Deputy Commissioner for Consumer Affairs v Pajo Projects Pty Ltd (ACN 158 823 119) & Sommariva

[2015] SADC 9

DISTRICT COURT OF SOUTH AUSTRALIA

(Civil)

DEPUTY COMMISSIONER FOR CONSUMER AFFAIRS v PAJO PROJECTS PTY LTD (ACN 158 823 119) & SOMMARIVA

[2015] SADC 9

Reasons for Decision of Her Honour Judge McIntyre

4 February 2015

ADMINISTRATIVE LAW

Building Work Contractors Act 1995

Joseph Sommariva is liable to disciplinary action on three grounds,  Fine imposed on two counts and a reprimand on the third.

Building Work Contractors Act 1995 s21(1)(c), s34(b), s49, referred to.
Commissioner for Consumer Affairs v Sollars (2001) 79 SASR 145, applied.

DEPUTY COMMISSIONER FOR CONSUMER AFFAIRS v PAJO PROJECTS PTY LTD (ACN 158 823 119) & SOMMARIVA
[2015] SADC 9

1. Joseph Anthony Sommariva is a licensed building work contractor.   The Commissioner for Consumer Affairs makes complaint that there is proper cause for disciplinary action against Mr Sommariva under the provisions of the Building Work Contractors Act 1995 (“the Act”).

2. The allegations are, in short, that Mr Sommariva carried on business as a licensed building work contractor in a name other than that under which he was licensed; that he performed building work under a domestic building work contract without providing the building owner with a certificate evidencing the taking out of an insurance policy and that he published a misleading statement

   Issues

   1.     Whether on the balance of probabilities there is proper cause for taking disciplinary action against Mr Sommariva; and if there is:

   2.     What are the proper orders to be made?

   Background

3. Mr Sommariva is a licensed building work contractor and registered building work supervisor.  Apart from a period of suspension of his contractor’s licence, he has held licence/registration BLD10701 since.

4. Mr Sommariva was the subject of a previous complaint by the Commissioner in 2003 in action number DCADD-03-09.  Reasons for decision were handed down on 26 May 2004 finding that there was proper cause for disciplinary action against Mr Sommariva.  On 19 January 2005 his Honour Judge Clayton made orders that:

   1.     Mr Sommariva’s building work contractor’s licence be suspended for a   period of 5 years

   2.     Mr Sommariva’s registration as a building work supervisor would, until   further order, be subject to the following conditions:

   ·That Joseph Sommariva does not perform work as a building work supervisor for any person other than the holder of a building work contractor’s licence.

   ·That prior to 31 December 2005 Joseph Sommariva satisfactorily complete the Home Building Work Supervisors Course offered by the Housing Industry Association.  This registration as a building work supervisor will be suspended if Joseph Sommariva does not provide evidence of his satisfactory completion of the course to the Commissioner for Consumer Affairs on or before 31 January 2006.

   3.     Joseph Sommariva will, until further order, be prohibited from being a     director of a body corporate that is a building work contractor.

5. Mr Sommariva completed the Home Building Work Supervisors Course on 22 November 2005 and forwarded evidence of his completion of the course to the Commissioner for Consumer Affairs shortly thereafter.  This effectively satisfied the two conditions imposed upon his registration as a building supervisor. 

6. The building licence suspension ended in January 2010 and Mr Sommariva was able to hold a building work contractor’s licence thereafter. 

7. Mr Sommariva applied to the Court in 2012 to be released from the order that he be prohibited from being a director of a body corporate that is a building work contractor.  Mr Sommariva swore three affidavits in support of his application.[1]  In those affidavits he accepted that the misconduct that led to the imposition of the orders was very serious and fully warranted the penalties imposed on him.  Since having his licence suspended and conditions imposed on his registration as a building supervisor he says that he has reformed his work practices and rebuilt his reputation in the building industry.  His affidavits set out the steps he has taken in that regard. 

   [1] Affidavits dated 3 July 2012, 3 august 2012 and 18 October 2012.

8. Mr Sommariva wishes to pursue building projects in the housing area under the name Pajo Projects Pty Ltd (ACN 158-823-119) (“Pajo”).  Mr Sommariva indicated in his affidavits that he was a director of Pajo and that the company was registered on 5 June 2012.  Pajo does not hold a building work contractor’s licence and Mr Sommariva indicated that Pajo was not at the time of swearing his affidavits used for building work purposes.  If his application is successful he intended that Pajo would apply for a building work contractor’s licence. 

9. The Commissioner filed an outline of submissions in response to Mr Sommariva’s application on 18 September 2012.  The Commissioner accepted that the Court has the power to set aside the prohibition.  The Commissioner’s position as set out in paragraph 19 of the written submissions was that the Commissioner accepted that the public interest or benefit in maintaining the prohibition on Mr Sommariva being a director of a company that can undertake building work is not substantial and the Commissioner did not therefore oppose the application.  Shortly after filing that outline of submissions the Commissioner received a complaint which led to an investigation and the current complaint.

10. In March 2007 Mr Sommariva commenced employment as a sub-contractor for House Brothers Pty Ltd (“House”).  His contract with House apparently allowed Mr Sommariva to pursue his own projects and to introduce people to House as clients. 

11. At the start of 2012 Mr Sommariva identified some business opportunities relating to the increasing interest by Chinese nationals in property development in Australia. Mr Sommariva introduced Ms Chao Xu to House as a potential client. In early 2012 House contracted to build Ms Xu’s house at North Parkway. House took out building indemnity insurance in accordance with s.34 of the Act.

12. The commercial relationship between Mr Sommariva and House began to break down.  House in May 2012 decided that it did not wish to proceed with building Ms Xu’s house and, as I am told was his right under the agreement with House, Mr Sommariva took over that build in his personal capacity.  He signed a contract with Ms Xu to that effect on or about 13 May 2012.  That contract is the subject of two of the three counts on the complaint.

13. On 4 October 2012 the Commissioner received information from House which led to the current complaint.

    The complaint

14. I must consider whether there is proper cause for disciplinary action against Mr Sommariva in the context of s.21(1)(c) of the Act. I note at this point that Mr Sommariva concedes the three breaches of the Building Work Contractors Act 1995 as alleged by the Deputy Commissioner for Consumer Affairs. It is however necessary for me satisfy myself on the balance of probabilities that there is proper cause for action in respect of each of the three counts in the complaint.

    Count 1

15. Count 1 alleges that on or about 13 May 2012 the defendant carried on business as a licensed building work contractor in a name other than that under which he was licensed and in a name that he had not given the Commissioner written notice of contrary to s.49 of the Act. This relates to the contract for building work entered into with Ms Chao Xu.

16. At all times Mr Sommariva held a building work contractor’s licence under the name of Joseph Sommariva.  The contract for the building work with Ms Xu sets out the name of the builder as “Joseph Sommariva (Pajo Projects Pty Ltd)”.  Mr Sommariva accepts that “Pajo Projects Pty Ltd” was not the name under which he was given permission to hold his building work contract licence. 

17. I am told that Ms Xu at all times believed that she was dealing personally with Mr Sommariva. Notwithstanding this the contract was ambiguous. It is my view that the inclusion of the words “Pajo Projects Pty Ltd” in the contract with Ms Xu was contrary to s.49 of the Act. The maximum penalty under that section is a fine of $2,500.

    Count 2

18. Count 2 alleges that between 5 June 2012 and 24 June 2013 Mr Sommariva performed building work under a domestic building work contract without providing the building owner with a certificate that evidenced the taking out of a policy of insurance contrary to s.34(b) of the Act.

19. This count relates to the building work performed for Ms Chao Xu under the contract to which I have referred. Mr Sommariva says that he was at all times aware of his obligation as the builder to take out a policy but could not do so as there was already a policy in place. House had taken out building indemnity insurance for Ms Xu’s build. Apparently it is Industry practice that there can only be one building indemnity insurance over any building project. Mr Sommariva says that he had to wait until the build was complete and then obtain a retrospective policy for Ms Xu in his name. He did this with QBE. The certificate was posted to Ms Xu on or about 4 December 2013 and a copy has been filed in court. Albeit it appears Ms Xu’s build was at all times the subject of the appropriate indemnity insurance this is a clear breach of s.34(b) by Mr Sommariva. The maximum penalty for such a breach is a fine of $20,000.

    Count 3

20. This count alleges that on or about 19 March 2013 at Rosslyn Park Mr Sommariva published a misleading statement in relation to a Master Builders Association award contrary to s.48(b) of the Act. The nature of the misleading statement was a sign erected outside a building site which read, amongst other things, “Pajo Group, Joe Sommariva MBA Award winner”. As at that date neither the Pajo Group nor Pajo Projects Pty Ltd had won an award, nor had Mr Sommariva personally won such an award.

21. Mr Sommariva’s previous company, Sommariva Constructions Pty Ltd won a commendation of excellence from the Master Builders Association in 1994. The project for which the commendation was awarded was a building that Mr Sommariva personally built and he believed that what was on the sign was factually correct. He now accepts that it was not accurate and could have confused and potentially misled consumers. I therefore conclude that Mr Sommariva did make a statement that was false or misleading in a material particular and that accordingly he has breached s.48(b) as alleged. The maximum penalty under that section is a fine of $2,500.

    Disciplinary action

22. For the reasons outlined above I am satisfied on the balance of probabilities that there is proper cause for taking disciplinary action against Mr Sommariva. The orders that may be made are set out in s.25 of the Act. I have set out the maximum penalties for each breach above. In exercising the power to make orders in disciplinary proceedings the protection of the public is paramount.[2]

    [2] Commissioner for Consumer Affairs v Sollars (2001) 79 SASR 145

23. It is conceded by the Commissioner that there is no allegation of defective workmanship in respect of Mr Sommariva and that indeed the consumer Ms Xu is very complimentary of Mr Sommariva’s work for her.  It is my view that the matters that are the subject of the complaint are at the lower end of the scale for such breaches. 

24. I note that Mr Sommariva has been the subject of disciplinary proceedings in May 2004. However, it seems that whilst Mr Sommariva was significantly in breach of the Act at that time, he has undertaken significant steps to rehabilitate himself. This current matter is not in any sense an acceleration of his past offending nor is it repeat offending. It appears that at least part of Mr Sommariva’s problem is his failure to distinguish between acting personally and acting as a director of a company.

25. Taking all of the matters that have been put to me into account I am satisfied that the orders I propose to make in this matter and the associated matter DCCAD-03-09 will adequately protect the community.

26. I therefore make orders as follows:

    In respect of count 1, I impose a fine of $1000.
             In respect of count 2, I impose a fine of $3000.
             In respect of count 3, I record a reprimand.

27. The original complaint and summons filed in this matter listed Pajo as the first respondent.  An amended complaint was filed pursuant to leave granted by Master Blumberg on 27 January 2015. This does not make any complaint against Pajo.  It appears that, in effect, the Commissioner has discontinued proceedings in respect of Pajo.  I will hear the parties as to what, if any, formal orders are required in respect of Pajo.