BUILDING SERVICES BOARD and WEST
[2016] WASAT 143
•21 DECEMBER 2016
JURISDICTION : STATE ADMINISTRATIVE TRIBUNAL
ACT: BUILDING SERVICES (REGISTRATION) ACT 2011
CITATION: BUILDING SERVICES BOARD and WEST [2016] WASAT 143
MEMBER: JUSTICE J C CURTHOYS (PRESIDENT)
MR P DE VILLIERS (MEMBER)
MS D QUINLAN (MEMBER)
HEARD: DETERMINED ON THE DOCUMENTS
DELIVERED : 21 DECEMBER 2016
FILE NO/S: VR 158 of 2016
BETWEEN: BUILDING SERVICES BOARD
Applicant
AND
JEFFREY WEST
Respondent
Catchwords:
Registered building service practitioner - Registered building service contractor - Whether disciplinary matters exist - Misleading and deceptive conduct - Failure to comply with an order - Negligence
Legislation:
Building Services (Complaint Resolution and Administration) Act 2011 (WA), s 36
Building Services (Registration) Act 2011 (WA), s 53, s 56(2)(e), S 58(1)(i), s 58(3)
Home Building Contracts Act 1991 (WA), s 25C, s 25C(2)
State Administrative Tribunal Act 2004 (WA), s 60(2), s 87(1), s 87(2)
Result:
Disciplinary matters found to exist and the allegations proven - global fine of $15,000 imposed and costs of $3,200
Summary of Tribunal's decision:
The respondent was a registered building service practitioner and registered building service contractor. He traded under the business name Kameleon Homes. On 16 August 2016 the applicant cancelled the respondent's contractor registration and refused to renew the respondent's practitioner registration. The applicant then made three allegations to the Tribunal that disciplinary matters exist with respect to the respondent in that he had:
a) engaged in misleading or deceptive conduct in connection with a contract for the carrying out of a building service at 2 Ontario Crescent, Joondalup by knowingly providing a document to the Tribunal as evidence of some of the terms of that contract when the document was in fact not part of that contract as formed and which contained a forged signature;
b) failed to comply with an order of the Tribunal under which he was required to pay an agreed settlement sum of $50,000 to the owners of 2 Ontario Crescent by 13 October 2015; and
c) engaged in negligent conduct in that he demanded and received a deposit from the owners of 10 Nookawarra Place, Kelmscott without first obtaining insurance contrary to s 25C of the Home Building Contracts Act 1991 (WA).
The Tribunal found that the disciplinary matters exist with respect to the respondent as alleged. The Tribunal ordered the respondent to pay a fine of $15,000 and costs of $3,200.
Category: B
Representation:
Counsel:
Applicant: Ms D Mahiepala
Respondent: N/A
Solicitors:
Applicant: Department of Commerce
Respondent: N/A
Case(s) referred to in decision(s):
Briginshaw v Briginshaw (1938) 60 CLR 336
Builders' Registration Board and Ongarezos [2006] WASAT 53
Builders' Registration Board of Western Australia and Elliott [2009] WASAT 44
Builders' Registration Board of Western Australia and Utopia Industries Pty Ltd [2006] WASAT 295
Building Services Board and Cramphorn [2016] WASAT 57
Building Services Board of Western Australia and De Coppi [2011] WASAT 182
Legal Practitioners Complaints Committee and Gandini [2006] WASAT 163
Legal Profession Complaints Committee and Wells [2014] WASAT 112 (S)
Medical Board of Western Australia and Roberman [2005] WASAT 81 (S)
Parkdale Custom Building Furniture Pty Ltd v Puxu Pty Ltd (1982) 149 CLR 191
Quinn v Law Institute of Victoria [2007] VSCA 122; (2007) 27 VAR 1
REASONS FOR DECISION OF THE TRIBUNAL:
Introduction
The respondent was a registered building service practitioner and registered building service contractor pursuant to the Building Services (Registration) Act 2011 (WA) (BSR Act). The respondent traded under the business name Kameleon Homes (Kameleon).
On 16 August 2016, further to a request made by the respondent on 1 August 2016, the applicant cancelled the respondent's building service contractor registration. Also, on 16 August 2016, following an application by the respondent, the applicant refused to renew the respondent's building service practitioner registration.
On 28 September 2016, the applicant made an allegation to the Tribunal that disciplinary matters exist with respect to the respondent in accordance with s 56(2)(e) of the BSR Act, in connection with 2 Ontario Crescent, Joondalup (Ontario Crescent) and 10 Nookawarra Place, Kelmscott (Nookawarra Place).
On 18 October 2016, the Tribunal determined that these proceedings should be determined entirely on the documents pursuant to s 60(2) of the State Administrative Tribunal Act 2004 (WA) (SAT Act). Both parties were afforded the opportunity to provide evidence and submissions to the Tribunal. The applicant provided a bundle of documents (which includes a number of witness statements) and a statement of issues, facts and contentions. The respondent has not provided any evidence or submissions in response to the allegations that disciplinary matters exist against him.
Whilst the respondent has not availed himself of the opportunity provided to respond to the allegations made by the applicant and the evidence provided in support of those allegations, the Tribunal is mindful that we must be independently satisfied that the facts supporting those allegations are correct and the allegations are made out.
Issue for determination
The issue for determination by the Tribunal is whether disciplinary matters exist in respect of the respondent under s 53 of the BSR Act.
In particular, the applicant alleges that:
a)Pursuant to s 53(1)(j)(i) of the BSR Act, the respondent has engaged in misleading or deceptive conduct in connection with a contract for the carrying out of a building service at Ontario Crescent, Joondalup by providing a document to the Tribunal as evidence of some of the terms of that contract when the document was in fact not part of that contract as formed (Allegation 1).
b)Pursuant to s 53(1)(l) of the BSR Act, that the respondent has failed to comply with an order of the Tribunal dated 18 August 2015 made under the Building Services (Complaint Resolution and Administration) Act 2011 (WA) (BSCRA Act) under which he was required to pay $50,000 to the owners of Ontario Crescent by 13 October 2015 (Allegation 2).
c)Pursuant to s 53(1)(e) of the BSR Act, that the respondent has engaged in negligent conduct in that he demanded and received a deposit from the owners of Nookawarra Place without first obtaining insurance contrary to s 25C of the Home Building Contracts Act 1991 (WA) (HBC Act) (Allegation 3).
General principles in disciplinary proceedings
The allegations against the respondent must be established on the balance of probabilities to the Briginshaw standard. The Tribunal must feel an actual persuasion of the occurrence of events or the existence of the relevant facts before being satisfied that an allegation against a person has been made out: see Briginshaw v Briginshaw (1938) 60 CLR 336 at [361] [363] and Legal Practitioners Complaints Committee and Gandini [2006] WASAT 163 at [64] - [65].
The object of disciplinary proceedings is the protection of the public and the maintenance of proper professional standards. The maintenance of those standards is conducive to the protection of the public. Disciplinary proceedings are not designed to punish the person who is disciplined: Paridis v Settlement Agents Supervisory Board [2007] WASCA 97; (2007) 33 WAR 361 at [25].
Facts
Having considered the evidence provided by the applicant which includes a bundle of documents and a number of witness statements, the Tribunal is satisfied that the facts as alleged by the applicant are correct. The Tribunal notes the material facts as follows.
Ontario Crescent
On 8 May 2013 the respondent entered into a contract with Ms Louise Cloney for internal and external renovations to a dwelling located at 2 Ontario Crescent, Joondalup for the value of $139,256.70 (Ontario Crescent contract).
The Ontario Crescent contract consisted of:
a)an 'Alterations & Additions HBCA Lump Sum Building Contract' issued by Kameleon setting out its terms and conditions (Applicant's Bundle pages 53 - 72);
b)a 'Special Conditions' page (Applicant's Bundle page 73); and
c)a 'Schedule' setting out the Ontario Crescent contract particulars and signing clause (Applicant's Bundle pages 74 - 75).
On or about 15 May 2013 the respondent commenced work at Ontario Crescent.
As a result of ongoing disputes as to the quality of the work and delay, on 29 August 2013 Ms Cloney terminated the Ontario Crescent contract (Applicant's Bundle pages 103 - 105). Ms Cloney proceeded to have the remaining work completed by engaging other trades but encountered numerous defects in the work which had been completed by the respondent (Applicant's Bundle pages 106 - 112). On or about 31 October 2013, Ms Cloney lodged a complaint under the BSCRA Act with the Building Commission regarding the respondent's workmanship and this complaint subsequently referred to the Tribunal for determination (the complaint proceedings).
On 3 February 2015, at the initial directions hearing of the complaint proceedings, the Tribunal ordered the respondent to produce the copy of the specification document that he claimed formed part of the Ontario Crescent contract (Applicant's Bundle page 133). Pursuant to that order, on 8 February 2015 the respondent filed with the Tribunal the specification documentation he said had been signed by Ms Cloney. Ms Cloney claimed never to have seen the specification document.
On 9 July 2015, in order to prove her assertion that she had never seen nor signed any specification document at the time of contracting, or at all, Ms Cloney obtained a forensic report from Document Examination Solutions. That report identified that the signature said to belong to Ms Cloney on the specification document was not a naturally executed signature of Ms Cloney but was a 'trace method' simulated signature by an unknown writer (Applicant's Bundle pages 134 - 171).
On 17 August 2015 the complaint proceedings were listed for final hearing which resulted in the matter being referred to mediation. On 18 August 2015, following a mediation of the complaint proceedings, the parties reached an agreement where the respondent would pay Ms Cloney $50,000 (settlement sum) within eight weeks of the date of an order by the Tribunal. On 18 August 2015, the Tribunal issued an order under s 36 of the BSCRA Act in accordance with the parties' agreement (the Tribunal's order) (Applicant's Bundle page 172). The Tribunal's order required the respondent to pay Ms Cloney the settlement sum by 13 October 2015.
Later, in October or November 2015, the respondent applied to the Tribunal for a stay of the Tribunal's order (Applicant's Bundle page 8). On 3 June 2016, the Tribunal refused the respondent's application and confirmed the Tribunal's order (Applicant's Bundle page 8). The settlement sum remains unpaid.
Nookawarra Place
On 2 March 2016 the respondent entered into a contract with Mr Gary Kemp and Ms Susan Bettenay (the owners) for the construction of a new split level residential dwelling at 10 Nookawarra Place, Kelmscott for the value of $485,783.36 (Nookawarra Place contract) (Applicant's Bundle pages 191 - 212).
Pursuant to s 25C of the HBC Act, a builder must not perform residential building work under a residential building work contract or demand any payment, including any deposit payable under the contract, in relation to the building work, unless the builder:
a)has obtained a policy of insurance (known colloquially as home indemnity insurance or 'HII') in relation to the building work to be carried out; and
b)provided the owner with evidence that the builder took out a policy of HII in relation to the building work to be carried out in the form of a certificate of insurance.
On 4 March 2016 the respondent sent the owners an invoice for payment of the deposit of 6.5% of the Nookawarra Place contract in the amount of $31,575.91, with the owners attending to payment of this amount on 9 May 2016 via cheque (Applicant's Bundle pages 213 - 214).
The respondent never obtained HII for the works under the Nookawarra Place contract. The respondent failed to provide the owners with a certificate evidencing he had taken out HII prior to requesting from the owners the deposit under the Nookawarra Place contract.
The respondent never commenced the work under the Nookawarra Place contract.
Consideration
Allegation 1 - misleading or deceptive
Conduct is misleading if it induces or is capable of inducing error: Builders' Registration Board of Western Australia and Utopia Industries Pty Ltd [2006] WASAT 295 at [21] citing Parkdale Custom Building Furniture Pty Ltd v Puxu Pty Ltd (1982) 149 CLR 191 at 198.
The Tribunal has previously found that the phrase 'misleading or deceptive' is to be construed as not requiring intention as an element of misleading and deceptive conduct: Builders' Registration Board and Ongarezos [2006] WASAT 53 at [31] - [35].
The Tribunal finds that the signature of Ms Cloney was forged in the specification document. The Tribunal also finds that the only reasonable inference is that the respondent knew that the signature had been forged. This is because the respondent either forged the signature himself or arranged for someone else to do so. Whilst there are two equally reasonable competing inferences open to the Tribunal as to how the signature was forged and therefore the Tribunal is unable to make a finding as to how that occurred, the respondent knew the signature was forged and sought to rely on that specification document which was never part of the Ontario Crescent contract.
Therefore, the Tribunal finds that the respondent's conduct was misleading or deceptive pursuant to s 53(1)(j)(i) of the BSR Act in that, whilst conducting the complaint proceedings concerning Ontario Crescent, the respondent knowingly filed in the Tribunal and attempted to rely on a specification document that contained a forged signature of Ms Cloney and that did not form part of the Ontario Crescent contract.
Allegation 2 noncompliance with the Tribunal's order
The Tribunal finds that the respondent was obliged to comply with the Tribunal's order to pay the settlement sum to Ms Cloney but failed to do so within the time period allowed, or at all, that being a disciplinary matter pursuant to s 53(1)(l) of the BSR Act.
Allegation 3 negligence
Section 25C(2) of the HBC Act provides that a builder must not perform residential building work under a residential building work contract unless the owner has been furnished, prior to a demand from the builder for any payment in relation to the residential building work including any deposit payable, with a certificate of HII.
In Builders' Registration Board of Western Australia and Elliott [2009] WASAT 44 at [59] the Tribunal considered what constitutes professional negligence. The Tribunal found it had been established that:
… It is generally accepted that the standard required is the exercise of due care, skill and diligence, which requires the bringing to the task in hand the competence and skill usually employed by members of the particular profession[.]
In Building Services Board and Cramphorn [2016] WASAT 57 at [72] (Cramphorn), the Tribunal was not persuaded that a failure to comply with the HBC Act constitutes negligence. The Tribunal found in Cramphorn that the conduct in issue amounted to a breach of the HBC Act rather than negligence and that a disciplinary matter might well have been made out if the allegation had been made under s 53(1)(a)(ii) of the BSR Act.
Pursuant to s 53(1)(a)(ii) of the BSR Act, a disciplinary matter exists if after registration, the registered building service provider has been convicted of an offence against, amongst other legislation, the HBC Act. Under s 53(2) of the BSR Act, a reference in subsection (1)(a) to a conviction includes a finding of guilt, or the acceptance of a guilty plea, whether or not a conviction is recorded. The applicant submits that in the present matter (as was also the case in the matter of Cramphorn), a disciplinary matter under s 53(1)(a)(ii) of the BSR Act is not open to be made as no conviction for an offence under the HBC Act has occurred.
The applicant submits that the preferred approach here is that taken in the matter of Building Services Board of Western Australia and De Coppi [2011] WASAT 182 (De Coppi) at [51] - [52]. The Tribunal found that s 25C of the HBC Act established that there is a duty on a builder not to demand any payment in relation to a residential building contract prior to providing the owner with an approved form of certificate that the requisite policy of insurance has been taken out.
The Tribunal further found in De Coppi (at [55] - [56]) that a registered builder was responsible for ensuring that the requisite policies were in place and that in not doing so, was in breach of that duty. The Tribunal considered that the breach of that duty is 'clearly one which constitutes a departure from the conduct to be expected from a reasonably competent builder or building services contractor, and accordingly constitutes negligence'.
The applicant contends that:
a)whilst in this case the building work was not commenced such that the respondent could be convicted of the alleged offence under s 25C of the HBC Act, the failure of the respondent to comply with a statutory obligation to obtain HII was a breach of the duty as identified in De Coppi and meant that the owners did not have insurance for the deposit payment that they paid prior to the obtaining of HII or the commencement of the work;
b)a clear message needs to be conveyed to the industry at large that negligent conduct of this nature in relation to the compulsory home indemnity insurance obligations and the protection it affords homeowners will be regarded seriously; and
c)the respondent's conduct fell short of the standard of care to be expected of a building service contractor.
The Tribunal finds that the respondent's conduct in not taking out HII for the work to be carried out at Nookawarra Place before demanding and taking payment of a deposit under the Nookawarra Place contract was negligent pursuant to s 53(1)(e) of the BSR Act. The respondent did not return the deposit to the owners after abandoning the project. Moreover, because the respondent did not commence the work under the Nookawarra Place contract, the owners were left without recourse to HII, to have the deposit reimbursed.
Conclusion
In accordance with these reasons for decision, the Tribunal finds that disciplinary matters exist in respect of the respondent under s 53 of the BSR Act and that the particulars of the three allegations have been proven to the satisfaction of the Tribunal.
Penalty
The applicant submits, pursuant to s 58(1)(i) of the BSR Act, a penalty of $15,000 is appropriate and warranted on the basis that:
a)cancellation or suspension of either of the respondent's registrations is not possible given that the respondent is no longer registered as either a practitioner or contractor: s 58(3) of the BSR Act;
b)a substantial fine is appropriate to reflect the respondent's conduct, in particular the consequences suffered by the owners of Nookawarra Place, and also for sufficient general deterrence purposes;
c)notwithstanding that the respondent has not taken part in the proceedings and that there is a low expectation of recovery of any amount imposed, the amount ordered should be such that other registered contractors and practitioners are discouraged from engaging in similar conduct; and
d)the fine sought maximises the protection of the public: Quinn v Law Institute of Victoria [2007] VSCA 122; (2007) 27 VAR 1 at [31].
The twelve matters the Tribunal has previously identified that it takes into consideration in determining an appropriate sanction were detailed in Legal Profession Complaints Committee and Wells [2014] WASAT 112 (S) at [20]. The Tribunal considered that those twelve matters listed were not exhaustive and that they were interrelated. The respondent has not participated in the proceedings and therefore there is little information on which to form a conclusion in relation to all of the twelve matters. However, the applicant was able to provide submissions in relation to matters such as the need for protection of the public, the dishonesty by the respondent as well as submissions concerning his conduct involving breach of legislation and the Tribunal's order.
In Cramphorn the Tribunal considered that trust and communication was a fundamental aspect of the relationship between a builder and a client. The public must have confidence that those who are registered to undertake building work are competent and possess the requisite skills: Cramphorn at [81].
Ms Cloney was required to seek the intervention of the Building Commission in an attempt to have deficient work remedied at Ontario Crescent. The matter then proceeded to the Tribunal and the Tribunal's order was made by agreement. However, Ms Cloney remains left without the settlement sum being paid.
Further, the respondent engaged in misleading and deceptive conduct in that he submitted a document to the Tribunal that was not in place at the time the Ontario Crescent contract was entered into and which he knew contained a forged signature.
The owners at Nookawarra Place were left without access to HII and $31,575.91 out of pocket by the respondent's failure to obtain HII for the work to be carried out under the Nookawarra Place contract.
The respondent has no previous disciplinary history. The respondent has not participated in the proceedings so there is little information, other than the fact that he sought for the applicant to cancel his building contractor registration but not his building practitioner registration, to indicate any remorse or insight that the respondent may possess. The Tribunal is unaware of any personal circumstances that may amount to a mitigating factor.
The respondent's dishonest conduct and disregard for his clients is evidence of a need to protect the public against further misconduct by him. The Tribunal finds that the respondent's conduct was not isolated.
The Tribunal agrees with the applicant's submission that a substantive fine is warranted in this case. Having regard to the maximum penalty being $25,000 and that the conduct of the respondent is not of the worst kind but still serious, the Tribunal considers that it is appropriate to impose a fine of $15,000 as a global penalty for his conduct.
Costs
The applicant seeks an order that the respondent pay its costs in the sum of $3,200.
The starting position in any consideration of an application for costs in the Tribunal is that s 87(1) of the SAT Act contemplates that parties bear their own costs in proceedings. However, s 87(2) of the SAT Act confers a discretion on the Tribunal to make an order for the payment by a party of all or any of the costs of another party.
In relation to the exercise of the Tribunal's discretion regarding costs in vocational disciplinary proceedings, a successful application by a vocational regulatory body has usually resulted in an order for costs being made in favour of the vocational regulatory body: Medical Board of Western Australia and Roberman [2005] WASAT 81 (S) at [30] as cited in Legal Profession Complaints Committee and Wells [2014] WASAT 112 (S) at [78] - [80].
Having considered all of the circumstances, in particular that the applicant is acting in the public interest in a disciplinary matter, the Tribunal considers that it is appropriate to exercise its discretion to make an order that the respondent pay the applicant's costs of these proceedings. Whilst the applicant does not provide any basis for how the sum sought has been calculated, the Tribunal considers that the amount sought of $3,200 is reasonable for the time spent by the applicant's legal counsel.
Orders
Accordingly, the Tribunal orders as follows:
1.The Tribunal finds that a disciplinary matter exists in that:
a)the respondent has engaged in misleading or deceptive conduct pursuant to s 53(1)(j)(i) of the Building Services (Registration) Act 2011 (WA) in connection with a contract for the carrying out of a building service at 2 Ontario Crescent, Joondalup by knowingly providing a document to the Tribunal as evidence of some of the terms of that contract when the document was in fact not part of that contract as formed and which contained a forged signature;
b)the respondent has failed to comply with an order of the Tribunal dated 18 August 2015 made under the Building Services (Complaint Resolution and Administration) Act 2011 (WA) pursuant to s 53(1)(l) of the Building Services (Registration) Act 2011 (WA) under which he was required to pay $50,000 to the owner of 2 Ontario Crescent, Joondalup by 13 October 2015; and
c)the respondent has engaged in negligent conduct pursuant to section 53(1)(e) of the Building Services (Registration) Act 2011 (WA) in that he demanded and received a deposit from the owners of 10 Nookawarra Place, Kelmscott, without first obtaining insurance contrary to s 25C of the Home Building Contracts Act 1991 (WA).
2.Within 14 days of the date of this order, pursuant to s 58(1)(i) of the Building Services (Registration) Act 2011 (WA), the respondent is to pay the Building Commissioner a fine of $15,000.
3.Within 14 days of the date of this order, pursuant to s 87(2) of the State Administrative Tribunal Act 2004 (WA), the respondent is to pay the applicant's costs fixed at $3,200.
I certify that this and the preceding [50] paragraphs comprise the reasons for decision of the State Administrative Tribunal.
___________________________________
DELANEY QUINLAN, MEMBER
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