that the person's failure to be so authorised resulted from inadvertence only.
The applicant seeks an order from the Court pursuant to s 6(2)(b) of the BWC Act that its failure to obtain a licence resulted from inadvertence only, such that it is entitled to recover monies claimed pursuant to the building contract in the sum of $1,139,121.59.
At issue is whether the applicant’s failure to hold a builder’s licence in South Australia while undertaking the building work the subject of the building contract resulted from inadvertence only.
The Court agreed to hear and determine this question as a preliminary issue.
The evidence
The applicant relied on the evidence of its managing director, John Garrick White. Mr White is also the beneficial owner of the applicant and its controlling mind. That evidence was set out in two affidavits of Mr White dated 13 July 2023 and 25 September 2023. Mr White was cross-examined extensively on the contents of his affidavits. While there were aspects of his evidence which I found less than satisfactory, namely, his evidence concerning whether the applicant required a building licence in any state other than Queensland, which I found to be defensive and equivocal, I am prepared to rely upon his evidence.
His evidence was that the applicant failed to obtain a builder’s licence while carrying on business as a building work contractor as that term is defined in s 3(1) of the BWC Act. That work was undertaken pursuant to a building contract between the applicant and the respondent dated 18 November 2020 (the T-Ports contract). The applicant’s failure to obtain a builder’s licence for the performance of this work was due only to Mr White failing to turn his mind to whether he was required pursuant to the BWC Act to obtain a South Australian builder’s licence. He wrongly assumed that he was not under any such obligation.
The applicant was incorporated in 2004. It initially operated in New South Wales although over the years it has undertaken work in other states including South Australia. In New South Wales there is no requirement for it to obtain a builder’s licence as it does not undertake residential building work.
In March 2021 an officer of the Queensland Building and Construction Commission (QBCC) contacted the applicant stating that it was in breach of the Queensland Building and Construction Commission Act 1991 (Qld) as it was advertising its availability to carry out building work in Queensland when it did not hold a contractor’s licence in that state. When first alerted to the situation Mr White expressed some scepticism but quickly came to accept that he was required to be licenced if the applicant wished to operate in Queensland. He took steps to obtain a contractor’s licence in Queensland. The applicant ultimately obtained a licence in February 2022. In undertaking various procedures to obtain that licence Mr White completed forms for the QBCC which required him to indicate whether the applicant was licenced in any other state. He responded in the negative. That response was accurate. Had his answer been different, the form required him to identify in which state or states the applicant was licenced. As the applicant was not licenced elsewhere he did not complete this part of the form.
On 23 February 2022 following the grant of a contractor’s licence in Queensland, Mr White sent an email to various of the applicant’s employees informing them of the grant of a building licence for Queensland and stating that no licence was required in any other state. I accept that this statement accurately reflected Mr White’s understanding at that time. There was no reason for him to have sought to mislead the applicant’s employees about this matter. I find that Mr White did not become aware of the requirement under South Australian law to obtain a builder’s licence for the purpose of undertaking the work on the T-Ports contract until 20 July 2023.
Nonetheless, contrary to the submission put by the applicant, in order for Mr White to have formed the view set out in his email of 23 February 2022 that no building licence was required in any state other than Queensland, he must necessarily have considered that question. While I find his evidence on this topic to be unsatisfactorily defensive, I find that his view was the result of an incorrect assumption he made founded in the requirements of the New South Wales licencing regime.
The alternative construction is that he either knew he was required to be licenced in South Australia or he appreciated it was possible that he was required to be licenced in South Australia. In either circumstance he chose to proceed with the building work in circumstances that either breached or had the potential to breach the relevant South Australian legislation. Given the size of the contract and the evidence of how the applicant, at the behest of Mr White, dealt with the situation that arose in Queensland in relation to the requirement for a contractor’s licence, I consider it implausible that he would not have taken steps to comply with the statutory licencing requirement in this state if he knew or suspected he had to be licenced in South Australia. I find that his non-compliance with that statutory requirement was the result of a failure to undertake the relevant inquiry as to the existence of any licencing requirement because of the incorrect assumption he made. I find he failed properly to advert his mind to whether the assumption he made was correct.
Does that entitle the applicant to the order it seeks pursuant to s 6(2)(b) of the BWC Act?
Inadvertence
The applicant submits that Mr White’s ignorance of the statutory regime under which the applicant was required to be licenced constitutes inadvertence for the purpose of s 6(2)(b) of the BWC Act. The respondent submits that he was not ignorant of the obligation to be licenced or, if he was, such ignorance was due either to his wilful failure to make relevant enquiries in circumstances where he must have understood that there was a statutory regime for licencing builders in South Australia, or his reckless indifference to the applicant’s statutory obligations. This requires a consideration of the proper construction of the meaning of “inadvertence” in the context of the BWC Act.
The applicant relies upon a line of authority commencing with a judgment of the Full Court of the Supreme Court of Queensland in Sanwa Australia Finance Ltd v Ground-Breakers Pty Ltd (In Liq)[2] to support its construction of the exception in s 6(2)(b) of the BWC Act where it was held the failure to be licenced resulted from inadvertence.
[2] [1991] 2 Qd R 456.
Sanwa was concerned with the question of whether the appellant’s failure to lodge notices in respect of company charges within a prescribed period of their creation, as required under the Companies (Queensland) Code, was due to its ignorance of the requirement to give notice amounting to inadvertence within the terms of the relevant provision of the Code. Section 205(3)(a) of the Code empowered the Court to extend the period for giving notice if it was satisfied that the failure to lodge a notice was accidental, due to inadvertence or some other sufficient cause.
Kelly SPJ, with whom Macrossan CJ and Connolly J agreed, observed that the weight of authority supported the position whereby a person’s failure to carry out a statutory requirement because of ignorance of the law may amount to inadvertence. Kelly SPJ cited with approval the reasons of the Full Court of the Supreme Court of Western Australia in Hamilton v Property Investments Ltd,[3] in which the Court adopted the primary meaning of “inadvertent”, namely, as being “not properly attentive”.[4]
[3] [1983] WAR 317.
[4] Sanwa Australia Finance Ltd v Ground-Breakers Pty Ltd (In Liq) [1991] 2 Qd R 456 at 461.
In Re Accolade Wines Australia Ltd Brereton J held that, in the context of the Corporations Act 2001 (Cth), inadvertence includes failure to advert to or understand the requirement for registration within the specified period, and innocent error in the sense of failure to register through ignorance of the legal requirement to do so, or of the consequences of not doing so, in contrast to disregard of a company’s statutory obligation.[5]
[5] Re Accolade Wines Australia Ltd [2016] NSWSC 1023 at [14].
In Commonwealth Bank of Australia v HM Aircraft Holdings Pty Ltd the Court held that an active but incorrect consideration of a requirement, a failure to turn one’s mind to the requirement, or a failure to appreciate the true significance of non-compliance with a requirement can be characterised as inadvertence, so long as such a failure is not intended to flout, or is recklessly indifferent to proper compliance.[6]
[6] (2021) 152 ACSR 63, 73.
By similar reasoning in Bluewaters Power 1 Pty Ltd v The Griffin Coal Mining Company Pty Ltd[7] the Supreme Court of Western Australia determined that a plaintiff’s failure to register a security interest under the Corporations Act, where the evidence was that the company was not aware and did not receive legal advice to the effect that the security interests ought to have been registered, resulted from inadvertence. The Court observed that inadvertence is usually constituted by “human error or oversight” or “being not properly attentive” rather than a disregard of statutory obligations.
[7] [2019] WASC 438 at [40]-[42].
In A1 Quality Concrete Tanks Pty Ltd v Civil & Allied Technical Constructions Pty Ltd[8] the plaintiff was a Victorian company conducting a business of construction of concrete tanks. It was engaged by the defendant to, inter alia, construct a tank in South Australia, thereby being subject to the requirements of s 6 of the BWC Act. In proceedings for the recovery of money pursuant to the building contract between the parties, the defendant relied on the plaintiff’s failure to hold a builder’s licence in resisting the claim for monies owed. Judge McNamara of the Victorian County Court, in considering whether the failure could be characterised as resulting from inadvertence for the purpose of s 6(2)(b) of the BWC Act, said:[9]
There seems, therefore, to be a substantial body of authority supportive of the view that the defence of inadvertence so as to excuse a party from a contravention of a statute may be available if what is not adverted to is a rule of law because of ignorance on the part of the actor of the existence of the rule. This approach seems to have been adopted in a number of circumstances where the inadvertence has led to a failure to register what should have been registered. Where, however, the inadvertence has led to a positive illegal act, there seems to have been a reluctance to treat ignorance of the law as providing a proper basis for [the] defence of inadvertence.
Here, for the purposes of the exercise, if A1 is deemed to have been carrying on the business of a building work contract merely by purporting to accept and execute a one-off contract where it was approached in Victoria by a South Australian resident, without, so far as the evidence disclosed, advertising its business in South Australia at all, where it is unaware of the Building Work Contractors Act, that unawareness could constitute inadvertence. It may be objected that the illegal act here would be the acceptance and execution of the contract; but in my view, the essence of the alleged illegality would be the failure to register, and the authorities to which I have referred indicate that failure to register due to ignorance of the legal obligation to register can constitute inadvertence.
…
[The defendant] submitted that [the plaintiff] should simply have checked whether a licence was needed. No doubt this was correct. The existence of an inadvertence defence appears to recognise and, to some extent, indulge human weakness and a failure to achieve perfection in administrative matters. It is not so plainly obvious that the sub-contractor considering undertaking work such as this should obtain legal advice as it is that someone launching a company takeover should do. The Companies (Acquisition of Shares) Code cases are distinguishable on this ground.
[8] [2014] VCC 1239.
[9] A1 Quality Concrete Tanks Pty Ltd v Civil & Allied Technical Constructions Pty Ltd [2014] VCC 1239 at [113]-[114], [118].
The respondent submits that the exception in s 6(2)(b) of the BWC Act is of narrow application. Both a purposive construction of the BWC Act and relevant authority excludes the operation of the inadvertence only exception where a failure to obtain a licence results from ignorance of, inattentiveness to, or the reckless disregard of the primary requirement of the BWC Act to be licenced.
The respondent submits that the primary purpose of the BWC Act is the protection of consumers who engage builders to perform building work. That purpose is achieved by requiring building work to be performed by a licensee in a proper and competent manner. The prohibition of recovery of a fee for unlicenced building work serves to deter the performance of building work by unlicenced builders. The inadvertence exception was inserted into the BWC Act in recognition that the prohibition on recovery of a fee for unlicenced building work could operate harshly in some limited circumstances. Those circumstances do not include ignorance of a builder’s obligation to be licenced.
In support of this construction the respondent seeks to rely upon the Second Reading Speech in relation to the Builders Licencing Act 1986 (SA) (the 1986 Act), the predecessor legislation to the BWC Act. The Attorney-General in his Second Reading Speech, referring to the inadvertence exception, said that it would “not assist a person … who acts in ignorance of the requirement to be licenced”.[10] The respondent submits that the Court can rely on the Second Reading Speech in relation to the predecessor legislation because during the Second Reading Speech for the BWC Act the Attorney-General observed that the inadvertence only exception was similar to the cognate provision in the predecessor legislation.[11]
[10] South Australia, Parliamentary Debates, Legislative Council, 27 February 1986, 694 (Chris Sumner, Attorney-General).
[11] South Australia, Parliamentary Debates, Legislative Council, 25 October 1995, 342 onwards (Kenneth Griffin, Attorney-General).
The applicant submits that in this case the Court is not assisted by the terms of the Second Reading Speech of the predecessor legislation. While s 16(1) of the Legislation Interpretation Act 2021 (SA) does permit resort to the Second Reading Speech in determining the meaning of a provision, the terms of the Second Reading Speech cannot be used as a substitute for the orthodox interpretation of a statutory provision which begins and ends with the language of the legislation, informed by its statutory purpose identified by the text and context of the relevant provisions of the Act.[12]
[12] Taylor v Attorney-General (Cth) [2019] HCA 30 at [87], (2019) 268 CLR 224, as applied by the Court of Appeal in R v Marshall [2023] SASCA 105 at [55].
Given the terms of the relevant provision of the predecessor legislation[13] are substantially the same, the Second Reading Speech is capable of assisting in the ascertainment of the meaning of s 6(2)(b). However, it is a matter for the discretion of the Court and it remains the case that the Second Reading Speech cannot be used as a substitute for the orthodox approach to the interpretation of statutory provisions and the ascertainment of their meaning. I have had regard to the Second Reading Speech. However, in accordance with s 16(3)(a) of the Legislation Interpretation Act 2021 (SA) I have accorded limited weight to the passage in the Second Reading Speech relied on by the respondent, given the desirability of persons being able to rely on the ordinary meaning of inadvertence in its context in the BWC Act, and the purpose of s 6(2)(b) in the scheme of that Act.
[13] Builders Licencing Act 1986 (SA) s 39.

In that context the meaning of the predecessor provision to s 6(2)(b), namely, s 39 of the 1986 Act, was considered in Tea Tree Gully Builders Co Pty Ltd v Martin.[14]Bollen J described the 1986 Act as establishing a licencing scheme for builders and requiring strict compliance with the provisions of the scheme. The scheme was established for the protection of the public. The Parliament intended that only those competent to build should build and, in enforcement of that requirement, it demanded that builders be licenced. Bollen J characterised s 39 of the 1986 Act as ameliorating the position as it had existed under the Builders Licencing Act 1967 (SA), that a builder was not entitled to payment if not licenced. His Honour held that s 39 amended the position to allow recovery where that failure was due to an “inadvertent slip”. However, in Martin Bollen J rejected a submission that the failure to be licenced in that case was due to an inadvertent slip. He found that the builder was not licenced, knew he was not, and knew he should not have performed the building work in those circumstances. That is not this case. Section 6(2)(b) is concerned with the subjective state of mind of the unlicenced builder. As I have found, Mr White did not have a subjective belief before 20 July 2023 that he had to be licenced to perform work in South Australia.
[14] (1992) 59 SASR 344.
The respondent challenges the applicant’s reliance on Sanwa, Bluewaters and A1, only the last of which is concerned with the BWC Act. It submits that Sanwa and Bluewaters are of limited assistance. They concern late filing of documents or the registration of interests. In Sanwa the unregistered charge was invalid. In Bluewaters the security interest would not vest in the company on voluntary administration unless registered within six months. The cases concern whether the Court ought to exercise a statutory discretion to extend the time in which the relevant notice may be given, thereby alleviating the applicant from the consequences of the failure to lodge on time. The respondent submits both cases are readily distinguishable. Both concern very different legislative regimes and factual matrices. Neither concern a regime in which a failure to comply is illegal, as opposed to having consequences in terms of the rights of the parties. In both cases the relevant party was represented by lawyers. In this case there is no evidence that the applicant had legal advice. Further, in neither case was the relevant act also a contractual requirement. The respondent submits that the circumstances of findings of inadvertence in both cases turn on their own facts and distinct legislative regimes.
The respondent also submits that A1 does not assist the applicant. A1 was a relatively small business. It had undertaken work in Victoria and New South Wales constructing concrete tanks. CATCON was a larger concern which carried out major civil engineering projects. CATCON asked A1 also to provide tanks for a project in Aldinga, South Australia. Following discussions between A1 and CATCON, CATCON indicated that it would not proceed with the work. A1 then claimed for its costs of undertaking preparatory works said to have been authorised in an earlier exchange of emails between the parties. CATCON denied that the email exchange gave rise to a binding contract. If it did, CATCON alleged illegality because A1 did not hold a builder’s licence in South Australia. The director of A1 gave evidence that he was unaware of the requirement for a licence under the BWC Act. The trial judge accepted this evidence, reasoning that the builder accepted and executed a one-off contract to complete building work in South Australia after being approached in Victoria by a South Australian resident, and did not advertise its business in South Australia at all. The trial judge referred to the judgment in Dumoine Holdings Pty Ltd v United & Commercial Holdings Ltd.[15]In Dumoine the applicant had mounted a takeover bid but failed to carry out the steps required by the Companies (Acquisition of Shares) (NSW) Code. Young J refused the relief sought based on a plea of inadvertence. Young J considered that the concept of inadvertence did not cover the situation where the applicant ought to have full knowledge of the relevant law. However, in A1 Judge McNamara distinguished Dumoine on the basis that it was not so plainly obvious that a subcontractor such as A1, considering undertaking work of the kind that existed in that case, was required to obtain legal advice. The situation might well have been different if the case concerned the launch of a company takeover. The judge treated the cases concerning Companies (Acquisition of Shares) (NSW) Code breaches as being in a different category.
[15] (1985) 13 ACLR 448.
In any event, even if A1 is a correct construction of the BWC Act, the respondent submits it is also readily distinguishable on its facts. In this case the applicant undertook significant work outside of New South Wales and in particular in South Australia, and held itself out as being able to undertake building work interstate, including in South Australia. Second, there was no evidence in A1 comparable to the applicant’s experience with the QBCC in 2021 and 2022. Third, there was no evidence that the builder in A1 was also contractually obliged to hold a licence, or that the builder had made any positive representations about being licenced. Fourth, in this case, it cannot be said that the applicant need not have obtained legal advice. Additionally, in A1 the trial judge, in considering the authorities on inadvertence, held that, where it had led to a positive illegal act, there seems to have been a reluctance to treat ignorance of the law as providing a proper basis for finding that the breach of the licencing requirement resulted from inadvertence. However, the trial judge did not reconcile this with s 6(1), which makes the performance of unlicenced building work an offence punishable by a large fine or imprisonment. The judgment in A1 does not refer to any of the legislative history of the BWC Act.
While there are factual differences between the circumstances of this case and the circumstances of A1, I do not consider those factual differences justify a different construction being given to the test of inadvertence in s 6(2)(b). Further, A1 is not authority for the proposition that in the circumstances of that case the applicant ought not to have obtained legal advice. Rather, the trial judge in A1 held that it was not plainly obvious that a subcontractor considering undertaking the work the subject of the dispute in that case ought to have obtained legal advice. The failure to be licenced in South Australia resulted from inadvertence by A1 where it was unaware of the requirement for the holding of a licence in order to undertake building work. In A1 the Court held that it was A1’s lack of awareness of the requirements of the BWC Act that could constitute inadvertence. In addition, contrary to the submission put by the respondent that the trial judge in A1 adopted a contradictory approach in concluding that where inadvertence had led to a positive illegal act, there seems to have been a reluctance to treat ignorance of the law as providing a proper basis for a finding of inadvertence, without addressing the terms of s 6(1) which makes unlicenced building work illegal, the trial judge in A1 did address this very question, saying:[16]
It may be objected that the illegal act here would be the acceptance and execution of the contract; but in my view, the essence of the alleged illegality would be the failure to register, and the authorities to which I have referred indicate that failure to register due to ignorance of the legal obligation to register can constitute inadvertence.
[16] [2014] VCC 1239 at [114].
The respondent also relies on the judgment of the District Court of South Australia in Quality Roofing Services Pty Ltd v McIntyre.[17]In that case Judge Tracey considered the reasoning in A1 saying:[18]
In that case, the judge found that the inadvertence defence was open to the owner of a business operating almost exclusively in Victoria and thereafter approached in Victoria by a South Australian resident to do building work in South Australia. The builder in this instance was genuinely unaware of the licencing regime in South Australia. Of note is the fact that the judge considered the fact that the builder did not advertise its business in South Australia to be a relevant factor.
[17] [2017] SADC 62.
[18] Quality Roofing Services Pty Ltd v McIntyre [2017] SADC 62 at [410].
In Quality Roofing the builder held a South Australian builder’s licence which was limited to “roof plumbing, fencing, excluding brick and brush, carports, pergolas and verandahs”. However, the Court found that the licence did not permit the builder to undertake the construction of a fully enclosed veranda which was the subject of the dispute. Quality Roofing’s director gave evidence that it was adequately licenced as it had a licence to build verandas and carports which are or can be enclosed. The Court rejected his evidence that the licence the company held was adequate to permit him to undertake the building work in issue. The judge found that while the controlling mind of the company misunderstood the extent of the obligation to be licenced, he nonetheless knew of the licencing regime and therefore could not rely on the inadvertence defence in s 6(2)(b). The Court drew a distinction between a case where a builder is unaware of the existence of the licencing regime and the case where the builder knows of the statutory regime but misunderstands the nature of the obligation imposed by s 6(1). The Court held that in the former case the inadvertence defence is open, but not in the latter case. While it might be open to doubt whether the judge’s conclusion in relation to the latter case is correct, these proceedings concern the former case.
The District Court in Quality Roofing Services followed A1.
In addition, the respondent submits that the inadvertence test is not satisfied because the “Bidders’ Responsibilities” section of the “RFQ Wallaroo Instruction to Bidders” issued by the respondent in June 2020 specified that the applicant was responsible for “informing and satisfying itself as to the requirements of any relevant authorities and legislative requirements that apply or may apply to the works” and “reviewing potential risks with its legal and financial advisers and making its own evaluation of its bid”, and the applicant failed to obtain legal advice. The evidence is somewhat equivocal as to whether this occurred, but I am prepared to proceed on the basis that the applicant did not obtain legal advice. The responsibility was not specific to this question, but rather was a stipulation that the applicant should obtain its own legal advice in relation to its contractual and statutory obligations. In any event, a failure to obtain legal advice as to whether the applicant was obliged to be licenced in South Australia does not deprive the applicant’s failure to obtain a licence from being due to inadvertence. A failure to obtain such legal advice is entirely neutral in determining whether the inadvertence test has been satisfied. There is no reason why a failure to obtain legal advice in the circumstances of this case could not be due to inadvertence.
The respondent submits that, in any event, the applicant’s failure to be licenced in South Australia was not due to inadvertence, but the applicant’s wilful failure to make relevant enquiries where the applicant must have understood there was a statutory regime for licencing builders in South Australia, or its reckless indifference to the existence of such a statutory obligation. I do not accept this submission. In effect, it is a submission that the applicant proceeded to undertake the building work not caring whether or not he had satisfied the obligation to be licenced. That submission is inconsistent with the finding I have made accepting that the applicant would have obtained a licence had he been aware of the obligation to do so.
I conclude that the statutory test of inadvertence in s 6(2)(b) is satisfied where a builder’s failure to be licenced is due to the builder’s ignorance of the statutory obligation to do so, unless the failure is the result of a wilful failure to make relevant inquiries where the builder must have understood there was a statutory regime for licencing builders in South Australia, or the builder’s reckless indifference to the existence of such a statutory obligation. I find that in this case the applicant’s failure to obtain a builder’s licence was due to Mr White’s inadvertence in failing to turn his mind to whether he was required to obtain a builder’s licence in South Australia. Having wrongly assumed he did not, he failed to advert his mind to the correct answer to that question. It is important to recognise the statutory purpose in enacting s 6(2)(b). It is intended to provide a remedy for human error. In construing the provision, care should be taken not to undermine that purpose by adopting a construction which is too narrow or rigid. Accordingly, I am satisfied that the applicant’s failure to be licenced was due to inadvertence within the meaning of s 6(2)(b).
Finally, the respondent submits that the operation of the inadvertence exception in s 6(2)(b) is confined to circumstances where the failure to obtain a licence results from inadvertence only. Inadvertence must be the exclusive and exhaustive explanation for the failure to be licenced. In this case, the respondent submits that, even accepting the construction for which the applicant contends, inadvertence was not the only reason for the failure to be licenced in South Australia. It follows that to the extent that the failure to be licenced was attributable to inadvertence on the part of the applicant, it was also attributable to Mr White’s positive belief that a licence was not required to do the contracted work in South Australia. I do not accept this submission. It involves cleaving apart what is the single relevant fact, namely, the failure by the applicant to advert its controlling mind to the question of whether South Australian legislation required the holding of a builder’s licence. Mr White’s view that a licence was not required in South Australia was the result of his failure to advert his mind to the correct answer to that question.
Conclusion
For these reasons I find that the applicant’s failure to hold a builder’s licence resulted from its inadvertence and its inadvertence only.
I will hear the parties as to the orders that should be made in light of these findings and the question of costs.

[2023] SASC 175

15 December 2023