Commissioner for Consumer Affairs v Beck - [2006] SADC 105

DISTRICT COURT OF SOUTH AUSTRALIA
(District Court Administrative and Disciplinary Division)
In the Matter of THE SECURITY AND INVESTIGATION AGENTS ACT 1995
COMMISSIONER FOR CONSUMER AFFAIRS v BECK
[2006] SADC 105
Reasons for Decision of His Honour Judge Rice, Assessor Hutchinson and Assessor MacDonald
19 July 2006
ADMINISTRATIVE LAW
PROFESSIONS AND TRADES - OTHER PROFESSIONS, TRADES OR CALLINGS - LICENSING OF PARTICULAR TRADES OR CALLINGS
Complaint against respondent as holder of a Security and Investigation Agents licence - complainant asserts that there is proper cause for disciplinary action by reason of the respondent being a director of a company voluntarily wound up for the benefit of creditors - circumstances leading to the company being wound up - circumstances outside the control of the respondent.
Held: there is proper cause for disciplinary action - decline to cancel respondent's licence provided that, within twelve months, he undertake a TAFE course entitled "Establishing a Contracting Business" and provide the Commissioner for Consumer Affairs with evidence of the successful completion of the course.
Security and Investigation Agents Act 1995 ss 9(1)(e)(ii), 25(1)(e)(ii), 29(1)(c)(i) and 29(3), referred to.
Commissioner for Consumer Affairs v Pertini [2005] SADC 133, considered.

COMMISSIONER FOR CONSUMER AFFAIRS v BECK
[2006] SADC 105
Introduction

In this matter the Commissioner for Consumer Affairs laid a complaint against Norman Eugene Beck (“Mr Beck”) alleging there was proper cause for disciplinary action against Mr Beck. The terms of the complaint are as follows:
1.Events have occurred such that the defendant would not be entitled to be licensed as a Security and Investigation Agent if he were to apply for a licence.
Sections 25(1)(e)(ii) and 9(1)(e)(ii) of the Security and Investigation Agents Act 1995.
Particulars
(a)The defendant has held, at all material times, a Security and Investigation Agents licence (ISL 133) endorsed for the work functions of ‘investigation agent – inquiry work’, ‘security agent – security guard work’, ‘security agent – crowd control work’ and ‘security agent – canine handling’.
(b)The defendant was, at all material times, a director of Patriot Protective Services Pty Ltd, ACN 079 170 942.
(c)On 11 March 2005, Patriot Protective Services Pty Ltd was voluntarily wound up for the benefit of creditors.
Section 25 of the Security and Investigation Agents Act 1995 (“the Act”) provides for various matters that are a proper cause for disciplinary action against an agent. Section 25(1)(e)(ii) provides as follows:
25―Cause for disciplinary action
(1) There is proper cause for disciplinary action against an agent if―
..........
(e)in the case of a person licensed as an agent―
(i).....
(ii)events have occurred such that the agent would not be entitled to be granted the licence if he or she were to apply for it; .....
Section 9(1)(e)(ii) relevantly provides:-
9―Entitlement to be licensed
(1) Subject to section 9A, a natural person is entitled to be granted a licence if―
.....
(e)in the case of a licence not to be subject to an employee condition, the person―
(i).....
(ii)has not, during the period of five years preceding the application for the licence, been a director of a body corporate that has been wound up for the benefit of creditors―
(A)when the body was being so wound up; or
(B)within the period of six months preceding the commencement of the winding up; .....
The essence of the complaint was that a cause for disciplinary action arose because Mr Beck, a licensed agent, was the director of a company when it was wound up for the benefit of creditors, such that he would not be entitled to be granted a licence if he was to apply for it now.
Upon the hearing of the complaint, the Court decided that there was proper cause for disciplinary action, but declined to cancel Mr Beck’s licence provided Mr Beck, within twelve months, undertook a TAFE course entitled “Establishing a Contracting Business”. The course could be completed by correspondence and was available to be taken through Adelaide TAFE. Mr Beck is to provide the Commissioner for Consumer Affairs with evidence of the successful completion of the course within twelve months of the date of the order of the Court, namely, 19 July, 2006. We indicated that we would provide reasons in due course, which we now do.
Factual circumstances
Mr Beck was a director and employee of Patriot Protective Services Pty Ltd. Both Mr Beck and the company held security licences pursuant to the Security and Investigation Agents Act 1995. Mr Beck has been licensed as a security agent since 1980 under this Act and the previous Commercial and Private Agents Act 1972. He currently holds a licence for a variety of functions as an investigation agent and as a security agent.
On 14 February, 2005, Patriot Protective Services Pty Ltd was placed into voluntary administration and, on 11 March, 2005, the creditors of the company resolved that the company be wound up. It was not contested upon the hearing of the complaint that there was proper cause for taking disciplinary action.
Section 29 of the Act provides a range of discretionary orders that may be made upon the Court being satisfied that there is proper cause for taking disciplinary action. A combination of sub-sections (1)(c)(i) and (3) enabled the Court to make the order that has been made.
Submissions before us explained the circumstances that led to the company being wound up for the benefit of creditors. The poor financial position of the company by late 2004, early 2005, has its origins with a contract it had with the Adelaide International Rodeo in the latter part of 1997. The company submitted an invoice for $15,000, being the amount it had paid to its employees. The company conducting the event, Rodeo Adelaide Pty Ltd., itself had administrators appointed and the invoice remained unpaid. We accept that that was a situation that was beyond Mr Beck’s control.
There were three other events that had a significant impact on the ongoing financial viability of the company.
The first was that the company lost the security contract with Adelaide TAFE. That also was outside the control of Mr Beck.
Secondly, a substantial dispute and misunderstanding arose with the Australian Taxation Office (“the ATO”) relating to payment of superannuation on extra and overtime wages. This occurred because of the conduct of an employee and also was outside Mr Beck’s control. Although the amount outstanding was eventually paid, significant penalties were imposed.
Thirdly, there was also a dispute with the ATO relating to Business Activity Statements and Instalment Activity Statements. Significant penalties were applied to the debt.
With the financial position of the company declining, Mr Beck sought advice from an employee of the ATO as to what he should do. It was recommended that he take advice from company reconstruction specialists, PPB. Mr Beck took that advice and an administrator was appointed. As we understand it, this was also in accord with some advice received from an employee with the Commissioner’s office without an understanding of the ramifications.
Upon liquidation of the company, the only unsecured creditor of the company was the ATO ($128,000). A secured creditor (the Bank) was paid $20,000. There were no other creditors of the company.
As Mr Townsend, on behalf of Mr Beck, submitted:
It was therefore not a situation where there were a large number of creditors and a decision was taken to cut losses and effectively disadvantage those creditors, rather, professional advice was taken from the abovementioned PPB and advice was taken from the Office before the decision was made to proceed with the liquidation.
Present position of Mr Beck
Mr Beck’s record, since 1980, as the holder of a commercial and private agents licence (under the previous legislation) and a security and investigation agents licence under the Act, has been exemplary. He currently has a contract with the Australian Submarine Corporation (“ASC”). Mr Beck has had an involvement with the ASC since 1992. As at the time of the hearing, he had been asked to tender in a closed contract for additional work for the ASC. If he is successful in his tender for the additional work, it will involve a significant increase in personnel.
Some purposes of the Act
The Act is concerned, amongst other things, with the grant and control of licences and those who hold them. Part of the purpose of the legislation is, as is amply evidenced by s 9(1)(c) of the Act, to ensure that licence holders have sufficient business knowledge and acumen to properly carry on business under the licence. The Act is designed to ensure a protection of the public by the means described. One of the factors that would be important to members of the public is the ability of the licence holder to run a business and thereby adequately protect the consumer of the security industry services.
We were referred to the decision of this Court in Commissioner for Consumer Affairs v Pertini [2005] SADC 133 (Judge Beazley, Assessor Hutchinson and Assessor Drogemuller) involving a complaint against the defendant pursuant to the Building Work Contractors Act 1995. That case is similar to the present because the proper cause for taking disciplinary action was the winding up of a construction company of which the defendant was a director. In that case the defendant’s licence was not cancelled and the Court imposed conditions upon the defendant’s licence such that he was restricted to performing carpentry and joinery limited to first and second fixing.
We would, with respect, agree with the Court in that case that the fact of the liquidation of the company does not automatically lead to the conclusion that the defendant does not have the appropriate business skills. In that case, as here, the liquidation of the company was largely outside the control of the defendant (paragraph 19). We make it clear that, in this case, we are of the view that the winding up of the company was largely beyond his control and, in large measure, did not reflect adversely on his business acumen.
Apart from the present case, it is easy to imagine a company getting into financial difficulty which has nothing to do with the business skills of a director/licence holder. A security agents licence holder may provide security services for one company. If that company goes into liquidation, the domino effect may be the security agents licence holder also goes into liquidation, which may well have nothing to do with business skills.
Conclusion
We confirm the view expressed at the conclusion of the hearing of the complaint. This is not an appropriate case for cancellation of the licence. Mr Beck has successfully run a business for many years. He has a very good and, one would expect, exacting client in the ASC, with the realistic prospect of expansion of the services provided to it. The financial troubles of the company were largely not of his making.
We have ordered that Mr Beck undertake a course through TAFE, “Establishing a Contracting Business”. The course must be completed within twelve months and the Commissioner is to be notified that the course has been successfully completed within that time.