Commissioner for Consumer Affairs v Pertini - [2005] SADC 133

DISTRICT COURT OF SOUTH AUSTRALIA
(District Court Administrative and Disciplinary Division)
COMMR FOR CONSUMER AFFAIRS v PERTINI
Judgment of His Honour Judge Beazley, Assessor Hutchinson and Assessor Drogemuller
6 October 2005
ADMINISTRATIVE LAW
PROFESSIONS AND TRADES - OTHER PROFESSIONS, TRADES OR CALLINGS - LICENSING OF PARTICULAR TRADES OR CALLINGS
Complaint against defendant as holder of a building work contractors licence for many years - complainant asserts that there is proper cause for disciplinary action by reason of the defendant being a director of a corporation wound up for the benefit of creditors - scheme of the Act discussed - wide range of orders available upon finding that there is proper cause for disciplinary action - order varying the conditions of the defendant's licence so as to limit the work which may be undertaken by the defendant.
Building Work Contractors Act 1995 ss 7(2), 9(1)(d), 22, 25(1) and 45, referred to.
Commissioner for Consumer Affairs v Standley (1988) 71 SASR 152; Commissioner for Consumer Affairs v Sollars (2001) 79 SASR 145; Commissioner for Consumer Affairs v Quinn [2003] SASC 183; Commissioner for Consumer Affairs v Jeffries (1999) SADC 107; Commissioner for Consumer Affairs v Tedesco [2005] SADC 79, considered.

COMMR FOR CONSUMER AFFAIRS v PERTINI
[2005] SADC 133

The Commissioner for Consumer Affairs (“the Commissioner”) lodged a Complaint, pursuant to s 22 of the Building Work Contractors Act 1995 (“the Act”) setting out matters that were alleged to constitute grounds for disciplinary action under Part 4 of the Act against Darren Lee Pertini (“the defendant”). The allegations were that:
Events have occurred such that the defendant would not be entitled to be licensed as a building work contractor if he were to apply for a licence:
Sections 21(1) and 9(1)(d) of the Act.
Particulars
(a)The defendant has held at all material times a building work contractors licence and supervisors registration, limited to “residential building work up to and including two storeys, renovations and carpentry and joinery, and the total value of any contract not to exceed $350,000” BLD 55025, pursuant to the Building Work Contractors Act 1995.
(b)The defendant was, at all material times, a director of DL and KJ Constructions Pty Ltd, ACN 096 175 129.
(c)On 7 September 2004 the Supreme Court of South Australia ordered that DL and KJ Constructions Pty Ltd be wound up.
Background
The facts giving rise to the disciplinary action were not in dispute. The agreed facts were as follows:
A certificate was tendered by the complainant pursuant to s 59(3) of the Act, establishing that at all relevant times the defendant has held a Building Work Contractors Licence and a supervisors registration. The complaint concerns only the said licence.
1.The defendant is aged 34 years and has been employed solely in the building industry for 18 years.
2.The defendant:-
2.1currently holds building work contractors licence and supervisor’s registration number BLD 55025 restricted to “Residential building work up to and including two storey, Renovations and Carpentry and Joinery; and the total value of any contract not to exceed $350,000” pursuant to the Act as and from 28 September 2001.
2.2was a nominated building work supervisor for DL and KJ Constructions Pty Ltd from 20 August 2001 to 25 November 2004.
2.3was a nominated director of DL and KJ Constructions Pty Ltd in respect of the latter’s licence number BLD 168971 pursuant to the Act from 20 August 2001 to 25 November 2004.
2.4was a nominated director of Pertini Constructions Pty Ltd in respect of its licence number BLD 162879 pursuant to the Act from 22 March 2000 to 19 February 2001.
3.Prior to the grant of the licence number BLD 55025 on 19 January 1999, the defendant held a licence and supervisor’s registration pursuant to both the Act and its predecessor, the Builder’s Licensing Act 1986, being number RL/SRL 55025, restricting the defendant to “carpentry and joinery limited to first and second fixing, with a total value of any contract not to exceed twelve thousand five hundred dollars ($12,500)”.
4.On 7 September 2004, DL and KJ Constructions Pty Ltd was wound up on the petition issued by the Deputy Commissioner of Taxation. Although there was some dispute about the quantum of the outstanding creditors of that company, the defendant has continued to pay the judgment debt of the Deputy Commissioner of Taxation so that the judgment, which was the basis of the petition, in the sum of forty two thousand and ninety five dollars ($42,095) has been reduced as at the date of the hearing to five thousand two hundred and seventy three dollars and sixty four cents ($5,273.64).
5.There is no complaint about the ability of the defendant to work as a builder. There has never been a complaint about the quality of the work undertaken by him in his 18 years in the industry. The high regard in which his work is regarded in the industry is disclosed in testimonials from Tagara Builders Pty Ltd and Trisha Henderson, both dated 14 February 2005.
6.No application is made by the Commissioner with respect to the defendant’s supervisor’s registration pursuant to the Act.
The Act
Section 9(1)(d) of the Act prevents a natural person from obtaining a licence in the circumstances where that person has, during a period of ten years preceding the application for a licence, been a director of a body corporate wound up for the benefit of creditors in the circumstances set out therein. In the present case, the defendant was a director of DL and KJ Constructions Pty Ltd at the time of its liquidation on 7 September 2004. It follows that were the defendant to have applied for a licence subsequent to 7 September 2004, he would have been ineligible for a period of ten years to have his application granted. Consequently, s 21(1)(e) of the Act deems that there is proper cause for disciplinary action against the defendant. The range of available orders, which may be made upon such disciplinary action, is set out in s 25(1) of the Act.
The Commissioner is empowered pursuant to s 7(2)(b) of the Act to vary or revoke any conditions limiting the work that may be performed under the authority of a licence at any time upon the application of the licensee. It is the Commissioner who is empowered to lodge any complaint pursuant to s 22 of the Act.
Insofar as it may be said that orders contemplated by s 25 of the Act may have harsh consequences for a licensee, Parliament has provided in s 45 for an applicant to seek an exemption from a specified provision of the Act.
We are satisfied in accordance with s 25 of the Act that there is proper cause for taking disciplinary action against the defendant. The only matter which remains is the appropriate order to be made.
Commissioner’s Application
The Commissioner does not seek an order for the cancellation of the defendant’s licence or registration pursuant to s 25(1)(c)(iii) of the Act. The Commissioner, instead, seeks an order pursuant to s 25(1)(c)(i) imposing conditions upon the defendant’s licence, which would restrict him to performing carpentry and joinery limited to first and second fixing. By contrast the defendant submits that an order varying the terms of the present licence so as to reduce the value of any contract from $350,000 to $200,000 would provide adequate protection for the public. Notwithstanding the attitudes expressed by the parties, it is for the court to determine what orders ought be made pursuant to s 25 of the Act. See R v A (2003) SASC 121 at (20-21).
In Commissioner for Consumer Affairs v Sollars (2001) 79 SASR 145 the scheme of the Act was identified as “relevantly to protect the public by regulating who may engage in the activities for which a licence is required. The focus is on the protection of the public by requiring applicants to meet criteria directed to their qualifications, experience and fitness for the occupation.… Although the consequences of the making of an order may appear to operate as a punishment … it needs to be understood that the order itself is not punitive in character, nor is the decision as to the order to be made to be reached by reference to considerations relevant to the sentencing of an offender.”
The Act was one of three licensing schemes enacted by Parliament in 1995. The other enactments namely the Security and Investigation Agents Act and the Plumbers Gas Fitters and Electricians Act are less restrictive than the Act in that the ineligibility period is 5 years in the case of a director of a company wound up for the benefit of the creditors. The purpose of each piece of legislation is clearly to protect consumers and others engaged in the relevant industry from an unacceptable risk of financial loss, and to maintain a high standard of conduct by licensees.
Discretion to Impose Disciplinary Orders Under Section 25 of the Act
There is no doubt that s 25 of the Act vests a discretion in the Court as to the range of disciplinary orders. It must be contrasted with the role of the Commissioner in respect of the grant of an application for a licence pursuant to s 9 of the Act. In Commissioner for Consumer Affairs v Standley (1998) 71 SASR 152 the Full Court of the Supreme Court held that the Commissioner has no discretion with respect to the objective criteria such as that contained in s 9(1)(d) of the Act. In the present case, had DL and KJ Constructions Pty Ltd been wound up within 10 years prior to the application by the defendant for a licence, that application had to be refused. The discretion in s 25 of the Act is however not of an arbitrary kind and must be exercised judicially having regard to the nature of the legislation. There are various decisions of the Supreme Court which provide guidance as to the proper exercise of the discretion.
In the event that a licensee was not eligible for a licence at the time when he applied for and was granted the same, it would appear that the cancellation of that licence would be the only alternative available to the Court. See Commissioner for Consumer Affairs v Quinn (2003) SASC 183 at paragraph 8.
In the present case, the disciplinary action is brought upon the grounds that events have occurred since the licence was granted. There have been a large number of complaints issued in this Court by the Commissioner in such circumstances. In many of those matters it has been held that the only appropriate order for the protection of the public has been the cancellation of the licence. In Commissioner for Consumer Affairs v Jeffries (1999) SADC 107, a case involving the personal bankruptcy of the licensee, the rationale for such an order was expressed as follows:
While we have some sympathy for the defendant in his present position, it is our opinion that notwithstanding the matters favourable to the defendant, it would defeat the protective scheme of the Act if his licence were not cancelled. To do otherwise would be to say that even though the defendant could not be granted a licence if he were to apply for one at any time within ten years after (the liquidation of a company) he is entitled to retain it, whether subject to conditions or not because he already had it at the time of the disentitling event, in other words that the licence can be preserved by an accident in timing.
In light of the decision in Jeffries we invited the parties to put such further submissions to us in writing, as they may be advised, as to why an order for cancellation of the licence ought not be made. Both parties accordingly provided further written submissions.
In our opinion the Court does have a discretion to grant orders, short of the cancellation of the licence, which may adequately provide for the protection of the public. We have no doubt however that the starting point in such a matter is the cancellation of the licence, for the reasons expressed in Commissioner for Consumer Affairs v Jeffries. In Commissioner for Consumer Affairs v Tedesco [2005] SADC 79, the Court went further and suggested that only in exceptional circumstances should the licence not be cancelled, whenever the subsequent event involved one of the objective criteria for the grant of a licence.
Application of the discretion of the facts
The personal circumstances of the defendant are most unusual. As indicated above he has been engaged in the building industry for some 18 years. Not only has there been no complaint about the quality of his work, he appears to be held in the highest regard with respect to excellence of his workmanship.
The liquidation of the company of which he was a director was the consequence of a claim made by the Deputy Commissioner of Taxation. The judgment sum has largely been discharged by the defendant, and will be totally discharged under the terms of an agreement with that creditor. The inability to meet that liability prior to the presentation of the petition was the result of the defendant having executed a joint personal guarantee of an unrelated transaction. The joint guarantor, having been declared bankrupt; it fell to the defendant solely to meet that debt. At no stage has the defendant been declared bankrupt. There is no aggravating feature of personal misconduct beyond being a director of an insolvent company. The defendant has sought professional advice with respect to the management of his finances. He has as dependents his estranged wife and 4 children. His sole source of income is from his trade in the building industry.
We have no doubt that those matters have quite properly influenced that attitude of the Commissioner to not seek an order for cancellation of the licence.
We do not accept that the fact of liquidation of the company automatically leads to the conclusion that Mr Pertini does not have appropriate business skills, indeed it appears that the liquidation was the consequence of events largely outside his control. There are many examples where a licence ought not be automatically cancelled in such circumstances – including a subcontractor failing because of the refusal or failure of a contractor to pay what was properly due. This is not a case where the defendant is an undischarged bankrupt and where a suspension of the licence is required for the protection of the public.
In our opinion the public can be properly protected by the imposition upon the licence of conditions pursuant to s 25(1)(c)(i) of the Act.
We have given a great deal of consideration to the submissions of the defendant that there ought be no restriction upon the terms of the current licence save for reducing the value of contract work from $350,000 to $200,000.
It was submitted that any other condition would result in the defendant being unable to meet the outstanding obligations to the Deputy Commission of Taxation and provide support to his dependents. We are also aware that s 34 of the Act provides additional protection for the public, with respect to domestic building work contracts, by obliging licensees to take out a satisfactory policy of insurance.
Notwithstanding the force of that submission, we do not accept that the suggested variation adequately protects the public.
In our opinion the condition suggested by the Commissioner balances the aim of the protection of the public while permitting the defendant to undertake carpentry and joinery work. While the terms of the licence will enable the defendant to contract with the public, this work will involve smaller contracts with less financial risk to the public. The defendant will, of course, be able to subcontract carpentry and joinery work from other contractors, and maintain work pursuant to the supervisor’s registration.
Accordingly, pursuant to s 25(1)(c)(i) of the Act we order that the Defendant’s Licence No BLD 55025 be varied by restricting the same to “Carpentry and Joinery: Limited to first and second fixing”.
We shall hear the parties as to the form of the condition expressed in these reasons and as to whether the licence ought be further limited both as to the period of the varied condition and as to the total value of any contract.