Queensland Building Services Authority v Glorious Constructions Pty Ltd
[2012] QCAT 246
•19 June 2012
| CITATION: | Queensland Building Services Authority v Glorious Constructions Pty Ltd [2012] QCAT 246 |
| PARTIES: | Queensland Building Services Authority |
| v | |
| Glorious Constructions Pty Ltd |
| APPLICATION NUMBER: | OCR041-11 |
| MATTER TYPE: | Occupational regulation matters |
| HEARING DATE: | 16 and 17 May 2012 |
| HEARD AT: | Brisbane |
| DECISION OF: | Peta Stilgoe, Senior Member |
| DELIVERED ON: | 19 June 2012 |
| DELIVERED AT: | Brisbane |
| ORDERS MADE: | 1. The application is dismissed. |
| CATCHWORDS: | OCCUPATIONAL REGULATION – BUILDING – where licensee backdated a building contract – whether dishonest purpose – whether inconsistent reasons given for backdating – whether a fit and proper person – effect of breaches of the Domestic Building Contracts Act 2000 Queensland Building Services Authority Act1991, s 89(c) Peters v The Queen (1997) 192 CLR 493 Australian Broadcasting Tribunal v Bond (1990) 170 CLR 321 |
APPEARANCES and REPRESENTATION (if any):
| APPLICANT: | N Andreatidis instructed by Queensland Building Services Authority |
| RESPONDENT: | A Wallace instructed by Hemming & Hart |
REASONS FOR DECISION
This is a disciplinary proceeding against Glorious Constructions Pty Ltd. The Queensland Building Services Authority contends that proper grounds for disciplinary proceedings exist pursuant to s 89(c) of the Queensland Building Services Authority Act1991 because Timothy Peter Nelson, a director of Glorious Constructions, is not a fit and proper person to exercise control or influence over the company.
The particulars of the allegation that Mr Nelson is not a fit and proper person are:
a)That Mr Nelson backdated a building contract.
b)The building contract was backdated for dishonest purposes.
c)Mr Nelson failed to act with honesty and integrity because he gave the Authority inconsistent reasons for backdating the contract.
d)He failed to act with honesty and integrity because he was unable to recall whether he backdated another contract and this inability led to an inference that it was not unusual for Mr Nelson to backdate contracts.
e)Glorious Constructions breached ss 26, 39, 55, 62 and 68 of the Domestic Building Contracts Act2000.
All but one of these allegations arise from dealings between Glorious Constructions and Mr and Mrs Eason in 2006. The parties have agreed a number of facts about these dealings:
a)Mr and Mrs Eason possessed an owner builder licence for work at their property at Mt Nebo.
b)They had engaged a different builder to perform the work that was the subject of their owner builder licence. That work was defective in material and substantial ways.
c)Mr and Mrs Eason approached Mr Nelson to rectify the defective work. In early August 2006, Mr Nelson agrees to perform rectification work.
d)Glorious Constructions signed a Preliminary Agreement on 1 August 2006 and started work on 16 August 2006. Mrs Eason signed that document on 1 September 2006.
e)On 27 August 2006, Glorious Constructions provided a one page written quote to Mr and Mrs Eason.
f)In late August/early September 2006, Glorious Constructions issued a number of invoices and they were paid. Glorious Constructions also entered into a number of subcontracts.
g)On 30 September 2006, the parties signed a building contract but backdated it to 31 August 2006.
h)Glorious Constructions paid the statutory insurance on 6 October 2006.
Glorious Constructions concedes that it backdated the contract and that it paid the statutory insurance late. It is for the tribunal to determine these matters:
a)Did Glorious Constructions give inconsistent reasons for backdating the contract?
b)Did Glorious Constructions backdate the contract for dishonest purposes?
c)What was the effect of Glorious Constructions’ breach of the Domestic Building Contracts Act2000?
d)Was Mr Nelson’s conduct such that he is not a fit and proper person to exercise control or influence over Glorious Constructions?
Did Glorious Constructions give inconsistent reasons for backdating the contract?
The Authority has referred the tribunal to statements Mr Nelson filed in proceedings between Glorious Constructions and Mr and Mrs Eason and the company’s response, through its lawyers, to the show cause notices issued by the Authority.
In his statement dated 14 September 2007, Mr Nelson asserted:
The reason the contract had been back-dated to 31 August was at the request of [Mr and Mrs Eason] so that it could include some of the work carried out after 31 August 2006.[1]
[1] Exhibit 7 at [16].
In his statement dated 20 May 2008, Mr Nelson asserted:
I must say, also, that one of the reasons it was backdated was because I wanted to avoid any problems with the BSA as a result of not having a formal contract at the time I commenced work for [Mr and Mrs Eason].[2]
As stated, after the Contract had been completed and signed, it was back-dated to 31 August 2006. This was at my suggestion (so that I would not get into trouble with the BSA for not having a proper contract in place when works initially commenced)...[3]
[2] Exhibit 8 at [84].
[3] Exhibit 8 at [172].
By letter dated 20 January 2011, Sawford Lawyers, on behalf of Glorious Constructions, wrote to the Authority in response to show cause notices in these terms:
(the back-dating of the Eason contract was) to allow the Easons to access finance in relation to the work already carried out by [Glorious Constructions].[4]
[4] Exhibit 6, page 101 at [9].
Mr Nelson was cross examined on this issue. He told the tribunal that there were two reasons why he back-dated the contract. The first reason was that the Authority’s officer, Mr Vosper had attended the site to inspect the work of the previous builder and, during that inspection, told Mr Nelson that he would need a formal contract. The second reason was that Mr and Mrs Eason had cash to complete the work to a certain point but that they would then need a contract to obtain finance. Mr Nelson backdated the contract to include works that had been performed and invoiced but which were not covered by Mr and Mrs Eason’s cash reserves.
[10] I accept Mr Nelson’s oral evidence that there were two reasons why he backdated the contract. It is consistent with, and explains, the earlier written material. In his written statement of 20 May 2008, by the use of the word “also”, Mr Nelson alludes to the fact that there were two reasons for the contract being backdated.
[11] The Authority also points to the inconsistency in Mr Nelson’s evidence about whether he suggested the contract be backdated or whether Mr and Mrs Eason requested it. There is an inconsistency in the evidence but I find that little turns on it. Even if Mr and Mrs Eason did not request that the contract be backdated, they obviously acquiesced in Mr Nelson’s conduct.
Did Glorious Constructions backdate the contract for dishonest purposes?
[12] The Authority is not submitting that Glorious Constructions was dishonest within the meaning of s 89(f) of the Queensland Building Services Authority Act 1991. Instead, it submits that “dishonest” is a subset of whether a licensee is a fit and proper person.
[13] It further submits that, because Mr Nelson’s intention in backdating the contract was to avoid problems with the Authority, his action was dishonest.
[14] Counsel for the company submitted that the test of dishonesty is whether the act is “dishonest” by community standards.[5] He submitted that “dishonesty” is normally used to describe an act where there has been some intent to deceive or cheat and is not normally used to describe acts that are merely reckless, disobedient or foolish.
[5] Peters v The Queen (1997) 192 CLR 493.
[15] The Australian Concise Oxford Dictionary defines “dishonest” as:
“fraudulent, insincere”.
[16] It is clear from the submissions of both parties that Mr Nelson’s intention in backdating the contract is a relevant factor. The Authority submits that Mr Nelson backdated the contract to “avoid trouble”.
[17] In his oral evidence before the tribunal, Mr Nelson consistently told me that his belief Mr and Mrs Eason were owner/builders was a relevant factor in his dealings with them. He told the tribunal that he did not think that he needed a contract with Mr and Mrs Eason initially because they were acting as the builder and he was simply a sub-contractor. He told the tribunal that he thought Mr Vosper was wrong when he told Mr Nelson that Glorious Constructions did require a contract, but that it would have been foolish to ignore Mr Vosper’s advice.
[18] In its cross examination of Mr Nelson, the Authority pointed out that, at the time this contract was entered into, subcontractors working for an owner/builder were required to enter into a written contract and that the position did not change until 2007. Mr Nelson admitted that he did not know this and that he had worked for other owner/builders on the same basis.
[19] Counsel for Glorious Constructions took me through a review of Domestic Building Contracts Act 2000, reprint 1(c) to demonstrate that, as at 2006, there was doubt about the position in relation to an owner/builder which was clarified by an amendment in 2007. Counsel argued that, prior to the amendment, it was reasonable for a contractor to believe that he did not require a written contract with an owner/builder. Counsel submitted that a licensee cannot be said to be dishonest because of a wrong assumption about the relevant law.
[20] Mr Nelson told the tribunal that he further believed that it was very difficult for owner/builders to obtain finance from a bank so, once the Easons’ cash ran out, they would require a written contract to enable them to obtain finance and finish the work. The Authority did not challenge that belief.
[21] There was uncontested evidence before me that Mr and Mrs Eason were acting as owner/builders. I accept that Mr Nelson believed that he did not require a written contract because Mr and Mrs Eason were owner/builders. I also accept that, because of the uncertainty of the position under the Domestic Building Contracts Act 2000 of the time, that belief was reasonably held.
[22] I do not accept that Mr Nelson’s action of backdating the contract was insincere. The Authority has provided no evidence that it was fraudulent and, as I have already observed, it does not make a claim under s 89(f) of the Queensland Building Services Authority Act 1991. Although Mr Nelson’s action in backdating the contract was wrong and ill-advised, I am not persuaded that it was “dishonest”.
What was the effect of Glorious Constructions’ breach of the Domestic Building Contracts Act2000?
[23] Counsel for Glorious Constructions provided a multi-pronged argument in relation to breaches of the Domestic Building Contracts Act 2000, ranging from a submission that the Act does not apply, through an argument that if the Act applied there was no breach of the Act to a submission that, if the Act applied and there was a breach, it was merely a factor that I could consider in determining whether Mr Nelson was a fit and proper person and did not allow me to impose a penalty in relation to those breaches.
[24] While I appreciate the thoughtful and elegant arguments of Counsel, I have assumed that Glorious Constructions did breach the Act and that the breaches are matters that I may take into account when considering whether Mr Nelson was a fit and proper person.
[25] I have taken this approach because, as I have already identified, the breaches arise from the same contract and the same set of circumstances as the Authority’s allegations about dishonesty, that is, the contract with Mr and Mrs Eason. If Mr Nelson did the wrong thing, he did the wrong thing. That is the conduct upon which I have focussed and it is not helpful to characterise the same behaviour in numerous different ways to inflate artificially the gravity of the wrongdoing.
Was Mr Nelson’s conduct such that he is not a fit and proper person to exercise control or influence over Glorious Constructions?
[26] The Authority submits that the test to determine whether Mr Nelson is a fit and proper person is[6]:
a)That improper conduct has occurred.
b)That improper conduct is likely to occur.
c)Whether it can be assumed that improper conduct will not occur.
d)Whether the general community will have confidence that it will not occur.
[6] Australian Broadcasting Tribunal v Bond (1990) 170 CLR 321 at 380.
[27] Glorious Constructions concedes that improper conduct has occurred.
[28] Counsel for the Authority withdrew any reliance on the allegation that Mr Nelson’s answers to questions about another contract led to the conclusion that this was not the only occasion on which Mr Nelson backdated a contract. This was a sensible concession as, in his oral evidence, Mr Nelson told me that he didn’t believe that he had backdated any other contract but he “couldn’t be sure”.
[29] The Authority acknowledges that the events the subject of this application occurred almost six years ago and there is no evidence that Mr Nelson has otherwise breached any legislative obligations or acted in a dishonest way. At the hearing, Counsel for the Authority withdrew its submission that Glorious Constructions’ licence should be cancelled or suspended and conceded that, Mr Nelson’s dishonesty, if any, was “at the low end of the scale”.
[30] However, the Authority relied on a decision of the Supreme Court of South Australia[7] to submit that Mr Nelson’s conduct prior to, and after, the improper conduct was a secondary consideration and that the public interest requires that Mr Nelson’s conduct be scrutinised critically.
[7] Legal Practitioners Conduct Board v Clisby [2012] SASCFC 43.
[31] I agree that Mr Nelson’s conduct needs to be scrutinised critically but the extracts from Clisby relied upon by the Authority do not respond to the questions posed by the High Court in Bond. There is no evidence that improper conduct is likely to occur and given Mr Nelson’s good conduct since 2006, I am entitled to assume that he will not engage in such improper conduct in the future.
[32] The final question is whether the general community will have confidence that the improper conduct will not occur. The Authority has argued that I can only be satisfied that improper conduct will not occur in the future by imposing an appropriate penalty and that a penalty is necessary to signal support for the integrity of the regulatory scheme and to act as a deterrent against contravention.
[33] I find it difficult to accept the rather cyclical argument that I ought to find Mr Nelson is not a fit and proper person because I ought to impose a penalty, which I cannot impose unless I make the primary finding.
[34] The Authority has taken no action against Mr Nelson personally, even though he received a show cause notice at the same time as the company. When questioned, Counsel for the Authority submitted that there were no grounds on which disciplinary action could be brought against Mr Nelson. It seems to me that the Authority could have brought proceedings under s 89(a) – contravention of a requirement imposed under the Act or the Domestic Building Contracts Act 2000. If I am wrong, and the “licensee” in s 89(a) can only be the company, there is an obvious lacuna in the legislation.
[35] It is illogical, on the present facts, that Mr Nelson is not a fit and proper person to run a licensee company but is a fit and proper person to operate under his personal licence.
[36] At the hearing, I asked the Authority “why this builder?” Although the question was rhetorical, I am concerned with the Authority’s apparent lack of interest in the company’s activities during 2006 until comparatively recently. Mr Vosper, an inspector employed by the Authority, knew that Glorious Constructions didn’t have a written contract in September 2006. The Authority issued a direction to rectify in 2007. Mr Nelson’s statements, from which the complaint of dishonesty comes, were available in 2008 yet the Authority did not issue a show cause notice until December 2010. If Mr Nelson was such a threat to public confidence in the industry, the Authority’s failure to act for over two years is inexplicable.
[37] In all the circumstances, I find that the general community can have confidence that the improper behaviour will not occur in the future. I further find that although Mr Nelson’s actions were wrong, the Authority has not demonstrated that he is not a fit and proper person to run Glorious Constructions.
[38] The Authority’s application should be dismissed.
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