Commissioner for Consumer Affairs v Brownrigg - [2008] SADC 132

DISTRICT COURT OF SOUTH AUSTRALIA
(District Court Administrative and Disciplinary Division)
COMMISSIONER FOR CONSUMER AFFAIRS v BROWNRIGG
[2008] SADC 132
Judgment of Her Honour Judge Cole, Assessor Mr R Stainer and Assessor Mr I MacDonald
16 October 2008
ADMINISTRATIVE LAW
Plumbers, Gas Fitters and Electricians Act 1995
Complaint against a licensed plumbing contractor alleging two bases for disciplinary action - finding that proper cause exists for disciplinary action - order made cancelling licence and also prohibiting respondent from being the director of a body corporate that is a plumbing contractor.
Plumbers, Gas Fitters and Electricians Act 1995, referred to.
Commissioner for Consumer Affairs v Morgan [1999] SADC 96, considered.

COMMISSIONER FOR CONSUMER AFFAIRS v BROWNRIGG
[2008] SADC 132

This matter concerns a complaint by the Commissioner for Consumer Affairs (“the Commissioner”) pursuant to s 21 of the Plumbers, Gas Fitters and Electricians Act 1995 (“the Act”), setting out matters which are alleged to form the basis for disciplinary action against Mr Brownrigg.
The Facts
Mr Brownrigg holds plumbing contractors licence number 1496 pursuant to the Act, which entitles him to carry on the business of performing any plumbing work for other people. He also holds plumbing workers registration PGE 1496 under the Act, which entitles him, personally, to undertake plumbing work. It is also endorsed “can provide technical direction and be able to certify”.
The defendant was a director of Brownrigg Property Services Pty Ltd ACN 069 677 550 (“the company”). The company carried on the business of providing plumbing services until it was wound up on 25 May 2000 with debts to unsecured creditors of $220,000. Approximately half of that amount was owed to the Australian Taxation Office (“the ATO”).
In 2001, Mr Brownrigg was found liable in this Court to disciplinary action under the Act in respect of the company. He was ordered to undertake and successfully complete the study of two business modules within a twelve month period. Mr Brownrigg did not complete the two modules within the twelve month period. He took 18 months to complete them. As a result, he was, again, the subject of disciplinary action for a breach of the order of the Court. The outcome of that disciplinary action was that he was fined $1,500 and, pursuant to s 24(1)(f), prohibited from being the director of a body corporate that is a contractor under the Act until 25 May 2005.
On 26 March 2007, an order of the Federal Magistrates Court was made, with the effect that Mr Brownrigg became an undischarged bankrupt, the act of bankruptcy having occurred on 1 February 2007. Mr Brownrigg’s unsecured debts on that day were $289,625, and his secured debts were $81,300. The disciplinary action the subject of this decision arises from Mr Brownrigg’s bankruptcy.
The Act
The Act provides, in s 20(1)(d):
20 (1) There is proper cause for disciplinary action against a contractor if –
(d)events have occurred such that the contractor would not be entitled to be licensed as a contractor if the contractor were to apply for a licence.
The Act provides, in s 9(1)(c):
9 (1)     A natural person is entitled to be granted a licence if the person –
…
(c)     is not an undischarged bankrupt or subject to a composition of deed or scheme of arrangement with or for the benefit of creditors; and
…
(e)     has sufficient business knowledge and experience and financial resources for the purpose of properly carrying on the business authorised by the licence; and
…
Ms Thomas, counsel for the Commissioner, argued that there are two distinct bases for disciplinary action against Mr Brownrigg. The first basis is the fact that Mr Brownrigg is an undischarged bankrupt. The second basis is that the liquidation of the company, together with the bankruptcy, form the basis for a finding that Mr Brownrigg does not have sufficient business knowledge, experience and financial resources for the purpose of carrying on the business of a plumbing contractor.
Ms Thomas conceded that being made bankrupt does not automatically lead to the cancellation of a licence under the Act (see Commissioner for Consumer Affairs v Morgan [1999] SADC 96), nor is bankruptcy, by itself, evidence of a lack of business knowledge and experience. Bankruptcy may be a consequence of events outside of the control of the person who is made bankrupt. However, Ms Thomas argued, this is not a case where the bankruptcy arose from events outside of the contractor’s control. Mr Brownrigg’s Statement of Affairs showed that the bankruptcy arose from overspending and mismanagement. Mr Brownrigg owes Sensis Pty Ltd $42,303 for advertising in the Yellow Pages. He owes $26,432 on credit cards, 85% of which, he conceded, was personal expenses. He owes the Deputy Commissioner of Taxation $96,000, and he owes WorkCover Corporation $5,342. On his Statement of Affairs, Mr Brownrigg states that he gave four of his employees tools to the total value of $32,704 in lieu of making superannuation payments on their account. He owes Mr Cunningham, a client who assisted him with some financial advice, $50,000.
We are satisfied that both bases argued by Ms Thomas have been made out, and each constitutes proper cause for disciplinary action.
The Commissioner sought an order for the cancellation of Mr Brownrigg’s plumbing contractors licence, an order prohibiting Mr Brownrigg from being employed or otherwise engaged in the business of a plumbing contractor and an order prohibiting him from being the director of a body corporate that is a plumbing contractor.
Mr Brownrigg accepted that there were grounds for disciplinary action, but argued for something less than the cancellation of his plumbing contractors licence.
Mr Brownrigg submitted, in relation to the liquidation of the company in 2000, that an employee of his accountant adopted the practice for several years of booking company expenses to a loan account, with the result that the company was paying excessive tax. This brought Mr Brownrigg into dispute with the ATO and, he said ultimately he received advice that he should have the company liquidated.
In relation to his bankruptcy, Mr Brownrigg attributed it to several events. Firstly, he said, he had been running his business from his home, with four vans, when a neighbour complained to the local Council, with the result that Mr Brownrigg had to seek commercial premises from which to conduct the business. He leased premises in Stepney for $25,000 per annum. He purchased some fittings and equipment for those premises. He had not budgeted for the rent or the overheads of these premises. Secondly, a staff member who had been managing the construction side of the business resigned to set up his own business. Mr Brownrigg took over that role, and hired a new employee to supervise the maintenance side of the business, for a salary plus vehicle.
Mr Brownrigg submitted that he had 32 years in the plumbing industry. He said that he had never had a complaint about his workmanship. He said that he has a client base of 6,000 to 7,000 customers. He has had six apprentices, two of which have been apprentice of the year. Mr Brownrigg pointed to the adverse effect the orders sought by the Commissioner were likely to have on his family because of his diminished earning capacity.
Ms Thomas submitted that the orders were sought, not by way of punishment for Mr Brownrigg, but for the protection of the public.
Mr Brownrigg’s explanation for his bankruptcy does not serve to show that it arose because of circumstances beyond his control. The costs of the rental and equipping of the premises, and the cost of replacing one employee with another go only a short way towards explaining unsecured debts of $289,625. On the basis of Mr Brownrigg’s bankruptcy, and the circumstances of it as shown by the Statement of Account, we determine that it is appropriate to cancel Mr Brownrigg’s plumbing contractor’s licence until further order. It is also appropriate to make an order prohibiting him from being the director of a body corporate that is a plumbing contractor until further order. We will make orders accordingly. The Commissioner sought a further order prohibiting Mr Brownrigg from being employed by a plumbing contractor or otherwise engaged in the business of a plumbing contractor. We do not consider that such an order is necessary, and it would seem to unduly restrict Mr Brownrigg’s employment options.