Jabbour and Director-General, Department of Finance, Services, and Innovation (NSW Fair Trading)

Jabbour and Director-General, Department of Finance, Services, and Innovation (NSW Fair Trading) [2016] AATA 987 (5 December 2016)

Division	GENERAL DIVISION
File Number(s)	2016/2206
Re	Maroun Jabbour
APPLICANT
And	Director-General, Department of Finance, Services, and Innovation (NSW Fair Trading)
RESPONDENT

DECISION

Tribunal	Senior Member A Poljak
Date	5 December 2016
Place	Sydney

The decision under review, being the decision of NSW Fair Trading dated 17 January 2016, is affirmed.

........................[sgd]................................................

Senior Member A Poljak

CATCHWORDS

PROFESSIONS AND TRADES – licensing – mutual recognition – ACT contractor licence – NSW contractor licence refused – directors duties – whether the applicant took all reasonable steps to avoid liquidation – whether the applicant is a fit and proper person – whether non-disclosure on application was deliberate – risk to the public – decision affirmed

LEGISLATION

Corporations Act 2001 (Cth), s 9, s 494

Home Building Act 1989 (NSW), s 20, s 20(1A), s33B(1)(a)(xvii), s 33C(3), s 33C(4), s 33C(5)

Mutual Recognition Act 1992 (Cth), s 17(2), s 19(1), s 19(2)(h), s 20, s 20(1), s 23(1)

CASES

Australian Broadcasting Tribunal v Bond (1990) 170 CLR 321

REASONS FOR DECISION

5 December 2016

Senior Member A Poljak

The applicant holds a Construction Occupation Licence (building) with certain restrictions in the Australian Capital Territory (“ACT”); with an issue period of 8 February 2016 to 8 February 2017.
On 17 February 2016 the applicant applied to NSW Fair Trading, the respondent, for a NSW Contractor Licence (Building) under the Mutual Recognition Act1992 (Cth) (“the Act”) (“the Application”).
Following a request from the respondent for provision of further information and supporting evidence, the application was refused on 5 April 2016 (“the Reviewable Decision”). This is the decision under review in these proceedings.
The application was refused for the following reasons:
(i)The applicant failed to disclose information that was pertinent to the processing of the application regarding external administration and that non-disclosure was done with deliberate intent;
(ii)There was insufficient evidence that the applicant took reasonable steps to avoid administration and that there would be no risk to the public concerning the applicant’s capacity to complete building contracts if the licence was issued;
(iii)The applicant was found not to be a fit and proper person to hold a contractor licence.

BACKGROUND

The Buildform Group of Companies (“the Buildform Group”) is a developer/builder in the construction industry and is a family business.
In 2008, Buildform Constructions Pty Ltd (“Buildform”) was incorporated and was one of numerous companies within the Buildform Group. The applicant was a director and shareholder of Buildform from 5 January 2008 until 9 July 2013.
Buildform was placed into voluntary administration (creditor’s voluntary winding up) on 23 August 2013.
On 26 August 2013, the Consumer Trader and Tenancy Tribunal (“CTTT”) ordered Buildform to pay $309,530.10 for rectification of defective work and costs of the proceedings on an ordinary and indemnity basis as agreed or assessed. And such sum was to be paid on or before 23 September 2013. A copy of the notice of order and reasons for decision are before me in evidence.

ISSUES

The issues to be determined in these proceedings are as follows:
(i)Whether the applicant is entitled, pursuant to section 20 of the Act, to be registered by the respondent as a builder;
(ii)Whether the exception set out in section 17(2) of the Act applies, namely that sections 20(1)(a), 20(1A) and 33B(1)(a)(xvii) of the Home Building Act 1989 (NSW) (“HBA”) require the respondent to refuse the application;
(iii)Whether the applicant is a fit and proper person within the meaning of section 20(1)(a) of the HBA;
(iv)Whether the applicant took reasonable steps to avoid the external administration of Buildform;
(v)Whether there is no risk to the public concerning applicant’s capacity to complete building contracts if the licence is to be issued;
(vi)Whether the application should be granted with conditions imposed on the licence; and
(vii)Costs.

RELEVANT LEGISLATIVE PROVISIONS

Section 17 of the Act provides:
(1) The mutual recognition principle is that, subject to this Part, a person who is registered in the first State for an occupation is, by this Act, entitled after notifying the local registration authority of the second State for the equivalent occupation:
(a)to be registered in the second State for the equivalent occupation; and
(b)pending such registration, to carry on the equivalent occupation in the second State.
(2) However, the mutual recognition principle is subject to the exception that it does not affect the operation of laws that regulate the manner of carrying on an occupation in the second State, so long as those laws:
(a)apply equally to all persons carrying on or seeking to carry on the occupation under the law of the second State; and
(b)are not based on the attainment or possession of some qualification or experience relating to fitness to carry on the occupation. (Emphasis added)
In the same Act, “occupation” is defined as:
…an occupation, trade, profession or calling of any kind that may be carried on only by registered persons, where registration is wholly or partly dependent on the attainment or possession of some qualification…
Subsection 19(1) of the Mutual Recognition Act provides that:
A person who is registered in the first State for an occupation may lodge a written notice with the local registration authority of the second State for the equivalent occupation, seeking registration for the equivalent occupation in accordance with the mutual recognition principle.
Subsection 19(2)(h) provides that the notice must give consent to the making of inquiries of, and the exchange of information with, the authorities of any State regarding the person’s activities in the relevant occupation or occupations or otherwise regarding matters relevant to the notice.
Subsection 20(1) provides:
A person who lodges a notice under section 19 with a local registration authority of the second State is entitled to be registered in the equivalent occupation, as if the law of the second State that deals with registration expressly provided that registration in the first State is a sufficient ground of entitlement to registration.
Subsection 23(1) states that a local registration authority may refuse a grant of registration if, amongst other grounds:
(a)any of the statements of information in the notice as required by section 19 are materially false or misleading …. .
In regards to a contractor licence in New South Wales, section 20 of the HBA relevantly provides:
(1)The Secretary must refuse an application for a contract licence if:
a)the Secretary is not satisfied that the applicant is a fit and proper person to hold a contractor licence, or
a1) the Secretary is not satisfied as to the matters of which the Secretary is required to be satisfied by sections 33B and 33C,or …(Emphasis added)
Pursuant to 20(1A), without limiting subsection 20(1)(a), in determining whether an applicant is a fit and proper person to hold a licence “the Secretary is to consider whether the applicant is of good repute, having regard to character, honesty and integrity.”
Section 33B(1)(a)(xvii) of the HBA relevantly provides that an authority must not be issued unless the Secretary is satisfied that each relevant person in relation to the application was not a director of a company that became an externally administered company (other than external administration resulting from a members’ voluntary winding up of the body corporate) at any time within 12 months after the person ceased to be a director and within three years before the date of the application.
The voluntary liquidation of Buildform was a creditor’s voluntary winding up. It was not a members’ voluntary winding up as defined by section 9 of the Corporations Act 2001 (Cth) (“CA”) as a declaration of solvency was not lodged pursuant to section 494 of the CA. Accordingly, section 33B(1)(a)(xvii) applies.
Pursuant to section 33C(3) of the HBA, a contractor licence may be issued if the Secretary is of the opinion that:
(a)there is no evident risk to the public that the applicant will be unable to complete contracts entered into in the future to do residential building work or specialist work, and
(b)the relevant person concerned took all reasonable steps to avoid the bankruptcy, liquidation or appointment of a controller or administrator. (Emphasis added)
Section 33C(4) of the HBA provides that a contractor licence issued under subsection 33C(3):
may be issued subject to a condition that the holder of the licence must not enter into a contract to do work if the contract price exceeds $20,000 (inclusive of GST) or (if the contract price is not known) the reasonable cost of the labour and materials involved in the work exceeds $20,000 (inclusive of GST).

VOLUNTARY ADMINISTRATION OF BUILDFORM

The applicant ceased to be a director of Buildform on 9 July 2013; prior to the company being placed into voluntary administration (creditor’s voluntary winding up) on 23 August 2013.
The applicant says in his affidavit dated 22 August 2016, that Buildform underwent steady growth and moved its focus from small residential related projects and specific types of work, like formwork, to larger and more complex developments. During this time an additional shareholder became involved with Buildform but did not want to purchase shares in the company. Accordingly a new company, Buildform Projects Pty Ltd, was established. It is the evidence of the applicant that Buildform was wound up voluntarily as part of this corporate restructure and not a result of CTTT proceedings initiated by Mr Secivanovic.
Tony Jabbour, Managing Director of Buildform Group states in a letter dated 16 June 2014, that Buildform “was not wound up externally but rather, we had arranged for the company to be voluntarily wound up as part of the corporate restructure.”
In a Report to Creditors dated 2 September 2013, Grahame Hill advised that he was appointed Liquidator of Buildform at a meeting of members held on 23 August 2013 and that the company had ceased operations prior to his appointment.
Richard A Bobb, a chartered accountant, states in a letter dated 18 March 2016, that:
the voluntary liquidation of BC [Buildform] was a decision made by the directors, at the relevant time, to undertake corporate restructure. At all relevant times prior to the decision to voluntary wind up BC [Buildform], the financial position of the company was sound and there were no financial difficulties or solvency issues.
Shortly after being placed in voluntary administration, the CTTT made an order against Buildform on 26 August 2013 for the amount of $309,530.10 for rectification costs of defective work, plus costs (ordinary and indemnity basis as agreed or assessed). The proceedings were initiated in about 2012 and concerned a claim arising from work that took place in about 2008. Contrary to the applicant’s evidence that Buildform rigorously defended the proceedings, the reasons for decision state that Buildform (or its representative) did not appear before the CTTT at the last directions hearing in July 2013 nor at the hearing of the substantive matter on 26 August 2013.
Given the quantum of the CTTT proceedings and the timing of the voluntary administration three days prior to the hearing before the CTTT on 26 August 2013, I find it implausible that the decision to place Buildform into voluntary administration had nothing to do with the potential outcome of the proceedings and was merely the result of a restructure. In any event, that is not a matter for me to decide in these proceedings.
I am satisfied from the ASIC records that Buildform was subject to a creditor’s voluntary winding up and as such, a contractor licence may not be issued unless I am of the opinion that there is no evident risk to the public that the applicant will be unable to complete contracts entered into in the future to do residential building work or specialist work, and that the applicant took all reasonable steps to avoid the bankruptcy, liquidation or appointment of a controller or administrator.
Also as already stated, prior to being placed into administration (creditor’s voluntary winding up) on 23 August 2013, a declaration of solvency for Buildform was not made and lodged with ASIC pursuant to section 494 of the CA.
Having regard to the evidence before me, I cannot be satisfied that the applicant took all reasonable steps to avoid Buildform being subject to a creditor’s voluntary winding up.
At hearing, the applicant stated that while he was recorded as a director of Buildform with ASIC, it was merely a “trivial technicality”. He said that his two older brothers managed the overall administration of the company and that his role was predominantly project based. He said that while he was a director of Buildform he was “just told what to do” and was not engaged in conversations leading up to the company being placed into voluntary administration. He said that his young age at the time played a big role in his lack of involvement in the running of the company, but claims that now he is 33 years old and is more responsible.
I accept that this is how the applicant saw his role with Buildform, but as a director, he had statutory obligations. The general duties imposed by the CA on directors and officers of companies include the duty to exercise their powers and duties with the care and diligence that a reasonable person would have, which includes taking steps to ensure that they are properly informed about the financial position of the company.
It is plain from the applicant’s evidence that he had little, if anything, to do with the decision to place Buildform into administration. However, his young age and lack of involvement in the overall management of the company at the time does not excuse him from his obligations and duties as a director. It was his responsibility to be involved in such key decisions. This factor logically flows into the next question to be satisfied, namely, whether there is a risk to the public that the applicant will be unable to complete contracts entered into in the future to do residential building work or specialist work.
I cannot be satisfied that there is no risk to the public given the evidence of the applicant in regards to his lack of involvement in the overall management of Buildform and the execution of his duties as a director. Additionally, the reasons of the CTTT on 26 August 2013 raise some concern in relation to the conduct of Buildform in the proceedings, namely their non-appearance at the latter stages. As a director for the majority of the time that the proceedings were on foot in the CTTT, the applicant bears some responsibility for the way in which the proceedings were conducted.
For the above reasons, I am satisfied that the respondent would be required to refuse the application under section 33B (1)(a)(xvii) HBA had the application been lodged in NSW. Since section 33C(3) has not been satisfied, the contractor licence cannot be issued subject to the conditions in subsections 33C(4) and (5) of the HBA. Accordingly the application must be refused pursuant to section 20 (1)(a1) of the HBA and section 17(2) of the Act.

FITNESS

Section 20(1)(a) of the HBA requires the respondent to be satisfied that the applicant is fit and proper before granting the application for a NSW contractor licence. To consider whether the applicant is of good repute, I must have regard to his character, honesty and integrity.
In Australian Broadcasting Tribunal v Bond (1990) 170 CLR 321 at p. 380, Toohey J and Gaudron J said:
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.
Section 7 of the Mutual Recognition Registration Application deals with a number of questions regarding matters that need to be declared by the applicant. Relevantly section 7(ii) specifically asks about any orders of a Tribunal against a company of which the applicant was a director and section 7(v) asked whether the applicant had ceased being a director of a company which, within 12 months of the resignation, was placed into administration; including creditors voluntary winding up. The applicant did not disclose that either of these questions applied to him. The respondent contends that the non-disclosure in the application of two relevant events shows that the applicant is not a fit and proper person.
I agree with the respondent that non-disclosure of matters to be declared in section 7 of the application is a serious matter. However, I do not agree that the applicant’s non-disclosure in this case warrants a finding that he is not a fit and proper person. My reasons for this are as follows.
The applicant says that he believed the respondent was aware of the history of Buildform and that he had no intention to mislead or deceive. The applicant says that he believed Buildform was never insolvent; he therefore thought that the content of the question in section 7(v) relating to insolvency was not applicable. I find this plausible given his evidence that he was not involved in the overall management of the company even though he was a director and shareholder of Buildform from 5 January 2008 until 9 July 2013. While his answer to this question may have been careless, I am not willing to make a finding, on the evidence before me, that the non-disclosure by the applicant was deliberate. In regards to section 7(ii), the orders of the CTTT were made on 26 August 2013. At that time the applicant was not a director of Buildform.
In these proceedings, the applicant has provided two character references which I have read and considered. The references speak of the applicant’s reputation, character, honesty and integrity.
In particular the letter from Mr Romanous dated 10 August 2016. Mr Romanous speaks very highly of the applicant and says that he “can with confidence state that Maroun [the applicant] and Buildform [Group] are one of the most professional, honest, reliable and competent team in the building industry”. He states that he has known and worked with the applicant for more than eight years and that he considers him to have “the professional knowledge, skills, expertise and credibility required to manage and construct such multiunit projects with competency”.
Shady Younes, in a letter dated 11 August 2016, states that the applicant has great attention to detail and knowledge of construction and that he highly recommends the applicant to clients due to his professional workmanship and manner.
Having regard to this evidence and that of the applicant in regards to the reasons for non-disclosure, I am satisfied that the applicant is a fit and proper person to hold a contractor licence pursuant to sections 20(1)(a) and 20(1A) of the HBA.

CONCLUSION

Although I find that the applicant is a fit and proper person pursuant to sections 20 (1)(a) and 20(1A) of the HBA, his application cannot succeed.
The applicant’s application for a NSW Contractor Licence (Building) under the Mutual Recognition Act1992 (Cth) made on 17 January 2016, must be refused pursuant section 33B(1)(a)(xvii) of the HBA as I have found that he hasn’t satisfied section 33C(3) of the HBA.
Accordingly, the decision under review is affirmed.
I note that it has been three years since the applicant was a director of Buildform. If he were to submit a fresh application, section 33B(1)(a)(xvii) of the HBA would no longer apply.

I certify that the preceding 49 (forty -nine) paragraphs are a true copy of the reasons for the decision herein of Senior Member A Poljak

.........................[sgd]...............................................

Associate

Dated 5 December 2016

Date(s) of hearing	30 September 2016
Date final submissions received	17 October 2016
Counsel for the Applicant	Mr J Young
Solicitors for the Applicant	Gavel & Page Lawyers
Solicitors for the Respondent	Mr W Maynard, NSW Fair Trading

[2016] AATA 987

5 December 2016

Key Legal Topics

Areas of Law

Administrative Law

Statutory Interpretation

Legal Concepts

Judicial Review

Procedural Fairness

Standing

Statutory Construction

Appeal