Hutchings Electrical Pty Limited v Director General, Department of Fair Trading

[2004] NSWADT 23

CITATION:	Hutchings Electrical Pty Limited & Anor v Director General, Department of Fair Trading [2004] NSWADT 23
DIVISION:	General Division
PARTIES:	FIRST APPLICANT Hutchings Electrical Pty Limited SECOND APPLICANT Steven Owen Hutchings RESPONDENT Director General, Department of Fair Trading
FILE NUMBER:	033095, 033096
HEARING DATES:	28/07/2003-31/07/2003
SUBMISSIONS CLOSED:	07/31/2003
DATE OF DECISION:	02/04/2004
BEFORE:	Montgomery S - Judicial Member
APPLICATION:	Home builder - cancellation of contractor licence - Home Builder - cancellation of supervisor or registration certificate - Home Building Act - home builder - cancellation of contractor licence - Home Building Act - home builder - cancellation of supervisor or registration certificate
MATTER FOR DECISION:	Principal matter
LEGISLATION CITED:	Administrative Decisions Tribunal Act 1997 Fair Trading Act 1987 Home Building Act 1989
CASES CITED:	Stephens v Director General, Department of Fair Trading [2003] NSWADT 173 Director General, Department of Fair Trading v Cohen [2000] NSWFTT 3 Hutchings -v- Commissioner of Police, New South Wales Police Service [2001] NSWADT 62 Maurice Neville Hinchcliffe v Building Services Corporation Commercial Tribunal of NSW No. 1115 of 1995 (unreported) Clyne v NSW Bar Association (1960) 104 CLR 186 Taylor -v- Director General, Department of Transport (GD) [2001] NSWADTAP 29
REPRESENTATION:	FIRST & SECOND APPLICANT T Davie, barrister RESPONDENT A Wilson, solicitor
ORDERS:	1. I affirm the decision of the Commissioner for Fair Trading that the contractor licence issued to Hutchings Electrical Pty Limited is cancelled and that the Company is permanently disqualified from being:-; (a) the holder of any authority,; (b) a member of a partnership, or an officer of a corporation that is a member of a partnership, that is the holder of an authority, or; (c) an officer of a corporation that is the holder of an authority.; 2. The decision of the Commissioner for Fair Trading in relation to the supervisor's certificate issued to Mr Steven Owen Hutchings is set aside. I substitute for that determination the decision that the supervisor's certificate issued to Mr Steven Owen Hutchings is cancelled and that Mr Hutchings be disqualified for a period of three years from being:-; (a) the holder of any authority,; (b) a member of a partnership, or an officer of a corporation that is a member of a partnership, that is the holder of an authority, or; (c) an officer of a corporation that is the holder of an authority. Such period of disqualification is to take effect from 10 March 2003

1 Hutchings Electrical Pty Limited (“the Company”) and Mr Steven Hutchings (“Mr Hutchings”) each hold a licence under the Home Building Act 1989 (“the Act”). The Company holds contractor licence number EC40179. Mr Hutchings is the Company’s nominated qualified supervisor, and he holds a qualified supervisor certificate number EA44989.

2 On 9 September 2002, a delegate of the Commissioner for Fair Trading (“the Commissioner”), issued show cause notices under section 61 of the Act directed to the Company and Mr Hutchings. The notices invited them to make submissions as to why disciplinary action should not be taken against them. The Company and Mr Hutchings responded to the show cause notices through their solicitor by letter dated 18 October 2002, and made submissions in relation to them.

3 The show cause notices contained minimal information relating to the applicants’ alleged conduct. The details of the allegations were provided on 21 January 2003 when the Commissioner’s delegate, Mr Christopher Hanlon Director, Compliance and Standards Division for the Department of Fair Trading (now the Office of Fair Trading), issued a Notice of Decision under section 64 of the Act in relation to each of the show cause notices. That Notice of Decision was subsequently withdrawn and a new Notice of Decision was issued on February 2003.

4 The reasons provided with the Notice of Decision (“Mr Hanlon’s reasons”) provided the applicants with an outline of the case against them and the Commissioner’s delegate’s views in relation to the issues raised. Mr Davie submitted that the show cause notices do not comply with the requirements of the Act. Mr Hanlon’s reasons were the first document provided to the applicants that met those requirements. In part, those reasons stated:

“The Department commenced to investigate the conduct of the Company and its director and nominated supervisor Mr Hutchings due to the unsatisfactory number of complaints that had been lodged against the Company.

The investigation established that the Company operates primarily in Sydney's Northern Suburbs. It carries out approximately 3,000 jobs each year and has an annual turnover of in excess of $1 million.

The Company employs five licensed electricians in addition to Mr Hutchings, as well as two apprentices.

To obtain new business, the Company distributes leaflets promoting the supply and installation of safety switches for a fixed price of $99. Clients who respond to this promotion would also receive a "10 point safety check", which later became a "157 point safety check". During these safety checks, the Company's electrician would make a visual check of the house's wiring installation to detect for any faults. The rectification of these faults would be at an additional cost to the consumer.

When interviewed by departmental investigators on 4 February 2001, Mr Hutchings agreed that the use of the offer to fit safety switches was "to build up business". He agreed that the supply and installation of the safety switches for $99 was done at a loss to the Company. He also agreed that his employed electricians were on wages, but could gain an additional 3% commission for any accepted quote for additional work.

When Mr Hutchings was absent on holidays, either Mr S Marsh or Mr D Thorpe were left in charge of the Company. Mr Thorpe had commenced negotiations with Mr Hutchings to establish a partnership, which would operate within the Eastern Suburbs of Sydney.

The Department's investigation focussed upon six separate sites where the Company provided work. A departmental inspector assessed each site. The inspector is a licensed electrician who possesses extensive practical residential electrical wiring experience. Each site was assessed with particular attention focused upon the house's switchboard and its internal wiring. In each case, an installation inspector from Energy Australia independently assessed the work. These inspections focused primarily upon the house's switchboard.

The investigation also revealed that Energy Australia had issued an unacceptable number of defect notices to the Company since January 2001.

The facts relating to each site and the issuance of the defect notices are summarised as follows:-

1. 12 Wellman Road, Forestville

On 15 January 2001 Mr D and Mrs N Weber received a leaflet from the Company and engaged it to carry out the installation of a safety switch. The couple had not previously experienced any problems with their house's electrical installation.

Upon arrival at the site, one of the Company's electricians, Mr S Marsh conducted a safety inspection and stated that there were a number of dangerous faults in the wiring that required immediate attention. He prepared a quote for $1,962, which was accepted.

On 22 January 2001 another electrician employed by the Company Mr C Mathieson attended the site to carry out the previously quoted work. Before commencing, he identified an immediate need to re-wire all of the power circuits, which were covered by rubber installation material. An additional quote of $1,690 was prepared and was also accepted.

During May 2001 Mr and Mrs Weber lodged a complaint against the Company with the Department.

On 25 July 2001 a departmental inspector carried out an assessment of the site. He observed ten instances where electrical work had been carried out contrary to AS/NZS 3000:2000 (Clauses 1.7.3, 1.7.7, 1.10.1, 3.9.4.1, 3.10.3.5, 5.4.1, 5.7.3.4 and 5.8.3).

In the inspector's view the Company's failure to comply with AS/NZS 3000:2000 significantly increased the exposure of the house’s occupants to suffer injury from electrical shock and damage to the house through fire.

On 22 October 2001 an Energy Australia installation inspector carried out an inspection. Five instances were observed where the work failed to comply with AS/NZS 3000:2000 (Clauses 1.10.1, 2.9.4.4 and 3.9). The inspector issued a defect notice to the Company, which required it to rectify the stated defects within a 21 day period.

2. 77 Ellery Parade, Seaforth

On 27 March 2000 Mr D Taylor and Ms G Mathews engaged the Company to inspect their house to determine why the safety switch tripped periodically. They were also concerned that various light globes frequently blew and Ms Mathews occasionally received electric shocks from the VCR.

Mr Hutchings, on behalf of the Company attended the site and carried out an inspection. He stated that the house required immediate re-wiring, as it presented a danger to the occupants' children. Mr Taylor and Ms Mathews, concerned for the safety of their children accepted the quote and work was commenced immediately. The value of the contract was $8,935.

Mr C Mathieson for the Company completed the work.

Mr Taylor was dissatisfied with the standard of the work provided, as the pre-existing problems continued to occur after the work had been completed. He was also concerned when he was charged an additional $795 for the installation of new power points, which Mr Mathieson had advised would be included in the previously quoted price.

During May 2000, Mr Taylor received a certificate dated 27 March 2000 evidencing the existence of home warranty insurance to cover the work carried out in his house. The contractor should have provided the certificate prior to the commencement of any work.

On 7 August 2000 Mr Taylor lodged a complaint against the Company to the Department. On the same date, an Energy Australia installation inspector carried out an inspection of the site. He observed 2 instances where the work failed to comply with AS/NZS 3000:2000 (Clauses 2.5.3.1 and 3.9.4.3) and two instances where the work failed to comply with the NSW Service and Installation Rules (Rules 1.9.8 and 4.13). The inspector issued a defect notice to the Company, which required it to rectify the stated defects within a 21 day period.

The defected work was not rectified within the stipulated period causing Energy Australia to issue a disconnection notice to house's occupants on 17 October 2000.

On 3 October 2001 a departmental inspector carried out an assessment of the site. He observed 9 instances where electrical work had been carried out contrary to AS/NZS 3000:2000 (Clauses 1.7.7, 2.9.4.4, 2.9.6, 3.7.2.4, 3.9.40.1, 3.9.4.3, 3.10.3.5, 5.4.1 and 5.7.3.4).

According to Mr Taylor, the problem with the tripping of the safety switch was corrected following the replacement of an iron.

3. 53 Darley Street, Forestville

On 1 December 2000 Mrs Hyde contacted the Company as her house had temporarily lost its power supply. Mr and Mrs Hyde had previously dealt with the Company in 1999 when one of its employees replaced an oven.

The Company sent Mr S Marsh to the house. He inspected the site and prepared a quote for electrical work to be carried out. The value of the quote initially was $1,520. The work was described as the re-wiring of four power circuits, the wire in the downstairs areas were to be covered in PVC conduit and any power points would be replaced where required. The work was to take 8 days and would involve two men during this period. According to Mr and Mrs Hyde, they were under the belief that it was an emergency repair.

After Mr Hyde accepted the quote and work had commenced, Mr Marsh stated that he had mistakenly left off a zero on the quote and in fact, the quote should have been for $15,200. Mr Hyde agreed to this amended quote and authorised the Company to deduct $7,500 from his credit card account as the initial payment.

On 8 December 2000 a company representative deducted a further $7,500 from Mr and Mrs Hyde's credit card. This deduction had been made without prior authorisation. When Mr Hyde enquired as to why this deduction had been made, Mr Hutchings informed him that it was due as the work was almost complete.

After the work was complete, the safety switch continued to trip. During March 2001 Mr and Mrs Hyde replaced their refrigerator. After this, the safety switch did not trip.

On 3 May 2001 Mr Hyde was dissatisfied with the cost of and the stated necessity for the work and lodged a complaint with the Department.

During the course of the Department's investigation it was determined that the Company had failed to provide home warranty insurance coverage for this work. When interviewed, Mr Hutchings stated that this had occurred due to a clerical error.

On 3 October 2001 a departmental inspector carried out an assessment of the site. He observed 5 instances where electrical work had been performed contrary to AS/NZS 3000:2000 (Clauses 2.9.4.2, 5.5.4.2, and 5.8.3.1).

In the view of the inspector, the defects were likely to present as an unacceptable increase in the risk of the house's occupants sustaining a shock or death.

On 22 October 2001 an Energy Australia installation inspector carried out an inspection of the site. He observed 7 instances where the work failed to comply with AS/NZS 3000:2000 (2.8.3.3.3, 2.9.4.2, 2.9.4.4, 5.5.4.2, 2.9.2, and 3.7.2.2). The inspector issued a defect notice to the Company, which required it to rectify the stated defects within 21 days. These defects were rectified within this period.

4. 21 Valley Road, Balgowlah Heights

On 4 May 1999 Mr Hutchings, on behalf of the Company contracted with Ms W Pruden to install a surge diverter, a circuit breaker switchboard and replace a movement detector at the rear of the house as well as re-wire a number of switches and lights. The value of the contract was $1,350.

On 6 May 1999 Mr Hutchings advised Ms Pruden that her house required re-wiring at a cost of $4,500. She did not proceed with the work after receiving different independent advice from two other electrical contractors who had inspected the house's installation.

During February 2000 Ms Pruden lodged a complaint against the Company with the Department.

On 24 September 2001 a departmental inspector carried out an assessment of the site. He observed that the wiring was serviceable and in his view did not require replacement. He also observed 5 instances where electrical work attributable to the Company had been carried out contrary to AS 3000:1991 (Clauses 2.23.5.4, 5.8.2.1, and 5.8.2.4).

On 22 October 2001 an Energy Australia installation inspector carried out an inspection of the site. He observed 5 instances where the work failed to comply with AS/NZS 3000:2000 (Clauses 2.9.4.4, 5.5.1 and 5.6.1). The inspector issued a defect notice to the Company, which required it to rectify the stated defects within a 21 day period.

5. 17 Bedford Crescent, Collaroy

On 4 May 2001 Mr J Murphy and Ms M Cutcliffe arranged for the Company to install a safety switch in their house. Mr Hutchings attended and following an inspection stated that there was a need for two circuit breaker switchboards with safety switches as well as two surge diverters to be installed for the total cost of $1,427. The house, though relatively small had previously been wired as two separate flats and had two meter boxes.

At the time of presenting the quotation, according to Ms Cutcliffe, Mr Hutchings highlighted the urgency of the work by referring to the need for her to keep her children safe. On this basis she agreed to have the work carried out.

On 10 May 2001 Mr S Marsh, another electrician employed by the Company arrived to carry out the work. The electrician carried out another inspection and stated that the work could not be done, as the house needed immediate re-wiring at a cost of in excess of $8,000. He stated that it was a seriously dangerous situation. When Ms Cutcliffe stated that the cost of the work was high, Mr Marsh proposed the alternative, that he could fault find the installation to identify the problem at the cost of $45 per half hour per man. Ms Cutcliffe agreed to the latter course. At the end of the day she was presented with an invoice for $396.

On 16 May 2001 Mr Murphy, on behalf of Ms Cutcliffe lodged a complaint against the Company with the Department.

On 26 September 2001 a departmental inspector carried out an assessment of the site. He observed that the majority of the house's wiring was serviceable and did not require replacement. The inspector tested the installation and determined that the reason why the safety switches did not work was that the installing electrician had incorrectly wired them. The test, in the view of the inspector was a basic one that any competent electrician would perform in similar circumstances. At the time that this inspection occurred, an installation inspector from Energy Australia accompanied the Department's inspector.

6. 5/1 Bond Street, Mosman

During August 2000 Mr Hutchings, on behalf of the Company contracted with Ms L Louisson to install a larger capacity cable to supply electricity to a kitchen cooktop. When used, the appliance would trip the unit's circuit breaker. Mr Hutchings stated to Ms Louisson that the existing cable was inadequate to meet the load of the hotplates and cooktop and that a larger capacity cable was required to rectify the problem. The combined load of the hotplates and the oven was 35 amps, whilst the circuit and the circuit breaker was of 25 amps capacity.

On 14 September 2000 the Company carried out the work, but left the cooktop disconnected. The Company charged Ms Louisson $583 for this work. The Company then refused to connect the cooktop until she paid an additional $77. In the Company's view, one of the hot plate elements required replacement.

On 29 September 2000 the work was completed and the appliance connected.

Ms Louisson experienced the same problem with use of the cooktop tripping the circuit breaker. She contacted the Company and Mr Hutchings advised her that he was not responsible and that rectification would require further payment.

During November 2000 Ms Louisson lodged a complaint against the Company with the Department. She had received advice from another electrician that the pre-existing cable was not the cause of the problem and that there was no need for the work to have been provided by the Company. Faulty hotplate elements were replaced and the circuit breaker ceased to trip when the hotplates and oven were used.

Ms Louisson also lodged an application against the Company before the then Fair Trading Tribunal. It subsequently found in Ms Louisson's favour and ordered the Company to pay her $1,735.

On 21 December 2001 a departmental inspector carried out an assessment of the site. During the course of the physical assessment he observed that the cooktop had not been adequately earthed contrary to AS/NZS 3000:2000 (Clause 5.2.2).

Defect Notices issued by Energy Australia

The Department was provided with information from Energy Australia relating to the conduct of the Company.

According to records maintained by Energy Australia, the Company, between 1 January 2001 to 21 March 2002 submitted 790 notifications of electrical work (NOEWs).

There is a statutory obligation upon all installing electricians who have undertaken work to submit a NOEW to the relevant electricity supply authority within 14 days of the completion of electrical installation in accordance with clause 9 of the Electrical Safety (Electrical Installations) Regulations, 1998.

The electricity supply authority has an obligation under a nationally based safety regime to conduct random inspections of work which has been brought to its attention through the submission of NOEWs.

Of the NOEWs submitted by the Company, Energy Australia inspected 87 sites. Energy Australia operates on a policy of inspecting approximately 10% of the total number of submitted NOEWs. As a result of these inspections it issued 28 defect notices to the Company. A defect notice requires the Company to rectify, at its own cost specified aspects of the work within a 21 day period or sooner if the work is classified as being a major defect.

Further information provided to the Department by Energy Australia revealed that between March 2002 to August 2002, it conducted 196 inspections of sites where the Company had submitted NOEWs. Of these sites, a further 24 defect notices were issued. This was after the Company's electricians attended a two day refresher course which focused upon safety and testing procedures.

On 4 February 2002 Mr Hutchings participated in a taped recorded interview with Departmental investigators. During the interview, Mr Hutchings admitted: -

(a) the Company had circulated leaflets that did not comply with the statutory requirements of Clause 63(c)(ii) of the Home Building Regulations, 1997 ("the Regulations"), in that the leaflet failed to include the Company's licence number,

(b) electricians employed by the Company engaged in the provision of defective work, in that when inspected specified work was contrary to AS 3000:1991, AS/NZS 3000:2000 and the NSW Service and Installation Rules. By engaging in work contrary to AS/NZS 3000:2000, the Company had contravened Clause 7 of the Electricity Safety (Electrical Installations) Regulations, 1998. By failing to comply with the Rules, the Company contravened Clause 16 of the Electricity Safety (Safety Plans) Regulations, 1997.

In the Interview, Mr Hutchings disputed the accuracy of some of the defects that had been identified by the Energy Australia's inspectors and the Department's inspector and attributed to the Company's employees. Of the accepted defects, he stated that though all defects could be potentially dangerous, these were of a minor nature, which could be easily rectified.

Determination

I have considered the material that has been provided to me.

I have determined that there are sufficient grounds to find that Hutchings Electrical Pty Limited was guilty of improper conduct under sections 51(1)(a), (b) and (c) of the Act. The Company has committed offences against the Act and the Regulations. In that it failed to provide home warranty insurance within accordance with section 92, its contracts failed to comply with section 7, in that the work was not sufficiently described and its promotional advertising failed to include its licence number contrary to Clause 63.

Licensed electricians employed by the Company were required to carry out the work. This work must be done in accordance with the relevant legislation for the work such the Electrical Safety (Electrical Installations) Regulations, 1998. By failing to adequately test the work and by doing work that is defective the Company's employees have failed to comply with the requirements of another Act. Similarly, all residential building work, inclusive of specialist work must be carried out in accordance with the implied statutory warranties. The work carried out by the Company's employees breached two of these statutory warranties implied contrary to sections 18B(a) and (c) of the Act, in that all residential building work shall be carried out to a proper and workmanlike manner and in compliance with any other law.

I am not satisfied that the Company did all that it could have to ensure that its nominated supervisor, Mr Hutchings exercised sufficient control over its employees' work.

I further determine that there are sufficient grounds to find that Mr Hutchings, as the nominated qualified supervisor for Hutchings Electrical Pty Limited was also guilty of improper conduct under sections 53(1)(a), (b) and (c) of the Act. Mr Hutchings was under a statutory obligation to exercise all due diligence to prevent the Company's employees from performing work not in accordance with the Act and any other relevant legislation and that the work must be carried out to the requisite standard.

I also determine that Mr Hutchings was guilty of improper conduct under section 54(1) of the Act. As an officer of a corporation that held a licence, he had a statutory obligation to ensure that the corporation did not engage in improper conduct as defined under section 51 of the Act.

In accordance with sections 56 and 57 of the Act, I am satisfied that there are reasonable grounds to take disciplinary action against both Hutchings Electrical Pty Limited and Mr Hutchings.

Matters for consideration

Two complementary and equally troubling patterns emerge in respect of the Company's method of doing business.

First, there has been a high level of defective work carried out by the Company. The number of defects detected by Energy Australia during the course of its inspections is of concern. It demonstrates that there has been insufficient care taken by the Company and its employees in carrying out this work. The view that most of these are minor defects and that they can be rectified is not a sufficient answer. There is an obligation on the Company to carry out the work properly in the first place. There is an obligation on Mr Hutchings as the Company's nominated supervisor to ensure that work is done competently and in accordance with the requirements of relevant standards and legislation.

The high level of defective work carried out by the Company indicates that there is a serious failing in relation to this aspect of its operations. I am of the view that this is a systemic issue that affects an unacceptably high proportion of the Company's operations.

Second, and of even greater concern, there are issues that go to the heart of the Company's probity and integrity. The Company has engaged in a practice of providing quotes for work and then, once they have been contracted to do work for a consumer, asserting a need for extensive and expensive additional work to be done. In some cases this assertion as to the need for additional work has been accompanied by reference to the importance of making the electrical installation safe for the consumer's children.

There is substantial evidence, which I accept, that there was no need for much of this work. In each case where the assertion was made that additional work was required there was a very significant increase in the cost of the work.

I am satisfied that this was a deliberate ploy by the Company to generate additional revenue. The practice of falsely representing that there is a need for work to be done is prohibited by the Fair Trading Act, 1987. I am of the view that this practice by the Company is potentially more harmful to consumer interests that those instances of minor defective work carried out by the Company.

Consumers should be able to rely upon the competence, judgement and honesty of specialist tradespersons when providing advice and recommendations as to the need for work to be done. Indeed unlike many other aspects of home building a consumer is never entitled to do electrical work themselves and a significant safety regime involving suppliers, distributors electricians and regulators is in place to ensure the safety of consumers. The Company has taken advantage of consumers' perceptions that the Company and its representatives have specialised knowledge of electricity. The Company and its representatives have taken advantage of consumers' perceptions that electricity is inherently dangerous and they have taken advantage of consumers' perceptions that it is imprudent to ignore faulty electrical installations.

I am satisfied that the Company has engaged in predatory conduct where it took advantage of its position as a licensee in an area of specialist work and misrepresented to consumers the need for such specialist work to be carried out by them.

I view that conduct as being most grave.

Mr Hutchings is ultimately responsible for the standard of work provided by the Company's employees. I note that due to the specialist nature of electrical work each employee who carries out the work must be licensed in their own right or be personally supervised by someone who does hold the requisite category of licence. This does not remove the accountability of Mr Hutchings as the Company's nominated supervisor.

During his interview with departmental investigators, Mr Hutchings agreed that specific work performed by the Company's electricians was defective. He agreed that he was responsible for all facets of the Company's operation, in particular its "technical running". He stated that defects were "oversights" and "...are not acceptable..." within the Company's operation. He described the procedures that were in place to monitor the work of the Company's electricians. He further stated that his electricians knew that the "...ramifications of poor workmanship is a formal warning which can result in termination, yet despite his employee's work being defected by the supply authority there is no evidence that any electrician received anything more than a reprimand was disciplined.

Additionally, Mr Hutchings attempts to mitigate the severity of the Company's conduct by stating that the detected defects were of a minor nature. I cannot accept this view. The Company's clients are entitled to receive work that is of the requisite standard. Indeed, a statutory obligation is placed on all installing contractors to ensure that the work is safe and appropriate for use. To this end, electricians are trained to test their own work and to certify as to its compliance. The Company arranged for its electricians to undergo a refresher course on testing procedures in February 2002. Notwithstanding their attendance, their work was still found to be defective.

Mr Hutchings' failure to ensure that the requisite standard of work is maintained indicates that he is either unwilling to act diligently in this regard, or is incapable of providing an adequate level of supervision. He has unsuccessfully attempted to deflect the blame for his failure to provide adequate supervision on others. Mr Hutchings submitted that the accuracy of the Energy Australia inspectors' trade related knowledge is inadequate and that this has contributed to a number of defects having been withdrawn after he has disputed them. He further submitted that the number of defect notices issued to a licensed contractor is an ineffective guide as the contractor's competency on that basis.

When interviewed Mr Hutchings agreed that on two separate occasions the Company failed in its statutory duty to provide to its clients home warranty insurance in accordance with section 92 of the Act. In one case, the certificate evidencing the existence of home warranty insurance was not provided within the time stipulated. The certificate was provided after the work had been completed.

Whilst in the second case, the Company failed totally to provide home warranty insurance. Mr Hutchings explained that this had resulted from a clerical error and that a new protocol had been instigated to prevent this from occurring in future.

Failure to provide home warranty insurance is a serious contravention of the Act.

Both the Company and Mr Hutchings have been previously placed on notice by the Department for the need to adequately supervise the work carried out by its electricians. Similarly, prior notice was provided for the Company to sufficiently describe the work to be carried out in accordance with section 7 of the Act.

Neither appears to have benefited by the leniency that has been previously extended by the Department through the use of formal cautions.

As the Company's nominated supervisor Mr Hutchings is expected to demonstrate the characteristics of honesty, the possession of trade related competence and knowledge. I am of the view that the Department's investigation has found him to be lacking in each of these characteristics.

I have carefully examined all aspects of these matters. I note that Mr Hutchings has submitted that regard should be had to the fact that all defects have been rectified. My concern is that defects are still being detected in the Company's electricians' work. I have paid close regard to the impact that my decision will have upon the Company, its employees and in particular that of Mr Hutchings and his family. I am aware that, unlike other areas of home building, the loss of a licence for an electrician results in that licensee being unable to work in their chosen trade.

However, in light of my view that there are overlapping patterns of misconduct that go to both the competence of the Company and its representatives and to their honesty and integrity I believe that I have no alternative but to deal with this matter in a manner that will have a serious affect on both the Company and on Mr Hutchings.”

5 With respect to Mr Hutchings that Notice of Decision provided:

“I have determined this matter in accordance with section 62 of the Home Building Act, 1989 ("the Act"). The reasons for my determination are contained in the attached document. You will note that I am satisfied that you engaged in improper conduct as defined in sections 53(1)(a), (b) and (c) and section 54(1) of the Act.

You should also note that the supervisor's certificate issued to you has been cancelled and you have been disqualified for a period of ten years from being:-

(a) the holder of any authority,

(b) a member of a partnership, or an officer of a corporation that is a member of a partnership, that is the holder of an authority, or

(c) an officer of a corporation that is the holder of an authority. Such period of disqualification is to take effect from 10 March 2003.

You should further note that I have determined that you must pay to the Department's Director-General, as a penalty, an amount of $5,000 within a period of 28 days of the date of this Notice.”

6 With respect to the Company the Notice of Decision provided:

“I have determined this matter in accordance with section 62 of the Home Building Act, 1989 ("the Act"). The reasons for my determination are contained in the attached document. You will note that I am satisfied that the Company engaged in improper conduct as defined in sections 51(1)(a), (b) and (c) the Act.

You should also note that the contractor licence issued to the Company has been cancelled and that the Company has been permanently disqualified from being:-

(a) the holder of any authority,

(b) a member of a partnership, or an officer of a corporation that is a member of a partnership, that is the holder of an authority, or

(c) an officer of a corporation that is the holder of an authority. Such period of disqualification is to take effect from 10 March 2003.”

7 Each of the Applicants sought an internal review of the decisions and that review was undertaken by Mr Lindsay Le Compte, the General Manager of the Office of Home Building for the Department of Fair Trading. Mr Le Compte provided a statement of reasons for his decision dated 21 March 2003 and made findings in the following terms:

“ Findings :

It must be acknowledged that electrical installation work carries with it an inherent potential to endanger human safety and damage to property. Even the most minor diversion from the established procedures has the potential to produce fatal results.

I have examined Mr Hutchings' statement dated 13 February 2003 and its supporting documents. I find no new material that was not previously provided to the Delegate. I do note that Mr Hutchings has provided some additional material that attempts to clarify some aspects of his previous submissions.

I note that there are a number of issues that do require clarification in this matter. However, these issues do not detract from the Delegate's findings.

First, Mr Hutchings submits that a number of defects issued to the Company should not have been issued. He submits that the Company in some instances repaired existing installations and as such the incorrect work standard was applied. In support of this submission, Mr Hutchings refers to a publication entitled "Guide to the Inspection of Consumers' Electrical Installations". I note that Mr Hutchings did not provide a copy of this document to the Department with his statement.

The reference taken from this publication at Clause 6.1, according to Mr Hutchings is that "installation work should be to the standard of the Wiring Rules edition applicable with the material currently in use".

It is the Department's position that the current guidelines for use in inspecting consumer installations are as follows: -

Australian/New Zealand Standard (AS/NZS) 3000/2000 referred to as the Wiring Rules,

Recommended Standard Inspection Procedures for Existing Electrical Installations, issued June 1981 and

AS/NZS 3017/2001 -Electrical Installations -Testing and Inspection Guidelines.

I find that the work described as defects and carried out by the Company falls within the categories of alterations or additions to an existing installation. The work could not be categorised as repairs. A repair is the replacement of an existing item such as a powerpoint or a fuse base on the switchboard. This work category does not require the submission of a Notification of Electrical Work (NOEW) to the Network Operator.

The installation of a safety switch on the main switchboard is an alteration as such it requires the submission of a NOEW.

According to Clause 1.5 Alterations, Additions and Repairs, AS/NZS 3000/2000 "every alteration of, or addition to, an existing electrical installation shall be deemed to be a new electrical installation and all relevant provisions of this Standard shall apply to every such alteration or addition". "Repairs to existing electrical installations or parts thereof may be effected using methods that were acceptable when the part of the installation was originally installed, provided that the methods satisfy the fundamental safety principles of Section 1 of the Standard."

Secondly, contrary to Mr Hutchings' submission no "additional licence is required to do mains and metering work". This type of work is referred to within the industry as contestable work. Any licensed electrical contractor can wire the installation's switchboard and install the consumer's mains, however only the Network Operator or an Authorised Service Provider (APS) can connect the consumer mains. Any licensed electrical contractor who possesses suitable training and trade competency can seek the accreditation from the Network Operator to be an APS.

The Company has either elected not to seek such additional accreditation or has had its application refused by the Network Operator. In any event, the Company has engaged another contractor who has APS accreditation as its sub-contractor. The sub-contractor has carried out the work under the supervision of the Company's nominated supervisor, Mr Hutchings. Though not accredited to do the work himself, as the Company's nominated supervisor he is ultimately responsible for the standard of work provided by its sub-contractor. I note that Mr Hutchings now accepts this responsibility as he submits that "we have now altered our policy so that checks are made on any work contracted out."

Thirdly, Clause 6.3.2 of AS/NZS 3000/2000 and Clause 1.4 of AS/NZS 3017/1996 requires that an installation be mandatory tested for the following: -

Continuity of the Earthing system,

Insulation Resistance,

Polarity and

Correct Circuit Connections.

The defective work provided by the Company, whether it is classified as minor or major for the purposes of the Network Operator is a breach of the implied statutory warranties as set down in section 18B of the Act.

I note that Mr Hutchings has submitted that he and the Company should gain some benefit from the efforts to reduce the ratio of defects detected by the Network Operator to the number of sites where the Company has carried out work. Both the Company and Mr Hutchings are now aware that its work should have been tested. The successful self-regulation of this industry is reliant upon electrical contractors testing their own work. The occurrence of an overwhelming majority of these identified defects would have been eliminated should the Company had of complied with its testing obligations under AS/NZS 3000/2000. It is inappropriate for Mr Hutchings to regard Energy Australia as the Company's quality assessor. This is his role and he has failed to carry it out with all due diligence.

I further note that Mr Hutchings' submission does not address why, after taking all of these steps to establish a new procedure to specifically address a reduction in the Company's defect ratio, that the Network Operator could between August 2002 and December 2002 identify defects present at another eight sites.

I agree with the Delegate's findings and share his concerns with both the high incidence of defective work provided by the Company and its unacceptable practice of providing quotations for work where the need for some of the work was falsely represented. I am of the view that Mr Hutchings could have easily rectified both of these concerns, but has elected not too. Both the Company and Mr Hutchings were under statutory obligations to ensure that the work was tested for safety and compliance. The evidence indicates this did not occur.

It is a reasonable expectation that the Company would have instructed its employees to prepare fully itemised quotations for its clients. The evidence indicates this did not occur. I am of the view that to not do so was to take an unfair advantage of its clients at a traumatic time when they were looking to the Company for assistance.

I note the view taken by the Administrative Decisions Tribunal in setting aside the decisions of the Director-General to suspend the licences of both the Company and Mr Hutchings. I do not agree with Mr Hutchings' submission that the Tribunal's finding necessarily renders the continued incidence of defective work as not being a significant concern. Each defect detected in the work provided by the Company constitutes a breach of the implied statutory warranties as set down in section 18B of the Act.

I do not agree that the attendance of employees at a two day refresher course could constitute evidence of "regular training".

I find the misconduct of the Company and of Mr Hutchings to be particularly troubling. Mr Hutchings has had principal responsibility for this conduct. I am unable to find any genuine attempt by either to properly address the Department's justified concerns. I have approached the Delegate's decision to remove Mr Hutching's immediate ability to work in his chosen career and the direct and indirect impact that this will have on other parties with careful consideration. I find that the Company's systemic conduct in engaging in defective work over a long period together with the false representations made by its employees as to the need for some work to occur merits decisive action to ensure future protection to the community.

Conclusion:

I find that there was sufficient basis upon which the Director-General's Delegate served Notices to show cause upon the Company and Mr Steven Hutchings. I affirm the decision of the Delegate that both were guilty of improper conduct.

I further agree with the Delegate's findings that it was appropriate that disciplinary action be taken against both Mr Hutchings and the Company under section 62 of the Act.

I affirm the Delegate's decision to cancel the authorities of Hutchings Electrical Pty Limited and Mr Hutchings and to permanently disqualify the former and to disqualify the latter for a period of ten years. I additionally affirm the Delegate's decision to order Mr Hutchings to pay a penalty of $5,000, however as the period under which payment was to be made has now expired I vary the decision to enable him to make payment by 28 April 2003.”

8 On 11 April 2003, the Company and Mr Hutchings lodged applications for review of the Commissioner's decisions with the Tribunal. The matters were heard together between 28 and 31 July 2003. At the conclusion of the hearing the decisions were reserved. These are the reasons for decisions with respect to those applications.

Legislation

9 The Home Building Act 1989 makes provision for the regulation of residential building work and specialist work. Part of this regulative scheme is the provision of licences and certificates to do such work. Section 4 of the Act provides that a person is prohibited from contracting to do residential building work or specialist work on behalf of an individual, partnership or corporation unless that person is the holder of a licence authorising that person to contract to do that work.

10 Section 56 specifies the grounds upon which the Commissioner may take disciplinary action against the holder of a contractor licence. Section 57 specifies the grounds upon which the Commissioner may take disciplinary action against the holder of a supervisor or tradesperson certificate. Those sections provide:

“56 Grounds for taking disciplinary action against holder of a contractor licence

The Director-General may take disciplinary action under section 62 against the holder of a contractor licence on any of the following grounds:

(a) that the holder is not entitled to hold the contractor licence,

(b) that the holder is not fit to hold the contractor licence,

(c) that the holder is guilty of improper conduct,

(d) that there is not a sufficient number of nominated supervisors to ensure:

(i) that the statutory warranties for residential building work are complied with, or

(ii) that specialist work is done in a good and skilful manner and that good and suitable materials are used in doing the work, or

(iii) that the requirements applicable to the work made by or under this or any other Act in respect of residential building work or specialist work are complied with,

(e) in the case of a holder of a contractor licence that is a partnership--that any of the members of the partnership, or any of the officers of a corporation that is a member of the partnership, is not a fit and proper person to be a member of the partnership or an officer of the corporation or has been guilty of improper conduct,

(f) in the case of the holder of a contractor licence that is a corporation--that any of the officers of the corporation is not a fit and proper person to be an officer of the corporation or has been guilty of improper conduct,

(g) that the holder has failed to comply with a condition of the contractor licence imposed by a determination under this Part.

57 Grounds for taking disciplinary action against holder of a supervisor or tradesperson certificate

The Director-General may take disciplinary action under section 62 against the holder of a supervisor or tradesperson certificate on any of the following grounds:

(a) that the holder is not entitled to hold the certificate,

(b) that the holder is not fit to hold the certificate,

(c) that the holder is guilty of improper conduct,

(d) that the holder is not capable of doing all or part of the work that the certificate authorises the holder to do,

(e) that the holder has failed to comply with a condition of the certificate imposed by a determination under this Part.”

11 Section 51 makes provision regarding improper conduct generally. It provides:

“51 Improper conduct: generally

(1) A holder of a licence who is authorised by the licence to contract to do residential building work or specialist work, or a holder of a supervisor or tradesperson certificate, is guilty of improper conduct if the holder:

(a) commits an offence against this Act or the regulations, whether or not an information has been laid for the offence, or

(b) without reasonable cause, does not comply with the requirements of a rectification order under Division 2 of Part 3A, or

(c) breaches a statutory warranty, or

(d) in the case of specialist work, does the work otherwise than in a good and workmanlike manner or knowingly uses faulty or unsuitable materials in the course of doing the work.

(1A) The holder of a licence who is authorised by the licence to contract to supply kit homes is guilty of improper conduct if the holder:
(a) commits an offence against this Act or the regulations, whether or not an information has been laid for the offence, or

(b) without reasonable cause, breaches a contract to supply any kit home that the licence authorises the holder to contract to supply.

(2) The holder of a licence is guilty of improper conduct if the holder:
(a) without reasonable cause, breaches a contract to do any work that the licence authorises the holder to contract to do, or

(b) without reasonable cause, does not comply with the requirements of a rectification order under Division 2 of Part 3A, or

(c) does not comply with an order of the Tribunal, or

(d)

(e) commits fraud or makes any misrepresentation in connection with any contract authorised by the licence or any contract for the sale of any dwelling, structure or work that has resulted from, or been affected by, any work done under the authority of the licence, or

(f) is convicted of any offence under the Workers Compensation Act 1987 or the Workplace Injury Management and Workers Compensation Act 1998 or any regulations made under either of those Acts.

(3) It is a sufficient defence to a complaint that the holder of a licence has been guilty of improper conduct as referred to in subsection (1) (b), (c) or (d) in connection with work undertaken by the holder, if the holder proves to the satisfaction of the Director-General that the holder did all that could reasonably be required to ensure that a nominated supervisor for that work would exercise such degree of control over the doing of the work as would be necessary to prevent the occurrence of the improper conduct.”

12 Section 53 makes provision regarding improper conduct by nominated supervisors. It provides:

“ 53 Improper conduct: nominated supervisors

(1) The holder of an endorsed contractor licence or a supervisor certificate who has control over the carrying out of residential building work or specialist work of any kind is guilty of improper conduct if:

(a) the requirements applicable to the work made by or under this Act or any other Act are not complied with, or

(b) a breach of a statutory warranty occurs in the course of doing that work, or

(c) in the case of specialist work, the work is done otherwise than in a good and workmanlike manner or faulty or unsuitable materials are used in the course of doing the work.

(2) The holder of an endorsed contractor licence or a supervisor certificate is to be presumed, in the absence of evidence to the contrary, to have control over the doing of all work for which the holder is a nominated supervisor.

(3) It is a sufficient defence to a complaint that a holder has been guilty of improper conduct under this section if the holder proves to the satisfaction of the Director-General that the holder used all due diligence to prevent the occurrence of the improper conduct.”

13 Section 54 makes provision regarding improper conduct by nominated supervisors. Section 54(1) provides:

“54 Improper conduct: members of partnerships or officers of corporations

(1) An individual who is a member of a partnership or an officer of a corporation that is the holder of a licence is guilty of improper conduct if the holder does any of the things referred to in section 51 or 52.”

14 Section 61 provides for the issue of a show cause notice by the Commissioner, where 'there are reasonable grounds for believing that there are grounds for taking disciplinary action', and for the holder of a contractor licence to make submissions in response. In part that section provides:

“61 Notice to show cause

(1) This section applies if the Director General is of the opinion that there are reasonable grounds for believing that there are grounds for taking disciplinary action under section 62 against the holder of an authority.

(2) The Director General may serve a notice in writing on the holder of an authority, inviting the holder to show cause why he, she or it should not be dealt with under this Division.

(3) The notice must state the grounds on which the holder is required to show cause and must specify the period, being at least 14 days, during which it must be done.”

15 Section 62 specifies the Commissioner's powers when satisfied that there are grounds to take disciplinary action:

“62 Disciplinary action that may be taken by Director-General

If, after compliance with this Division, the Director-General is satisfied that any ground on which disciplinary action may be taken against the holder of an authority has been established in relation to the holder, the Director-General may do any one or more of the following:

(a) determine to take no further action against the holder,

(b) caution or reprimand the holder,

(c) make a determination requiring the holder to pay to the Director-General, as a penalty, an amount not exceeding $11,000 (in the case of an individual) or $22,000 (in the case of a corporation) within a specified time,

(d) vary the authority held by the holder, by imposing a condition on the authority, including a condition requiring the holder to undertake a course of training relating to a particular type of work or business practice within a specified time,

(e) suspend the authority for a period not exceeding its unexpired term,

(f) cancel the authority,

(g) disqualify the holder, either temporarily or permanently, from being any one or more of the following:

(i) the holder of any authority, or any specified kind of authority,

(ii) a member of a partnership, or an officer of a corporation that is a member of a partnership, that is the holder of an authority,

(iii) an officer of a corporation that is the holder of an authority.”

16 Section 83B of the Act provides for a right of review of decisions made by the Commissioner to the Tribunal:

“83B Reviews by Tribunal

(1) An applicant for the issue or alteration of an authority aggrieved by any decision of the Director-General relating to the application may apply to the Tribunal for a review of the decision.

(2) The holder of an authority aggrieved by any decision of the Director-General to alter an authority or to cancel a provisional authority may apply to the Tribunal for a review of the decision.

(2A) The holder of a licence aggrieved by a decision of the Director-General to suspend the licence under section 22A or 22B may apply to the Tribunal for a review of the decision.

(3) A person aggrieved:

(a) by a decision made by the Director-General under Part 4 (Disciplinary proceedings) to impose a penalty or to cancel or suspend a contractor licence, or

(b) by any other decision made by the Director-General under that Part that is prescribed by the regulations,

may apply to the Tribunal for a review of that decision.

(4) For the purposes of this section, the Director-General is to be taken to have refused any application that has not been withdrawn if the Director-General has not served on the applicant notice of the decision on the application:

(a) within 40 days of its being lodged at an office of the Department of Fair Trading, or

(b) if the Director-General and the applicant agree on a longer period--within the longer period after its being so lodged.”

17 Regulation 58A(3) of the Home Building Regulation 1997 (“the Regulation”) provides:

“ 58A Review by Administrative Decisions Tribunal

(1) For the purposes of section 83B (3) (b) of the Act, the following decisions of the Director-General under Part 4 of the Act are prescribed:

(a) a decision to vary an authority by imposing a condition on the authority,

(b) a decision to suspend an authority (other than a contractor licence),

(c) a decision to cancel an authority (other than a contractor licence),

(d) a decision to disqualify the holder of an authority from being:

(i) the holder of an authority, or

(ii) a member of a partnership, or an officer of a corporation that is a member of a partnership, that is the holder of an authority, or

(iii) an officer of a corporation that is the holder of an authority.

Note: Section 83B(3)(a) of the Act provides for review by the Administrative Decisions Tribunal of a decision to impose a penalty or to cancel or suspend a contractor licence.

(2) In this clause, authority has the same meaning as it has in section 55 of the Act.

(3) Subclause (1) extends to any such decision made before the commencement of the subclause (but not before the commencement of section 83B (3) of the Act as substituted by the Home Building Legislation Amendment Act 2001).”

18 These provisions combine with s.38 of the Administrative Decisions Tribunal Act 1997 (“the ADT Act”) to give the Tribunal jurisdiction to review the Commissioner's decisions.

19 It is the Tribunal's task in determining the review to make the correct and preferable decision. Section 63 of the ADT Act provides:

“63 Determination of review by Tribunal

(1) In determining an application for a review of a reviewable decision, the Tribunal is to decide what the correct and preferable decision is having regard to the material then before it, including the following:

(a) any relevant factual material,

(b) any applicable written or unwritten law.

(2) For this purpose, the Tribunal may exercise all of the functions that are conferred or imposed by any relevant enactment on the administrator who made the decision.

(3) In determining an application for the review of a reviewable decision, the Tribunal may decide:

(a) to affirm the reviewable decision, or

(b) to vary the reviewable decision, or

(c) to set aside the reviewable decision and make a decision in substitution for the reviewable decision it set aside, or

(d) to set aside the reviewable decision and remit the matter for reconsideration by the administrator in accordance with any directions or recommendations of the Tribunal.”

20 Several volumes of material are in evidence. The evidence tendered by the Applicants consisted of statements by Mr Hutchings and former employees of the Company Mr Stephen Marsh or Mr David Thorpe. These statements provide evidence with respect to the general business operations and also address the specific allegations with respect to the work undertaken at:

12 Wellman Road, Forestville, 2087 (owned by Douglas and Nona Weber)

77 Ellery Parade, Seaforth, 2092 (owned by Donald Taylor and Glynis Matthews)

53 Darley Street, Forestville, 2087 (owned by James and Maureen Hyde)

21 Valley Road, Balgowlah Heights, 2093 (owned by Wilga Pruden)

17 Bedford Crescent, Collaroy, 2097 (owned by Meagan Cutcliffe and Joseph Murphy)

Unit 5, 1 Bond Street, Mosman, 2088 (owned by Lourdes Louisson)

21 Mr Hutchings provided a detailed statement dated 17 October 2002 in response to the Notice to Show Cause, and a further detailed statement dated 23 February 2003 in response to Mr Hanlon’s decision. He provided a further statement dated 27 July 2003 in response to comments made by Mr Peter King, an Investigator with the Department of Fair Trading in response to Mr Hutchings’ 23 February 2003 statement. Mr Hutchings also provided statements in regard to specific sites which are the subject of the Show Cause Notices. Mr Hutchings attended the hearing and was subjected to cross-examination.

22 The documentary evidence tendered by the Commissioner consisted of three volumes of documents. Much of this material was excluded following Mr Davie’s objection. My reasons for excluding that material were given during the hearing and I do not propose to restate them here. Defect Notices issued by Energy Australia were admitted subject to weight. In addition to the material in the three volumes, the Commissioner relied on an affidavit by Mr John Mazey, an Installation Inspector with Energy Australia.

23 Included in the Commissioner’s evidence is a report by Mr King dated 2 July 2002. At the time of writing his report Mr King had over 32 years experience in the electrical industry involved in electrical installation, inspection and testing. He holds a current electrician's licence. He was certified as Low and High Voltage Inspector by The Sydney County Council and Sydney Electricity. He carried out electrical inspections of the installations that are the subject of these proceedings for the purpose of providing his opinion concerning compliance with the applicable Australian/New Zealand standards and the need for work as determined by the Company. Mr King provided a further report dated 10 March 2003 which was in response to Mr Hutchings’ statement provided in response to the Notice to Show Cause.

24 Mr King was accepted as an expert witness. He appeared and gave evidence at the hearing and was subjected to cross-examination.

25 Mr Davie sought to have much of Mr King’s report exclude on the basis that the document contained a mixture of hearsay, submissions, unqualified and expert opinion that was inadmissible. He argued that Mr King adopted a zealous and partisan approach that was maintained at the time he composed his reports. While I accept Mr Davie's criticism of the document and agree with him that 'it is not anywhere approaching a rigorous document' I note that Mr Davie did not seek to challenge Mr King’s record of his observations at the various sites. I allowed the report into evidence however the weight to be given to the contents of that document remains to be determined.

26 Also included in Commissioner’s evidence are statements from owners of the properties referred to above. Those statements are generally consistent with the comments made by Mr Hanlon in his reasons for decision relating to the Notice to Show Cause. Of those individuals, Ms Meagan Cutcliffe, Ms Wilga Pruden, Ms Maureen Hyde and Mr Donald Taylor attended the hearing and adopted their statements as true and correct. They were not cross-examined.

Summary of evidence

27 It is convenient to discuss and make findings separately for the various matters alleged against the applicants. While the grounds on which the applicants were required to show cause are not clearly articulated, several items can be identified from Mr Hanlon’s reasons. I propose to deal with them under the following heads:

A. Issues relating to defective work and breach of statutory warranties at 12 Wellman Road, Forestville

B. Issues relating to defective work and breach of statutory warranties at 12 77 Ellery Parade, Seaforth

C. Issues relating to defective work and breach of statutory warranties at 12 53 Darley Street, Forestville

D. Issues relating to defective work and breach of statutory warranties at 12 21 Valley Road, Balgowlah Heights

E. Issues relating to defective work and breach of statutory warranties at 12 Unit 5, 1 Bond Street, Mosman

F. Issues relating to home warranty insurance

G. Issues relating to contracts and promotional advertising

H. Issues relating to improper conduct under the Act and the Company's method of doing business.

I. Issues relating to supervision

The Commissioner’s case

28 Mr Douglas Weber and Mrs Nona Weber, the owners of 12 Wellman Road, Forestville, provided statements concerning their dealings with the Company and Mr Hutchings. Their evidence is essentially as set out in Mr Hanlon’s reasons.

29 The Commissioner alleges that the Company carried out installation work that does not comply with the Australian/New Zealand Wiring Rules (AS/NZS 3000:2000) contrary to clause 7 of the Electricity Safety (Electrical Installations) Regulation 1998. He further asserts that a person who carries out work otherwise than in accordance with the Australian/New Zealand Wiring Rules (AS/NZS 3000:2000) is guilty of an offence.

30 The evidence is that Mr King carried out an inspection of the electrical work at 12 Wellman Road, Forestville on 25 July 2001. Mr King identified defects where installation work did not comply with AS/NZS 3000:2000, contrary to clause 7 of the Electricity Safety (Electrical Installations) Regulation 1998. Mr King also explained the possible consequences of the defects. Mr King observed that:

(i) The disused conductors at the front of the hinged panel of the switchboard were not terminated, insulated, connected or removed. This is contrary to clause 1.7.7 of AS/NZS 3000:2000.

(ii) The lounge room light was not earthed. This is contrary to clause 5.4.1 of AS/NZS 3000:2000.

(iii) New earthing conductors were not threaded through the terminal cover of the light fitting. This is contrary to clause 1.7.3 of AS/NZS 3000:2000.

(iv) The lamp holder was left connected by three strands of the 24 strand conductor supplying the associated lamp holder. This is contrary to clause 1.10.1 of AS/NZS 3000:2000.

(v) The light in the upstairs study was left unsafe as the lamp holder was only supported by the connection at the terminals of the associated conductors. This is contrary to clause 1.10.1 of AS/NZS 3000:2000.

(vi) The equipotential bonding conductor installed on the metallic switchboard enclosure was not of an adequate cross-sectional area to protect the 16mm2 consumer mains. This is contrary to cause 5.83 of AS/NZS 3000:2000.

(vii) The 16mm2 equipotential bonding conductor of the metallic switchboard enclosure was not directly connected to the main neutral link and the enclosure. This is contrary to clause 5.7.3.4 of AS/NZS 3000:2000.

(viii) The PVC bushing was not fixed in place and glued as required. This is contrary to clause 3.10.3.5 of AS/NZS 3000:2000.

(ix) The disused conductors were not terminated, insulated, connected or removed. This is contrary to clause 1.10.1 of AS/NZS 3000:2000.

(x) A conductor of the new 16mm2 consumer's mains was not protected against mechanical damage. This is contrary to clause 3.9.4.1 of AS/NZS 3000:2000.

31 Mr John Mazey is an Installation Inspector with Energy Australia. He is a licensed electrical contractor with 39 years experience in the electrical industry. Mr Mazey’s evidence is that he carried out an inspection of the electrical work at 12 Wellman Road, Forestville on 22 October 2001. As a result a Defect Notice was issued to the Company. The notice identifies a number of defects, where installation work did not comply with AS/NZS 3000:2000. The defects identified in the notice include:

(i) The bonding conductor connected to the metallic switchboard enclosure was not of an adequate cross sectional area contrary to clause 5.8.3.2 of AS/NZS 3000:2000.

(ii) The holes through which the cables passed were not bushed contrary to clause 1.10.1 of AS/NZS 3000:2000.

(iii) The disused cables located behind the hinged panel were not terminated contrary to clause 3.9 of AS/NZS 3000:2000.

(iv) The neutral conductors associated with the residual current devices were identified contrary to clause 2.9.4.4 of AS/NZS 3000:2000.

(v) The numbering of the neutral conductors associated with the power circuits did not correspond with their numbered terminals at the protected neutral link. This is contrary to clause 2.9.4.4 of AS/NZS 3000:2000.

32 Mr Hutchings provided a statement date 17 October 2001 in which he offered a response to Mr King's report. In the statement he addresses the allegations brought by the Commissioner. He states:

“55. In response to number (48). The invoice receipt issued by Stan Bryant does not indicate the replacement of an element of a Kitchen Aid dishwasher. It indicates the replacement of an element in a dryer and the checking of a dishwasher. If in fact there was a problem with the dishwasher causing the RCD to trip after we had rewired the circuit I am sure that Mr. Webber would have contacted Hutchings Electrical. To date we have not been advised of any problem with any appliance on the rewired circuit.

56. In response to number (48)(a,b,c &d).The connection of RCD's to circuits often highlights deficiencies with circuits and or appliances. Often there can be a combination of faults identified, some immediately and some once the circuit is reconnected. As appliances with heating elements ingress moisture from the air and or water contained in the appliance, their level of insulation resistance can periodically alter. What may test and work one day can cause a safety switch to trip another day. This does not indicate that there was any fault in the electrical appraisal of the need to rewire the circuit.

57. In the statement number (49) Mr. King states; "The disused conductors at the front of the hinged panel of the switchboard were not terminated insulated or connected. As required by AS/NZS 3000:2000 clause 1.7.7."

58. In response to number (49). This was a minor classification defect that was repaired by Hutchings Electrical as per defect notice annexed here to.

59. In the statement number (50) Mr. King states; "The insulation of the disused conductor was in a serviceable condition and would not warrant replacement solely on the condition of the insulation of this conductor."

60. In response to number (50). It would appear that Mr. King came to his conclusion that the old black rubber power circuit cable was adequate by only a visual inspection of cable in the meter box. If he had carried out the same Insulation Resistance testing that Hutchings Electrical did he to would have come to the conclusion that the circuit required rewiring.

61. In the statement number (52) Mr. King states; "In conjunction with the above document, I refer to the document of 15 January 2001 issued by Hutchings Electrical that states "Quotation" Quote No 3357 "Earth three fittings downstairs, oyster outside, lounge room light, outside light at front door".

(a) My inspection revealed that the lounge room light referred to in this quotation was not earthed after Hutchings Electrical had completed the installation work. This contravenes the requirements of AS/NZS clause 5.4.1.

(b) However, Mr. Webber was charged for this work.

(c) As a result persons were left exposed to inadvertent contact with bare live metal which could result in shocks or death."

62. In response to number (52). During the Administrative Decisions Tribunal hearing Mr. King indicated that he was unsure if there was another light fitting in the lounge room that could have been the one that was been earthed by Hutchings Electrical.

63. In the statement number (53) Mr. King states; "In "Quotation" Quote No 3357 there is reference to earthing of the outside light at the front door. I consider that this work was not necessary."

64. In response to number (53). Mr. Webber was advised of this oversight by the attending installation technician.

65. In the statement numbers (54-56) Mr. King makes a variety of assumptions. Unfortunately as the electrician is not contactable I can not advise if he worked on these fittings.

66. In the statement number (57) Mr. King states; "1 refer to the document of 15 January 2001 issued by Hutchings Electrical entitled, "10 Point Safety Check" item Number 5. Main earth and Water Pipe Bond (6mm). I am of the opinion that the statement in the comments section of this item is inaccurate in that the statement infers that the Australian Standard AS/NZS 3000:2000 requires the existing main earth conductor to be replaced with a 6mm main earthing conductor. Which is not the case. The size of the main earthing conductor required to protect the active of the consumer mains is determined from table 5.1 AS/NZS 3000:2000 in relation to the cross sectional area of the largest active conductor. In this case the 7/.036 main earth was in order in relation to the existing 7/.044 consumer mains. Only when the new 16mm consumer mains were installed was a larger earth wire required.

67. In response to number (57). The current regulation size main earth and water pipe bond on new installations and when installing a 16mm consumer main is 6mm, As advised Mr. Marsh was incorrect in assuming that this particular situation warranted the larger earth.

68. In the statement number (58) Mr. King states; "I refer to the document of 15 January 2001 issued by Hutchings Electrical entitled, "10 Point Safety Check" item No 6 Mains cable from point of attachment to metering position. I am of the opinion that the statement in the comments section of this item is inaccurate in that the statement infers that AS/NZS 3000:2000 requires that the existing consumers mains have to be replaced. The existing consumer mains were capable of carrying the existing maximum demand as determined in accordance with the Standard. As the installation had a gas water heater and stove and Mr. Webber did not indicate to Hutchings Electrical that he intended to install new electric appliances such as air conditioning in the near future. I am of the opinion that the existing consumer mains did not warrant replacement.

69. In response to number (58). As previously indicated Mr. Marsh made an error of judgment which he has been reprimanded for and the customer was offered a refund.

70. In the statement number (59) Mr. King states; "The 7/.036 equipotential bonding conductor installed on the metallic switchboard enclosure was not of adequate cross-sectional area to protect the 16mm consumer mains, as required by AS/NZS 3000:2000 clause 5.8.3."

71. In the statement number (60) Mr. King states; "The 16mm equipotential bonding conductor of the metallic switchboard enclosure was not directly connected to the main neutral link and the enclosure, as required by AS 3000:2000 clause 5.7.3.4"

72. In response to numbers (59 & 60). An authorized service provider connected the new 16mm consumer mains in the meter box. The undersized bond to the box is not Hutchings Electrical's responsibility.

73. In the statement number (61) Mr. King states; "The PVC bushing used to bush the aperture in the metallic surround of the switchboard where the new 16mm consumer mains pass through the metal surround of the switchboard enclosure was not fixed in place and glued as required by AS 3000:2000 clause 3.10.3.5."

74. In response to number (61). Once again the service provider was the last electrician to work in the meter box and the responsibility should have been his.

75. In the statement number (62) Mr. King states; "The disused conductors at rear of hinged panel, were not terminated, insulated, connected or removed as AS 3000:2000 clause 1.10.1."

76. In response to number (62). This defect is disputed and the regulation clause stated does not apply. However Hutchings Electrical has rectified the situation.

77. In the statement number (63) Mr. King states; "A conductor of the new 16mm consumer mains was not protected against mechanical damage at the rear of the hinged panel of the switchboard,

(a) The PVC insulation was damage where it came in contact with the fixing screws of the Supply Authority meter and did not comply with AS 3000:2000 clause 3.9.4.1."
78. In response to number (63). The new consumer mains were connected by an authorised service provider and are his responsibility.

79. In the statement number (64) Mr. King states; "The PVC sheathed conductor installed adjacent to the main switchboard in the garage was not protected against mechanical damage where "metallic chicken wire" was placed over the PVC sheathed conductor."

80. In response to number (64). Hutchings Electrical is not responsible for existing works and as such has not been defected for this situation. Energy Australia does have the power if a dangerous situation does exist that it may issue a defect to the customer. This has not been done and as such I conclude that the situation is in fact not of a dangerous nature.

81. In the statement number (65) Mr. King states; "I refer to the document left in the letterbox of Mr. Webber at 12 Wellman Road Forestville January 2001 on behalf of Hutchings Electrical. The pamphlet indicates full compliance with the Standards Association of Australian Wiring Rules and Regulations.

(a) This statement is misleading, as the Standards Association of Australia has not existed for a number of years.

(b) However as indicated previously there is a publication known as Australian/New Zealand wiring rules and as indicated Hutchings Electrical has made a number of departures from this Standard.

82. In response to number (65). Hutchings electrical to the best of its ability complies with all relevant rules and regulations. Any errors are addressed and rectified. The electricians have been given further training in testing and safety issues to refresh and improve their understanding of all of the regulations. Hutchings Electrical is committed in it decision to provide future training in these areas.”

33 Mr Hutchings provided further statements dated 23 February 2003, in which he offered these following additional comments in relation to the Commissioner’s allegations:

“25. In response to paragraph 5, which states; "On 25 July 2001 a departmental inspector carried out an assessment of the site. He observed ten instances where electrical work had been carried out contrary to AS/NZS 3000:2000 (Clauses 1.7,3, 1.7.7, 1.10.1, 3.9.4.1, 3.10.3.5, 5.4.1, 5.7.3.4 and 5.8.3.).

I will list the ten individual instances so I may respond to them individually. This is as per the Investigation report dated 5 September 2002 a copy is annexed here to.

i) The disused conductors at the front of the hinged panel of the switchboard were not terminated, insulated, connected or removed. This is contrary to clause 1.7.7.

In response, the licensed service provider Andrew Sutton Electrical Pty Ltd was contracted to carry out the mains and metering work at the switchboard. An additional license is required to do this work, which is why we use authorized sub-contractors. However, Hutchings Electrical was able to resolve the issue. We have now altered our policy so that checks are made on any work contracted out. This instance would be classified as a minor defect by Energy Australia as it is not immediately dangerous to life health and property.

ii)The lounge room light was not earthed; this is contrary to clause 5.4.1.

In response, all the light fittings in the house were existing and as such are required to comply with the regulations from when they were installed, not the current regulation. Irrespective of this Hutchings Electrical has earthed the light fitting. These light fittings had been in place approximately 40 years; as I would estimate the house build date to be in the 1960's. The occupants of the home have had no issues with these fittings during this time.

iii) New earthing conductors were not threaded through the terminal cover of the light fitting. This is contrary to clause 1.7.3.

This instance would be classified by Energy Australia as "minor" because it is a departure from the wiring rules, which is not immediately dangerous to life health or property. Hutchings Electrical has made the appropriate repairs.

iv) The Lamp holder was left connected by three strands of the 24 strand conductor supplying the associated lamp holder.

In response, Hutchings Electrical did not install or work on this lamp holder it was an existing poor connection, and we were therefore not responsible for this. If Hutchings Electrical had been aware of the connection's failure to meet regulation as per our policy we would have notified the customer and provided a quotation to rectify the situation.

v) The light in the upstairs study was left unsafe as the lamp holder was only supported by the connection at the terminals of the associated conductors. This is contrary to clause 1.10.1.

In response, this would be classified by Energy Australia as a "minor" defect as it was not immediately dangerous to life health or property. It was a lamp holder that had come loose from its bracket at some point prior to the inspection by the Department. Hutchings Electrical repaired it once we were advised.

vi) The equi-potential bonding conductor installed on the metallic switchboard enclosure was not of an adequate cross sectional area to protect the 16mm consumer mains. This is contrary to clause 5.8.3.

In response, a licensed service provider Andrew Sutton Electrical who was contracted to carry out the metering and mains work created this defect. An additional license is required to do mains and metering work, which is why we use authorized sub-contractors. However, Hutchings Electrical was able to resolve the issue. We have now altered our policy so that checks are made on any work contracted out. This instance would be classified as a minor defect by Energy Australia as it is not immediately dangerous to life health and property.

vii) The 16mm equi-potential bonding conductor of the metallic switchboard enclosure was not directly connected to the main neutral link and the enclosure. This is contrary to clause 5.7.3.4.

93 The Commissioner alleges that the Company adopted practices in contravention of this provision. It is alleged that the Company engaged in a practice of providing quotes for work and then, once they have been contracted to do work for a consumer, asserting a need for extensive and expensive additional work to be done. In some cases this assertion as to the need for additional work has been accompanied by reference to the importance of making the electrical installation safe for the consumer's children. It is further alleged that there was no need for much of this work. In each case where the assertion was made that additional work was required there was a very significant increase in the cost of the work. This was a deliberate ploy by the Company to generate additional revenue.

94 In Mr Hanlon's decision he states:

“To obtain new business, the Company distributes leaflets promoting the supply and installation of safety switches for a fixed price of $99. Clients who respond to this promotion would also receive a "10 point safety check", which later became a "157 point safety check". During these safety checks, the Company's electrician would make a visual check of the house's wiring installation to detect for any faults. The rectification of these faults would be at an additional cost to the consumer.

When interviewed by departmental investigators on 4 February 2001, Mr Hutchings agreed that the use of the offer to fit safety switches was "to build up business". He agreed that the supply and installation of the safety switches for $99 was done at a loss to the Company. He also agreed that his employed electricians were on wages, but could gain an additional 3% commission for any accepted quote for additional work.”

95 Mr Hanlon concluded:

“The Company has taken advantage of consumers' perceptions that the Company and its representatives have specialised knowledge of electricity. The Company and its representatives have taken advantage of consumers' perceptions that electricity is inherently dangerous and they have taken advantage of consumers' perceptions that it is imprudent to ignore faulty electrical installations.

I am satisfied that the Company has engaged in predatory conduct where it took advantage of its position as a licensee in an area of specialist work and misrepresented to consumers the need for such specialist work to be carried out by them.

96 With respect to the property at 12 Wellman Road, Forestville it is alleged that the Company made false representations in relation to the need for electrical work. On 15 January 2001 Mr Marsh on behalf of the Company attended the property following Mr Weber's request to install a safety switch. On 22 January 2001 Mr Mathieson, an employee of the Company attended the property to carry out work and advised that there were further problems that made the home dangerous. A contract was entered into on behalf of the Company to do further work for the sum of $1,690.

97 The owners of 77 Ellery Parade, Seaforth, provided statements concerning their dealings with the Company and Mr Hutchings. The evidence is that they paid $9,740.00 to the Company in relation to this work on 4 April, 2000. Mr King’s evidence is that it not necessary to carry out work listed in quotation (2290) provided by the Company in order to rectify problems experienced by the homeowners.

98 Ms Pruden provided a statement concerning her dealings with the Company and Mr Hutchings in relation to 21 Valley Road, Balgowlah Heights. Ms Pruden stated that she was told by Mr Hutchings on 6 May 1999 that her house needed rewiring. Mr Hutchings advised that the approximate cost of the work would be $4500. Ms Pruden further stated that she obtained opinions from three other electricians who all advised that it was not necessary to rewire the house. Ms Pruden did not have any further electrical work carried out on the premises. On 24 September 2001 Mr King carried out an electrical inspection of the premises at 21 Valley Road, Balgowlah and advised that the electrical wiring was in a good condition and did not warrant replacement at the time of the inspection.

99 Mrs Cutcliffe, the owner of 17 Bedford Crescent, Collaroy, provided a statement concerning her dealings with the Company and Mr Hutchings. On 10 May 2001 Mr Marsh provided a quotation on behalf of the Company. The quotation contains a heading "Description of additional work required" and includes the statement "complete rewire of lighting and power circuits and consumers mains throughout the house" plus additional work for the approximate cost of $8000 labour only. On 26 September 2001 Mr King carried out an electrical inspection of the premises. In his statement he advised that the majority of the electrical wiring of the installation was in a serviceable condition, with a minor part requiring urgent attention. A full rewire of the premises was not warranted.

100 Ms Louisson provided a statement concerning her dealings with the Company and Mr Hutchings with respect to Unit 5, 1 Bond Street, Mosman. Ms Louisson stated that Mr Hutchings advised her that a cable supplying her cooktop should be upgraded from a 4mm cable to a 6mm cable, as the existing cable was not adequate to handle the electrical load from the cooktop. Mr King carried out an electrical inspection of the premises on 21 December 2001 and advised in his statement that the installation of a 6mm cable was not required. Ms Louisson obtained an independent inspection report in relation to the issue and was advised that no fault could be found on the old 4mm sub circuit originally supplying the cooktop and oven to warrant replacing/upgrading cables to 6mm.

101 Mr Wilson argued that consumers’ statements should be accepted and preferred to that of Mr Hutchings. The fact that a customer signed a contract with the Company on the same day that she received a quotation suggests that she relied on what had been said to her. It is also significant that the Company’s brochure referred to child safety. The owners of the properties at Wellman Road, Ellery Parade, and Darley Street all indicated that they had been told that their situation was dangerous. Each entered into a contract on the same day as a quotation was provided. Mr Wilson submitted that these consumers agreed to spend significant sums of money because they had been told that it was dangerous. Some had been misled into having the work done because they had been misled in this way.

The Applicants’ case

102 The applicants have hotly contested these allegations. Mr Davie submitted that there may be more than one opinion in relation to the necessity for work. It is a matter of judgment. Some allegations have been made that the applicants have omitted work by other situations that have been overcautious. In every case customer was presented with a range of options and customer chose from those options. He urged the Tribunal to be cautious in adopting hindsight opinions.

Findings in relation to this allegation

103 While I consider that there is some merit in Mr Hutchings' argument that there is scope for differing opinions in relation to whether or not particular work is necessary, I agree with Mr Hanlon's findings in relation to the Company's conduct. From the evidence before me it is clear the Company has deliberately set out to instil a sense of fear in its customers in order to generate additional revenue for the Company. The situation was exacerbated by the commission-based arrangement between the Company and its employees. I am satisfied that the Company, through its employees, misrepresented or exaggerated to its customers the need for specialist work to be carried out. The Company has taken advantage of its customers fears for its own gain.

104 In the circumstances I am satisfied that this model of behaviour constitutes improper conduct for the purposes of section 51 of the Act. In my view, this is the most serious of the Commissioner’s allegations and greatly overshadows those that I have discussed above. The seriousness of this conduct cannot be overstated. I agree with Mr Hanlon's conclusion that the Company has engaged in predatory conduct.

I. Issues relating to supervision

The Commissioner’s case

105 Mr Hutchings is the Company’s nominated qualified supervisor, and he holds a qualified supervisor certificate. A qualified supervisor who is supervising any electrical wiring work must ensure that the work is done correctly. Pursuant to section 53 of the Act the holder of a supervisor certificate who has control over the carrying out of residential building work or specialist work of any kind is guilty of improper conduct if the requirements applicable to the work made by or under this Act or any other Act are not complied with, or a breach of a statutory warranty occurs in the course of doing that work, or in the case of specialist work, the work is done otherwise than in a good and workmanlike manner or faulty or unsuitable materials are used in the course of doing the work. Section 53(2) of the Act provides that the holder of a supervisor certificate is to be presumed, in the absence of evidence to the contrary, to have control over the doing of all work for which the holder is a nominated supervisor.

106 The Commissioner asserts that Mr Hutchings is ultimately responsible for the standard of work provided by the Company's employees. The Commissioner’s position is reasonably set out in Mr Hanlon's reasons where he states:

“I note that due to the specialist nature of electrical work each employee who carries out the work must be licensed in their own right or be personally supervised by someone who does hold the requisite category of licence. This does not remove the accountability of Mr Hutchings as the Company's nominated supervisor.

During his interview with departmental investigators, Mr Hutchings agreed that specific work performed by the Company's electricians was defective. He agreed that he was responsible for all facets of the Company's operation, in particular its "technical running". He stated that defects were "oversights" and "... are not acceptable ..." within the Company's operation. He described the procedures that were in place to monitor the work of the Company's electricians. He further stated that his electricians knew that the "... ramifications of poor workmanship is a formal warning which can result in termination", yet despite his employee's work being defected by the supply authority there is no evidence that any electrician received anything more than a reprimand was disciplined.

Additionally, Mr Hutchings attempts to mitigate the severity of the Company's conduct by stating that the detected defects were of a minor nature. I cannot accept this view. The Company's clients are entitled to receive work that is of the requisite standard. Indeed, a statutory obligation is placed on all installing contractors to ensure that the work is safe and appropriate for use. To this end, electricians are trained to test their own work and to certify as to its compliance. The Company arranged for its electricians to undergo a refresher course on testing procedures in February 2002. Notwithstanding their attendance, their work was still found to be defective.

Mr Hutchings' failure to ensure that the requisite standard of work is maintained indicates that he is either unwilling to act diligently in this regard, or is incapable of providing an adequate level of supervision. He has unsuccessfully attempted to deflect the blame for his failure to provide adequate supervision on others. Mr Hutchings submitted that the accuracy of the Energy Australia inspectors' trade related knowledge is inadequate and that this has contributed to a number of defects, having been withdrawn after he has disputed them. He further submitted that the number of defect notices issued to a licensed contractor is an ineffective guide as the contractor's competency on that basis.”

107 Mr Davie argues that there is confusion between the roles of nominated supervisor and qualified supervisor. He submitted that Mr Thorpe is also a qualified supervisor and there is no evidence to suggest that when Mr Hutchings did not supervise the Company’s work, that supervision was not undertaken by Mr Thorpe.

Findings in relation to this allegation

108 I agree with the Commissioner's assertion that Mr Hutchings is ultimately responsible for the standard of work provided by the Company's employees. It is my understanding that Mr Hutchings has accepted that this is the responsibility of a nominated supervisor. As an officer of the Company Mr Hutchings must accept the responsibility for the Company's actions. In the circumstances I am satisfied that the evidence has proven improper conduct for the purposes of sections 53 and 54 of the Act.

109 I note Mr Davie's submissions that no fraudulent intent or wilful conduct has been suggested against Mr Hutchings. The evidence shows that Mr Hutchings took on board all suggestions that were made to him and undertook rectification of any defects that were notified. I have not formed a view contrary to this submission. I consider that this is relevant to consideration of what action is to be taken against Mr Hutchings and I will discuss this further later in these Reasons.

Disciplinary Action - Submission

110 The Commissioner determined to permanently disqualify the Company from being the holder of any authority and to disqualify Mr Hutchings from being the holder of any authority for 10 years. Additionally Mr Hutchings was to pay $5,000.00 to the Commissioner as a penalty.

111 Mr Davie submitted that this was excessive. Mr Davie noted that a penalty of the nature imposed on the Company was appropriate only in the most serious of cases. He argued that the Tribunal should take account of all the circumstances of the applicants’ conduct. He urged the Tribunal to note that the Company had undertaken thousands of jobs and that the Commissioner’s case is limited to only six of them.

112 He argued that no fraudulent intent has been suggested and that if it had been it would need to be put robustly. He further urged a finding of no wilful conduct. This is indicated by the fact that the Company appropriately addressed any defects that were brought to its attention. All suggestions made were taken on board. There has not been persistent or chronic action. Where the applicants disagreed with the Commissioner’s interpretation of the applicable rules or legislation, the alleged defects were rectified and then the matter was argued.

113 Mr Wilson in contrast argued that there is evidence of defective work extending over a long period. This period extends from May 1999 to August 2002. Defect notices were issued in relation to 22 properties however Mr Hutchings only inspected four of those properties. As the nominated supervisor Mr Hutchings is responsible for the Company’s work. The fact that he failed to inspect the work that was the subject of the defect notices is a factor to be considered when weighing his fitness to hold an authority. The Tribunal could not be satisfied that this conduct would not reoccur.

114 Similarly, the Tribunal must take account of the statements provided by the Company’s customers. Their evidence should be preferred to that of Mr Hutchings. He argued that Mr Hutchings’ lack of insight into the gravity of his misconduct for the home owner is a factor to be taken into account: Stephens v Director General, Department of Fair Trading [2003] NSWADT 173.

115 Mr Wilson referred to the Director General, Department of Fair Trading v Cohen [2000] NSWFTT 3 where Judge K P O’Connor, Chairperson outlined a number of factors to be taken into account. His honour stated at paragraphs 44 – 45:

44) The Tribunal noted that in the submissions in support of the maximum penalty emphasis had properly been given to (1) deterrence, personal and general; and (2) the objectives and the consumer protection function of the licensing legislation. The Director General has similarly given these factors considerable emphasis in the submissions in these proceedings.

45) Alongside those factors the Tribunal considered that the following factors should be weighed:

a) the nature, width and extent of the contraventions

b) the loss or damage and prejudice in consequence of the contraventions

c) the circumstances in which the contraventions took place

d) whether the licensee has been to have engaged in any similar conduct

e) the presence of fraudulent or dishonest intent and deliberation on the part of the licensee

f) the extent of carelessness or wilfulness of the conduct

g) the efforts made to correct the situation and what measure have been taken by the licensee

h) what consciousness the licensee (a) had (b) displayed, of its obligations under the relevant statute and to the owners

i) the effect upon the licensee

j) antecedents

k) attitude, building history and future compliance

l) the penalty range.

116 In Hutchings -v- Commissioner of Police, New South Wales Police Service [2001] NSWADT 62 the Deputy President of this Tribunal observed at paragraphs 17 –19:

“17 The Tribunal has frequently quoted the decision in Australian Broadcasting Tribunal v Bond 1990 94 ALR 11 as a guide to the consideration of the meaning of "fit and proper". In that case, Toohey and Gaudron JJ said at 65, that:

The expression "fit and proper person", standing alone, carries no precise meaning. It takes its meaning from its context, from the activities in which the person is or will be engaged and the ends to be served by those activities. The concept of "fit and proper" cannot be entirely divorced from the conduct of the person who is or will be engaging in those activities. However, depending on the nature of the activities, the question may be whether improper conduct has occurred, whether it is likely to occur, whether it can be assumed that it will not occur, or whether the general community will have confidence that it will not occur. The list is not exhaustive but it does indicate that, in certain contexts, character (because it provides indication of likely future conduct) or reputation (because it provides indication of public perception as to likely future conduct) may be sufficient to ground a finding that a person is not fit and proper to undertake the activities in question.

…

19 The question Toohey and Gaudron JJ pose in the Bond Case should be addressed. Is the question when determining whether Mr Hutchings is a fit and proper person:

whether improper conduct has occurred,

whether it is likely to occur,

whether it can be assumed that it will not occur, or

whether the general community will have confidence that it will not occur; or

some other question.”

117 Mr Wilson argued that it is not significant that some defects might be classified as minor. A breach is a breach and these provide sufficient grounds for the Tribunal to deal with the applicants on the basis of improper conduct under the Act.

118 Mr Wilson referred me to the decision of the Commercial Tribunal in Maurice Neville Hinchcliffe v Building Services Corporation Commercial Tribunal of NSW No. 1115 of 1995 (unreported) where it is stated at pages 22 – 27:

“[T]he purpose of legislation is to protect the public. The Tribunal has taken into account the appellant's remorse and contrition in coming to its decision: Clive Andreas Evatt , ACT Supreme Court, No 373 of 1987. Nevertheless, subjective matters cannot overtake the public interest. The same principles apply to builders in disciplinary proceedings and licensing matters as they do for barristers and medical practitioners: Buttsworth v Walton , Court of Appeal, 19 December 1991, unreported per Samuels JA 15:

"The subjective matter, however, seems to me to assume incorrectly that an order made by the Tribunal under section 32(r) of the Act is a punitive one ... but when the purpose of an order is to protect the public, these matters diminish in weight, if indeed they are left with any substance at all. Equally, the public interest in the appellant's continuing in practice must be weighed against the public interest in protecting patients from any repetition of the conduct exhibited in this case ...".

…

There are also numerous cases evaluating the fitness of an applicant to hold either a licence or a certificate. Isolated or passing departure from proper standards may not warrant the refusal of a licence but intention or extended conduct over a period of time is viewed differently: New South Wales Bar Association v Evatt (1968) 117 CLR 177 at 183; Ziems v Prothonotary of the Supreme Court of New South Wales (1957) 97 CLR 279 at 298. Character evidence may be relevant, but each case must be assessed on its own particular circumstances.

In Clearihan v Registrar of Motor Vehicle Dealers in the Australian Capital Territory (1994) 122 ACTR 25 at 30, Miles CJ stated that each case must be assessed on its merits. In assessing the impact of past adverse findings on certain licence applications, it might not always be relevant. On the other hand, adverse determinations may point to a lack of appreciation of what is demanded by the licence, then consideration of them becomes important. The appellant has no such adverse determinations against him.

In determining whether a person is fit and proper to hold a licence, the Tribunal does not consider this in isolation. The whole of the conduct of the appellant is taken into account. Proper regard must be had of the context also of the regulatory regime: Young Taek Chong Hongv Tomazin (1994) ASC 56-283 at 58,984.

As already noted above, the intention of the Act is consumer protection. The accreditation of a person as a building contractor (or a qualified supervisor) under the Act means that a person can be held out to the public as being not only possessed of acceptable building expertise, irrespective of size or complexity, but is a person of integrity and honesty: Hughes & Vale Pty Limited v State of New South Wales 93 CLR

This jurisdiction has recognised the significance of the consumer protection aspect of licensing in a number of cases. In Bournelis v Building Services Corporation, Commercial Tribunal of New South Wales, 9 June 1995, unreported at 5, it is stated:

"Members of the public must have confidence in builders both from the perspective of standard of work and honesty. Consumers place their trust and their money in builders and often rely on their advice at times which are often stressful, that is, the renovating, extension or building of a home. Consumers must be sure that the confidence they place in builders is not abused. They should be able to assume that builders adhere to the proper standards of trust and honesty."

119 In considering what disciplinary action to take I have taken account of all the factors referred to above. I am particularly cognisant of the fact that the purpose of disciplinary action is not to punish the applicants but to protect the public: Clyne v NSW Bar Association (1960) 104 CLR 186 at 201.

120 I have noted that most of the defects that I have found proven were of a minor nature. I also note however that the conduct has extended over a significant period of time and over many different sites. Of themselves, the particular defects are not such as would justify action as harsh as that determined by the Commissioner. I have not found there to be fraudulent or dishonest intent and deliberation on the part of the applicants in relation to those defects. Nor have I found particular carelessness or wilfulness of the conduct. In each case the Company made efforts to correct the situation when defects were brought to its attention. Nevertheless, the applicants’ conduct demonstrated a lack of quality control and inadequate supervision. Energy Australia has performed the supervisory role that Mr Hutchings should have been playing in relation to the Company.

121 I have indicated above that I agree with the Commissioner’s views with respect to the Company’s predatory conduct. The Company has demonstrated a wanton disregard for its obligations to its customers.

122 In my opinion the Commissioner was correct to cancel the Company’s authority and to permanently disqualify it from being the holder of any authority.

123 I am of the view, however, with respect to Mr Hutchings, that the period of disqualification was greater than is warranted by his offences. It is my view that a disqualification period of three years would be preferable. It is my view that Mr Hutchings’ failings are more the result of inadequate management ability than lack of trade skills or dishonesty. He lacks the foresight to understand the consequences of the incentive program that he put in place in the Company and risks associated with adopting the methods used to cultivate work opportunities. In my view he would benefit from management training before undertaking such a position in the future. Nevertheless, I do not believe that the protection of the public requires that he be excluded from the industry for a longer period than three years.

124 It is also my view that the consequence of the cancellation and disqualification of the Company and of Mr Hutchings is that he is likely to be financially strained. In those circumstances the imposition of a financial penalty would not, in my view serve to protect the public, but rather would have a punitive effect on Mr Hutchings. Given that decision, I do not consider it appropriate to impose a monetary penalty.

125 In relation to the Company case, therefore, the decision of the Tribunal is to affirm the Commissioner’s decision.

126 In relation to Mr Hutchings, the Commissioner’s decision is set aside. In substitution for that determination is the decision that Mr Hutchings be disqualified from holding a contractor licence for a period of 3 years.

Orders

1. I affirm the decision of the Commissioner for Fair Trading that the contractor licence issued to Hutchings Electrical Pty Limited is cancelled and that the Company is permanently disqualified from being:-
(a) the holder of any authority,

(b) a member of a partnership, or an officer of a corporation that is a member of a partnership, that is the holder of an authority, or

(c) an officer of a corporation that is the holder of an authority.

2. The decision of the Commissioner for Fair Trading in relation to the supervisor's certificate issued to Mr Steven Owen Hutchings is set aside. I substitute for that determination the decision that the supervisor's certificate issued to Mr Steven Owen Hutchings is cancelled and that Mr Hutchings be disqualified for a period of three years from being:-
(a) the holder of any authority,

(b) a member of a partnership, or an officer of a corporation that is a member of a partnership, that is the holder of an authority, or

(c) an officer of a corporation that is the holder of an authority. Such period of disqualification is to take effect from 10 March 2003.