Obradovic v Commissioner for Fair Trading, Office of Fair Trading

[2005] NSWADT 140

CITATION:	Obradovic v Commissioner for Fair Trading, Office of Fair Trading [2005] NSWADT 140
DIVISION:	General Division
PARTIES:	APPLICANT Todd Obradovic RESPONDENT Commissioner for Fair Trading, Office of Fair Trading
FILE NUMBER:	053070
HEARING DATES:	19/05/2005
SUBMISSIONS CLOSED:	19/05/2005
DATE OF DECISION:	24/06/2005
BEFORE:	Hennessy N - Magistrate (Deputy President)
APPLICATION:	Home Builder - issue of contractor licence - Home Building Act - home builder - issue of contractor licence
MATTER FOR DECISION:	Principal matter
LEGISLATION CITED:	Building Services Corporation Act 1989 Home Building Act 1989 Home Building Regulation 1997
CASES CITED:	Australian Broadcasting Tribunal v Bond (1990) 170 CLR 321 Hughes and Vale Pty Ltd v State of New South Wales (1955) 93 CLR 127
REPRESENTATION:	APPLICANT In person RESPONDENT V Griswold, solicitor
ORDERS:	The Commissioner’s decision to refuse to issue Mr Obradovic with a contractor licence is affirmed

REASONS FOR DECISION

Introduction

1 In November 1983, Mr Obradovic was issued with a contractor licence to do building work. He specialised in building new houses and built 69 houses during the period from 1985 to 1994. Sixteen of Mr Obradovic’s clients lodged a total of 25 complaints against him in relation to his building work. In several cases the Commissioner for Fair Trading issued rectification orders against Mr Obradovic. While he complied with some of those orders, he did not comply with others and some of the clients concerned lodged insurance claims so that another builder could remedy the work. A total of $88,369 was paid in insurance claims to five of Mr Obradovic’s customers. The Commissioner was successful in recovering only $11,702 from Mr Obradovic in relation to these claims. Mr Obradovic says that that is because he was not at fault.

2 In 1996 the Commissioner suspended Mr Obradovic’s licence and it expired in October 1997. In August 2004 Mr Obradovic lodged a fresh application for a contractor licence to work as a builder. The Commissioner refused that application on three grounds. The first was that he was satisfied that Mr Obradovic had an unreasonable number of complaints made against him. (Home Building Regulation 1997 cl 25(1)(vii).) The second was that he was satisfied that Mr Obradovic had an unreasonable number of insurance claims paid in relation to his work. (Home Building Regulation 1997 cl 25(1)(x).) The third was that he was not satisfied that Mr Obradovic is a fit and proper person to hold a contractor licence. (Home Building Act 1989 s 20(1)(a).) Mr Obradovic has asked the Tribunal to review the Commissioner’s decision.

Issues

3 The issues which the Tribunal has to determine are:

a) whether it is satisfied that Mr Obradovic has not had an unreasonable number of complaints made against him;

b) whether it is satisfied that Mr Obradovic has not had an unreasonable number of insurance claims paid in relation to work that he carried out; and

c) whether it is satisfied that Mr Obradovic is a fit and proper person to hold a contractor licence. This includes consideration of whether Mr Obradovic is of good repute having regard to character, honesty and integrity.

History of complaints and insurance claims

4 Mr Obradovic has had a history of complaints against him. Although we do not have all the Commissioner’s documents in relation to those complaints, in general the complaints were made after clients attempted to get Mr Obradovic to rectify defective or incomplete work. In several cases clients were unsuccessful in getting Mr Obradovic to rectify or complete the work. They then made complaints to the Commissioner or his predecessor, the Building Services Corporation. The following discussion is not intended to be a comprehensive examination of each complaint and claim, nor of all the parties’ submissions about those complaints and claims. It is intended to be a summary of the position highlighting examples from various complaints and claims. The complaints can be categorised as follows:

• Complaints made but not proceeded with because, for example, on investigation no defects were identified for which Mr Obradovic was responsible or the time period for making a complaint had expired. (See, for example, complaints by Gigg (items 26 and 36), Fajou (items 10 and 19).)
• Complaints made but resolved between the client and Mr Obradovic informally. (See, for example, Rubino (item 4).)
• Complaints made, inspections carried out and rectification order issued where Mr Obradovic complied with that order during the time specified or the complaint was withdrawn (See, for example, Horrobin (item 5), Tapping (item 6) and Oliver (item 14).)
• Complaints made, inspections carried out and rectification order issued but Mr Obradovic failed to carry out the rectification to the satisfaction of the client or complete the work within the time frame or at all (See White (item 13), Keats (item 12), Coulton (item 15), Wadhera (items 28 and 33), Kljaic (items 29 and 31) and Grujic (item 35).)

5 Mr Obradovic says a number of things in his defence. First, he says that it was only where clients or investigators were in the wrong that he refused to rectify alleged defects or repay insurance monies. Secondly, Mr Obradovic says that the Deed of Release which resolved all outstanding litigation between him and the Commissioner “exonerated” him from any further liability for any of the complaints or insurance payments. Thirdly, he maintains that certain provisions under the previous legislation, the Building Services Corporation Act 1989, were unfair because investigators were able to ignore his side of the story.

6 Complaints not justified. According to Mr Obradovic, only eight of the 25 complaints were justified, namely items 4, 6, 7, 8, 9, 12, 15 and 21 as listed in the Commissioner’s written submissions. The others were either frivolous or not substantiated. In seven of the eight admittedly legitimate claims, Mr Obradovic says that he completed the work as required. In only one case (item 25) did the Building Services Corporation sue him for insurance monies paid to a client. Although a judgement was entered in favour of the Commissioner, Mr Obradovic was successful in having that judgment set aside.

7 Insurance claims were paid on six occasions. In relation to the Grujic insurance claim of $34,760, Mr Obradovic disagreed with the opinions of Mr Grujic’s expert and a meeting was held in which the technical issues were discussed. Following that meeting, Mr Obradovic maintains that the Commissioner did not pursue him for that debt. In relation to the insurance claim of $410 paid to Mr Horrobin, Mr Obradovic says that Mr Horrobin had not paid the final instalment on the contract and that is why he did not rectify the alleged defects. He said that he ultimately paid the amount, as it was not worth litigating. In relation to the insurance claim for $16,666 paid to Mr White, Mr Obradovic says that he did not install the vanity top because Mr White refused to pay for the variation cost. He accused Mrs White of fraudulently including the vanity top in the contract. That matter resulted in litigation with the Commissioner and was resolved by Mr Obradovic paying the sum of $10,000 in full settlement of all legal actions against him. In relation to the insurance payments of $15,601 and $18,980 to Mr Kljaic, Mr Obradovic says that the Commissioner should not have paid these claims because Mr Kljaic moved into the home before it was completed and had not paid Mr Obradovic the final amount that was due.

8 Deed of Release. Contrary to Mr Obradovic’s submission, the signing of the Deed of Release in settlement of the litigation with the Commissioner, does not “exonerate” either party because it was made without admission of liability. Furthermore, the signing of that Deed does not eliminate Mr Obradovic’s complaint history for the purposes of making licensing decisions.

9 Changes to legislation. Mr Obradovic’s final point was that the legislation was amended in 1994 to ensure that the Building Services Corporation did not have the role of issuing rectification orders. According to Mr Obradovic that role was given to an independent Tribunal which can ensure that procedural fairness is met. Mr Obradovic maintained that prior to the amendment of the Home Building Act in 1994, investigators could ignore his side of the story and he was not able to challenge their decision except in court. He says that that deficiency was overcome with the new Act but it was very unfair to him at the time. Mr Obradovic says that all he was doing was defending himself against unfairness.

Number of complaints

10 It appears from Mr Obradovic’s evidence that he was building houses for approximately 9 years from 1985 until 1994. During that time he built approximately 69 houses. In relation to 53 of those houses, no complaint was ever made. However in relation to the remaining 16 houses, the owners made a total of 25 complaints. The test in Clause cl 25(1)(a)(vii) of the Regulation is whether the Commissioner (and now the Tribunal) considers that an unreasonable number of complaints have been made against Mr Obradovic. It is not possible to determine whether a raw number is reasonable or not. That number must be assessed in relation to the period which it covers, the amount of work the builder was carrying out during that period and the nature of the complaints. In this case 16 customers made 25 complaints against Mr Obradovic during the period of approximately 9 years when he was building new homes. That represents slightly less than a quarter of Mr Obradovic’s customers during that period. Mr Obradovic says that only eight of those complaints were justified and that seven were resolved. The remaining matter (Coulton) was the subject of legal proceedings.

11 Another way of assessing the reasonableness of the number of complaints against a particular builder would be to compare the rate of complaints against him with the rate of complaints against other builders doing similar work. Not surprisingly, there was no evidence to that effect. Because the Commissioner does not know how much building work a particular builder has carried out, it is not possible to compare the rate of complaints against Mr Obradovic with the rate of complaints against other builders.

12 Several complaints against Mr Obradovic were either not substantiated or were remedied. Many others were not remedied in a timely fashion, or at all, even after rectification orders were issued. Five insurance payments were made totalling $88,369. While I accept that Mr Obradovic disputed the basis of some of the complaints and the Commissioner’s decisions, these disagreements do not explain all Mr Obradovic’s conduct. Reading through the complaints and the correspondence associated with them, it is apparent that a high proportion of Mr Obradovic’s clients had great difficulty getting him to rectify work for which he was plainly liable. They were forced to lodge formal complaints after he failed to rectify the problem informally. Even when rectification orders were made and Mr Obradovic accepted that he was responsible for fixing the problem, extensive delays were commonplace. In many cases the work was either not carried out, was delayed or was not completed. I do not accept that in every case Mr Obradovic had a genuine and justifiable disagreement with the client or the investigator. He received at least two warnings about his conduct, but these warnings appeared to have no effect.

13 In my view 25 complaints, representing just less than a quarter of Mr Obradovic’s customers over a 9 year period, is an unreasonable number given the nature of the complaints and Mr Obradovic’s response to them. Consequently the Commissioner’s decision to refuse Mr Obradovic’s application for a contractor licence is affirmed.

Number of insurance claims paid

14 During the period from 1987 to 2000, the Commissioner paid out a total of $88,369 in relation to six insurance claims from five of Mr Obradovic’s customers. The test in Clause cl 25(1)(a)(x) of the Regulation is whether the Commissioner (and now the Tribunal) considers that an unreasonable number of insurance claims have been paid in respect of work carried out by the builder. Again, it is not possible to determine whether a raw number is reasonable or not. That number must be assessed in relation to the period which it covers, the amount of work the builder was carrying out during that period and the nature of the claims. In the light of all the evidence about these claims, including the amount of the claims and Mr Obradovic’s explanation for not rectifying the alleged defects, I consider the payment of six insurance claims in the relevant period to be unreasonable.

Fit and proper

15 The final issue is whether the Tribunal is satisfied that Mr Obradovic is a fit and proper person to hold a contractor licence. This includes consideration of whether Mr Obradovic is of good repute having regard to character, honesty and integrity. The Commissioner submitted that Mr Obradovic has refused to acknowledge any wrong doing and has continually denied responsibility in relation to many of the complaints. Instead he has blamed the client, the investigator, the arbitrators and the courts for the situation in which he finds himself. According to the Commissioner, the complaints, the insurance payments and the court proceedings disclose a pattern of behaviour which leads to the conclusion that Mr Obradovic is not able to deal with clients and the Commissioner with complete honesty and integrity.

16 Mr Obradovic’s perspective is that one in every five or six of his clients did the wrong thing and gave him a difficult time. Because of the way the legislation was drafted, the Commissioner was able to ignore his side of the story and pay insurance claims which he did not consider to be justified. He said he has never cheated anyone and the disputes only arose because the client had breached the contract or the Commissioner did not listen to him.

17 The term “fit and proper person” was discussed by Chief Justice Mason in Australian Broadcasting Tribunal v Bond (1990) 170 CLR 321 at [63]. The Chief Justice said that:

The question whether a person is fit and proper is one of value judgment. In that process the seriousness or otherwise of particular conduct is a matter for evaluation by the decision maker. So too is the weight, if any, to be given to matters favouring the person whose fitness and propriety are under consideration.
18 The decision as to whether or not to grant a person a builder’s licence must be exercised keeping in mind the activities in which the person will be engaged if an authority is granted. (See Hughes and Vale Pty Ltd v State of New South Wales (1955) 93 CLR 127 at 156; Australian Broadcasting Tribunal v Bond (1990) 170 CLR 321.) In this case Mr Obradovic’s conduct all relates to his work as a builder. I have found that in several cases Mr Obradovic did not attend promptly even to the defects for which he acknowledged responsibility. Clients had difficulty contacting him on occasions and some had great difficulty in getting him to rectify the work. That situation forced several to make formal complaints to the Commissioner. Mr Obradovic ignored rectification orders when he did not consider himself liable to fix the defects and blamed “the system” for this perceived injustice. This led to the payment of six insurance claims and to court proceedings to recover those monies from Mr Obradovic. Although there was no evidence of dishonesty or bad repute, Mr Obradovic’s extreme tardiness and intransigence means that he is not a fit and proper person to hold a contractor licence.

Orders

The Commissioner’s decision to refuse to issue Mr Obradovic with a contractor licence is affirmed.