Woolley v Commissioner for Fair Trading, Office of Fair Trading
[2005] NSWADT 127
•06/08/2005
CITATION: Woolley Commissioner for Fair Trading, Office of Fair Trading [2005] NSWADT 127 DIVISION: General Division PARTIES: APPLICANT
Graham Edward Woolley
RESPONDENT
Commissioner for Fair Trading, Office of Fair TradingFILE NUMBER: 043253 HEARING DATES: 2/11/2004 SUBMISSIONS CLOSED: 04/21/2005 DATE OF DECISION:
06/08/2005BEFORE: Molony P - Judicial Member APPLICATION: Home Builder - improper conduct - Home Building Act - home builder - improper conduct MATTER FOR DECISION: Principal matter LEGISLATION CITED: Home Building Act 1989
Home Building Regulation 1997
Home Building Regulation 2004CASES CITED: Anisminic v Foreign Compensation Board [1969] 2 AC 147
Clyne v NSW Bar Association (1960) 104 CLR 186
Federal Airports Corporation v Aerolineas Argentinas (1997) ALR 649
Jadwan Pty Ltd v Secretary, Department of Health and Aged Care (2003) 204 ALR 55
Nature Conservation Council of New South Wales Inc v The Minister Administering the Water Management Act 2000 [2005] NSWCA 9
Pinnacle Homes (Sydney) Pty Ltd v Director-General, Department of Fair Trading [2001] NSWADT 222
Project Blue Sky Inc v Australian Broadcasting Authority (1998) 194 CLR 355, [1998] HCA 28REPRESENTATION: APPLICANT
In person
RESPONDENT
J Coss, solicitorORDERS: 1. The decision of the Commissioner made on 8 July 2004 that Mr Woolley was guilty of improper conduct by contracting to do and doing work for which he was not licenced with respect to the property at 17 Springside Road, Rozelle is set aside; 2. The other decision made by the Commissioner made on 8 July 2004 with respect to Mr Woolley being guilty of improper conduct are affirmed; 3. The decision of the Commissioner made 8 July 2004 to impose a monetary penalty of $3,000.00 is set aside, and in its place the Tribunal determines to impose a monetary penalty on Mr Woolley, which is to be paid by 7 July 2005, of:; i. $1,500.00 with respect to the finding that Mr Woolley is guilty of improper conduct by entering into a contract without the insurance required by the Act being in place;; ii. $1,000 with respect to the finding that Mr Woolley is guilty of improper conduct by contracting to do and doing work for which he did not hold a licence in respect of both the Chatswood and Crows Nest properties.
Introduction
1 Mr Woolley holds a contractor licence under the Home Building Act 1989. It authorises him to do and supervise residential building work in three categories: general building (house lifting only), carpentry and joinery, and general concreting (footings only).
2 In the well known difficulties which beset the home building industry following the crisis that afflicted the insurance industry in 2001 and 2002, Mr Woolley, like many others in the building industry, had great difficulty in obtaining home owners warranty insurance cover on terms suitable to him. He was not prepared to provide insurers with the guarantees they sought. With the consent of his then clients, he continued to do work he had contracted to do, despite the fact that he did not have the required insurance cover. He kept trying to find home owners warranty insurance on suitable terms. He became very annoyed and frustrated by what he considered were the unreasonable requirements of insurers, and of the home owners warranty insurance scheme established by the government under the Home Building Act 1989.
3 He decided to go public with his frustrations, in an effort to expose the inadequacies of the system that he saw as forcing him to work illegally, without insurance. He contacted the press. He featured in an article entitled, “Home owners who risk building outside the law”, which appeared in The Daily Telegraph on 14 September 2002. It read:
- “FRUSTRATED home builders are working illegally without insurance because of delays of up to three months getting cover.
Home owners incensed by the insurance fiasco are agreeing to go ahead with illegal work despite a multitude of potential risks if something goes wrong, The Daily Telegraph has learned.
Builders yesterday said uninsured work was under way on projects in "every suburb" of Sydney because of the crisis in home warranty insurance.
The NSW Department of Fair Trading confirmed it was investigating uninsured work and said the Issue was of "great concern".
The two main areas of risk are physical accidents and builders going broke half way through a job.
In either case, the owner could be in trouble if there is no insurance.
"Home warranty insurance is about protection of the consumer - anyone building without that is going against the Act and that is a very serious Issue," a Department of Fair Trading spokeswoman said.
"The consumer may not be aware of the consequences."
Breach notices have been issued to builders operating without insurance and offenders could lose their licences.
The NSW Master Builders' Association is receiving 30 calls a day from members complaining they are unable to get insurance.
"We've had many complaints from builders that they're being forced to work illegally to keep their businesses going," association executive director Brian Seldler said.
Since the collapse of HIH, builders claim insurance premiums have increased from around $600 to several thousand dollars and the waiting time for certificates from 20 minutes to several months.
Veteran builder Graham Woolley and home owner Peter Philip have agreed to begin work, without insurance, on a $150,000 extension In Rozelle.
Mr Woolley, who has been waiting 12 weeks to receive Insurance approval, said the delay - understood to be caused by a dispute over his capital resources - had made his business untenable.
"I'm working illegally but I challenge them to take me to court and fight a civil action - we'll see what the judge thinks," he said. "There are a lot of builders in my situation."
He said he did have public liability insurance in case of injury.
Mr Phillip, who wanted his extension completed by Christmas, said he carried out his own "risk assessment" on the builder and was happy to go ahead.
4 Predictably, the Commissioner, who is charged with regulating the home building industry and enforcing compliance with the Home Building Act 1989, could not ignore Mr Woolley’s open and public defiance. An investigation was commenced into Mr Woolley’s activities. Mr Woolley co-operated in that investigation and was forthright and honest in his dealings the Commissioner. In the course of that investigation, officers of the department concluded that in addition to carrying out residential building work without the required insurance, Mr Woolley was carrying out work beyond the scope of his licence. There was no suggestion that this work was in any way below standard or inadequate.
5 Following the investigation, the Commissioner commenced disciplinary procedures under the Act with respect Mr Woolley. Given the very public “challenge” to the Commissioner issued by Mr Woolley, this too was entirely predictable. Those procedures culminated in the Commissioner determining on 11 March 2004, that Mr Woolley was guilty of improper conduct and that he should pay a penalty of $3,000 within 28 days. This decision was confirmed on internal review on 8 July 2004.
6 On 2 August 2004 Mr Woolley lodged an appeal with this Tribunal seeking to review the Commissioner’s decision.
Issues
7 The issue raised for consideration in this appeal are:
- Whether Mr Woolley is guilty of improper conduct as a result of undertaking residential building work beyond the scope of his licence.
Whether Mr Woolley is guilty of improper conduct as a result of undertaking residential building work without the requisite home owners warranty insurance.
If Mr Woolley is found to be guilty of improper conduct, what disciplinary action should be taken with respect to that improper conduct?
The Prohibition on Unlicensed Work.
8 Section 4 of the Home Building Act 1989 provides:
- (1) A person must not contract to do:
(a) any residential building work, or
(b) any specialist work,
except as or on behalf of an individual, partnership or corporation that is the holder of a contractor licence authorising its holder to contract to do that work.
Maximum penalty: 1,000 penalty units in the case of a corporation and 200 penalty units in any other case.
(2) The holder of a contractor licence who has contracted to do any residential building work must not contract with another person for the other person to do the work (or any part of the work) for the holder unless the other person is the holder of a contractor licence to do work of that kind.
Maximum penalty: 1,000 penalty units in the case of a corporation and 200 penalty units in any other case.
(3) The holder of a contractor licence must not contract with another person for the other person to do any work (or part of any work) for the holder for which insurance is required under this Act unless the other person is the holder of a contractor licence to do work of that kind.
Maximum penalty: 1,000 penalty units in the case of a corporation and 200 penalty units in any other case.
9 “Residential building work” is defined in s.4:
- "residential building work" means any work involved in, or involved in co-ordinating or supervising any work involved in:
(a) the construction of a dwelling, or
(b) the making of alterations or additions to a dwelling, or
(c) the repairing, renovation, decoration or protective treatment of a dwelling.
…
10 Contractor licence is defined as meaning “a contactor licence referred to in section 4, 5 or 16A”.
11 In addition, section 12 makes it an offence to do unlicensed residential building work.
The work said to have been done outside Mr Woolley’s licence
12 The Commissioner found that Mr Woolley did residential building work beyond the scope of his licence. Mr Woolley did not dispute that he did the following work, but did dispute that it was outside the terms of his licence:
- a) organised and co-ordinated tiling, plumbing and electrical work at 17 Springside Road, Rozelle under a contract for a second story addition and renovation dated 12 August 2002. Form the records of interview conducted with Mr Woolley it appears that work commenced on 20 August 2002 and was still underway in December 2002;
b) employed and co-ordinated plumbers and electricians to do work and 313A High Street, Chatswood under a contract for renovation dated 14 September 2001. From the records of interview conducted with Mr Woolley it appears that work commenced in mid-September 2001;
c) co-ordinated electrical and plumbing work at 107 Atchison Street, Crows Nest under a contract dated 14 June 2001 for renovation. From the records of interview conducted with Mr Woolley it appears that work commenced in July 2001 and was completed in that year.
13 According to the history contained in submissions filed by the Commissioner Mr Woolley was originally issued with a contractor licence in 1989 for the category “carpentry and joinery”. In 1991 it was varied, “to additionally allow work on “house lifting”, “concrete footings” and “staircases””. In October 2003, after the matters giving rise to the disciplinary action against him, Mr Woolley’s contractor licence was endorsed with a condition that the licence is “only for contracts not requiring home warranty insurance”.
14 The evidence before me does not identify precisely when Mr Woolley’s current licence was issued, however submissions received from the Commissioner assert that his present licence was issued in October 2004.
15 There is a photocopy of one of Mr Woolley’s earlier licences, in the Commissioner’s materials, which expired on 15 October 2002. It is under this licence that he did the work at Chatswood and Crows Nest. That licence shows the following categories:
- carpenter and joiner
house lifting
staircases footings
16 Contractor licences are issued by the Commissioner pursuant to s.20. Section 21 is concerned with the authority conferred by a contractor licence. It provides:
- (1) A contractor licence authorises its holder to contract to do the following:
(a) to do any residential building work that is described in the contractor licence when it is issued (being work of a category or categories prescribed by the regulations),
(b) …
(1A) A contractor licence that authorises its holder to contract to do residential building work authorises the holder to supply such building components as are necessary for any such work done by the holder.
(2) The authority conferred by a contractor licence:
(a) is subject to the conditions applicable to the contractor licence for the time being, and
(b) may, on the application of the holder of the contractor licence, be varied by an order of the Director-General set out in a notice served on the holder of the contractor licence.
- Sub-section (1), in its present form, was introduced by the Home Building Legislation Amendment Act 2001 (Schedule 1[5]) and commenced operation on 1 July 2002. It was therefore in operation when Mr Woolley’s October 2002 and present contractor licences were issued.
17 Before 1 July 2002 section 21 provided:
- (1) A licence authorises its holder to contract to do such residential building work, or specialist work, or to supply such kinds of kit homes, as may be described in the licence when it is issued.
(1A) A licence that authorises its holder to contract to do residential building work authorises the holder to supply such building components as are necessary for any such work done by the holder.
(2) The authority conferred by a licence:
- (a) is subject to the conditions applicable to the licence for the time being, and
(b) may, on the application of the holder of the licence, be varied by an order of the Director-General set out in a notice served on the holder of the licence.
18 At that time the Home Building Regulation 1997 was in operation. It has since been replaced by the Home Building Regulation 2004 which commenced on 27 August 2004.
19 Clause 36A of the Home Building Regulation 1997 commenced operation on 1 July 2002 and set out the categories for which the Commissioner could issue a contractor licence. There was no equivalent regulation before then. Clause 36A provided:
- (1) For the purposes of sections 21 (1) (a) and 27 (1) (a) of the Act, the following categories of residential building work are prescribed:
- (a) general building work,
(b) swimming pool building,
(c) swimming pool repairs and servicing,
(d) structural landscaping,
(e) carpentry,
(f) joinery,
(g) flooring,
(h) bricklaying,
(i) stonemasonry,
(j) dry plastering,
(k) wet plastering,
(l) painting,
(m) decorating,
(n) wall and floor tiling,
(o) general concreting,
(p) demolishing,
(q) excavating,
(r) underpinning or piering,
(s) fencing,
(t) glazing,
(u) waterproofing,
(v) roof tiling,
(w) roof slating,
(x) roof plumbing,
(y) mechanical services,
(z) metal fabrication,
(aa) minor tradework,
(bb) minor maintenance and cleaning.
- It can be seen that after 1 July 2002 the Regulation did not make provision for the categories “general building (house lifting only)”, “staircases”, or “general concreting (footings only)”.
20 The 1997 Regulation also contained a provision allowing for extended definitions of work that holders of contractor licences were authorised to do. Clause 38 provided:
- (1) Extended descriptions of the work that the holders of various kinds of contractor licences or certificates are authorised to do or contract to do are provided in Schedule 3.
(2) If the work that a contractor licence authorises its holder to contract to do is described in the contractor licence by the use of a work description specified in Column 1 of the Table in Schedule 3, the description is to be taken to refer to the work specified for the work category in Column 2 of that Table.
- An examination of Schedule 3 reveals that it provides, in table form, extended descriptions of some, but not all, of the categories of work specified in clause 36A. Instructions on how to read the table are provided:
- Holders of contractor licences or certificates on which are endorsed one or more of the work categories listed in Column 1 of the Table are authorised to contract to do or to do, as the case may be, the specialist work or the residential building work more fully described in Column 2 of the Table opposite each such work category. Work categories endorsed on contractor licences or certificates but not listed in Column 1 are to be taken as referring to the work involved, as a matter of trade practice, in the trade or building activity described by the endorsed work category.
21 Prior to 1 July 2002 there was an equivalent provision to clause 38.
22 The Home Building Regulation 2004 contains similar provision specifying the categories of work for the purposes of s.21(1)(a) (clause 46), and providing for extended descriptions of those categories (clause 50 and Schedule 5). As with the 1997 Regulation, after the commencement of clause 36A on 1 July 2002, it did not provide for anything which matches the categories “general building (house lifting only)” or “general concreting (footings only)”.
23 I first became aware of this problem with work done under the October 2002 licence in the course of preparing these reasons for decision, after I had heard evidence and reserved my decision. As a consequence, I asked the Registrar to write to the parties, noting that I had examined the provisions referred to above, and seeking their written submissions on the following issues:
- 1. Under what provisions of the Home Building Act 1989 and the Regulation was Mr Woolley issued with a contractor licence authorising him to do and supervise the following residential building work: “general building (house lifting only) …, and general concreting (footings only)”, with specific regard to the restrictions “house lifting only” and “footings only”?
2. Pursuant to what power did the Respondent place the restrictions “house lifting only” on Mr Woolley’s general building licence, and the “footings only” on Mr Woolley’s concreting licence?
3. If the Home Building Act 1989 and the Regulation do not provide for the inclusion of such restrictions in a contractor licence, what is the effect (if any) of the issue to Mr Woolley of a licence subject to those restrictions on Mr Woolley’s ability to contract to do residential building work in the categories for which he was licenced?
4. Any other matters which the parties regard as flowing from these questions.
24 Submissions have been received from both parties. Those from Mr Woolley, who was unrepresented and asked to comment on what are difficult technical legal issues, do not really advance the issue. In his submissions Mr Woolley complains about the condition that he not do work requiring home owners warranty insurance. That, however, is not a matter to which this appeal relates.
25 The Commissioners submission recited much of the legislative background, and the history of Mr Woolley’s licence, already discussed above. In respect to my second question, the Commissioner referred to section 36(1) which provides:
- (1) An authority is subject to:
(a) any conditions prescribed by the regulations for authorities of the same kind, and
(b) any conditions imposed by order of the Director-General and set out in it when it is issued, except to any extent that they may be inconsistent with conditions referred to in paragraph (c), and
(c) any conditions imposed by order of the Director-General and set out in a notice served on the holder of the authority.
(2) A person issued with an authority must not contravene any requirement made by the conditions of the authority.
Maximum penalty: 40 penalty units in the case of a corporation and 20 penalty units in any other case.
- The submission noted that an example of such a condition is that imposed in October 2003 in respect of Mr Woolley only entering contracts not requiring home warranty insurance. The submission did not, there, go so far as to suggest that the categories on Mr Woolley’s licence ought to be regarded as conditions.
26 In response to my third question the Commissioner submitted:
- It is arguable that the Act and Regulation do provide for the restriction of work on Mr Woolley's licence by virtue of using the prescribed category labels on the licence (HBA section 21(1)(a); HBR 2004, clause 46 (or HBR 1997, clause 36A)) and adding work descriptors as conditions imposed under HBA sections 21(2)(a) and 36(1)(b).
However, in the unlikely event that the OFT had no power to apply descriptors which restrict the extent of work in the nominated broad category on the licence, the following provisions arguably may be used to restrict work by unqualified persons.
HBR clause 26(1) provides that before a contractor licence is issued, the Commissioner must be satisfied that the applicant is or has nominated a person who is qualified to supervise the work, complying with clause 28(1), which provides that the Commissioner must be satisfied that the applicant holds qualifications or has passed such examinations or practical tests as determined necessary.
The Commissioner must reject an application for a contractor licence if not satisfied that a requirement prescribed by the regulations would be met: HBA s.20(3)(a).
The Commissioner may, by serving notice on the licence holder, cancel the licence if it was issued in error: HBA s.43(1)(b).
27 By way of additional information the Commissioner submitted:
- The Home Building Act 1989 and Regulation were amended in mid-2003 to rationalise the building licensing program by reducing the number of existing licence categories. Prior to that time, there were about 420 categories of building and trade licence. Now there are around 40 categories of licence.
The then Minister for Fair Trading in his second reading speech (Hansard 31/5/01, p14158) explained that having too many categories of licence encourage a too narrow specialisation of skills and is confusing for consumers. There were further consultations with industry representatives before the final list of categories was introduced through the Regulation.
Licence holders are able to continue to do the same work they did before. However, if the previous category label was different from any of the new ones, the licence with a broad new description of work may be endorsed with some conditions in order to describe the exact work as previously authorised.
As mentioned above, Mr Woolley's licence was originally issued in 1989 (the date of 19/2/1990 is only a computer printing date) under the category of "carpentry and joinery", with his requested variations added in 1991.
From 22/6/2002, Mr Woolley's licence shows 3 of the new categories: (i) "building", with the restriction "house lifting only"; (ii) "carpentry and joinery"; which would already include (timber) "staircases"; and (iii) "general concreting", with the restriction "footings only".
The restriction on the new category labels merely reflect the work that Mr Woolley had described in 1991 and which he had since been licensed to do.
Mr Woolley was not qualified to do, and not licensed to do or to contract to do or to supervise, general building (eg specialist work all other work not described on Mr Woolley's licence) or general concreting beyond
28 From 1 July 2002 a contractor licence authorises its holder to do residential building work described in the licence, “being work of a category or categories prescribed by the regulations”: s.21(1). None of the categories "building" with the restriction "house lifting only", “staircases", or "general concreting" with the restriction "footings only", were among the categories of work prescribed by the Home Building Regulation 1997 which applied when Mr Woolley’s October 2002 contractor licence was issued. Similarly, they are not categories of work prescribed by the Home Building Regulation 2004.
29 As a consequence when the Commissioner issued Mr Woolley with a contractor licence, in October 2002, in the categories "building" with the restriction "house lifting only", “staircases", or "general concreting" with the restriction "footings only", that contractor licence was not one for categories prescribed by the regulation as required by s.21(1). The Commissioner did not have the power to issue such a licence.
30 The Commissioner argued, alternately, that the limitations contained in Mr Woolley’s contractor licence could be characterised as conditions on the licence imposed under section 36(1)(b), which operates a condition of the contractor licence (section 21(2)(b)). While this is an interesting argument to mount retrospectively, the reality is that the Commissioner’s own records and decisions make it very clear that the limitations on Mr Woolley’s licence, were not imposed as conditions, but were imposed as category limitations. Thus the opening paragraph of the decision under review contains the following sentence:
- The licence authorised Mr Woolley to do residential building work within the categories of “general building work (house lifting only)”, “carpentry and joinery” and “general concreting (footings only)”.
- Given that the Commissioner has always treated the general building and concreting limitations contained in Mr Woolley’s licence as categories, and imposed them as categories, it is not now possible for the Commissioner to retrospectively change that decision.
31 As a result I am satisfied that in October 2002 the Commissioner did not have the power to issue Mr Woolley with a contractor licence for the categories of residential building work which the Commissioner attached to his licence, apart from carpentry and joinery.
What consequences flow from part of the licence being beyond power?
32 The imposition of the general building and concreting limitations contained was beyond the Commissioner’s power and ultra vires of the regulation. As such the Commissioner’s decision to issue Mr Woolley with the licence was affected, in part, by error. The Commissioner was able to issue licences in the categories carpentry and joinery. What impact did that excess of power have on Mr Woolley’s licence?
33 There is an extensive and at times confusing body of law going to the question of what consequences follow from a decision in excess of power: whether the decision is a nullity, is void or voidable, is valid but unlawful or invalid (Anisminic vForeign Compensation Board [1969] 2 AC 147; Federal Airports Corporation v Aerolineas Argentinas (1997) ALR 649; Jadwan Pty Ltd v Secretary, Department of Health and Aged Care (2003) 204 ALR 55; Project Blue Sky Inc v Australian Broadcasting Authority (1998) 194 CLR 355, [1998] HCA 28; Nature Conservation Council of New South Wales Inc v The Minister Administering the Water Management Act 2000 [2005] NSWCA 9; and see the discussion in Aronson & Dyer, Judicial Review of Administrative Action, (Second Edition), LBC 2000.)
34 It is not necessary for this Tribunal to determine which of those consequences flow from the Commissioner’s exceeding his powers when imposing categories on Mr Woolley’s contractor licence. The Tribunal’s function is to place itself in the shoes of the Commissioner while making the decision under review afresh, and to make the correct and preferable decision. The Tribunal is not conducting a judicial review. No matter how one characterises the consequences which flow for the contractor licence being issued, in part, beyond power, it is clear that that the imposition by the Commissioner in October 2002 of the categories “general building work (house lifting only)” and “general concreting (footings only)” in Mr Woolley’s licence was unlawful. That fact should inform any decision as to whether Mr Woolley performed work outside the scope of his licence
Was Mr Woolley guilty of improper conduct in doing unauthorised work?
35 Section 51 of the Act deals with improper conduct. It provides:
- (1) A holder of a licence who is authorised by the licence to contract to do residential building work or specialist work, or a holder of a supervisor or tradesperson certificate, is guilty of improper conduct if the holder:
(a) commits an offence against this Act or the regulations, whether or not an information has been laid for the offence, or
…
36 With respect to the building site at Rozelle Mr Woolley undertook the work which gave rise to this allegation from between August and September 2002, to at least December of that year. It is not clear from the evidence before me what work was done when in that period, and whether he organised and co-ordinated tiling, plumbing and electrical under his licence as issued before or after October 2002. In any case, he argued that the work was done in accordance with categories in his licence, that I consider were unlawfully imposed. For work done after the licence was issued in October 2002 it is, in my view, impossible for there to be a finding under s.51 that as a licence holder he engaged in improper conduct (by doing residential building work other than as the holder of a contractor licence authorising him to contract to do that work contrary to s.12(a)).
37 Mr Woolley argued in the course of his evidence that what he did was within the compass of the licence as issued to him: a matter which was disputed by the Commissioner. The reality is that, because those categories in his licence (upon which he relied) were unlawfully imposed, a determination of whether the work he undertook was within the scope of the trade practice for those categories would be futile, and tainted by the initial unlawfulness. As a result, that unlawfulness makes it impossible to determine the issue, and the Commissioner’s decision that Mr Woolley was guilty of improper conduct, by virtue of doing residential building work on the Rozelle site, other than as the holder of a contractor licence authorising him to contract to do that work, must be set aside.
38 With respect to the work done on at the Chatswood and Crows Nest sites, I am satisfied on Mr Woolley’s own admissions (both before me and in the records of interview) and on the contracts concerned, that he contracted to employ and co-ordinate plumbers and electricians at Chatswood, and did co-ordinate plumbers and electricians at Crows Nest. With respect to that work Mr Woolley’s licence, before October 2002, authorised him to do the residential building work described in the licence:
- carpenter and joiner
house lifting
staircases footings
- It will be remembered that the definition of residential building work in section 4 includes work involved coordination or supervising the work. I cannot be satisfied that contracting to undertake and supervise renovations, and coordinating or organising plumbing or electrical work, was within the scope of his licence at that time.
39 As a result I am satisfied that Mr Woolley was guilty or improper conduct by reasons of his contracting to do, and doing, work outside the scope of his licence with respect to bother the Chatswood and Crows Nest sites.
Improper Conduct – No Insurance
40 Section 92(1) of the Home Building Act 1989 provides:
- (1) A person must not do residential building work under a contract unless:
(a) a contract of insurance that complies with this Act is in force in relation to that work in the name of the person who contracted to do the work, and
(b) a certificate of insurance evidencing the contract of insurance, in a form prescribed by the regulations, has been provided to the other party (or one of the other parties) to the contract.
Maximum penalty: 200 penalty units.
…
(3)This section does not apply if the contract price does not exceed $5,000 or (if the contract price is not known) the reasonable market cost of the labour and materials involved does not exceed $5,000.
41 On his own evidence Mr Woolley undertook residential building work at 17 Springside Road, Rozelle without a contract of insurance relating to that work in place. I accept that he did so with the consent of the owners of that property, with whom he had contracted to do that work. I also accept that at all times Mr Woolley was endeavouring to affect the required insurance on reasonable terms. I accept that he was continually frustrated in doing so by the demands of insurers for detailed information regarding his business, which he supplied, and which was lost, on three occasions. I also find that in electing to proceed with the work without the requisite insurance in place, Mr Woolley knew that he was acting in breach of the provisions of the Act. His challenge to the Commissioner in The Daily Telegraph makes that abundantly clear.
42 The issue that then arises is whether the unlawfulness which tainted the issue of his licence operates, as it did with the other charge of improper conduct, to prevent a finding of improper conduct because of the lack of insurance? I have reached the conclusion that it does not do so for a number of reasons. First, the requirement for insurance is not dependant on the categories of work being done by the contractor, but on the contract sum. There is no dispute that Mr Woolley’s contract for the work was one which required insurance. Second, despite the inclusion of unlawful categories in Mr Woolley’s licence, he was also licensed to do carpentry and joinery work. Those are prescribed categories under the Regulation and his licence in those categories was lawful. It was as the holder of a contractor licence (containing both lawful and unlawful categories) that Mr Woolley entered into the contract to residential building work at 17 Springside Road, Rozelle for the sum of $130,000.00. He knew he should not do so, and chose to disregard the provisions the Home Building Act 1989.
43 Because Mr Woolley contracted to do the work at 17 Springside Road, Rozelle without the required home owners warranty insurance in place, it is clear that he breached both s.92(1)(a) – doing uninsured work – and s.92(1)(b) – failing to provide the other party to the home building contract with a certificate of insurance. As a result he was guilty of improper conduct. The unlawfulness of part of his licence does not prevent this finding being made because he held a lawful licence, in part, and knowingly entered into a contract in breach of ss.92.
Disciplinary Action
44 Once a person is guilty of improper conduct under section 51, section 56(c) provides that the Commissioner may take disciplinary action against that person. Section 62 sets out the disciplinary action which may be taken which ranges from no action, through caution, reprimand and monetary penalty, to cancellation and disqualification of the contractor’s licence. In Mr Woolley’s case the Commissioner chose to impose a monetary penalty of $3,000 in respect of both improper conduct offences. The Commissioner did not indicate how much monetary penalty was imposed for each offence. Such an explanation would have been of assistance to the Tribunal in understanding how the Commissioner viewed each matter.
45 In considering what disciplinary action to take I am cognizant of the fact that the purpose of disciplinary action is not to punish Mr Woolley but to protect the public: Clyne v NSW Bar Association (1960) 104 CLR 186 at 201. I have found that Mr Woolley entered into a contract without the insurance required by the Act being in place. I accept that this occurred in the context of the insurance crisis and that Mr Woolley has been endeavouring without success to procure the necessary insurance. I accept that his client was aware that there was no insurance in place when the contract was entered into. Nonetheless, Mr Woolley knowingly entered into the contract in breach of the Act and by doing so placed both himself and his client at considerable risk. Fortunately, the evidence indicates that Mr Woolley’s work was of a good standard, and so the dangers he has exposed both himself and his client to may not come to fruition.
46 Contracting in breach of section 92 as Mr Woolley did, is not, in view, a course of action that which can be excused or dealt with by way of reprimand. Holders of contractor licences must understand that the requirement for home owners warranty insurance is an essential feature required of those participating in the residential building market in NSW. Licence holders who disregard the provisions do so at their peril and their client’s peril. As the President of this Tribunal pointed out in Pinnacle Homes (Sydney) Pty Ltd v Director-General, Department of Fair Trading [2001] NSWADT 222, “insurance is fundamental” to regulation of the home building industry in NSW, and the public interest in ensuring that the insurance requirements of the regulatory scheme are complied with must be given primacy.
47 I have also found that Mr Woolley contracted to do and did work for which he did not hold a licence in respect of both the Chatswood and Crows Nest properties. I accept that from a reading of the records of interview with Mr Woolley and from his own statement to the Tribunal, that Mr Woolley did not have a full understanding of the limits of his licence when he did so.
48 I am not satisfied that Mr Woolley is guilty of improper conduct with respect to the contract and work at Rozelle for the reasons discussed above.
49 The Commissioner chose to impose a monetary penalty on Mr Woolley. Given the circumstances, I agree that a monetary penalty is appropriate, as was the level of penalty imposed. Because the Commissioner did not allocate specific penalty amounts to each the matters found against Mr Woolley, I do not know how much the Commissioner allocated to each offence of improper conduct.
50 I therefore propose to set aside the decision that Mr Woolley pay a penalty of $3,000.00 and in its place determine that Mr Woolley pay a monetary penalty of $1,500.00 in respect of my finding that he is guilty of improper conduct by reason of his breach of s.92. That is a penalty, which in the circumstances reflects the censure which his conduct merits.
51 With respect to the improper conduct arising from Mr Woolley doing work beyond the scope of his licence, I propose to impose a monetary penalty of $1,000.00. This reflects the fact that, unlike the Commissioner, I have made no finding of improper conduct with respect to the Rozelle property.
Decision
52 The determination of the Tribunal is therefore that:
- 1. The decision of the Commissioner made on 8 July 2004 that Mr Woolley was guilty of improper conduct by contracting to do and doing work for which he was not licenced with respect to the property at 17 Springside Road, Rozelle is set aside.
2. The other decision made by the Commissioner made on 8 July 2004 with respect to Mr Woolley being guilty of improper conduct are affirmed.
3. The decision of the Commissioner made 8 July 2004 to impose a monetary penalty of $3,000.00 is set aside, and in its place the Tribunal determines to impose a monetary penalty on Mr Woolley, which is to be paid by 7 July 2005, of:
- i) $1,500.00 with respect to the finding that Mr Woolley is guilty of improper conduct by entering into a contract without the insurance required by the Act being in place;
ii) $1,000 with respect to the finding that Mr Woolley is guilty of improper conduct by contracting to do and doing work for which he did not hold a licence in respect of both the Chatswood and Crows Nest properties.
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