Commissioner for Consumer Affairs v Built It Pty Ltd & Zollo - [2019] SADC 66

DISTRICT COURT OF SOUTH AUSTRALIA
(Civil)
COMMISSIONER FOR CONSUMER AFFAIRS v BUILT IT PTY LTD & ZOLLO
[2019] SADC 66
Judgment of Her Honour Judge Chapman
24 May 2019
ADMINISTRATIVE LAW
Complaint against director of building work contractor which was in liquidation at time of trial - whether Commissioner may proceed against a director when Complaint stayed against building work contractor - whether there is proper cause for disciplinary action against the building work contractor for various alleged breaches of the Building Work Contractors Act 1995 - whether the Second Respondent was a director or de facto director at relevant times.
Held: The Commissioner may proceed against the Second Respondent in circumstances where the Complaint against the First Respondent is stayed. Proper cause for disciplinary action found against the First Respondent as alleged. The Second Respondent was a director or a de facto director of the First Respondent at relevant times. Disciplinary action may be taken against the Second Respondent on that basis.
Building Work Contractors Act 1995 (SA) s 22; Acts Interpretation Act 1915 (SA) s 22; Corporations Act 2001 (Cth) s 471B, referred to.
Commissioner for Consumer Affairs v Sollars (2001) 79 SASR 145; Briginshaw v Briginshaw (1938) 60 CLR 336; Smithton Ltd v Naggar [2014] EWCA Civ 939; Grimaldi v Chameleon Mining NL (No 2) (2012) 200 FCR 296; Chameleon Mining NL v Murchison Metals Limited [2010] FCA 1129; Deputy Commissioner of Taxation v Austin (1998) 39 ATR 485; Buzzle Operations Pty Ltd (in liq) v Apple Computer Australia Pty Ltd [2010] NSWSC 233, applied.

COMMISSIONER FOR CONSUMER AFFAIRS v BUILT IT PTY LTD & ZOLLO
[2019] SADC 66

On 23 September 2015, the Commissioner for Consumer Affairs filed a Complaint against the two respondents pursuant to s 22 of the Building Work Contractors Act 1995 (SA) (the Act). An amended Complaint (third Complaint) was filed on 20 December 2016.
Grounds 1 – 5 are against the First Respondent as a body corporate which was a building work contractor. It is alleged there is proper cause for disciplinary action against the First Respondent pursuant to s 21(c) or (e) of the Act.
Ground 6 is against the Second Respondent. The Commissioner pleads Grounds 1 – 5 against the Second Respondent alleging disciplinary action may be taken against the Second Respondent on the basis he was a director of the First Respondent at the relevant times.
Ground 1 – 3
In each ground, the allegation is that there is proper cause for disciplinary action against the First Respondent pursuant to s 21(1)(c) of the Act. It is alleged the First Respondent acted contrary to s 34(b) of the Act by failing to provide building owners with a certificate evidencing the taking out of the necessary policy of insurance for building work. The building owners were David Terrell and Julie Cahill (Ground 1), Matthew and Ingrid Wilkshire (Ground 2) and Darron and Lara Reid (Ground 3).
Ground 4
The allegation is that there is proper cause for disciplinary action against the First Respondent as a building work contractor pursuant to s 21(1)(c) of the Act. It is alleged another person (the Second Respondent) acted improperly in the course of conducting the business of the First Respondent by acting in breach of an undertaking he gave in this Court on 21 March 2000 not to act as a director of a body corporate that was a building contractor.
It is alleged that from 2 November 2011 to 9 March 2015, the Second Respondent acted as director of the First Respondent (as an appointed director twice in that period and as a de facto director for the remainder) in breach of that undertaking.
Ground 5
The allegation is that there is proper cause for disciplinary action against the First Respondent as a building work contractor pursuant to s 21(1)(e) as events have occurred such that the First Respondent would not be entitled to be licensed as a building work contractor if the contractor were to apply for a licence. That is because s 9(2)(e) of the Act requires each director to be a fit and proper person. The Second Respondent is said not to have been a fit and proper person because of the matters set out in Grounds 1 to 4.
Ground 6
Ground 6 is solely against the Second Respondent. It is pleaded that disciplinary action may be taken pursuant to s 21(4) of the Act against the Second Respondent in relation to the matters alleged in Grounds 1 to 5 because he was director of the First Respondent at the relevant times.
First Respondent now in Liquidation
By letter dated 24 January 2018, Mr Stuart Otway advised the Court that on 22 November 2017 he was appointed as Liquidator of the First Respondent pursuant to an Order of the Federal Court of Australia.
By operation of s 471B of the Corporations Act 2001 (Cth), the proceedings against the First Respondent are stayed unless the Commissioner obtains leave from the Supreme Court. Counsel appearing for the Complainant indicated the Complainant was not going to make application for leave to continue proceedings against the First Respondent[1]. Instead, the Complainant was to proceed only with the complaint as against the Second Respondent pursuant to Ground 6.
[1] This was raised in directions hearings on 25 January 2018, 6 February 2018 and 15 February 2018.
Proceeding with the trial against the Second Respondent ex parte
The trial proceeded in the absence of the Second Respondent after his applications for an adjournment of the trial were refused and he absented himself from the courtroom.
Prior to 5 March 2018, two trial dates had been listed but had to be vacated for various reasons.
The trial was due to commence on 5 March 2018 against the Second Respondent following multiple directions hearings in January and February 2018. Mr Golding appeared for the Complainant. Mr Zollo appeared for himself as the Second Respondent, having terminated the instructions of his counsel, Mr Strawbridge, over the weekend. He intended to represent himself but did not have any of the relevant materials in his possession. The trial was briefly adjourned to enable him to obtain the necessary documentation from his former counsel.
At 12.00 noon on that day, Mr Strawbridge appeared for the Second Respondent on limited instructions to make an application for an adjournment of the trial. The basis for the application was that Mr Zollo received news in the two hour adjourned period that morning that his aunt in Italy had passed away. He sought an adjournment of two months in order to put in place funeral arrangements, overcome grief and ‘get it all behind him’. The application was briefly adjourned for Mr Strawbridge to obtain further instructions.
Following the brief adjournment, Mr Strawbridge submitted there were family overseas who were able to attend to the funeral arrangements for the aunt who had been in her late 80s. He made an application for an adjournment for two to three weeks solely on the basis of time for the Second Respondent to grieve. The application was further adjourned until 2.15pm for Mr Strawbridge to obtain further instructions.
Mr Strawbridge then made an application for a two week adjournment on three grounds. First, grief. Second, time for the Second Respondent to better equip himself with the Commissioner’s case, and finally, time for the Second Respondent to discuss a potential resolution with the Complainant.
I refused the application for a two week adjournment. The Second Respondent had had years to acquaint himself with the case against him and discuss resolution with the Commissioner. I granted the application for an adjournment for the rest of that afternoon because of the recent news received by the Second Respondent of his aunt’s death.
On 6 March 2018, at 10.15am, the Second Respondent attended in person. In the interim, Mr Strawbridge had emailed Chambers to indicate the Second Respondent was still seeking an adjournment for two weeks because of his aunt’s death. Mr Zollo made an application for a two to three week adjournment. He said he had been thinking about his aunt a lot who was close to him, like a mother. His mother had died two months ago. His dog had passed away a couple of weeks ago. It was a bit rough for him. He needed time to do some talking with his family and do things such as ‘rosary and stuff like that’. His aunt was being buried that day in Italy. There was no medical evidence in support of Mr Zollo being unfit to participate in the trial. The application was refused.
Mr Zollo stated he was unfit to represent himself and was not going to stay. Mr Golding made an application for the trial to proceed ex parte. That application was heard in Mr Zollo’s presence. I explained to Mr Zollo how the trial would proceed if he chose to absent himself and the consequences of his absence. I ruled that the trial would proceed ex parte. Mr Zollo then left the court room.
The Complainant commenced his case with an opening address, tendered documents and called witnesses.
On 6 March 2018, I ordered that the fee payable by Mr Zollo for the trial transcript be remitted. He was notified of that order.
Later that day, a medical certificate was emailed to Chambers stating that Mr Zollo is ‘suffering from loss of family member’ and would be unfit for work from 6 March to 13 March 2018. Neither Mr Zollo nor counsel attended to make any submissions. The trial proceeded ex parte. I considered the certificate was insufficient as a basis to grant an adjournment based on Mr Zollo’s lack of fitness.
During the course of the trial, I raised a point of statutory construction with the Complainant regarding the ability of this court to make a finding that there is proper cause for disciplinary action against the First Respondent as a body corporate (such a finding is necessary in order to then take disciplinary action against the Second Respondent as a director) when there are no proceedings against the First Respondent. Mr Strawbridge was made aware of that matter. He attended in court with and on behalf of the Second Respondent at 10.00am on Thursday, 7 March 2018. He informed the court he had instructions to appear for the Second Respondent in regard to the point of statutory construction. On application of the Complainant, the submissions were adjourned to 10.15am on Friday, 8 March 2018. Mr Strawbridge and Mr Zollo then left and the Complainant continued his case.
The statutory construction point was heard on Friday, 8 March 2018. Mr Strawbridge appeared for the Second Respondent. Mr Zollo was present in court. The trial was adjourned to a date to be fixed for the ruling.
On 16 March 2018, I made a ruling in regard to the point of statutory construction. The reasons for that ruling are set out below at paragraphs 27-40. Mr Golding formally closed the Commissioner’s case. Mr Strawbridge, representing Mr Zollo, indicated that Mr Zollo wished to represent himself and present evidence in his defence. The matter was adjourned to 13 April 2018 for presentation of the defence case which took place over three days. Mr Zollo appeared in person. He tendered documents. He called Mr Carmine Barone, his former solicitor, as a witness. Mr Zollo gave evidence in his defence.
Both parties presented oral and written closing submissions.
Proceeding against director of body corporate but not body corporate
Section 21(4) of the Act provides that disciplinary action may be taken against each director of a relevant body corporate (here, the Second Respondent) if there is proper cause for disciplinary action against the body corporate (here, the First Respondent). The question is whether the Court is able to make a finding there ‘is proper cause for disciplinary action’ against the body corporate in circumstances in which the Complainant is not proceeding against the body corporate. If not, then the proceedings against the director are foredoomed to failure because action against the director is contingent upon the Court first finding there is proper cause for disciplinary action against the body corporate.
Mr Strawbridge appeared for the Second Respondent for the purpose of submissions regarding the point of statutory construction. Mr Zollo was also in attendance.
It is necessary to set out Part 4 of the Act in full:
Part 4—Discipline of building work contractors, supervisors and building consultants
20—Interpretation of Part
In this Part—
building work contractor includes—
(a)     a former building work contractor; and
(b)     a person licensed as a building work contractor, whether or not carrying on business as a building work contractor; and
(c)     a person formerly licensed as a building work contractor under this Act or as a builder under the repealed Act;
building consultant means a person (other than a registered architect) who carries on the business of giving advice or furnishing reports in respect of domestic building work (whether being work already performed, work in progress or work that may be required in the future), and includes a former building consultant;
building work supervisor includes—
(a)     a former building work supervisor; and
(b)     a person registered as a building work supervisor whether or not acting as a building work supervisor; and
(c)     a person formerly registered as a building work supervisor under this Act or the repealed Act;
director of a body corporate includes a former director of a body corporate.
21—Cause for disciplinary action
(1)     There is proper cause for disciplinary action against a building work contractor if—
(a)     licensing of the contractor was improperly obtained; or
(b)     the contractor has acted contrary to an assurance accepted by the Commissioner under the Fair Trading Act 1987; or
(c)     the contractor or another person has acted contrary to this Act or otherwise unlawfully, or improperly, negligently or unfairly, in the course of conducting, or being employed or otherwise engaged in, the business of the contractor; or
(d)     the contractor has failed to comply with an order made by a court under Part 5; or
(e)     events have occurred such that the contractor would not be entitled to be licensed as a building work contractor if the contractor were to apply for a licence.
(2)     There is proper cause for disciplinary action against a building work supervisor if—
(a)     registration of the supervisor was improperly obtained; or
(b)     the supervisor has acted unlawfully, improperly, negligently or unfairly in the course of acting as a building work supervisor.
(3)     There is proper cause for disciplinary action against a building consultant if—
(a)     the consultant has acted contrary to an assurance accepted by the Commissioner under the Fair Trading Act 1987; or
(b)     the consultant has acted unlawfully, improperly, negligently or unfairly in the course of acting as a building consultant.
(4)Disciplinary action may be taken against each director of a body corporate that is a building work contractor or building consultant if there is proper cause for disciplinary action against the body corporate.
(5)Disciplinary action may not be taken against a person in relation to the act or default of another if that person could not reasonably be expected to have prevented the act or default.
(6)This section applies in relation to conduct occurring before or after the commencement of this section.
22—Complaints
The Commissioner or any other person may lodge with the District Court a complaint setting out matters that are alleged to constitute grounds for disciplinary action under this Part.
23—Hearing by District Court
(1)On the lodging of a complaint, the District Court may conduct a hearing for the purpose of determining whether the matters alleged in the complaint constitute grounds for disciplinary action under this Part.
(2)Without limiting the usual powers of the District Court, the Court may during the hearing—
(a)     allow an adjournment to enable the Commissioner to investigate or further investigate matters to which the complaint relates; and
(b)     allow the modification of the complaint or additional allegations to be included in the complaint subject to any conditions as to adjournment and notice to parties and other conditions that the Court may think fit to impose.
24—Participation of assessors in disciplinary proceedings
In any proceedings under this Part, the District Court will, if a Judge of the Court so determines, sit with assessors selected in accordance with Schedule 1.
25—Disciplinary action
(1)On the hearing of a complaint, the District Court may, if it is satisfied on the balance of probabilities that there is proper cause for taking disciplinary action against the person to whom the complaint relates, by an order or orders do one or more of the following:
(a)     reprimand the person;
(b)     impose a fine not exceeding $20 000 on the person;
(c)     in the case of a person who is licensed as a building work contractor or registered as a building work supervisor—
(i)     impose conditions or further conditions on the licence or registration;
(ii)suspend the licence or registration for a specified period or until the fulfilment of stipulated conditions or until further order;
(iii)     cancel the licence or registration;
(d)     disqualify the person from being licensed or registered under this Act;
(e)     prohibit the person from being employed or otherwise engaged in the business of a building work contractor;
(f)    prohibit the person from being a director of a body corporate that is a building work contractor;
(g)     prohibit the person from carrying on business as a building consultant;
(h)     prohibit the person from being employed or otherwise engaged in the business of a building consultant;
(i)    prohibit the person from being a director of a body corporate that is a building consultant.
(2) The District Court may—
(a)     stipulate that a disqualification or prohibition is to apply—
(i)     permanently; or
(ii)    for a specified period; or
(iii)     until the fulfilment of stipulated conditions; or
(iv)     until further order;
(b)     stipulate that an order relating to a person is to have effect at a specified future time.
(3)     If—
(a)     a person has been found guilty of an offence; and
(b)     the circumstances of the offence form, in whole or in part, the subject matter of the complaint, the person is not liable to a fine under this section in respect of conduct giving rise to the offence.
26—Contravention of orders
If a person—
(a)     is employed or otherwise engages in the business of a building work contractor or building consultant; or
(b)     becomes a director of a body corporate that is a building work contractor or building consultant; or
(c)     carries on business as a building consultant,
in contravention of an order of the District Court, that person and the building work contractor or building consultant are each guilty of an offence.
Maximum penalty: $35 000 or imprisonment for 6 months.
Mr Strawbridge submitted that because the Complainant was not proceeding against the body corporate, no disciplinary action could be taken pursuant to s 21(4) against the Second Respondent by virtue of him being a director of that body corporate. He referred to s 25(1) of the Act which lists various disciplinary orders the Court may make. Before making any such orders, there must be a ‘hearing of a complaint’ and the Court must be satisfied on the balance of probabilities that there is ‘proper cause for taking disciplinary action’ against the person to whom the complaint relates. Mr Strawbridge relied upon that provision to submit there must be a hearing of a complaint against the body corporate before any finding of ‘proper cause for disciplinary action’ could be made against the body corporate. He referred to the second reading speech[2] for the Bill in support of that construction. In particular, in the explanation of clause 21 in the second reading speech, it is said that ‘if a body corporate may be disciplined, so may the directors’[3].
[2] Building Work Contractors Bill, Legislative Council, 25 October 1995, pp342 – 348.
[3] Ibid, p346.

The Complainant conceded the construction contended for by the Second Respondent was reasonably open but submitted there is also another construction reasonably open which would promote the purpose or object of the Act and therefore must be preferred[4]. He submitted the issue is whether ‘proper cause for disciplinary action’ as it appears in s 21(4) has the same meaning as ‘proper cause for taking disciplinary action’ as set out in s 25(1) of the Act. If it does, then the proceedings cannot continue against the Second Respondent because there is no hearing of a complaint to establish proper cause as against the First Respondent.
[4] Section 22 of the Acts Interpretation Act 1915 (SA)
The Complainant submitted that s 21 through to s 25 should be read in a temporal order. It is not until the final stage when orders may be made pursuant to s 25 that disciplinary action is actually taken. Up until that point, there is ‘proper cause for disciplinary action’ (s 21) or there are ‘grounds for disciplinary action’ (s 22 and s 23). The Complainant may not ever ask for disciplinary action to be taken against a body corporate pursuant to s 25 for various reasons, such as when the body corporate has been deregistered. Nevertheless, the Complainant may contend there is ‘proper cause for disciplinary action against the body corporate’ within the meaning of s 21(4) so that disciplinary action may be taken against each director by the making of orders pursuant to s 25(1). He submitted that the phrase ‘proper cause for disciplinary action’ (against the body corporate) in s 21(4) is referable back to s 21(1), (2) or (3) of the Act. The court may find there is ‘proper cause for disciplinary action’ against the body corporate without a hearing of a complaint against the body corporate. This is akin to the situation where proceedings are brought against a respondent on the basis of vicarious liability but are not brought against the respondent who is primarily liable. He submitted such a construction promoted one of the purposes of the Act, namely, the protection of the public. It enabled directors to be disciplined even though the body corporate had become deregistered making proceedings against that body corporate impossible.
I agree with the submissions made by the Complainant.
In my view, the word ‘taking’ has work to do in the phrase ‘proper cause for taking disciplinary action’ in s 25(1) of the Act. It is different from the phrase ‘proper cause for disciplinary action’ which appears in s 21 (1) to (4). Upon a consideration of Part 4 as a whole, it is evident the difference is relevant and purposeful.
Part 4 of the Act sets out three different stages or steps in the discipline of building work contractors, supervisors and building consultants. The first is the existence of a proper cause for disciplinary action (s 21). The second is the commencement of proceedings in the District Court by way of a complaint setting out matters alleged to constitute grounds for disciplinary action followed by a hearing to determine whether the matters so alleged constitute grounds for disciplinary action (ss 22 – 24). Finally, on the hearing of a complaint, the District Court may an order or orders if satisfied there is proper cause for taking disciplinary action against the person to whom the complaint relates. It is not until this third stage has been reached that it is correct to refer to the taking of disciplinary action. The making of such an order or orders is what is meant by taking of disciplinary action.
Section 21(4) and (5) deal with the circumstances in which disciplinary action may be taken against a director of a body corporate or may not be taken against a person by the making of orders pursuant to s 25(1).
Orders may be made against a director of a body corporate if there is proper cause for disciplinary action against the body corporate. This does not first require the taking of disciplinary action against the body corporate, that is, the making of an order or orders against the body corporate pursuant to s 25(1) of the Act. Rather, it requires the complainant to allege in the complaint that a ground for disciplinary action against the director is that there is proper cause for disciplinary action against the body corporate by reference to either s 21(1), (2) or (3). That will be the subject of the hearing of the complaint against the director and determination made pursuant to s 23 of the Act. If that is so determined, then the court may make an order or orders pursuant to s 25(1) if satisfied on the balance of probabilities there is proper cause for taking disciplinary action against the director.
An example of when the court may not be so satisfied is to be found in s 21(5) of the Act. Orders may not be made pursuant to s 25(1) against a person in relation to the act or default of another if that person could not reasonably be expected to have prevented the act or default.
This construction is to be preferred because it promotes the protective purpose of the legislation. For example, there may be occasion when the Commissioner does not become aware of the existence of a proper cause for disciplinary action until after a relevant body corporate has been deregistered. The Commissioner would not be able to proceed against the body corporate. If the construction contended for by the Second Respondent was preferred, then s 21(4) would prevent action being taken against any of the directors upon the body corporate becoming deregistered. Such a result would be inconsistent with the protective purpose of the legislation. The purposes of the Act and the disciplinary proceedings include regulating the conduct of persons who are licensed and/or registered under the Act, protecting the public and maintaining proper standards of conduct[5]. It cannot be the case that the protection of the public may be comprised simply because the body corporate has become defunct in the meantime. The fact that disciplinary proceedings against directors are envisaged in such circumstances is consistent with the broad definitions of a ‘building work contractor’, ‘building consultant’, ‘building work supervisor’ and ‘director’ to include persons who were formerly in those positions.
[5] Commissioner for Consumer Affairs v Sollars (2001) 79 SASR 145.
It is for these reasons that I ruled on 16 March 2018 that the Commissioner may proceed against the Second Respondent as a director of the First Respondent even though proceedings against the First Respondent are stayed.
Proof of the Complaint against the Second Respondent
In these proceedings, the Complainant must establish, on the balance of probabilities, that there is proper cause for disciplinary action against the body corporate pursuant to s 21(c) or s 21(e) of the Act as pleaded in Grounds 1 – 5. If there is proper cause, the Complainant must then establish the Second Respondent was, at all relevant times, a director of the body corporate. It is only then that disciplinary action may be taken against the Second Respondent pursuant to s 25(1) of the Act.
The standard of proof is as set out in Briginshaw v Briginshaw[6].
Is there proper cause for disciplinary proceedings against the First Respondent?
[6] (1938) 60 CLR 336, 361 – 362 per Dixon J.
Ground 1
The following is pleaded as the basis for proper cause for disciplinary action against the First Respondent in Ground 1:
1.1At all material times the First Respondent held a building work contractor’s licence under the Act (BLD 219356) (“the Licence”) and carried on business as a building work contractor in South Australia.
1.2On or about 2 November 2011, the First Respondent contracted with David Terrell and Julie Cahill for the performance of building work, namely additions and renovations to a dwelling located at 116 Marlborough Street Henley Beach in the said State:
1.3The First Respondent performed building work for David Terrell and Julie Cahill from November 2011 to October 2013 at the Henley Beach site under the authority of the Licence.
1.4From November 2011 to October 2013 the First Respondent acted contrary to section 34(b) of the Act in that the First Respondent performed building work to which Part 5 Division 3 of the Act applied without having provided to David Terrell and Julie Cahill a certificate that evidenced the taking out of a policy of insurance that complied with the requirements of the Building Work Contractors Regulations 2011 (“the Regulations”).
Based on the affidavit of Krystle Bobrige, I am satisfied as to paragraph 1.1. It was not disputed by the Second Respondent.
The Commissioner called Julie Cahill to give evidence. From January 2011, Ms Cahill and her partner, David Terrell, met with Mr Zollo at their Henley Beach home on numerous occasions to discuss the possibility of renovation and extension work on their home.
On 2 November 2011, a written Domestic Building Contract was entered into between David Terrell and Julie Cahill as “the owner” and the First Respondent as “the builder”. A copy of that contract was tendered. It was for additions and renovations at 116 Marlborough Street, Henley Beach. It was signed by Ms Cahill as Owner. Ms Cahill gave evidence that Mr Terrell’s mother, Sue Terrell, witnessed her signature. Both Ms Cahill and Mr Terrell initialled each page as the Owners. No signature appears for the Builder, however, the initials “AZ” are at the bottom right hand corner of each page. Ms Cahill gave evidence she saw Mr Zollo write those initials on each page of the contract.
The Building Schedule was signed by Ms Cahill and Mr Terrell. Ms Cahill gave evidence she saw Mr Zollo write his signature in the space for the Builder. Ms Cahill, Mr Terrell and Mr Zollo initialled each page.
Ms Cahill said Council approval was obtained later in November 2011. The demolition work commenced the day after council approval was granted. Ms Cahill was on site everyday as she worked from home and continued to live in the house. The building work was estimated to take six months but was still continuing after nine months. Ms Cahill said she ended up finishing the work herself when Mr Zollo ‘walked off the job’ in about August 2012.
In his evidence, Mr Zollo did not dispute that he executed the contract on behalf of the First Respondent. He did not dispute there was building work performed by the First Respondent following the execution of the contract.
I find paragraph 1.2 has been proved.
I find paragraph 1.3 has been proved to the extent that building work was performed from November 2011 to August 2012 in accordance with the evidence of Ms Cahill, not to October 2013 as pleaded.
Ms Cahill gave evidence she spoke to Mr Zollo about insurance during a discussion about incorrect foundation work. He told her not to worry about it because there was indemnity insurance. He told her she would receive that insurance once the build was finished and had been approved by the council. She asked to see documentation approximately ten times during the building process but was never provided with any documents.
In his Response, the Second Respondent denied this ground and said the policy of insurance was taken out and supplied. However, when he gave evidence Mr Zollo said he did not have anything to do with insurance generally; that was all a matter for the First Respondent.
I find paragraph 1.4 has been proved. The First Respondent was performing building work to which Part 5 Division 3 of the Act applied. The work was ‘domestic building work’ in that it involved the demolition, construction and altering of the house at Henley Beach; was performed between November 2011 and August 2012; and did not come within s 33(2)(a) or (b).
Section 34 required the First Respondent, as a building work contractor, not to perform building work unless a complying policy of insurance was in force and a certificate evidencing that had been provided to the building owner.
I accept the evidence of Ms Cahill that she was not provided with the certificate. Her evidence is supported by the evidence of Mr Burfield and the statements of Ms David and Mr Loney which prove there was no insurance policy taken out by the First Respondent at all in respect of this property.
I find there is proper cause for disciplinary action against the First Respondent as pleaded in Ground 1, save as to the amended date for the completion of the building work as pleaded in paragraph 1.3.
The Complainant sought to allege in Ground 1 that the First Respondent was also in breach of s 34(a), namely, that there was a failure to have a policy of insurance in force at all.
The Complainant submitted there was no need to amend the pleadings because s 34(a) and (b) are not disjunctive or alternatives; in order for a consumer to be furnished with a certificate it is implicit that a policy of insurance must exist. Further, the Second Respondent always understood this to be the nature of the allegation. Mr Golding referred to submissions before Judge Slattery on 28 August 2017 when Mr Strawbridge appeared for Mr Zollo and there was discussion about a policy not having been taken out at all in relation to this building work.
I do not agree with Mr Golding that an amendment was not required. The pleadings for all three grounds (1 – 3) specify a failure to comply with s 34(b). No mention is made to s 34(a) in any of the grounds. The failure to take out the policy may be a matter of evidence in proof of the pleading regarding a breach of s 34(b); but there is no pleading of a breach of s 34(a) which, in my view, makes the allegation more serious.
The Commissioner had ample time to apply to amend Ground 1.
It was not raised at trial until Mr Zollo had decided to absent himself. In those circumstances, I do not allow this to become a part of the formal pleading for Ground 1.
Ground 2
Ground 2 alleges the same conduct by the First Respondent in relation to the building work contract and performance for Mr and Mrs Wilkshire as follows: -
2.1 Particular 1.1 is repeated.
2.2On or about 1 February 2012 the First Respondent contracted with Matthew and Ingrid Wilkshire for the performance of building work, namely additions and renovations to a dwelling located at 11 Jones Street Nailsworth in the said State.
2.3The First Respondent performed building work for Matthew and Ingrid Wilkshire from 3 February 2012 to August 2013 at the Nailsworth site under the authority of the Licence.
2.4From 3 February 2012 to August 2013 the First Respondent acted contrary to section 34(b) of the Act in that the First Respondent performed building work to which Part 5 Division 3 of the Act applied without having provided to Matthew and Ingrid Wilkshire a certificate that evidenced the taking out of a policy of insurance that complied with the requirements of the Regulations.
The Commissioner called Ms Ingrid Wilkshire to give evidence.
In around mid-2011 she and her husband were wanting to do an extension on their home at Nailsworth. They visited Homestead Homes and became aware that that company would not do the type of extension they were seeking. Mr Brett MacKereth recommended Mr Zollo who then made contact with them. On 1 December 2012, they signed a contract with the First Respondent for additions/renovations to their home. Mr Zollo signed on behalf of the First Respondent. The demolition work commenced toward the end of that month. It took about 18 months.
In his Response, the Second Respondent denied this ground and said the policy of insurance was taken out and supplied. However, when Mr Zollo gave evidence, he did not dispute that he signed the contract for the company nor that building work was performed. He gave general evidence that he did not have anything to do with insurance; that was all a matter for the First Respondent.
Mrs Wilkshire gave evidence she asked Mr Zollo for a copy of the Indemnity Insurance Certificate. She also sent an email requesting a copy of that certificate. They never received a copy of the Indemnity Insurance Certificate. She was shown a copy of the certificate in the witness box, dated 7 February 2012. She confirmed that she had not seen that prior to the trial scheduled in relation to this matter last year.
The Commissioner did not cross-examine Mr Zollo about Mrs Wilkshire’s evidence of discussions with him on the topic of insurance. I make no findings about those particular discussions. I accept Mrs Wilkshire’s evidence that they never received a copy of the Certificate from the First Respondent. In his evidence, Mr Zollo did not dispute that evidence as such but rather took the position that insurance was nothing to do with him.
I find paragraphs 2.1, 2.2, 2.3 and 2.4 proved. I find there is proper cause for disciplinary action against the First Respondent as pleaded in Ground 2.
Ground 3
The same conduct is pleaded against the First Respondent in relation to the building work contract with Mr and Mrs Reid as follows:
3.1 Particular 1.1 is repeated.
3.2On or about 27 August 2012, the First Respondent contracted with Darron and Lara Reid for the performance of building work, namely renovations and additions to their dwelling located at 3 Jenkins Avenue Myrtle Bank in the State of South Australia.
3.3The First Respondent performed building work for Darron and Lara Reid from October 2012 to March 2014 at the Myrtle Bank site under the authority of the Licence.
3.4From October 2012 to 3 December 2014 the First Respondent acted contrary to section 34(b) of the Act in that the First Respondent performed building work to which Part 5 Division 3 of the Act applied without having provided to Darron and Lara Reid a certificate that evidenced the taking out of a policy of insurance that complied with the requirements of Regulations.
The Commissioner called Darron Mark Reid. Mr Zollo was recommended to Mr Reid and his wife by Mr Wilkshire. On 27 August 2012, they signed a contract with the First Respondent for renovation work to their home at Myrtle Bank. Mr and Mrs Reid signed the contract as the owners.
Mr Reid could not recall whether Mr Zollo or Mr Mackareth signed on behalf of the First Respondent, but they were both present. A copy of the contract was tendered. Mr Zollo gave evidence he witnessed the contract which was signed by Mr Mackareth. Mr Brett Mackareth gave evidence he signed on behalf of the company and it looked like Mr Zollo’s signature as witness. I find that the contract, dated 27 August 2012, was signed by Mr Brett Mackareth on behalf of the First Respondent and witnessed by Mr Zollo.
Mr Reid gave evidence the demolition work commenced in October 2012 and the slab was laid just before Christmas 2012. Mr Zollo did not dispute that building work was undertaken.
Mr Reid gave evidence that after the demolition had been done he contacted Mr Zollo and asked for a copy of the Indemnity Insurance Certificate. He received a copy of that certificate by letter, dated 7 December 2012. The certificate of insurance itself indicates that it was issued on 3 December 2012.
In his Response, the Second Respondent denied this ground and said the policy of insurance was taken out and supplied. However, Mr Zollo gave general evidence he did not have anything to do with insurance generally; that was all a matter for the First Respondent.
I find paragraphs 3.1, 3.2 and 3.3 proved. I accept the evidence of Mr Reid that they were first provided with the certificate by letter, dated 7 December 2012. I find paragraph 3.4 proved, namely, that from October 2012 to 3 December 2012 building work was performed without the necessary certificate of insurance having been provided to Mr and Mrs Reid.
Summary of findings
I find there is proper cause for disciplinary action against the First Respondent as pleaded in Grounds 1, 2 and 3.
Is there proper cause for disciplinary action against the First Respondent: Ground 4

Paragraph 4.1 of Ground 4 repeats paragraphs 1.1, 1.2, 1.3, 2.2, 2.3, 3.2 and 3.3. I have already found those paragraphs proved.
Welford and Bagot contracts
Paragraphs 4.2 to 4.5 are as follows:
4.2On or about 5 February 2013, the First Respondent contracted with Bill and Sharon Welford for the performance of building work, namely additions and renovations at a dwelling located at 4 Gerlach Grove Evanston Park in the State of South Australia.
4.3The First Respondent performed building work for Bill and Sharon Welford from March 2013 to April 2014 at the Evanston Park site under the authority of the Licence.
4.4On or about 30 April 2013, the First Respondent contracted with Michael and Wendy Bagot for the performance of building work, namely the construction of two (2) adjoining dwellings at 61 MacArthur Avenue Plympton in the State of South Australia.
4.5The First Respondent performed building work for Michael and Wendy Bagot from June 2013 to September 2014 at the Plympton site under the authority of the Licence.
Mr Welford gave evidence he met Mr Zollo in early 2012. On 5 February 2013, he and his wife signed a contract with the First Respondent for renovations on their home. A copy of the contract was tendered. Building work commenced in March 2013 and took about 18 months for substantial completion. Mr Zollo did not dispute that he signed the contract on behalf of the company nor that building work was performed.
I find paragraphs 4.2 and 4.3 proved.
Mr Bagot gave evidence that he and his wife signed contracts for the construction of two houses. Work commenced around May 2013 and was completed in September 2014. The contracts signed on 30 April 2013 were tendered. Mr Zollo did not dispute that he signed the contracts on behalf of the company nor that the two houses were built.
I find paragraphs 4.4 and 4.5 proved.
The Undertaking by the Second Respondent
The Complainant alleges the Second Respondent signed an undertaking to the District Court on 21 March 2000 as follows:
4.6Prior to 7 December 1994 the Second Respondent held a builder’s licence and was registered as a building work supervisor under the former Builders Licensing Act 1986.
4.7Some time shortly prior to 7 December 1994 the former Commercial Tribunal of South Australia found that proper cause existed for disciplinary action against the Second Respondent under the former Builders Licensing Act 1986 (SA) on the basis that the Second Respondent had ceased to be a fit and proper person to be so licensed and so registered.
4.8On 7 December 1994 the Commercial Tribunal ordered that:
4.8.1 The Second Respondent’s builder’s licence and registration as a building work supervisor be cancelled under s 19(6)(c)(iv) Builders Licensing Act 1986; and
4.8.2 The Second Respondent be disqualified under s 19(6)(d) Builders Licensing Act 1986 until further order from being licensed or registered, or both, under the Builders Licensing Act 1986.
4.9Some time prior to 21 March 2000 the Second Respondent applied to the District Court to have the disqualification order of 7 December 1994 lifted.
4.10On or about 21 March 2000 the Second Respondent provided an undertaking to the District Court that he would not act as the director of a body corporate that was a building work contractor.
4.11Upon receipt of the undertaking from the Second Respondent, on or about 21 March 2000, the District Court discharged the disqualification order of 7 December 1994 against the Second Respondent.
The Complainant tendered the two decisions of the Commercial Tribunal, dated 25 February 1994[7] and 7 December 1994[8]. Those two decisions prove paragraphs 4.6 to 4.8.
[7] Commissioner for Consumer Affairs v Alessandro Zollo, Commercial Tribunal Disciplinary Inquiry, Adelaide, 25 February 1994, Judgment No OC152.
[8] Commissioner for Consumer Affairs v Alessandro Zollo, Commercial Tribunal Disciplinary Inquiry, Adelaide, 7 December 1994.
The business records of the orders made by the District Court were tendered in proof of paragraphs 4.9 to 4.11. On 21 March 2000, it was ordered by consent that the disqualification imposed upon Mr Zollo by the Commercial Tribunal on 7 December 1994 be discharged with Mr Zollo undertaking not to act as the director of a body corporate that is a building work contractor. A copy of an Undertaking, dated 21 March 2000, with a signature above the typed name of ‘Allessandro Zollo’ was tendered.
Mr Zollo submitted the Undertaking was improper and challenged its validity. In his written submission, he contended ‘it is bad form due to lack of specified term of the Undertaking, no proper detail as to dates of undertaking in its present form and not in keeping with the standard one would expect from the Commissioner for Consumer Affairs for a document prepared which was presented to Mr Zollo fourteen years later. The document was unstamped by the Court. It is now close to 18 years ago and we are still before the Court today arguing on the merits of this Undertaking.’[9] He went on to refer to some legal advice he received then made the submission that ‘The Commissioner for Consumer Affairs was to make application to enforce the Undertaking to specify conditions of time. No evidence of that has taken place. Under District Court of South Australia Rule 135 time has elapsed due to no action being taken in the 14 days stipulated’[10]. He also submitted the Undertaking should have been served in order to be activated.
[9] The Second Defendant Closing Submission, pp 6 - 7.
[10] The Second Defendant Closing Submission, p 7.
The current Rule 135 of the Supreme and District Court Civil Rules 2006 provides that if, on an interlocutory application, the Court allows or requires something to be done but does not fix a time within which it is to be done, it is to be done within 14 calendar days from the date of the Court’s order or direction.
There is no time limit specified in the Undertaking. Mr Zollo called his former legal representative, Mr Carmine Barone. He agreed his firm prepared the Undertaking. Given the passage of time and the destruction of his records, he had to rely upon his own recollection which was vague. The Undertaking was to resolve the action commenced by Mr Zollo to remove the disqualification of his licence that was ordered by the Commercial Tribunal. His best memory was that the Undertaking would not have had an indefinite time limit. It could be removed at any stage but by agreement between the Commissioner and Mr Zollo especially if he had obtained a building work contractor’s licence and had been working in the industry for a period of time. He had never been instructed to have the Undertaking set aside. In his written submission, Mr Zollo wrote that Mr Barone gave evidence that he had agreed the Undertaking with the Crown Solicitor for a period of one year, perhaps two; that he believed the Commissioner was to make an application to enforce the Undertaking and specify conditions of time. That was not Mr Barone’s evidence.
Mr Zollo gave evidence he did not sign the Undertaking even though it looks like his signature. He said he was not even in Adelaide. He said he did not want to be a director for a long time because he had enough on his plate to run the company as the estimator. He was not aware of the document until 2013 and upon becoming aware, he resigned as a director. He became a director again on 22 May 2014 because he was advised the Undertaking was invalid. He resigned in 2015 because he could not handle it, it was too much to be a director, he was doing the job of three people.
I do not accept Mr Zollo’s evidence that he did not sign the Undertaking in March 2000. Mr Barone was not asked any questions about who signed the Undertaking nor did he give evidence that someone other than Mr Zollo signed the Undertaking. Further, on 25 February 2009, Mr Zollo appeared before Judge Muecke in this Court on his application to renew his building licence. During the course of his submissions he stated ‘In 2000 I sign an agreement by saying that I will not be director of the company, and in due course there will be another action which I’m going to take and clear that up too as well, in due course’[11]. Then later in his submissions he said ‘…and my way of looking at it, I go to them to say ‘I’m not going to be director of the company, I don’t want to be director of the company but give me my licence’, and that’s why I signed the undersigned’[12]. In dismissing the application, Judge Muecke referred to the consent order that the disqualification in 1994 be discharged upon Mr Zollo giving a written undertaking that he would not act as the director of a body corporate that is a building work contractor.
[11] Exhibit C1, Tab 12, Transcript for Zollo v Commissioner for Consumer Affairs, No 1/2000, 25 February 2009, p 8.
[12] Ibid, pp 11 – 12.
I also find that Rule 135 of the Supreme and District Court Civil Rules 2006 has no application to the Undertaking. The Court was not directing or ordering that something be done. Rather, Mr Zollo personally gave an undertaking that he would not do something, namely, act as the director of a body corporate that is a building work contractor. That remained in force at the relevant times pleaded by the Commissioner. Further, there was no requirement for the Undertaking to be served on Mr Zollo. I find he personally signed the Undertaking.
I find paragraphs 4.6 to 4.11 proved.
Alleged breach of Undertaking by Second Respondent
The Complainant alleges that Mr Zollo breached the Undertaking he gave on 21 March 2000 in that he was appointed as a director and acted as de facto director of the First Respondent as follows:-
4.12From 2 November 2011 to 9 March 2015 the Second Respondent acted as a director of the First Respondent in breach of his undertaking to the District Court:
4.12.1From 14 May 2013 to 4 November 2013 and from 22 May 2014 to 9 March 2015 the Second Respondent was appointed as a director of the First Respondent.
4.12.2At all other material times between 2 November 2011 and 9 March 2015 the Second Respondent has acted in the position of a director of the First Respondent (i.e. has been a de facto director of the First Respondent) and was therefore a director and officer of the First Respondent in accordance with s9 of the Corporations Act 2001 (Cth) and s3 of the Act.
4.13In particular, the Second Respondent acted in the position of Director with respect to the contracts (including the performance of building work performed under such contracts) entered into by the First Respondent with:
4.13.1       David Terrell and Julie Cahill (see particulars 1.2 and 1.3).
4.13.2       Mathew and Ingrid Wilkshire (see particulars 2.2 and 2.3).
4.13.3       Darron and Lara Reid (see particulars 3.2 and 3.3).
4.13.4       Bill and Sharon Welford (see particulars 4.2 and 4.3); and
4.13.5       Michael and Wendy Bagot (see particulars 4.4 and 4.5).
The Second Respondent appointed as director of the First Respondent
The Complainant tendered ASIC records to prove the directorship of the First Respondent from 2009. The following persons were registered as directors during the periods set out below:-
Dario Zollo  8 January 2009 to 11 March 2010
Anthony Savage          12 February 2010 to 30 July 2012
Brett & John Mackereth      2 July 2012 to 30 April 2013
Barry McDonald                  6 July 2012 to 30 April 2013
Alex Zollo  14 May 2013 to 4 November 2013
Umair Qureshi  4 November 2013 to 4 July 2014
Alex Zollo  22 May 2014 to 9 March 2015
Mr Zollo agreed he was the registered director of the First Respondent from 14 May 2013 to 4 November 2013 and then again from 22 May 2014 to December 2014, the latter date being when he signed the paperwork resigning as director.
I find Mr Zollo was the registered director from 14 May 2013 to 4 November 2013 and then again from 22 May 2014 to 9 March 2015.
The Second Respondent acting as de facto director of the First Respondent
The concept of a de facto director is incorporated in the definition of ‘director’ in both s 3 of the Act and s 9 of the Corporations Act 2001 (Cth).
In s 3 of the Act, director of a body corporate includes –
(a) A person occupying or acting in the position of director or member of the governing body of the body corporate, by whatever name called and whether or not validly appointed to occupy or duty authorised to act in the position; and
(b) Any person in accordance with whose directions or instructions the directors or members of the governing body of the body corporate are accustomed to act.
In s 9 of the Corporations Act, director of a company or other body means:
(a)a person who:
(i)is appointed to the position of a director; or
(ii)is appointed to the position of an alternate director and is acting in that capacity; regardless of the name that is given to their position; and
(b)unless the contrary intention appears, a person who is not validly appointed as a director if:
(i)they act in the position of a director; or
(ii)the directors of the company or body are accustomed to act in accordance with the person’s instructions or wishes.
Subparagraph (b)(ii) does not apply merely because the directors act on advice given by the person in the proper performance of functions attaching to the person’s professional capacity, or the person’s business relationship with the directors or the company or body.
Note: Paragraph (b)—Contrary intention—Examples of provisions for which a person referred to in paragraph (b) would not be included in the term “director” are:
·   section 249C (power to call meetings of a company’s members)
·   subsection 251A(3) (signing minutes of meetings)
·   section 205B (notice to ASIC of change of address).
The test of whether a person is a de facto director of a body corporate is an objective one[13]. It is a question of substance and not simply of how that person has been denominated in or by the company[14]. As stated by Jacobsen J in Chameleon Mining NL v Murchison Metals Limited:
Whether a person is acting as a director of a company will depend upon the nature of the functions and powers which are exercised and the extent to which they are exercised. It is a question of fact which may often be one of degree. It requires consideration of the duties performed by the person in the context of the operation and circumstances of the company …
The circumstances which bear on the question include the size of the company, its internal practices and structure and how the alleged de facto director is perceived by outsiders who deal with the company.[15]
[13] Smithton Ltd v Naggar [2014] EWCA Civ 939, [39].
[14] Grimaldi v Chameleon Mining NL (No 2) (2012) 200 FCR 296, [68].
[15] [2010] FCA 1129 at [90], [91].
The Commissioner’s case is that the First Respondent was a family‑run company in which Mr Zollo was a dominant family figure exercising the top level management functions of the company and representing the company in most if not all matters of great importance during the relevant time regardless of whether he was registered as director or not[16].
[16] Deputy Commissioner of Taxation v Austin (1998) 39 ATR 485, 490; Buzzle Operations Pty Ltd (in liq) v Apple Computer Australia Pty Ltd [2010] NSWSC 233, 236.
The size and structure of the First Respondent
The First Respondent was a small company with minimal office space in Melbourne Street, North Adelaide and few employees. It was about 50m²with two rooms. The front room was divided as a meeting room and there were two desks and a small kitchen at the back.
Mr Zollo’s son, Dario Zollo, was the sole shareholder of the First Respondent. Mr Zollo, his son, Dario Zollo, and his daughter, Nadia Zollo, were all signatories to an ANZ Business account. Dario Zollo’s accounting firm provided accounting services to the company, mainly via Mr Zahid Kahn who was an employee of Dario Zollo’s accounting firm. Mr Kahn worked part time for the First Respondent. He usually worked after business hours, when he was free during business hours, on Saturday or on his lunch break. Mr Khan and Mr Justin Zollo worked at the office, the latter being Mr Zollo’s nephew. Mr Zollo’s daughter, Nadia, did some work making payments on behalf of the company. The only telephone contact details for the company on the company letterhead and on contracts was Mr Zollo’s mobile phone number.
The registered directors
Mr Zollo’s son, Dario Zollo, was the first registered director on 8 January 2009.
Mr Anthony Savage, the second registered director (12 February 2010 to 30 July 2012), was not called as a witness.
The Commissioner called Brett MacKereth and his brother, John MacKereth. They were registered as directors of the First Respondent from 2 July 2012 to 30 April 2013. Mr MacDonald was also a director for most of that period.
Mr Brett MacKereth gave evidence that he met Mr Zollo at a building site in about 2010 through an acquaintance, Mr Tony Savage. Mr MacKereth was a building consultant working for Homestead Homes. Mr Zollo invited him for a meeting at his house at Greenacres. Mr Zollo told him that if he came and worked with him, it would be a good mix.
Mr MacKereth thought Mr Zollo was the top man of the company, the chief executive officer, the managing director, general manager or director. He spoke as though he ran the company. He ‘pretty well’ told Mr MacKereth that he was the top man. He was on site all the time.
Mr MacKereth was introduced to Mr Zollo’s son, Dario, who ran the accounting firm across the street. He said Mr Zollo and Dario offered Mr MacKereth and his brother directorships. It was essentially said they would be a figurehead and Mr Zollo would be running the company. He and his brother agreed to have their names used as directors for a short term only if there was no liability.
During that time, Mr Zollo ran the company. He organised cheques, materials, staff and he seemed to be doing everything. He was involved in all meetings for quotes. Mr McDonald worked as a supervisor on sites. There were not any directors’ meetings. Mr MacKareth gave evidence they were not given any documents or data to look at or any information about the company. He did not have access to the company accounts. They were kept locked up in a filing cabinet. He continued in his role as a consultant for commission only. He was not given an email address, nor did his business card have his name on it. His brother was employed as a tradesman.
Mr MacKereth and his brother resigned as directors by sending an email to Mr Zollo on 21 January 2013[17]. In that email, Mr MacKereth stated their positions were no longer tenable. He wrote communication was non‑existent over the six months. There had been no official finance data, meetings or news of growth. He complained they had not been kept in the loop with all issues regarding disgruntled clients. They only joined the company under pretext of possible profits or dividends from the company for work done. They complained they were left in the dark.
[17] Exhibit C4, p516.
Mr MacKareth gave evidence he signed the contract on behalf of the First Respondent with Mr & Mrs Reid. Mr Zollo asked him to sign. They had an argument later about him having to sign it. He did not want the responsibility of signing it.
Mr John MacKereth gave evidence he is a labourer and met Mr Zollo through his brother, Brett MacKereth.
He said Mr Zollo became interested in him as a prospective director. There was a meeting at the office when Mr Zollo asked the two MacKereth brothers to become directors of the company. Mr John MacKereth had never been a director before. He gave Mr Zollo information about his financial situation and got a police clearance. He thought the only way for him to get employment was to become a director. All he really wanted to do was to be a labourer and eventually a tradesman for the company.

There were no directors’ meetings that he attended or annual general meetings. He was not given any financial responsibilities for the company. He did not ever see any financial documents for the company. He never reviewed or signed any documents on behalf of the First Respondent, nor was he asked to do so. He never saw any contracts entered into by the First Respondent. He did not use any computers at the office. He went to the office once a week to organise jobs that were pending. He did not have a business card. He did not have an email address for the company. He was paid a set wage of about $22.50 per hour to undertake labouring work. The amount did not reflect any higher duties because even though he was a director, he had no say or dealings in the company’s management at all. He did not have a key to the office, nor did he ask for one.
He believed Mr Zollo was definitely in charge when he observed interaction between Mr Zollo and Mr McDonald on building sites. Mr Zollo would tell Mr McDonald what to do.
David Terrell and Julie Cahill contract
Julie Cahill was called by the Commissioner to give evidence about the role of Mr Zollo in regard to the building contract between herself (and partner, Mr Terrell) and the First Respondent.
Around the end of 2010, Ms Cahill had a friend who was having renovation work performed by Mr Zollo at her home. That friend suggested she come over and meet Mr Zollo. Ms Cahill did so. Mr Zollo said he was representing a company called Built It Pty Ltd. Ms Cahill told Mr Zollo she was looking to do some renovations and an extension to her home at Henley Beach.
Mr Zollo came to their house for three to four meetings before they signed the contract. They did not have contact with anyone else from the company and understood Mr Zollo would handle everything in the whole process. Mr Zollo was the only person present from the company when they signed the contracts. She understood Mr Zollo was the company representative because he said as much. He said they were ‘only to speak to him, he will handle everything, he’s the owner, the builder, the director of the company, the whole lot’[18]. She observed that Mr Zollo was the person in charge on the building site. They dealt solely with him in relation to the problems that occurred during the build. They ended up terminating the contract in around February 2013 but were sent bills continuously. They tried to negotiate with Mr Zollo but were unsuccessful.
Wilkshire contract
[18] T192.
Mrs Wilkshire was called by the Commissioner to give evidence about the role of Mr Zollo in regard to the building contract between herself (and Mr Wilkshire) and the First Respondent.
Mr Zollo visited their home in about mid-2011. By that stage Mrs Wilkshire had drawn up some plans of her own. Mr Zollo provided them with a written quote. At some stage he provided them with a business card stating he was an estimator. They met with him a number of times over a five month period and then signed a contract. Mr Zollo signed the contract in her presence and initialled each page of the contract ‘AZ’. Mr Zollo directed her to make handwritten entries on the contract and also dictated the schedule for her to write out. She said all of the dealings were with Mr Zollo in relation to that contract. Mr Zollo told the couple he would manage the whole contract and all dealings would be through him. He was the point of contact for them. He would be on site every day. He would manage the sub-contractors and was authorised to sign on behalf of Built It Pty Ltd. The contract was signed on 1 February 2012.
The demolition work commenced toward the end of that month.
Mrs Wilkshire gave evidence that initially Mr Zollo was on site more or less every day. The work progressed as expected for the first few months. Towards the middle of the year things started to slow down. The expectation was that the entire contract would be performed by September 2012. The work ended up taking twice as long as expected. At some stage Mr Zollo claimed the couple had incurred a number of variations. They disputed that was the case. There was a meeting at their home with Mr Zollo to discuss those variations. A subsequent meeting occurred on 6 February 2013 at which Mr Zollo was present. No other person from the First Respondent was present at either meeting.
During that period Mrs Wilkshire received a number of emails from a person called Zahid. The emails tendered show that Zahid was sending emails from an address [email protected] or [email protected]. Mrs Wilkshire never spoke to Zahid but believes her husband did on one occasion. She never met Zahid.
In around May 2013, Mr and Mrs Wilkshire had a further meeting with Mr Zollo. Mr Wilkshire told him they wanted to speak to the owner of Built It. His response was “That’s me”. Mrs Wilkshire was expecting that answer. She thought Zahid was an employee because of the tone of the emails. At no time did Mr Zollo make any mention of any partners. There was only one other person who they dealt with and that was a young man called Justin who Mrs Wilkshire believed was Mr Zollo’s nephew, in his late teen years.
A further dispute arose when Mr and Mrs Wilkshire received the final invoice from the First Respondent. They instructed lawyers to represent them. The company brought proceedings against them for the unpaid amount. That litigation is ongoing.
Reid contract
Mr Reid was called by the Commissioner to give evidence about the role of Mr Zollo in regard to the building contract between himself (and Mrs Reid) and the First Respondent.
Mr and Mrs Reid met Mr Zollo for the first time in around June 2012. He came around to their home at Myrtle Bank. Some plans had been drawn up by somebody else by that stage for an extension on their existing house.
On 27 August 2012, they signed a contract with the First Respondent for the renovation work. Prior to signing the contract there had been two meetings with Mr Zollo at their home. At the second and third meetings, Mr Brett MacKereth was present. Mr Zollo said that Mr MacKereth was the estimator. Mr Reid could not recall whether Mr Zollo or Mr MacKereth signed the contract on behalf of the First Respondent. Demolition work commenced soon after the contract was signed and the slab was laid just before Christmas 2012.
The building work was to be completed by the middle of 2013. It was not completed at that time. Up to that point Mr Zollo was the only person with whom they dealt on behalf of Built It Pty Ltd. Mr Zollo told them they were not allowed to talk to the sub-contractors and if they had any questions they were to contact Mr Zollo. Mr Zollo was on site every second or third day for a brief period of time. Mr Reid formed the impression Mr Zollo was the owner of the company and that he was running it. He did not think Mr Zollo actually said he owned the company or he was the general manager.
They received some emails from a person called Zahid who they understood to be a financial controller in the business. Mr Reid gained that understanding because Zahid was the one who responded to all the money questions that were asked in the emails and at one point Mr Zollo said that Zahid controlled the finances. Mr Reid met Zahid at the Built It Pty Ltd office. Zahid was present in a meeting with Mr Zollo and Mr and Mrs Reid about the variation notices. They never had a meeting just with Zahid on his own.
There was a disagreement about the payment of further money. The company issued proceedings against Mr and Mrs Reid which are still on foot. Before litigation commenced there was a meeting to try and negotiate a settlement. In August or Setember 2013, Mr Zollo attended with his legal representative and Mr and Mrs Reid attended with their solicitor to try and resolve the situation. Up to that point discussions about the variations were with Mr Zollo.
The Welford contract
Mr Welford was called by the Commissioner to give evidence about the role of Mr Zollo in regard to the building contract between himself (and Mrs Welford) with the First Respondent.
Mr and Mrs Welford were referred by a friend to Mr Zollo in relation to possible extension and renovation work on their house at Evanston Park. They first met Mr Zollo in early 2012. Mr Zollo provided an initial quote, dated 6 February 2012, soon after visiting their home. Mr Zollo spoke about other houses he had built and that he had been a builder in Port Lincoln as well as in the bush. He also spoke of other renovation projects on at that time. Mr Welford gained the impression he was speaking to the builder himself. Mr Zollo did not talk about the company as such. He was basically saying it was him who had built a house or had renovated a house.
Because of the estimated price in February 2012, Mr and Mrs Welford did not immediately sign a contract. They ended up signing a contract on 5 February 2013 at their home. All negotiations prior to that time were with Mr Zollo who Mr Welford said seemed to be making the decisions.
Mr Welford could not recall whether Mr Zollo signed the contract in front of them or whether the contract had already been signed on behalf of the company. He believed it looked like Mr Zollo’s signature on the contract on behalf of the company. A second contract was also signed on 5 February 2013 for a rumpus room. Reference is made in the contract to a company representative. Mr Welford understood that to be Mr Zollo. He gained that understanding because Mr Zollo was the one who had all the conversations regarding the scope of contract and price and such things. He also understood that Mr Zollo would be the one giving approval on behalf of the company for tradesmen or sub-contractors to work on the site. The only other person who had been present with Mr Zollo at some stage was a draughtsman whose name Mr Welford could not recall. He believed the draughtsman came to his home with Mr Zollo at least twice and never attended on his own.
The work commenced in March or April 2013. The slab was poured in April 2013 and the contract was to be completed within six months. It took at least 18 months for substantial completion and there were still a few outstanding unfinished matters. Once the building work had started the only person he dealt with was Mr Zollo. He was on site during the period of the demolition and then at times when the footings were being prepared. Whenever he was on site he appeared to be in charge of the people working there in the sense they appeared to be reporting to him and he was giving them directions. When Mr Zollo was not on site there were occasions when Mr Welford would contact him usually by phone to make enquiries. He contacted Mr Zollo because he believed Mr Zollo was the builder and was running the project.
On 9 September 2013, Mr Welford prepared a document. He did that because of his uncertainty about whether there were going to be any variations or extras to be charged and was getting vague responses from Mr Zollo. Mr Zollo came to his home and discussed the document with Mr Welford. Mr Zollo initialled both pages of the document with the initials AZ. No one else attended that meeting on behalf of the First Respondent.
Mr Welford gave evidence he did not receive a copy of the Indemnity Insurance Certificate until about March 2014. He became aware at about that time that they should have had a copy of that insurance certificate and started asking Mr Zollo to provide it. Mr Zollo said it must have been an oversight and he would get a copy to them. In court, Mr Welford identified a copy of the certificate as the one they received in March 2014. It was issued on 2 September 2013. The work under the contract had commenced in March 2013.
Bagot contract
Mr Bagot was called by the Commissioner to give evidence about the role of Mr Zollo in regard to the building contract between himself (and Mrs Bagot) and the First Respondent. They wanted to have two houses built on a sub‑divided block.
In early 2012, he dealt with Mr Brett MacKereth in regard to the planning phase. Mr MacKereth then suggested they go with Mr Zollo.
He met with Mr Zollo in about September 2012. Mr Zollo gave them two written quotes. Two contracts were signed on 30 April 2013. Mr Zollo signed the contract on behalf of the First Respondent at the Melbourne Street office.
A clause in the contract was to the effect that all matters are to remain confidential between the owners and the company representative. Mr Bagot understood the company representative to be Mr Zollo. He also understood, based on another clause, that Mr Zollo was the person who would give approval on behalf of the company in regard to tradesmen or sub‑contractors who were to work on site.
The work was supposed to have been completed by Christmas 2013. However, by that stage only the footings had been poured and there was a timber frame. Mr Bagot said that during the period of construction, the only person he dealt with on behalf of the company was Mr Zollo. Ms Morgan at the company was only involved at the later stage and helped with things like furniture and discussions about colours. The work was completed in September 2014.
Mr Bagot said that towards the end, someone called Barry was presented to him by Mr Zollo. Barry checked on general things. He noticed that Barry could not do anything unless Mr Zollo told him to. He got the impression Mr Zollo was the boss.
Role of Second Respondent
The oral and documentary evidence demonstrates that the role of Mr Zollo did not differ when he was registered as a director from when he was not so registered.
Between 2 November 2011 and 13 May 2013 (when Mr Zollo was not a registered director), he signed building contracts on behalf of the First Respondent[19]; was the company representative in regard to contracts[20]; provided quotes for building owners; communicated with the building owners; approved payment of invoices; dealt with disputes, including possible legal proceedings and settlements; approved payment to Mr McDonald’s company (at a time when Mr McDonald was the registered director of the First Respondent); and received correspondence relating to taxation matters on behalf of the First Respondent. For example, an email from the accountants (Mr Zollo’s son’s business), dated 7 November 2012, attaching correspondence from the ATO was sent to Mr Zollo. Mr Zollo gave evidence it would have been Mr Khan who dealt with it but could not explain why it was addressed ‘Dear Alex’, other than to say it was ‘a strange set up’[21].
[19] Cahill/Terrell on 2 November 2011; Wilkshires on 1 February 2012; Gonzalez on 29 May 2012; Longbottom on 27 June 2012; Victorsen on 20 July 2012; J Mackereth on 27 September 2012; Kham on 28 December 2012; Welfords on 5 February 2013; Bagots on 30 April 2013.
[20] Cahill/Terrell; Wilkshires; Welfords; Bagots.
[21] T558.
Between 14 May 2013 and 4 November 2013 (when Mr Zollo was a registered director), he signed building contracts on behalf of the First Respondent[22]; was the company representative in regard to contracts[23]; communicated with the building owners; approved payment of invoices; was a signatory on a bank account for the First Respondent[24]; dealt with disputes, including legal proceedings; and was the authorised person for Workcover.
[22] Caruso on 5 July 2013; Chudgar on August 2013; Kilpatrick on 22 October 2013.
[23] Wilkshire; Welford; Bagot.
[24] Account Number 01 5228 4780-32378.
Between 5 November 2013 and 21 May 2014 (when Mr Zollo was not a registered director), he was the company representative in regard to a contract[25]; communicated with the building owners[26]; approved payment of invoices; was a signatory on a bank account for the First Respondent[27]; received correspondence relating to the resignation of the company building work supervisor; received correspondence relating to taxation matters; dealt with disputes, including legal proceedings; and appeared as the representative of the First Respondent in the Magistrates Court[28].
[25] Bagots.
[26] Bagots.
[27] Account Number 01 5228 4780-32378.
[28] Built It Pty Ltd v Gonzalez & Foot, 6 February 2014, AMCCI-13-3412.
From around August 2013 to 9 January 2014 (which spans the time when Mr Zollo was registered director and was not so registered), Mr Camporeale was the building supervisor for the First Respondent for six buildings. He met with Mr Zollo at the Melbourne Street office and was offered the part time work. He resigned after a short time due to lack of communication from Mr Zollo and a failure by Mr Zollo to respond to phone and email messages. He gave evidence Mr Zollo was the only person he dealt with other than Mr Khan who was introduced by Mr Zollo as the accountant/administrator of the business.
On 30 April 2014, Dario Zollo wrote to Mr Zollo in regard to taxation matters concerning the company. Mr Zollo gave evidence he had no idea why the letter was addressed to him. He said Dario must have made a mistake and thought he was still a director. He said it was a mistake.
Between 22 May 2014 and 9 March 2015 (when Mr Zollo was a registered director), he signed contracts on behalf of the First Respondent[29]; was the company representative in regard to a contract[30]; communicated with the building owners[31]; and approved payment of invoices.
[29] Bagots; Rillo.
[30] Bagots.
[31] Bagots; Mr and Mrs Dell.
Case for Second Respondent as to his role with the First Respondent
Mr Zollo’s case was that he was the estimator and merely an employee. In his written submissions, he described himself as an estimator and a Representative of the Company. He said he made no final decisions nor had he been a major influence over final decisions of the Company.
He relied upon a Memorandum of Appointment, dated 12 February 2010, which did ‘hereby authorise and empower Alessandro Zollo…as a Consultant and to represent the company to carry out quotations, inspections, estimations, purchase and payment for all materials appoint staff and tradesmen, assessment of accounts and collection of payments. We also require Alessandro Zollo to attend to any disputes between the company and customers when required. The company also authorises Alessanddro Zollo to carry out any matter or thing required for the conduct of the company including any application for consents including any applications at law which the company has power to pursue’. It was signed by Anthony William Savage described as Director and Appointer. Mr Zollo said it was drafted by someone who had a law and accounting degree, presented to him and he just signed it. He later gave evidence that when Dario Zollo was a director he told Mr Zollo that he wanted Mr Zollo to do this and that and it was all part of his employment, so Mr Zollo asked him to put it in writing.
A Memorandum of Appointment, dated 19 December 2014, signed by Brian Thorogood who is described as Director and Appointer was in similar terms. Mr Zollo said that was given to him because ‘they want me to attend some disputes in court and I was then requested by the court I should have an appointment by the company’[32].
[32] T443.
He said he had a written employment contract once he reached 65, in 2013/14, because someone came to the office and said he could be dismissed. He said Mr Khan could have dismissed him. During his evidence, Mr Zollo described Mr Khan as being like his boss. He took direction from Mr Khan, not the other way around. A clause in building contracts provided that all communications must be with the company representative. Mr Zollo agreed he was the company representative but Mr Khan was the one who wanted the clause inserted.
No employment contract was produced by Mr Zollo.
In relation to his son being the first director of the First Respondent, Mr Zollo gave evidence his son was an accountant who wanted to have another business. His son did not discuss anything about the company with him. Mr Zollo said he has only learnt in the last couple of years what took place, that his son started it up and what he did. He does not know who the shareholders were and did not know who owned it.

Mr Savage was the next director. He did not know who appointed Mr Savage, saying that was between Mr Savage and the company. Mr Savage had been working for the company probably even before Mr Zollo did. ‘He was there working, he was approached I suppose, he was told to be director and that’s it’[33]. As director, Mr Savage attended meetings, quoting jobs and was at the office or on the road every day. In his written submissions, he said Mr Savage gave him authority to meet with clients as estimator and the accountant handed the contracts to him to deal with the building site. Mr Savage organised the computer system.
[33] T471.
Mr Zollo gave evidence that Mr Brett Mackareth became a director because Mr Savage decided to retire. He agreed there was a meeting but denied offering the directorships to Brett and John Mackareth. Mr Zollo said it was not his idea; he just accepted the decisions. When they asked about who was the owner of the company, Mr Zollo said they need to discuss it with Mr Khan. Mr Zollo was of the view that there were directors’ meetings; he said they were both wrong to say he was the person in charge. He gave evidence that suggested Mr Brett Mackareth sign the contract with the Reids as his first contract as director; which made Mr Mackareth feel better.
In relation to his registration as director of the First Respondent between 14 May 2013 and 4 November 2013, Mr Zollo gave evidence he was only meant to be a temporary director because he was too involved with the estimations and everything else[34]. The Undertaking was presented to him by the Commissioner in 2013 and he went to Mr Barone. He said ‘that’s the first time I have been knowing that that was in existence’[35]. He resigned after he was shown the Undertaking by Consumer Affairs to make things ‘peaceful’[36]. Mr Zollo gave evidence that he told Mr Khan and Dario. Mr Quershi became director because he was known to Mr Khan and Dario. He did not know how Mr Qureshi became a director; he was told by Mr Khan that he would be the director and Mr Zollo needed to sign some paperwork. Minutes of the First Respondent for a meeting of directors at which Mr Zollo and Mr Quershi were present on 4 November 2013 record the appointment of Mr Quershi as director and a letter of resignation from Mr Zollo.
[34] T519.
[35] T439, 530, 533.
[36] T533.
Mr Zollo gave evidence he became a director again because he was advised the Undertaking was invalid[37]. He resigned from the directorship in December 2014. Zahid had told him it was only to be temporary. He said ‘I could not handle it…I was doing a job for three people. I could not do a directorship. That’s another what, 20 hours a week?’[38].
[37] T534.
[38] T536.
Later, Mr Zollo gave evidence there was not much difference if he was registered as director or not. When he was director, he just had to attend a few meetings with the rest, the shareholders and call a meeting probably once every 6‑8 weeks and that’s about all.
Mr Zollo denied that the other directors were a sham and that he was the person running the business.
Mr Zollo agreed he approved invoices and appeared on a number of disputes in court for the company. He said he was authorised to do so on behalf of the company; the directors told him to do so.
Findings
The evidence that Mr Zollo acted in the position of a director of the First Respondent at all relevant times was overwhelming. I reject his evidence that he was merely an employee. Generally, I found his evidence to be self-serving and, at times, contradictory. For example, he gave time pressures as a reason for resigning as a registered director but subsequently said in a different context there was little difference if he was director or not. His answers were often evasive and unresponsive to questions. Like a mantra, he made reference to ‘the company’ as opposed to himself but struggled when asked who ‘they’ were in regard to ‘the company’. He implied Mr Khan was running the company; at one stage, he referred to Mr Khan as being like the boss. That lacked credibility.
All the evidence established Mr Khan’s main employment was with Dario Zollo. He had an administrative presence at the office of the First Respondent. Mr Khan was there on a part time basis in order to help with book-keeping and such financial matters. For example, Mrs Wilkshire gave evidence she dealt with Mr Khan and Mr Zollo. Her clear impression from those dealings, including emails and phone messages, was that Mr Khan deferred to Mr Zollo. I expect that Mr Khan probably helped Mr Zollo draft clauses such as the company representative clause in the contracts, but I have no doubt they were Mr Zollo’s idea. All the evidence shows Mr Khan was not running the company; nor was he ‘the boss’. I reject Mr Zollo’s written submission that Mr Khan was the ultimate person responsible for staff hiring or firing. It was Mr Zollo who was running the company; he was undoubtedly ‘the boss’. That is certainly how he was perceived by the outsiders who dealt with the company. That perception is well supported by documentary evidence such as Mr Zollo’s approval of invoices and the multiple references to him as the first point of contact. It is also supported by the evidence of Brett and John Mackereth and Mr Camporeale which I accept.
I find that in 2010 Mr Zollo was well aware he had signed the Undertaking not to be a director. I have no doubt the Memorandum of Appointment, dated 12 February 2010, was his idea to try and subvert that Undertaking. In proceedings in the District Court in 2009, he knew the Undertaking was in existence. He referred to it during those proceedings. Whilst there was little evidence about the role of Mr Savage as director, I find Mr Zollo’s evidence that he had no idea how Mr Savage came to be a director unbelievable in light of the evidence concerning Mr Zollo’s dominant role in the company during the time Mr Savage was a registered director. I do find that Mr Zollo caused the Mackereth brothers and Mr McDonald to be directors of the company as figureheads only. Mr Zollo was in fact running the company during that time and continued to do so through to the end of December 2014. He needed their names on paper as directors. He knew it could not be his name. I consider it probable that he became registered director for two periods because he was unable to find someone else to be the name on paper at the time.
I find that at all relevant times the First Respondent was operated by Mr Zollo as his business. He exercised the top level management functions of the company and represented the company in all matters of importance regardless of whether he was registered as director or not.
I find paragraphs 4.12.2 and 4.13 proved.
Ground 5
Ground 5 was pleaded as follows:-
5.1 Particulars 1.1 and 4.12 are repeated.
5.2The First Respondent is not entitled to be licensed as a building work contractor pursuant to s9(2)(e) of the Act as a director of the First Respondent, namely, the Second Respondent, is not a fit and proper person to be a director of a body corporate that is the holder of a licence by reason of the matters alleged as Grounds One to Ground Four of this complaint.
I have found particulars 1.1 to 4.12 proved. I therefore find paragraph 5.1 proved. By reason of the matters alleged in Ground 4, I find that the First Respondent was not entitled to be licensed during the period when Mr Zollo was the sole person registered as a director. Mr Zollo had given an Undertaking in this Court not to be a director of a body corporate that was a building work contractor. He was in breach of that Undertaking. He was not a fit and proper person to be a director of the First Respondent.
Ground 6
The Complainant pleads that there is proper cause for disciplinary action against the Second Respondent pursuant to s 21(4) of the Act by reason of there being proper cause for disciplinary action against the First Respondent as alleged in Grounds 1 to 5 and the Second Respondent being a director of the First Respondent at all relevant times.
For the reasons already given, I have found that Mr Zollo was a registered director or acting as a de facto director during the periods alleged in Grounds 1 to 5. He is therefore a ‘director’ of a body corporate for the purposes of the Act and, in particular, s 21(4) of the Act.
I find that disciplinary action may be taken against Mr Zollo on the basis that he was a director of the First Respondent at the relevant times in regard to Grounds 1 to 5. There is proper cause for disciplinary action against the First Respondent in regard to Grounds 1 to 5.
I find Ground 6 proved.
I will hear the parties on whether disciplinary action should be taken against the Second Respondent and if so, the nature of that disciplinary action pursuant to s 25 of the Act.