Commissioner for Consumer Affairs v Built It Pty Ltd & Zollo (No 2)

[2019] SADC 191

DISTRICT COURT OF SOUTH AUSTRALIA

(Civil)

COMMISSIONER FOR CONSUMER AFFAIRS v BUILT IT PTY LTD & ZOLLO (No 2)

[2019] SADC 191

Decision of Her Honour Judge Chapman

17 December 2019

PROFESSIONS AND TRADES - BUILDERS - DISCIPLINARY PROCEEDINGS

Disciplinary action taken against second respondent pursuant to s 25 of the Building Work Contractors Act 1995. Orders made permanently prohibiting second respondent from working in the building industry.

COMMISSIONER FOR CONSUMER AFFAIRS v BUILT IT PTY LTD & ZOLLO (No 2)
[2019] SADC 191

1. On 24 May 2019, I found there was proper cause for disciplinary action against the first respondent and that disciplinary action may be taken against the second respondent because he was director of the first respondent at the relevant times.[1]  In summary, I made the following findings:

   ·the first respondent failed to provide a certificate of insurance in 2011 and 2012 to three consumers as required by s 34(b) of the Building Work Contractors Act 1995 (‘the Act’);

   ·the second respondent acted improperly in the course of conducting the business of the first respondent between November 2011 and March 2015 because he was acting in breach of an undertaking he gave to this Court on 21 March 2000; and

   ·the first respondent would not have been entitled to be licensed as a building work contractor during the period from November 2011 to March 2015 because the second respondent was not a fit and proper person to be a director of the company by reason of his breach of the undertaking.

   [1] [2019] SADC 66.

2. The Commissioner submits the following disciplinary action should now be taken against the second respondent pursuant to s 25 of the Act:

   a. a fine imposed pursuant to s 25(1)(b) of the Act;

   b.an order disqualifying him from being licensed or registered under the Act pursuant to s 25(1)(d) of the Act;

   c.orders prohibiting him from being a director of a building work contractor; or from being employed or otherwise engaged in the business of a building work contractor, pursuant to ss 25(1)(e) and (f) of the Act; and

   d.orders prohibiting him from carrying on a business as a building consultant; or from being employed or otherwise engaged in the business of a building consultant; or from being a director of a body corporate that is a building consultant pursuant to ss 25(1)(g) to (i) of the Act.

3. The Commissioner submits that these orders should be made on a permanent basis.

4. The seriousness of the findings against the second respondent cannot be appreciated without regard to the history of the matter.  On 25 February 1994, the former Commercial Tribunal delivered judgment in disciplinary proceedings against the second respondent.  Fifteen breaches of the former legislation were found proven.  The Tribunal found that proper cause existed for disciplinary action against the second respondent on the basis he ceased to be a fit and proper person to be licensed and registered under that Act.

5. On 7 December 1994, the Tribunal cancelled his licence as a builder and his registration as a building work supervisor forthwith.  He was also disqualified from being licensed or registered or both until further order.

6. On 21 March 2000, the disqualification imposed by the Tribunal in 1994 was discharged upon the second respondent signing an undertaking that he would not act as a director of a body corporate which holds a building work contractors licence. The relaxation of the 1994 orders in March 2000 enabled the second respondent to apply to the Commissioner for a licence or registration under the Act. No application was received by the Commissioner.

7. In 2009, the second respondent commenced proceedings in this court which were dismissed by Chief Judge Muecke.  The Chief Judge found he had no jurisdiction to order the Commissioner to send an application to the second respondent to renew the second respondent’s licence.  He made it clear there was no impediment to the second respondent applying to the Commissioner for a licence if he was so minded. 

8. Rather than making that application, the second respondent established the first respondent, a body corporate that was a building work contractor.  Contrary to his undertaking in March 2000, I have found he operated as a director of the first respondent between 2 November 2011 and 9 March 2015.

9. The second respondent’s breach of his undertaking was not an accidental one; it was deliberate, calculated and continued for over three years.  He procured others to be directors in name only to try and obscure the fact it was entirely his business.  He used the title of ‘estimator’ and described himself during these proceedings as a mere employee in an unconvincing attempt to distance himself from his true role.  In so doing, he deliberately and consciously sought to subvert both his undertaking to the court and the builders’ licensing regime.

10. The disqualification imposed upon the second respondent in 1994 was for a protective purpose.  The level of protection was relaxed to some degree in March 2000 upon the second respondent signing the undertaking.   That opened the way for the second respondent to make an application in accordance with the regulatory regime.  Instead of so doing, he flouted the system and tried to operate under the radar by evading the application process.  Certificates of insurance were not provided to three consumers (grounds 1 to 3) and his company, the first respondent, was not entitled to be licensed as a building work contractor.

11. During these proceedings, I heard some evidence about the performance of building work contracts by the first respondent and consumer dealings with the second respondent during the relevant period.  None of those matters were pleaded as part of the Complaint.  I have not made any findings about them.  The fact that those types of allegations have been made simply highlights the reason why there needs to be a builders’ licensing regime in place in general.

12. These proceedings are not for a punitive purpose, notwithstanding that the effect of any orders may have punitive consequences. Rather, the purpose is to protect the public. In so doing, disciplinary proceedings achieve the secondary purpose of upholding confidence and integrity in the building industry. The requirements set out in the Act perform an important function. Consumers place significant trust in, and reliance upon, those in the building industry to perform their duties diligently and in good faith.

13. It is readily apparent, having regard to the purpose of the Act, that the actions of the second respondent necessitate the making of further orders against him. Protective orders were made in 1994 and then relaxed to some extent in 2000. In discharging the 1994 disqualification, the court gave the second respondent an opportunity, subject to an undertaking given by him, to demonstrate that disciplinary action was no longer required. I have not heard any evidence or received any other material which indicates there is no longer a need to protect the public.

14. As to the Commissioner’s application for an order prohibiting the second respondent from being a director of a body corporate that is a building work contractor, I note that this already exists by virtue of the second respondent’s undertaking to the court. However, the second respondent has challenged the validity of that undertaking. It is therefore necessary to make such an order pursuant to s 25(1)(f).

15. An assessment of whether orders should be made pursuant to s 25(1)(d), (e) and (g) to (i) involves, inter alia, an assessment of the conduct which led to the 1994 orders, the circumstances of the relaxation of those orders in 2000, and the second respondent’s conduct thereafter. In that respect, I have particular regard to the undertaking entered into by the second respondent, the failure to apply for a licence after 2000 when he was permitted to do so, and the way in which he instead established an alternative vehicle, in breach of his undertaking, to avoid having to apply for a licence personally.

16. The Commissioner submits that the finding that the second respondent is not a fit and proper person to direct a company arises out of his own conduct and is personal to him. It follows, says the Commissioner, that the second respondent should be personally disqualified from being licensed or registered under the Act. I agree. The question is one of degree as to how long orders protecting the public are required.

17. The second respondent has demonstrated a determined willingness to act in contravention of his undertaking and the builders’ licensing scheme. He has failed to accept responsibility for his actions. The second respondent’s past actions and ongoing dismissive attitude to the protective regime tells me he is highly unlikely to accept and obey any conditions of a licence should he be permitted to reapply. He has demonstrated no contrition, remorse or insight into his conduct. His actions following the relaxing of the 1994 orders show that trust in him was misplaced. It would defeat the protective scheme of the Act if the second respondent were not permanently prohibited from operating within the building industry.

18. I am satisfied that there is a need for comprehensive orders prohibiting him from working in the building industry again. In light of the permanent nature of the prohibition orders, I do not consider it necessary to impose a fine.

19. I make the following orders:

    1.the second respondent is permanently disqualified from being licensed or registered under the Act pursuant to s 25(1)(d);

    2.the second respondent is permanently prohibited from being employed or otherwise engaged in the business of a building work contractor pursuant to s 25(e) of the Act;

    3.the second respondent is permanently prohibited from being a director of a body corporate that is a building work contractor pursuant to s 25(f) of the Act;

    4.the second respondent is permanently prohibited from carrying on business as a building consultant pursuant to s 25(g) of the Act;

    5.the second respondent is permanently prohibited from being employed or otherwise engaged in the business of a building consultant pursuant to s 25(h) of the Act; and

    6.the second respondent is permanently prohibited from being a director of a body corporate that is a building consultant.

    Costs

20. The Commissioner makes an application for costs pursuant to s 42H of the District Court Act 1991. This provision permits costs orders to be made where necessary in the interests of justice. The primary import of s 42G(2) of the District Court Act is to do away with the ordinary rule that costs follow the event.[2]  The practice of the Court essentially requires the emergence of an unusual or out of the ordinary feature of the contest justifying an award for costs in the interests of justice under this section.[3]  In my view, the progression of the hearing, although unusual, was not so out of the ordinary so as to warrant an order for costs.  The trial would have proceeded in any event, and the second respondent had the right to put the Commissioner to proof on the issues in the trial.

    [2] Marksman Training Systems Pty Ltd v The Registrar Of Firearms (No 3) [2015] SADC 16, [18]-[19].

    [3] Ibid.

21. I decline to make an order for costs.