Birelli Built Pty Ltd v Secretary, Department of Customer Services

Issues for determination

1. The issues for determination are whether the correct and preferable decision is to take disciplinary action against the Applicant and if so, what action should be taken.

Owners' complaint

1. In about August 2019 the solicitors for the owners of Property 1 wrote to the Applicant and complained about a number of issues with the property. On 17 October 2019 the owner of Property 1 wrote to Mr Kerio: Hi Andrew the following list of defects includes the three special defects that were emailed to you by our solicitor conveyancer following the first flooding of our garage on the 30th of August. Special defects Garage flooding following rain periods Upstairs main shower unusable due to water draining away from drain and overflowing Bad sewer smell from downstairs shower drain * ... With regard to item one, garage flooding after rain, the area was inspected during actual flooding by the builder on the 18th of September where an undertaking was given to commence repairs the following week and when this did not take place we were informed the builder was pursuing a possible insurance claim. As at writing no action has been taken to identify or commence rectification on any of the above listed special defects for a period approaching three months since official notification. … Back yard floods after rain appears to have no drainage maybe the cause of garage flooding after rain. Hose was left on medium flow in yard for thirty minutes, and garage showed water entry after a period of three hours approximate time for water to travel to lower garage level. … I can provide pictures of yard and garage flooding complete with dates if and when required. An urgent response to the above would be greatly appreciated.
2. It seems that the flooding issues were not resolved between 17 October 2019 and January 2023.

Rectification Orders

1. On 20 January 2023, a rectification order ("RO1") was issued with respect to residential building work at Property 1. RO1 provided: I Ronald Optland being appointed by the Commissioner for Fair Trading, under section 48D of the Home Building Act 1989 (the Act), have completed an investigation of a building dispute between the Complainant and the Contractor in respect of residential building work being carried out at: (Property 1) ("the residential building work/specialist work") I am satisfied that: ... the residential building work/specialist work done by the Contractor is defective. ... ORDER TO CONTRACTOR The Contractor is ordered to attend to the items set out in the Schedule attached to this Rectification Order (the Schedule). The work set out in the Schedule is to be completed by the Contractor by 28 February 2023 Subject to the Complainant's compliance with the conditions set out below. CONDITIONS The Complainant is to comply with the following conditions before the Contractor is required to comply with the Rectification Order. 1. Provide reasonable access to the site. 2. N/A. The Rectification Order will cease to have effect if the matter giving rise to the Rectification Order becomes the subject of a building claim before the NSW Civil and Administrative Tribunal before the date set out above for the Contractors compliance with this Rectification Order What happens to the Rectification Order if you lodge a Building Claim with the NSW Civil and Administrative Tribunal? Section 48A of the Home Building Act defines a building claim as a claim for (a) the payment of a specified sum of money, or (b) the supply of specified services, or (c) relief from payment of a specified sum of money, or (d) the deliver, return or replacement of specified goods or goods of a specified description, or (e) a combination of two or more of the items referred to in paragraphs (a) - (d) Section 48E(3)(c) of the Home Building Act provides that if you lodge a claim with the NSW Civil and Administrative Tribunal, concerning the building work to which the Rectification Order relates, before the expiry date of the Rectification Order, the order no longer has effect. The Tribunal will hear your claim and will make a determination based on the evidence presented. Under Section 48N of the Home Building Act, the Tribunal may appoint an independent expert, whose costs will be borne jointly by the parties (i.e. the applicant and respondent), to advise the Tribunal in relation to the matter to which the claim relates. In this case, the parties are unable to call any other expert or provide any other reports in support of their case without the permission of the Tribunal. The outcome of any case before the NSW Civil and Administrative Tribunal has no effect on any matters that are referred for assessment of possible breaches of the Home Building Act. What happens if the Rectification Order is not complied with by the expiry date? If a claim has not been lodged with the NSW Civil and Administrative Tribunal and work is not completed before the expiry of the Rectification Order, the Building Inspector provides the parties with information about other options to resolve their dispute. The Building Inspector will refer the matter of the Contractor's non-compliance with the Rectification Order for assessment and possible disciplinary action against the Contractor. …
2. The Schedule attached to RO1 provided: "Defective Work 1. Inspection revealed that there is water entering the garage from the back and side retaining walls. Contractor is to investigate rectify the water entering the garage from the back and side retaining walls. Ensure all affected surfaces are reinstated as close as practical to their original condition. … 2. Inspection revealed that there is water entering the stair and floor to the entry area from the retaining walls under the floor. Contractor is to investigate rectify the water entering the stair and floor to the entry area from the retaining walls under the floor. … The date by which this Rectification Order is to be complied with is: 28 February 2023."
3. Also on 20 January 2023, a rectification order ("RO2") was issued with respect to residential building work at Property 2. RO2 was in similar terms to RO1. However, the Schedule attached to RO2 provided: Defective Work 1. Inspection revealed that there is water entering the garage from the back and side retaining walls. Contractor is to investigate rectify the water entering the garage from the back and side retaining walls. Ensure all affected surfaces are reinstated as close as practical to their original condition. …

The Applicant's response

1. Mr Kerio, the Managing Director of the Applicant, advised the Respondent that the time given to complete the works on the rectification order was not sufficient. He explained that his personal circumstances, the circumstances of the Applicant, and the fact that the time for completion of the work fell in the holiday period for many people and tradespeople, meant that the completion date of 28 February 2023 was unachievable. His attempts to negotiate a later completion date with the property owners were unsuccessful.

Notice to Show Cause

1. In November 2023, the Department of Customer Service's Principal Disciplinary Officer issued a Notice to Show Cause ("NTSC") under the HB Act and the DBP Act. The NTSC stated: In my capacity as a delegate of the Secretary, I have formed the opinion that there is reasonable cause to believe that there are two grounds for taking disciplinary action against the Authority Holder, namely: DISCIPLINARY GROUND 1: under section 56(c) of the HB Act - that the holder of a contractor licence is guilty of improper conduct; and DISCIPLINARY GROUND 2: under section 64(c)(i) and (iii) of the DBP Act, the practitioner has contravened a law of this or another Australian jurisdiction (whether or not the contravention is an offence and whether or not the practitioner is prosecuted or convicted for the contravention) with respect to: (i) the preparation of regulated designs or the carrying out of building work, professional engineering work or specialist work or work authorised to be carried out under a relevant authorisation, and (iii) registration or relevant authorisation.
2. The NTSC provided the following background information (paragraph numbering and annexure references removed): On 19 June 2019, Kerio entered into a contract for sale with Thomas and Veronica Robertson (Complainant 1) to sell a dwelling … (Property 1). ... In or about May 2019, Kerio entered into a contract for sale with Heyang Li and Yu-Yin Chan (Complainant 2) to sell a dwelling at … (Property 2). ... On 17 January 2023, as a result of complaints from Complainants 1 and 2, Fair Trading Building Inspector Ronald Optland (Inspector Optland) conducted a site inspection of both Property 1 and Property 2. On 20 January 2023, Inspector Optland issued a Rectification Order (RO1) to the Authority Holder and provided a copy to Complainant 1 in relation to Property 1. … RO1: 1. indicates that Inspector Optland was satisfied that the residential building works carried out by the Authority Holder at Property 1 were defective; 2. required the Authority Holder to rectify the items listed in the schedule as 'Defective Work' which included; 2.1. water entering the garage from the back and side retaining walls. Contractor is to investigate rectify the water entering the garage from the back and side retaining walls that did not comply with P2.22 Weatherproofing, Section 2 Performance Requirement of the BCA Vol 2 (2016). Ensure all affected surfaces are reinstated as close as practical to their original condition; and 2.2. water entering the stair and floor to the entry area from the retaining walls under the floor that did not comply with P2.22 Weatherproofing, Section 2 Performance Requirement of the BCA Vol 2 (2016). Contractor is to investigate rectify the water entering the stair and floor to the entry area from the retaining walls under the floor. On 20 January 2023, Inspector Optland issued a Rectification Order (R02) to the Authority Holder and provided a copy to Complainant 2 in relation to Property 2. … R02: 1. revealed that there is water entering the garage from the back and side retaining walls. Contractor is to investigate rectify the water entering the garage from the back and side retaining walls that did not comply with P2.22 Weatherproofing, Section 2 Performance Requirement of the BCA Vol 2 (2016). Ensure all affected surfaces are reinstated as close as practical to their original condition. Both RO1 and RO2 required the Authority Holder to comply and complete the work set out in the schedule by 28 February 2023. On 25 May 2023, Inspector Goddard conducted a further inspection of both Property 1 and Property 2. Inspector Goddard identified the following items required by RO1 for Property 1 had not been rectified: 1. some form of exterior waterproofing system been applied to edge of the concrete slab and bottom edge of the external wall system which overhangs garage slab. … 2. the exterior application of waterproofing applied under the external wall system to the side of the garage; … 3. the underside of the external wall to the garage with the applied waterproofing system. It is further noted the external wall where measured, overhang the exposed bricks by 30mm where measured; (Photo 4)4 4. an agricultural drainage line installed to the rear left hand side of the garage. The pipe has been installed below the brickwork located under the concrete slab in an attempt to stop water ingress occurring into the internal of the garage; and 5. internal timber studs and bottom timber plate to the rear left hand side of the external timber framed wall have been cut and removed and has not been reinstated; and 6. internal works to the garage not completed. ... Inspector Goddard identified the following items required by R02 for Property 2 had not been rectified: 1. concrete path was constructed higher than the external wall to the garage. The contractor has applied some form of exterior waterproofing system to the edge of the concrete slab and bottom edge of the external wall system which overhangs the garage slab; 2. an agricultural drainage line having been installed to the rear right hand side of the garage. The pipe appears to go below the brickwork located under the concrete slab in an attempt to stop water ingress occurring into the internal of the garage; and 3. internal works to the garage not completed. Timber framing not reinstated. … Inspector Goddard sent an email to the Authority Holder advising that RO1 had not been complied with. On the same day, Inspector Goddard also emailed Complainant 1 advising them of the same details. ... Inspector Goddard sent an email to the Authority Holder advising that R02 had not been complied with. On the same day, Inspector Goddard also emailed Complainant 2 advising them of the same details. ... In response, the Authority Holder provided an email to Inspector Goddard advising the rectification order compliance dates were unachievable and advised some work has been carried out. …

The Respondent's powers in relation to Rectification Orders

1. Section 18B of the HB Act provides for warranties in relation to residential building work: 18B Warranties as to residential building work (1) The following warranties by the holder of a contractor licence, or a person required to hold a contractor licence before entering into a contract, are implied in every contract to do residential building work - (a) a warranty that the work will be done with due care and skill and in accordance with the plans and specifications set out in the contract, (b) a warranty that all materials supplied by the holder or person will be good and suitable for the purpose for which they are used and that, unless otherwise stated in the contract, those materials will be new, (c) a warranty that the work will be done in accordance with, and will comply with, this or any other law, (d) a warranty that the work will be done with due diligence and within the time stipulated in the contract, or if no time is stipulated, within a reasonable time, (e) a warranty that, if the work consists of the construction of a dwelling, the making of alterations or additions to a dwelling or the repairing, renovation, decoration or protective treatment of a dwelling, the work will result, to the extent of the work conducted, in a dwelling that is reasonably fit for occupation as a dwelling, (f) a warranty that the work and any materials used in doing the work will be reasonably fit for the specified purpose or result, if the person for whom the work is done expressly makes known to the holder of the contractor licence or person required to hold a contractor licence, or another person with express or apparent authority to enter into or vary contractual arrangements on behalf of the holder or person, the particular purpose for which the work is required or the result that the owner desires the work to achieve, so as to show that the owner relies on the holder's or person's skill and judgment. (2) The statutory warranties implied by this section are not limited to a contract to do residential building work for an owner of land and are also implied in a contract under which a person (the principal contractor) who has contracted to do residential building work contracts with another person (a subcontractor to the principal contractor) for the subcontractor to do the work (or any part of the work) for the principal contractor.
2. The power to issue a rectification order is pursuant to section 48E of the HB Act: 48E Inspector may make rectification order (1) If, after completing an investigation under section 48D, an inspector is satisfied - (a) that any residential building work or specialist work contracted to be done by the contractor is incomplete, or (b) that any residential building work or specialist work done by the contractor is defective, … the inspector may serve a written order on the contractor requiring the contractor to take such steps as are specified in the order to ensure that the work is completed or the defect or damage rectified, as the case requires. ... (3) A rectification order - … (b) must specify a date by which the requirements of the order must be complied with (or a date by which the requirements of each stage of the order must be complied with in the case of a staged rectification order), subject to the complainant's compliance with any condition referred to in paragraph (a), and (c) must indicate that the order will cease to have effect if the matter giving rise to the order becomes the subject of a building claim. (4) A rectification order may be amended by a further order of an inspector on the application of the person on whom the rectification order was served. (5) It is a condition of every contractor licence that the contractor must comply with the requirements of a rectification order.
3. As noted, section 48E(3)(c) of the HB Act provides that a rectification order will cease to have effect if the matter giving rise to the order becomes the subject of a building claim lodged with the Tribunal. No building claim was lodged with the Tribunal.
4. The failure to comply with a rectification order may result in further action against a licence holder. Section 51 of the HB Act provides: 51 Improper conduct: generally … (2) The holder of a contractor licence is guilty of improper conduct if the holder - … (b) without reasonable cause, does not comply with the requirements of a rectification order under Part 3A, Division 2 or Part 3B before the date specified in the order, or ...
5. Section 56 of the HB Act sets out grounds on which disciplinary action that may be taken. Section 56 provides: 56 Grounds for taking disciplinary action against holder of a contractor licence The Secretary may take disciplinary action under section 62 against the holder of a contractor licence on any of the following grounds - … (c) that the holder is guilty of improper conduct, …
6. Section 62 of the HB Act provides that disciplinary action may be taken against a licence holder. 62 Disciplinary action that may be taken by Secretary (1) If, after compliance with this Division, the Secretary is satisfied that any ground on which disciplinary action may be taken against the holder of an authority has been established in relation to the holder, the Secretary may do any one or more of the following - (a) determine to take no further action against the holder, (b) caution or reprimand the holder, (c) make a determination requiring the holder to pay to the Secretary, as a penalty, an amount not exceeding $11,000 (in the case of an individual) or $50,000 (in the case of a corporation) within a specified time, (d) vary the authority held by the holder, by imposing a condition on the authority, including a condition requiring the holder to undertake a course of training relating to a particular type of work or business practice within a specified time, (e) suspend the authority for a period not exceeding its unexpired term, (f) cancel the authority, (g) disqualify the holder, either temporarily or permanently, from being any one or more of the following - (i) the holder of any authority, or any specified kind of authority, (ii) a member of a partnership, or an officer of a corporation that is a member of a partnership, that is the holder of an authority, (iii) an officer of a corporation that is the holder of an authority. (2) If the holder of the authority is a partnership or corporation, the Secretary may take a disciplinary action specified in subsection (1) against the following individuals - (a) a member of the partnership, (b) an officer of a corporation that is a member of the partnership, (c) an officer of the corporation. (3) The Secretary may take disciplinary action under subsection (2) in addition to, or instead of, taking disciplinary action under subsection (1). (4) This Division applies to disciplinary action taken under subsection (2) in the same way as it applies to disciplinary action taken under subsection (1) and references in this Division to the holder of an authority extend to the individuals referred to in subsection (2).

The Tribunal's approach

1. Section 9 of the Administrative Decisions Review Act 1997 (NSW) ("the ADR Act,") provides that the Tribunal has jurisdiction in regard to an application for review of a decision of an administrator if enabling legislation provides that applications may be made to the Tribunal for administrative review.
2. The Tribunal has jurisdiction in regard to a number of licensing issues. Section 83B of the HB Act provides: 83B Administrative reviews by Tribunal … (3) A person aggrieved - (a) by a decision made by the Secretary under Part 4 (Disciplinary proceedings) to impose a penalty or to cancel or suspend an authority, or (b) by any other decision made by the Secretary under that Part that is prescribed by the regulations, may apply to the Tribunal for an administrative review under the Administrative Decisions Review Act 1997 of that decision.
3. Section 63 of the ADR Act provides that in determining an application, the Tribunal is to determine what is the "correct and preferable decision" having regard to the material before it. In reaching the correct and preferable decision, the Tribunal may: 1. exercise all of the functions that are conferred or imposed by the HB Act on the Respondent; and 2. affirm the decision, vary the decision, set aside the decision, and make a decision in substitution of the decision, or set aside the decision and remit the matter for reconsideration by the Respondent.
4. There is no formal onus of proof. In considering the Application, the Tribunal may have regard to any relevant material before it at the time of its review. Its consideration is not limited to material that was before the Respondent at the time it made the decision which is under review, or material that had not been provided to the Respondent.
5. The Tribunal is to make its own decision and there is no presumption that the Respondent's decision is correct. The Tribunal should consider all relevant materials and ignore all irrelevant materials.

Material before the Tribunal

1. The Applicant was represented by Mr Kerio, who attended the hearing and gave evidence. He provided a number of documents related to his dealings with the Respondent and the homeowners in relation to the rectification work along with an explanation for delay in completing the work.
2. The Respondent relies on material lodged pursuant to section 58 of the ADR Act. This material includes reports in relation to the work, the defects, and the interactions between the parties.
3. Both parties have provided written submissions.

The Applicant's case.

1. The Applicant contends that the period for compliance with the rectification orders was not reasonable because it did not allow for industry shut down at the time of year in which it required the work to be undertaken. The Applicant also relies on the fact that Mr Kerio, the Applicant's sole director, had undergone surgery in December 2022 and was unable to carry out work for a significant period after the surgery.
2. The Applicant also explained that because of the layout of the sites, extreme weather conditions were necessary to be able to identify the causes of the leaks. Those conditions were also necessary to test whether ratification waterproofing work was successful. Mr Kerio explained that the necessary testing could not be done earlier.
3. On 13 June 2023 Mr. Kerio wrote to Mr Mark Goddard, a Senior Building Inspector with the Respondent, and advised: As you were already made aware the previous compliance order date was unachievable. Setting this aside we have completed the waterproofing repairs to the property, we have a concrete pour this week to replace the concrete down the side of the property that was removed due to the waterproofing failure. Once this is completed only garage Gyprock will need to be attended to at (Property 1).
4. Mr Goddard responded: Mr. Kerio, following up on the Rectification Orders issued to Birelli Built Pty Ltd for (the Gymea properties) and subsequent re inspection of the properties. Could you please explain in writing by 9:00 AM Wednesday the 14/06/2023 why Birelli Built Pty Ltd have not complied with the Rectification Orders issued to such company as the compliance date of the Orders was the 28/02/2023.
5. On 26 November 2023 Mr. Kerio advised the Respondent: Since the beginning of this complaint and way prior to the Office of Fair Trading becoming involved Birelli Built has made every effort to determine the cause of the issues and resolve with minimal inconvenience and damage to the residence as possible, in some instances the issues were resolved quite quickly and others have taken quite a while. This is due to the nature of the problem at hand and the impossible task of replicating the leaks as they have only happened on extreme or quite high levels of rain. We have been upfront and honest with the homeowners and have taken their opinions on board also during this time. I have a good relationship with both home owners and in the past have been in constant contact with them in order to understand the issues at hand. The issues have now successfully been resolved and I have contacted the owners various times over the last 4 months to confirm this. We always knew and can confirm this in multiple conversations with the homeowners that we would do whatever required to repair the issue's. RO1 and R02 were issued on the 20/01/2023. At the time in question and due to the experience in attempting to repair the issue in the past, the time in which the rectification order was sent and the personal reasons listed below we notified Ronald Optiand that the time given to complete the works on the rectification order was not sufficient to complete the works. This was also discussed with the home owners and agreed that the repairs would definitely exceed the time provided by the rectification order. As most of us are aware, most industries are still on holidays and/or are booked out well into the February period due to extended holidays and previous back log from the past year, this proved to be a challenge because the first step in resolving any issues is to understand the order in which the works will be conducted and following this to stipulate the process in which the works are done. At Birelli Built Pty Ltd we are a small business and we didn't have the capacity at the time in question to employ full time workers, for the most part it was only myself that runs the business and does the paper work through the night. This is usually no excuse however on the 7th of December 2022 I had undergone a corrective surgery on my femur and hips due to a previous motor vehicle accident, the surgical process was quite intensive and I was unable to return to the workforce for 16 weeks. Upon my return I was only performing light duties however as I was under intense pressure to catch up on many months of not being able to go to work I was forced to return to work prematurely and carry out my commitments. In light of all of this progress was made on site by way of subcontractors however due to my injuries works could not be completed on time. This was not the only battle in this scenario, with any water leak one of the processes is monitoring prior to reinstalling interior linings etc, as this leak only ever came about in heavy downpour in excess of 30mm we were constantly at the mercy of the weather, there is no other way to determine if the repairs are successful unless this has occurred, if the linings and concrete are reinstated and the leak presents itself again further damage will have to be caused and inconvenience the home owners once again also the interior floor linings were discontinued and sacrifices were made in a bedroom to ensure consistency with the house, this meant that we only had 1 chance to ensure the works were sufficient otherwise a replacement floor lining not matching the existing would have to be installed. In relation to exceeding the time of the rectification order we appeal to the Disciplinary action unit to please forgive us for this and we have already taken the steps to ensure this never occurs again. We have since changed Architects and hydraulic engineers with all future jobs to ensure more detailed and technical plans, taken steps to enrol staff and I in courses to better understand water ingress and the role it plays in construction, employed capable people to help run the business and set in place processes and policies with strict adherence. … prior to the repairs been made there was an obvious defect in relation to water entry, however since the works have been completed we do not believe and are not aware of any outstanding defects or "breaches of warranty" and we can confirm that with or without the rectification order or the involvement via fair trading we have always maintained that we were going to do and were doing whatever necessary to correct the issues however as above multiple scenarios limited us in that instance specifically. This is not a breach in warranty in my opinion as we have returned to the site in question multiple times and made good on any defects raised. ... Conclusion: All works were completed and finalised prior to the 30/6/2023. We have apologised on numerous occasions to the home owners to which they are pleased and fair trading staff in relation to the time taken to complete these works. I personally guarantee that this will never happen again and we hope to never be contacted by the office of fair trading in relation to building defects ever again. This has been a massive learning curve for us and we have taken every step with the utmost seriousness and we again reiterate how apologetic we are that this occurred in the first instance. Our reputation and licence is the forefront of our business, this development was Birelli Built Pty Ltd's first project and many lessons have been learnt from this scenario also, I am glad and the home owners are also that this finally came to an end and can confirm all leaks/defects are repaired and interior linings reinstated as of prior to the 30/6/2023.
6. At the hearing, Mr Kerio presented similar arguments as justification for the Applicant's failure to comply with the rectification orders. He provided documentation to show that he had undergone surgery as explained, that the water proofer was unavailable to complete the work in the time allowed, and correspondence from the homeowners expressing their satisfaction with the final outcome of the rectification work.
7. He did not dispute that the Applicant had failed to comply with the rectification orders in the time allowed, but he contends that in all of the circumstances there was reasonable cause for the failure.

The Respondent's case.

1. The Respondent contends that the Applicant failed to comply with the rectification orders without reasonable cause. The Respondent submits that the orders that have been made in relation to the Applicant are warranted because of that failure.
2. Mr Coss, the Respondent's solicitor, submitted that the Applicant does not dispute that it failed to comply with the rectification orders by 28 February 2024. Nor is it disputed that it had failed to comply with the rectification orders when the properties were inspected on 25 May 2023. Similarly, the Applicant does not deny that the work was not completed when the properties were inspected on 25 May 2023 or when the final inspection was carried out on 13 June 2023.
3. The parties do not agree in regard to whether the failure to comply with the rectification orders was without reasonable cause.
4. Mr Coss submitted that all the issues that the Applicant has raised were taken into account in the disciplinary decision. He did not dispute Mr Kerio's evidence that he wasn't able to complete work for 16 weeks after his surgery, that is up to 29 March 2023, but he noted that the final inspection wasn't carried out until 13 June 2023. Work remained outstanding when the final inspection was carried out.
5. The Respondent submitted that as an authority holder, the Applicant is required to have arrangements in place to ensure that it can meet its legislative obligations. It failed to meet its obligations in relation to compliance with the rectification orders.
6. The Respondent is of the view that the disciplinary action taken against the Applicant was proportionate and appropriate. Accordingly, the Respondent submitted that the Tribunal should affirm the decision under review.

Discussion

1. As has been noted above, the rectification orders were issued in relation to defective work at properties in View Street Gymea. The Applicant was made aware of the problems in late 2019. The Respondent carried out an inspection at the properties in January 2023 and issued the rectification orders that required the Applicant to complete the work by 28 February 2023. The work was not completed when an inspection was carried out on 13 June 2023 and was ultimately finalised by 30 June 2023.
2. A period of over 3.5 years passed from the time that the Applicant was made aware of the problems until the rectification work was completed.
3. In Younan v Commissioner for Fair Trading [2018] NSWCATOD 9, Senior Member Ransome considered factors to be taken into account in considering an appropriate penalty. She stated at paragraph [48]: 48 Relevant factors in considering an appropriate penalty were identified by the Fair Trading Tribunal in Director-General, Department of Fair Trading v Cohen [2000] NSWFTT 3 at [45]. Those factors were confirmed in Younan v Commissioner of Fair Trading [2007] NSWADT 170 at [26] and Harb v Commissioner of Fair Trading [2007] NSWADT 175 at [60]. Two further factors were added in Ng v Commissioner for Fair Trading [2007] NSWADT 259 at [72]. The relevant factors are: (a) the nature, width and extent of the contraventions; (b) the loss or damage and prejudice in consequence of the contraventions; (c) the circumstances in which the contraventions took place; (d) whether the licensee has been found to have engaged in any similar conduct; (e) the presence of fraudulent or dishonest intent and deliberation on the part of the licensee; (f) the extent of carelessness or wilfulness of the conduct; (g) the efforts made to correct the situation and what measures have been taken by the licensee; (h) what consciousness the licensee (a) had (b) displayed, of its obligations under the relevant statute and to the owners; (i) the effect upon the licensee; (j) antecedents; (k) attitude, building history and future compliance; (l) the penalty range.
4. In the present matter, it is apparent that the Applicant has been on notice of the flooding issue at Property 1 since at least October 2019. By email dated 17 October 2019 the owner of Property 1 advised Mr Kerio of the flooding and requested urgent attention to the issue. The owners' solicitor had advised the Applicant of the flooding issue in about August 2019.
5. While there is some question about the accuracy of the plans and specifications, I am satisfied that the Applicant was responsible to ensure that they were accurate.
6. I have set out above the nature of the contraventions and the circumstances in which the contraventions took place. There is no suggestion that the Applicant has engaged in any similar conduct; or that there has been any fraudulent or dishonest intent and deliberation on the part of the Applicant.
7. There is no evidence before me with respect to carelessness or wilfulness of the conduct. However, the period that has passed since Mr Kerio was advised of the flooding and the owner requested urgent attention to the issue suggests that the efforts made to correct the situation were seriously inadequate. It can be inferred that the Applicant did not give high level attention to its obligations under the HB Act and to the owners.
8. Mr Kerio expressed concern in relation to the effect that the penalty will have upon the Applicant. However, he did not express the same level of concern in relation to the impact of the defective work on the owners. He pointed to correspondence that suggests that the owners were satisfied with the final rectification work, but he did not address the facts raised in the letter of 17 October 2019 the owner of Property 1.
9. I have considered the arguments presented on behalf of the Applicant and, in my view, they present a plausible explanation for the failure to meet the deadline imposed by the rectification orders. However, I agree with the Respondent that as an authority holder, the Applicant is required to have arrangements in place to ensure that it can meet its legislative obligations. If those arrangements had been in place, the impact of Mr Kerio's personal circumstances would have been minimum.
10. It is improbable that Mr Kerio would not have been aware of the annual industry shut down. Given that he had been notified of the issues some three years earlier, he could have taken steps to ensure that the rectification works had taken place prior to his surgery and prior to the annual industry shut down. There is no evidence before me to suggest that there were no periods of extreme or quite high levels of rain during those three years. It is unlikely that it would have been the case.
11. In the whole of the circumstances, I do not consider that the Applicant had reasonable cause to not comply with the rectification orders. Accordingly, I am satisfied that the Applicant is guilty of improper conduct. It is also likely that the Applicant breached the statutory warranty implied by section 18B(a) of the HB Act.
12. With respect to the penalty range, section 62 of the HB Act provides for a penalty not exceeding $11,000 in the case of an individual or $50,000 in the case of a corporation. In the present matter, a penalty in the sum of $2,500 was imposed in relation to the Applicant. Clearly that is towards the lower end of the penalty range.
13. In my view, that penalty is reasonable in the circumstances.
14. In addition to the monetary penalty, reprimands were imposed under section 62(1)(b) of the HB Act and section 66(1)(b) of the DBP Act. In the whole of the circumstances, I consider that the reprimands were appropriate.
15. However, Mr Kerio provided evidence that the required "Construct NSW course Waterproofing Design Principles" course has been completed. I do not consider that it is appropriate that he be required to undertake that course again.

Conclusion

1. In my view the correct and preferable decision is to vary the decision under review to remove the requirement that Mr Kerio undertake the "Construct NSW course Waterproofing Design Principles" course.
2. Otherwise, the decision under review should be affirmed.

Orders 1. The name of the respondent is changed to Secretary, Department of Customer Service. 2. The decision under review is varied. 3. The condition that "each director of the Authority Holder is required to complete the Construct NSW course Waterproofing Design Principles" is removed. 4. The decision under review is otherwise affirmed.

I hereby certify that this is a true and accurate record of the reasons for decision of the Civil and Administrative Tribunal of New South Wales. Registrar DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 12 November 2024