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

[2002] NSWADT 192

CITATION:	Hutchings Electrical Pty Limited & Anor v Director General, Department of Fair Trading [2002] NSWADT 192
DIVISION:	General Division
PARTIES:	FIRST APPLICANT Hutchings Electrical Pty Limited SECOND APPLICANT Steven Owen Hutchings RESPONDENT Director General, Department of Fair Trading
FILE NUMBER:	023198
HEARING DATES:	25/09/02
SUBMISSIONS CLOSED:	09/25/2002
DATE OF DECISION:	10/01/2002
BEFORE:	Montgomery S - Judicial Member
APPLICATION:	Fair Trading Act 1987 - Home Builder - suspension of supervisor's certificate - Home Builder - suspension of supervisor's certificate
MATTER FOR DECISION:	Principal matter
LEGISLATION CITED:	Administrative Decisions Tribunal Act 1997 Electrical Safety (Electrical Installations) Regulation 1998 Electricity Safety Act 1945 Fair Trading Act 1987 Home Building Act 1989
CASES CITED:	Rizen Smash Repairs Pty Ltd and Alfar v Director General, Department of Fair Trading [2002] NSWADT 173 Washington Gray Pty Ltd & Gough v Director General, Department of Fair Trading [2001] NSWADT 209 George v Rockett and Anor (1990) 170 CLR 104
REPRESENTATION:	FIRST & SECOND APPLICANT T Davie, barrister RESPONDENT A Grey, solicitor
ORDERS:	1. The decision of the Director General dated 30 August 2002 to suspend the contractor's licence of Hutchings Electrical Pty Limited is set aside; 2. The decision of the Director General dated 30 August 2002 to suspend the qualified supervisor's certificate of Mr Steven Owen Hutchings is set aside

1 On 30 August 2002 the Director General, Department of Fair Trading, exercising the power granted by s 64A of the Fair Trading Act 1987 (FTA), suspended for 60 days licences held by Hutchings Electrical Pty Limited (Hutchings Electrical) and Mr Steven Owen Hutchings.

2 The licences were issued under the Home Building Act 1989 (the HBA). Hutchings Electrical is authorised to undertake Electrical work. Mr Hutchings is the holder of a Qualified Supervisor Certificate and is authorised to do and supervise Electrical work. Mr Hutchings is the nominated supervisor for Hutchings Electrical.

3 The licensees have applied under s 64A(8) of the FTA for review of the Director-General’s decisions to suspend the licences. This decision deals with both applications for review. In so far as it is relevant to these proceedings, section 64A of the FTA provides:

“64A. Suspension of licences

(1) In this section, "licence" means any licence, permit or other authority granted or issued (whether before or after the commencement of this section) under any legislation administered by the Minister, and "licensee" means the holder of the licence, permit or authority.

(2) If the Director-General is of the opinion that there are reasonable grounds to believe that:

(a) a licensee has engaged in conduct that, under legislation administered by the Minister, constitutes grounds for suspension or cancellation of the licence, and

(b) it is likely that the licensee will continue to engage in that conduct, and

(c) there is a danger that a person or persons may suffer significant harm, or significant loss or damage, as a result of that conduct unless action is taken urgently,

the Director-General may, by notice served on the licensee, suspend the licence for a period of not more than 60 days specified in the notice, commencing on service of the notice.

(3) A notice under subsection (2) has effect according to its terms, whether or not the licensee has been afforded an opportunity to be heard as to whether the licence should be suspended.

(4) ...

(5) If, during the suspension of a licence under this section, the Director-General is satisfied that the facts and circumstances that gave rise to the suspension have so altered that the suspension should be terminated, it is the duty of the Director-General, by further notice specifying the date of termination, to terminate the suspension without delay and restore the licence to the licensee.

(6) Without affecting the generality of subsection (2):

(a) a second or subsequent notice may be served on a licensee under that subsection in respect of conduct of the kind to which that subsection refers, and
(b) any such notice may be served during a period of suspension of the licence concerned.
(7) This section has effect despite the provisions of any other Act, and the power conferred by this section is in addition to, and does not limit or displace, a power conferred by or under any other Act that authorises the Director-General or any other person to suspend or cancel a licence or take other action in respect of a licence or in respect of the conduct concerned.

(8) A licensee may apply to the Administrative Decisions Tribunal for a review of a decision of the Director-General under this section.”

4 The HBA is legislation administered by the Minister for Fair Trading. It is not disputed that the requirements of section 64A(1) of the FTA have been satisfied. Nor is it disputed that the Director General has power to suspend or cancel a licence pursuant to section 62 of the HBA.

5 The Tribunal’s powers are conferred by s 63 of the Administrative Decisions Tribunal Act 1997 (the Tribunal Act) Tribunal Act, which 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.”

6 By virtue of s 8 of the Tribunal Act, ‘[a] "reviewable decision" is a decision of an administrator that the Tribunal has jurisdiction under an enactment to review.’ Section 64A(8) of the FTA provides the Tribunal with this jurisdiction.

7 The Tribunal has adopted special procedures for hearing applications for review of suspensions, to ensure that they are dealt with expeditiously. In accordance with Practice Note 9 dated 15 July 2002 a time-table was set for filing of material following the filing of the Applications for review of the suspensions. The hearing was scheduled for 25 September 2002, and proceeded on that date. The Director General filed and served the material on which he relied on 18 September 2002 and the Applicants’ material was filed and served on 24 September 2002.

8 The Director General relied on two large folders of documents much of which had not previously been brought to the attention of the Applicants. Certain of the Director General’s documents which were prepared in July 2002 were not served until 18 September 2002. The Applicants asserted that they were disadvantaged by the lateness in service of those documents and the limited amount of time available to them in preparing material in response. Consequently leave was granted for Mr Hutchings to give oral evidence. Mr Grey was invited to cross-examine Mr Hutchings and he accepted that invitation.

The Notices of Suspension

9 The suspensions were issued on 30 August 2002. The Notices to Hutchings Electrical and to Mr Hutchings are in similar terms. The Notice to Hutchings Electrical asserts that the licensee has been engaged in conduct that constitutes improper conduct as defined in Part 4 Division 1 of the HBA. The Notice to Mr Hutchings asserts that he was the sole nominated supervisor of Hutchings Electrical and had the control over the carrying out of the specialist work of Hutchings Electrical.

10 The Notice to Hutchings Electrical provides:

“SCHEDULE OF CONDUCT & REASONS FOR DECISION

For the purposes of s.64A(2) of the Fair Trading Act, 1987 this schedule sets out details of the conduct that constitutes grounds for suspension of the licensee referred to in the attached Notice of Suspension of Licence, and the reasons for issuing that Notice.

A. CONDUCT

Hutchings Electrical Pty Lid (the licensee) is the holder of contractors licence no. EC40179 (the licence).

The licensee has been engaged in conduct that constitutes improper conduct as defined in Part 4 Division 1 of the Home Building Act 1989 (HBA).

Such conduct constitutes grounds for the suspension of the licensee's licence under s.62(e) HBA, or cancellation of the licence under s.62(f) HBA.

Particulars of Conduct

1. In the course of doing specialist work the requirements applicable to the work made under an Act have not been complied with.

Particulars

a) Clause 7 of the Electricity Safety (Electrical Installations) Regulation 1998 (the Regulation) under the Electricity Safety Act 1945 provides:

"A person who carries out installation work otherwise than in accordance with the Australian /New Zealand Wiring Rules is guilty of an offence ".
b) Clause 4 of the Regulation defines "Australian / New Zealand Wiring Rules" as meaning:-
"Australian and New Zealand Standard AS / NZS 3000: 2000 Electrical Installations (known as the Australian /New Zealand Wiring Rules), as in force for the time being, published jointly by Standards Australia & Standards New Zealand ".
c) (i) Following advice from the Department of Fair Trading (the Department) that it had received a number of consumer complaints in respect of specialist work carried out by the licensee, Energy Australia inspected certain addresses where the licensee had carried out work.

(ii) On 22 October 2001 Energy Australia issued three Defect Notices in respect of the sites inspected. A further site was found to have been the subject of the issue of a Defect Notice on 7 August 2000.

Schedule A - Defect Notices issued up to 22 October 2001

No.	Detect Notice No.	Date of Notice	Address of Work	Clause of AS / NZS Wiring Rules Breached
1	15540	7.8.00	77 Ellery Parade Seaforth 2092	2.5.3.1 1.9.8 NSW Service Rules 3.9.4.3 4.13 NSW Service Rules Advice no. 1098 NSW Service Rules
2	24272	22.10.0l	21 Valley Road Balgowlah Heights	5.5.1 2.9.4.4 2.9.4.4 5.5.1
3	2427	22.l0.01	12 Wellman Road Forestville	5.8.3.2. 1.10.1 3.9 2.9.4.4 2.9.4.4
4	24274	22.10.0l	53 Darley Street Forestville	2.8.3.3.3 2.8.3.3.3 2.9.4.4 5.5.4.2 2.9.5 3.7.2.2 2.9.4.2 Copies of the 4 Defect Notices issued by Energy Australia are attached to this Schedule of Conduct and Reasons for Decision,

d) Between 22 March 2002 and 26 August 2002 Energy Australia issued 22 Defect Notices to the licensee in respect of the inspection of sites where installation work had been carried out by the licensee,

Schedule B - Defect Notices issued 22 March 2002 to 26 August 2002

No.	Detect Notice No.	Date of Notice	Address of Work	Clause of AS / NZS Wiring Rules Breached
1	22257	4.3.02	4 Coniston Street Wheeler Heights	3.5.2 a 2.9.7
2	29352	30.4.02	32 Castle Circuit Seaforth	2.7.2.1 2.9.5
3	29406	3.5.02	10 Harrington Avenue Turramurra	3.7.2.10
4	29409	14.5.02	3 Shanur Street French Forest	5.7.3.5
5	26980	21.5.02	31 Riverview Road Clareville	5.6.7.l 4.1.2 NSW Service Rules 2.9.5
6	29419	27.5.02	23 Westbourne Avenue Lindfield	5.7.3.5 5.6.2.1
7	29420	27.5.02	30 Euroka Street Northbridge	5.l
8	26982	27.5.02	15 Arnhem Road Allambie Heights	2.9.5 2.9.5 3.7.4.l
9	26940	3l.5.02	12 St Vincent Road Greenwich	*2.5.3.2 2.9.4
10	20461	4.6.02	52 Castle Circuit Seaforth	*3.7.4.l
l1	29261	11.6.02	3 Wilmette Place Mona Vale	2.5.3.3
12	26989	12.6.02	56 Chard Road Brookvale	2.9.5 2.9.4.4 *17.3.2 *2.5.3.3
13	26993	19.6.02	47 Johnson Street Harbord	*3.4.1
14	26996	24.6.02	14B Bate Avenue Allambie	5.8.2.4
l5	27000	25.6.02	14 Wilson Street, Harbord	2.7.l 2.9.4.4
16	29436	27.6.02	16 Exeter Road, Wahroonga	1.9.3
17	29271	10.7.02	Shop 127,121-133 Pacific Highway Hornsby	*2.5.3.3
18	26757	25.7.02	100 Ada Avenue, Wahroonga	2.9.4 *7.1.4
19	26669	25.7.02	14 Tennyson Road, Cromer	*1.11.2.3 *2.5-3.1 5.6.3.1 *7.1.2.2
20	26673	31.7.02	l1/38 Waine Street, Harbord	2.9.8.4 3.10.3.5
21	26766	1.8.02	2 Collins Road, St Ives	*1.l1.2.2
22	26677	8.8.02	14 Addison Road, Manly	*2.9.6 Copies of the 22 Defect Notices issued by Energy Australia are attached to this Schedule of Conduct and Reasons for Decision.

e) All Defect Notices were issued in respect of installation work that was carried out otherwise than in accordance with the Australian / New Zealand Wiring Rules.

2. The matters set out above constitute improper conduct by the licensee under s.5l(l)(b) HBA.

B. OTHER FACTS

1) Energy Australia has advised the Department that between 1 January 2001 and 21 March 2002 that it issued 28 Detect Notices to the licensee in respect of 87 sites randomly inspected (being Defect Notices issued in respect of work other than that referred to in Schedule A).

2) a) On 4 February 2002 investigators Caroline Sills and Peter King of the Department interviewed Mr Steven Hutchings, the sole director and sole nominated qualified supervisor of the licensee in respect of complaints received by the Department and the Defect Notices issued by Energy Australia, as particularised in Schedule A.

b) Arising out of that interview Mr Hutching, on behalf of the licensee, undertook to have the seven electrical employees undertake the Contractor Installation Testing Course.

c) Mr Hutchings subsequently advised the Department the staff training had taken place on 22 and 23 February 2002.

3) Twelve of the defects recorded in the Detect Notices referred to in Schedule B above were major defects that were immediately dangerous to life, health and property.

Particulars

See items marked with "*" in Schedule B

C. REASONS FOR DECISIONS

l) There are reasonable grounds to believe that the licensee, based on the matters set out under CONDUCT, has engaged in conduct that constitutes grounds for suspension or cancellation of the licensee's licence.

2) There are reasonable grounds to believe, based upon the total number of breaches of the Australian / New Zealand Wiring Rules and the number of Defect Notices issued after the meeting with the Department's Investigators and the staff training reportedly undertaken, that the licensee will continue to engage in the conduct.

3) There are reasonable grounds to believe, based on the matters set out under CONDUCT and under OTHER FACTS, that there is a danger that a person or persons will suffer significant harm, loss or damage unless action is taken urgently.”

11 A schedule prepared by the Director General and annotated by Mr Hutchings sets out the items identified as major Defects and the respective positions of the parties in relation to those items. That schedule provides:

“SCHEDULE OF MAJOR DEFECTS

"B" No.	Defect Notice No	Address	Rule	Lay Description of Defect	Contractors Response	Departments Comment
l8	26757	100 Ada Ave Wahroonga	7. 1.4	The exhaust fan in the Upstairs shower was not suitable for its location	Repair only. As per “existing installations” Rule requirements	Exhaust fans display a protection rating which permits suitability for installation in various locations to be determined.
21	26766	2 Collins Rd St, lves	1.11.2.2	When tested, the earthing resistance between the sensor light and earth was less than the required .5 meg ohm indicating a fault in the system.	Contractor only did repairs at the premises. Light fitting was existing. (D.85) Repair only. As per “existing installations” Rule requirements	Energy Australia inquiries reveal light was installed by contractor.
22	26677	14 Addison St. Manly	2.9.6	The active parts of power points were exposed to inadvertent human contact behind the attic wall.	These power outlets were existing. Contractor only changed the faces of the power points. (D.84) Not required to alter the situation as per regulations	The contractor was the last electrician to work on these power points and should not have let them remain unsafe.
9	26940	12 St. Vincent Rd, Greenwich	2.5.3.2	No safety switch to GPO (power point) installed in damp area under the house.	Minor defect D.85. The power point was an addition to an existing power circuit that had no safety switch. Regulations do not require a safety switch to be added to existing unprotected circuits. Not required according to AS/NZS Regulations	Safety switch is required to be installed to an existing unprotected circuit, the power point is located in a hazardous location where dampness is present.
10	29461	52 Castle Circuit,	3.7.4. l (Service Seaforth Rule	No sketch was provided ) in the switchboard indicating where power cables had been installed beneath the ground.	Minor defect rectified after receiving Defect Notice	Power cables could be inadvertently severed by gardening or other excavation work.
12	26989	56 Chad Rd, Brookvale	2.5.3..3	Power points in wet areas in a kitchen (commercial premises) were not protected by a safety switch.	This arose when other builders subsequently carried out work. Minor defect. Not advised on defect notice that area in question was kitchen. Assumed it related to builders removing windows and walls after work done.	Although involving non-residential premises, hazardous areas where dampness or wet conditions exist require the provision of a safety switch. The Dept, does not believe contractors response is relevant to issue.
12	26989	56 Chard Rd, Brookvale	1.7.3.2	Live wires were not suitably protected at their ends against human contact.	Minor defect. This arose when other builders subsequently carried out work. (D.84887)	Energy Australia are investigating contractors claims. (D.90)
13	26993	47 Johnson St. Harbord	3.4.1	The light circuit to which a fan/heater is installed is under size for the amount of current that is drawn.	D. 83. The current drawn by these items collectively is within the capacity of the wiring. The circuit is not overloaded. Do not understand the issue. Defect is incorrect.	The contractor’s response has been considered by Energy Australia. Defect Notice stands. D.89. Appears more than one light connected to the circuit.
17	29271	Shop 127, 121-133 Pacific Hwy, Hornsby.	2.5.3.3	Three power circuits serving multiple power points in commercial kitchen were not connected to a safety switch.	No review requested by Contractor.	Power points in wet areas of non-residential premises are to be protected by a safety switch.
19	26669	14 Tennyson Rd, Cromer	1.11.2.3	When tested, the power circuit was found to have less than the required 1 meg ohm resistance - indicating a fault in the wiring.	Advised client - now contracted to upgrade the existing circuit. (D.84) Minor defect. Incorrect reading by EA Inspector. Defect indicated is for reading on a new circuit – not an existing circuit.	Energy Australia review indicates that contractor had added to the existing circuit and should not have left installation in that condition. D.96
2.5.3.1	The power and light circuits to the new section were not protected by a safety switch.	Nothing to do with the contractor. D84. Minor defect. Circuits were not installed by Hutchings electrical so not our responsibility.	The Department does not understand the response of the contractor.
7.12.2	Power point was located within an area too close to splashes from laundry sink.	The sink was not installed when electrical work carried out. D.84 Minor defect. The GPO is not in a restricted area. No defect exists.	The Department believes location of sink would be indicated by water supply pipes and waste pipes. If not, contractor should caution owner of dangerous positioning of sink.” The Director General’s Evidence

12 As indicated above, the Director General relied on two volumes of documents relating to the alleged breaches. Included in this material is a statement by Mr Peter King, a Departmental officer who had carried out inspections of work which was the subject of Defect Notices and had assisted with the preparation of the Director General’s case. Copies of all relevant Defect Notices were included in evidence. The Director General also relied on a statement of Mr Albert Johnson, a Senior Installation Inspector with Energy Australia. Mr Johnson holds a current electrician's licence, has 39 years experience in the electrical industry and has been employed by Energy Australia for 35 years. In his statement Mr Johnson outlined that usual reporting procedures required in relation to electrical installations and explained the classification of defects as major or minor defects as follows:

"Major Defect” renders the installation immediately dangerous and must not be connected to supply.

“Minor Defect"- not immediately dangerous and may be connected but must be rectified to comply within a period of grace.

13 Mr Johnson gave oral evidence consistent with his statement.

The Applicants’ Evidence

14 The Applicants put in evidence statements in relation to each of the alleged defects referred to in the Defect Notices. For the most part, these statements were prepared by the particular tradesman who undertook the relevant work on behalf of Hutchings Electrical. These statements recount the circumstances which lead to the contract entered by Hutchings Electrical and the work undertaken.

15 Mr Adam Simpson provided statements in relation to the allegations concerning 3 Shanuk Ave Frenchs Forest; 14 Wilson Street Harbord; 38 Wayne Street Harbord; 47 Johnson Street Harbord; 56 Chard Road Brookvale; 100 Ada Street Wahroonga; and 121-123 Pacific Highway Hornsby.

16 Mr David Thorpe provided statements in relation to the allegations concerning 2 Collins Road St Ives; 14 Tennyson Road Cromer; 23 Westbourne Street Lindfield; 30 Euroka Street Northbridge; and 47 Johnson Street Harbord.

17 Mr Scott Axford provided statements in relation to the allegations concerning 4 Coniston Street Wheeler Heights; 14 Tennyson Road Cromer; 14b Bate Avenue Allambie; 15 Arnam Road Allambie; and 52 Castle Circuit Seaforth.

18 Mr Stephen Marsh provided statements in relation to the allegations concerning 3a Wilmette Place Mona Vale; 10 Harrington Avenue Warrawee; 12 St Vincent Road Greenwich; 12 Wellman Road Forestville; 53 Darley Road Forestville; 56 Chard Road Brookvale; and 14 Addison Road Manly.

19 Mr Hutchings provided statements in relation to the allegations concerning 12 Wellman Road Forestville; 21 Valley Road Balgowlah Heights; 77 Ellery Parade Seaforth; and 53 Darley Street Forestville. Mr Hutchings also provided a statement which outlines his role in regard to the operations of Hutchings Electrical and the Applicants’ response to the concerns expressed by and actions taken by the Director General. He also provided an outline of the financial impact that the suspension has had on Hutchings Electrical.

20 With respect to the Director General’s allegations of major defects, Mr Hutchings argued that of the twelve defects listed in the tables shown above, the applicable installation inspectors report only classified four as major. The remaining eight are minor. The inspectors' reports were put in evidence and Mr Hutchings directed the Tribunal’s attention to the applicable classifications noted on each report. In Mr Hutchings submission, the following eight jobs have been given a code by the installation inspector of: "Customer installation work - Minor defect":

i. 12 St Vincent Road Greenwich, defect code issued (2).
ii. 3 Wilmette Place Mona Vale, defect code issued (2).
iii. 56 Chard Road Brookvale, defect code issued (2).
iv. 56 Chard Road Brookvale, defect code issued (1).
v. 127, 121-123 Pacific Hx~2› Hornsby, defect code issued (2)
vi 14 Tennyson Road Cromer, defect code issued (1)
vii. 14 Tennyson Road Cromer, defect code issued (2)
viii. 14 Tennyson Road Cromer, defect code issued (7)

21 The Applicants argued that the categorizing of these defects as major by the Director General is incorrect.

22 Mr Hutchings’ evidence is that the installation inspector did not need to disconnect or make safe the installations. If they all were in fact major defects, then it would be the inspector's responsibility to disconnect them all from supply immediately or make them safe. The Applicants argue that the fact that this did not happen supports the view that they were not major defects. The immediate danger of all of the defects was minimal and as such it is noted that the Energy Australia inspector issuing the defect only disconnected supply to one of them. That being a bathroom exhaust fan.

23 The Applicants also dispute the four defects categorized as major. The Applicants’ response as set out in the Schedule included at paragraph 11 above provides a summary of the argument raised by the Applicants. These are essential based on interpretations of the applicable regulations. Mr Hutchings’ evidence is that the interpretation issues have been raised with Energy Australia. In response to questions posed by Mr Davie for the Applicants, Mr Johnson conceded that there is scope for different interpretations of these regulations.

The Director General’s Submissions

24 Mr Grey for the Director General provided a written outline of submissions. The relevant parts of those submissions are as follows:

“Criteria 1 for Suspension

Licensee has engaged in conduct that constitutes grounds for suspension or cancellation of licence

Section 56(c) Home Building Act provides:-

"The Director General may take disciplinary action tinder s. 62 against the holder of a contractor licence on any of the following Founds:

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

Section 57(c) Home Building Act provides:-
"The Director General may take disciplinary action under s. 62 against the holder of a supervisor or registration certificate on any of the following grounds:

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

Section 51(1)(b)(c)(d) Home Building Act 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 registration 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) in the course of doing any work that the licence or certificate authorises the holder to do, fails to comply with the requirements applicable to the work made by or under this or any other Act in respect of the work, 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 "

Section 53(1)(a)(b)(c) Home Building Act provides:-
"53 Improper conduct: nominated supervisors
(1) The holder of an endorsed 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."

Section 53(2) Home Building Act provides:-
(2) The holder of an endorsed 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."
Section 62(e) & (f) Home Building Act provides:-
"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:
(e) suspend the authority for a period not exceeding its unexpired term,

(f) cancel the authority and, if the Director-General thinks it appropriate, disqualify the holder, either permanently or for such period as may be specified in the determination, from being any one or more of the following:

(i) the holder of any authority (or of an authority of a specified land),
(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."

The allegations set out in the Schedule of Conduct accompanying the Notices of Suspension concern failure to comply with the requirements applicable to the work made under an Act, in respect of the work.

Clause 7 of the Electrical Safety (Electrical Installations) Regulation 1998, made under the Electricity Safety Act 1945, requires the work to be carried out in accordance with the current Australian/New Zealand Wiring Rules (s.51(1)(b) & s.53(1)(a) HBA).

It is noted that as the subject work is "specialist work" it is also subject to statutory warranties in respect to work performed on dwellings (s. 5l(1)(c) and s. 51(1)(b) HBA) and the general requirements to carry out work in a good and workmanlike manner and that faulty or unsuitable materials should not knowingly be used (s.51(1)(d) and s.53(1)(c) HBA).

The matters particularised in Schedule A and Schedule B of the Schedule of Conduct to each of the Notices of Suspension are evidence of the matters required to be demonstrated to satisfy Criteria 1.

In addition to those matters particularised in the Schedule of Conduct, the report of Investigator King D.74 to 144) evidences additional defective specialist work at six other sites that would satisfy the definition of "improper conduct" under the Home Building Act.

Criteria 2 for Suspension
It is like that the licensee will continue to engage in that conduct

For the period 1 January 2001 the 21 March 2002 Energy Australia issued 28 Defect Notices in respect of 87 sites randomly inspected where electrical work had been carried out by the company (32%).

In addition, the inspections of Investigator King had independently identified significant defects at six sites.

The concerns of the DFT were raised with Mr Hutchings in an interview conducted on 4 February 2002. Despite the preventative measure subsequently taken to have electricians in the employ of the company undergo electrical testing assessment by TAFE, Energy Australia have identified ongoing problems with the company's work.

Twenty-two Defect Notices have been issued to the company since the staff training was advised to have been carried out.

The Defect Notices particularise 39 individual defects,

Twelve of the defects, occurring on nine of the 22 sites, are considered to be major defects.

The 22 notices were issued in respect of 196 jobs inspected (11%) between 22 March 2002 and 26 August 2002.

The company enters into a large number of contracts annually. The rate of issue of Defect Notices remains high, despite the measures taken in February 2002 intended to overcome non-compliance problems.

The dates of issue of the Defect Notices indicate that problems with non-compliance with the Wiring Rules is constant, unabated and ongoing. The fact that non-compliance continues despite the intervention of the DFT and the staging of TAFE testing indicates that the company and Mr Hutchings are not capable of preventing the conduct from continuing.

The above is evidence which goes to the satisfaction of Criteria 2.

Criteria 3 for Suspension

There is a danger that a person or persons may suffer significant harm, or significant loss or damage, as a result of that conduct unless urgent action is taken

The subject matter of the allegations is a failure to comply with statutory standards of workmanship in relation to electrical work.

Electrical installations carry the inherent potential for danger to human safety (electric shock and electrocution) and for damage to property and human safety (through fire).

There exists an intolerable level of major defects in the recent work (21/3/02 to 22/8/02) carried our by the company. These are defects which by definition pose an immediate threat to human safety

There has been no assessment carried out to determine the extent of the presence of major defects, in the 28 Defect Notices issued between January 2001 and March 2002, but the multiplicity of defects recorded is a compounding matter of concern.

Also compounding this concern are the defects reported upon by Investigator King at six further sites.

The above matters are evidence of danger of a kind that would satisfy Criteria 3.”

25 Mr Grey argued that the suspension is justified on the basis of the high number of complaints against the Applicants. Mr Hutchings is the one member of staff most distant from current practice but as not undergone training himself when he sent his staff for training. He has no immediate intentions of undergoing training. He has not spoken with his staff for three to four months with respect to the current Wiring Rules and can not say for sure whether they have current copies of those Rules. Energy Australia should not be performing the role of the Applicants quality control inspector.

26 Mr Grey referred to the recent Tribunal decisions of Rizen Smash Repairs Pty Ltd and Alfar -v- Director General, Department of Fair Trading [2002] NSWADT 173 and Washington Gray Pty Ltd & Gough -v- Director General, Department of Fair Trading [2001] NSWADT 209 as authorities for the principle that “belief” is an inclination of mind which can be held even if there is evidence to the contrary.

The Applicants’ Submissions

27 Mr Davie for the Applicants submitted that section 64A of the FTA provides for wide and sweeping powers that can have a major impact on the Applicants’ livelihood. The Director General also issues licences and in February 2002 determined to renew the Applicants’ licences.

28 Section 64A(2) of the FTA requires that the Director General must have reasonable grounds for his belief. There is no requirement that he consider the licensee’s view. He therefore cannot pass an uncritical eye over the material placed before him. If nothing is presented from the licensee or if there is any doubt to be resolved, the Director General should give the licensee the benefit of the doubt. Doubt should be resolved in favour of the licensee.

29 The Director General must consider the outcome if disciplinary action were to be taken. If he is to retrieve a licence already given, and taking away a licensee’s livelihood, the decision is to be taken carefully.

Would the alleged conduct constitute grounds for cancellation?

30 The Applicants do not dispute that the conduct which is the subject of the Defect Notices constitutes improper conduct. Mr Davie submitted that “Improper Conduct” is an exceptionally wide term. Improper conduct is not of itself justification for suspension. In determining whether improper conduct warrants suspension, it is necessary to consider loss or damage or prejudice caused. No such evidence has been presented. The evidence that the defects are potentially dangerous does not assist.

31 Mr Davie submitted that factors to be taken into account include the circumstances in which the events took place; similar conduct; fraudulent or dishonest intent; wilfulness; efforts made to correct the situation and the licensee’s consciousness of its obligations. There is no evidence other than that presented by the Applicants with respect to the circumstances of the events. These do not assist the Director General. There have been few warnings in the past and there is no evidence of persistent or chronically delinquent behaviour by the Applicants. A high level of complaint is not relevant if the complaints are not justified. A lot of these complaints are not justified. The Applicants have rectified the work even where they were not the Applicants responsibility or in fact there were no defects. The Applicants’ approach was to rectify the work and then argue their case. They fully cooperated with the Director General and Mr Hutchings subjected himself to cross-examination.

32 There can be no suggestion of fraudulent intent. Nor can it be suggested that the Applicants’ conduct is wilful or careless. The Applicants have made significant efforts to correct the work even where they did not believe the rectification was warranted. It can not be suggest that Mr Hutchings demonstrated wanton disregard or ignorance of the applicable regulations. It is irrelevant that Mr Hutchings has not undergone further training.

33 Mr Davie argued that even putting the defects at their highest, suspension or cancellation is not warranted. Of the defects which were classified by the Director-General as Major Defects, only four were identified by the reporting inspector as Major Defects. There is no evidence to contradict the reporting inspector’s classification. Those minor defects do not provide grounds for suspension.

34 Of the four defects which could be classified as Major Defects, there are reasonable grounds for the interpretation of the regulations adopted by the Applicants. In any event, the defects were rectified. There is no evidence to suggest that there was any actual danger associated with these defects. At most there was potential danger. Mr Hutchings testified that he takes the defects seriously and rectified them at Hutchings Electrical’s cost. These defects provide no reasonable ground for suspension. It follows that the requirements of section 64A(2)(a) of the FTA have not been satisfied.

35 Section 64A(2)(b) of the FTA requires the Director General’s opinion that there are reasonable grounds to believe that the licensee will continue to engage in conduct that constitutes grounds for suspension or cancellation of the licence. Defects in the past are not sufficient to ground the inference that there will be defects in the future that will constitute grounds for suspension or cancellation. Mr Davie argued that the Tribunal should conclude that the requirements of section 64A(2)(b) of the FTA have not been satisfied.

36 Section 64A(2)(b) of the FTA requires the Director General’s opinion that there are reasonable grounds to believe that there is a danger of significant harm, or significant loss or damage, as a result of conduct that constitutes grounds for suspension or cancellation of the licence unless action is taken urgently. Mr Davie argued that there is no evidence at all on this issue except that there were defects in the past. There is no evidence of actual danger only possible danger. There is also evidence that the Applicants have made serious attempts to address the situation.

37 Mr Davie submitted that the law cannot be that because a licensee made mistakes in the past its licence should be taken away. The logical extension of that proposition would be that all electricians who make mistakes should have their licence taken away. As Mr Johnson conceded, all electricians make mistakes.

Reasons and decision

38 I accept Mr Grey’s argument that Rizen Smash Repairs Pty Ltd and Alfar -v- Director General, Department of Fair and Washington Gray Pty Ltd & Gough -v- Director General, Department of Fair Trading are authorities for the principle that “belief” is an inclination of mind which can be held even if there is evidence to the contrary.

39 In Rizen Smash Repairs Pty Ltd and Alfar -v- Director General, Department of Fair Trading the Tribunal’s President stated at paragraph 38:

“38. The degree of satisfaction that an administrator (and the Tribunal on review) needs to possess in order to form the opinion that there are ‘reasonable grounds’ to ‘believe’ that factors specified by statute are present in a particular situation is not an onerous or high one.

39. This issue was considered by the Tribunal in Washington Gray Pty Ltd & Gough -v- Director General, Department of Fair Trading [2001] NSWADT 209 at [15]. It said:

‘Even though the holding of the belief is an "objective requirement" ( Hempel v Moore (1986) 70 ALR 551 at 609-610) the belief is not one which must be held with certainty, or even on the balance of probabilities. In George v Rockett and Anor ((1990) 170 CLR 104 at 116) Mason CJ, Brennan, Deane, Dawson, Toohey, Gaudron and McHugh JJ explained the distinction between reasonable grounds to believe and establishment on the balance of probabilities adding that:

. . . the assent of belief is given on more slender evidence than proof. Belief is an inclination of the mind towards assenting to, rather than rejecting, a proposition and the grounds which can reasonably induce that inclination of the mind may, depending on the circumstances, leave something to surmise or conjecture.’’

40. There must, as I see it, be rational and persuasive evidence for the formation of the belief. The power being exercised in this case is one of the utmost seriousness – it brings a business to an end, peremptorily and without the need for any prior notice or warning. For the operators of the business, and its employees, it will often have the effect of depriving them of their likelihood. They are provided with no opportunity to adjust their financial commitments, commitments which may be substantial – commercial lease payments, uncompleted jobs, trade debts. It is a crushing blow.

41. The Government and the Parliament saw it as a step to be taken in circumstances where the pursuit of disciplinary action, by way of notice to show cause, the production of evidence and the conduct of a disciplinary hearing, would not provide a sufficient protection of the public interest in relation to alleged misconduct on the part of the licensee. The Minister referred, when introducing s 64A into Parliament, to the delays that can surround the resolution of show cause proceedings and the risk to consumers and the public generally that the licensees may continue to engage in the suspected misconduct. The Minister said: ‘As a safeguard, the power to impose a suspension will only be exerciseable by the Director General and cannot be delegated. It will also only be used where it is considered that other measures available to the Department, such as obtaining from the trader an enforceable undertaking not to further engage in the improper conduct, will not protect consumers from significant loss or damage.’ (Fair Trading (Enforcement and Compliance Powers) Bill, Hansard, LA, 7038 (9 June 2000). “

40 The three question posed by s 64A are whether there are reasonable grounds to believe that: (a) the conduct constitutes grounds for suspension or cancellation of the licence under the relevant legislation; (b) it is likely that the licensee will continue to engage in that conduct, and (c) there is a danger that a person or persons may suffer significant harm, or significant loss or damage, as a result of that conduct unless action is taken urgently.

41 I accept the Applicants’ evidence that the majority of the defects that the Director-General asserts are major defects are in fact minor defects. The evidence of Mr Johnson to the effect that they are major defects is not accepted. It is clear that Mr Johnson’s opinion is not based on his own observations and is therefore given no weight. The defect notices speak for themselves and it is clear that the inspector who issued each notice had undertaken an inspection of the work and formed a view of the seriousness of the defect. In only one situation did the inspector consider the defect serious enough to disconnect the power supply. This of itself suggests that the inspectors did not consider the defects to pose a serious risk. That being the case it is difficult to see what “rational and persuasive evidence” the Director-General considered in the formation of his belief that the alleged defects constitute grounds for suspension or cancellation of the licence.

42 With a single exception, I am not satisfied that the conduct alleged against each licensee falls within ground (a) of section 64A(2) of the FTA. The only exception is the single defect in which the reporting Energy Australia inspector disconnected the power supply. In my opinion, the evidence before the Tribunal does not lead to the conclusion reached by the Director-General in relation to any other item. I do not accept that the alleged defects constitute grounds for suspension or cancellation of the licence on the standard outlined by the Tribunal’s President in Rizen Smash Repairs.

43 I have considered the arguments presented by the Applicants regarding the interpretation of the applicable Wiring Rules that the Applicants have disputed. With respect to the items, referred to above, which have been classified as major defects, it is my view that it is reasonably arguable that they are not in fact defects at all. I therefore have difficulty in concluding that ground (a) of section 64A(2) of the FTA has been satisfied.

44 Even if there are grounds for suspension or cancellation of the licence, I do not accept that it is likely that the licensee will continue to engage in that conduct. On the evidence before me I think it is highly unlikely that in the future the Applicants will engage in conduct that constitutes grounds for suspension or cancellation of the licence. It follows that I am not satisfied that the requirements of ground (b) of section 64A(2) of the FTA are satisfied.

45 Even if I am wrong and the requirements of section 64A(2) (a) and (b) have been made out, I am not satisfied that there is a danger that a person or persons may suffer significant harm, or significant loss or damage, as a result of that conduct unless action is taken urgently. There is simply no evidence to support that proposition. In my opinion, the Applicants’ conduct has been such that they cooperated fully and have rectified the defects even where they have been disputed. I have no reason to doubt that the Applicants are serious in their intention to comply with the applicable regulations in the future.

46 In my opinion, the action taken by the Director-General has arisen as the result of numerous complaints but those complaints are generally based in contractual disputes. Section 64A of the FTA is not the correct avenue to address those issues. Section 64A of the FTA is a mechanism to address urgent issues which require swift action where no other avenue is reasonably available. In my view, the legislature did not intend that contractual disputes of this kind would be address by this machinery. Other more appropriate avenues are available to the Director-General to address those issues.

Orders

1. The decision of the Director General dated 30 August 2002 to suspend the contractor's licence of Hutchings Electrical Pty Limited is set aside.

2. The decision of the Director General dated 30 August 2002 to suspend the qualified supervisor's certificate of Mr Steven Owen Hutchings is set aside.