Bou-Harb v Commissioner for Fair Trading

Relevant legislation

1. Amongst other things, the Home Building Act NSW 1989 (the HBA) establishes and regulates a statutory scheme in relation to the residential building industry and certain specialist work. Unlicenced contracting is prohibited: s4. Division 3 of Part 3 of the HBA provides for owner-builder permits which in particular circumstances, authorise unlicenced persons to do specified home building work. As referred to by the Tribunal in McGufficke v Commissioner for Fair Trading [2022] NSWCATOD 176 at [48], "the overall purpose of the HBA is to protect consumers in the contracting for and the construction of residential buildings".
2. Section 29(1) of the HBA relevantly defines "owner-builder work" to mean residential building work - a) the reasonable market cost of the labour and materials involved in which exceeds the prescribed amount, and (b) that relates to a single dwelling-house, dual occupancy or secondary dwelling - (i) that may not be carried out on the land concerned except with development consent under Part 4 of the Environmental Planning and Assessment Act 1979, or (ii) that is complying development within the meaning of that Act.
3. Clause 2(1) of Schedule 1 to the HBA relevantly provides: (1) In this Act, residential building work means any work involved in, or involved in co-ordinating or supervising any work involved in - 1. the construction of a dwelling, or 2. the making of alterations or additions to a dwelling, or 3. the repairing, renovation, decoration or protective treatment of a dwelling.
4. Section 30(1) of the HBA grants the Secretary discretion to grant owner-builder permits for the purposes of the HBA. Schedule 1 of the HBA defines "Secretary" to mean the Respondent.
5. Section 31 of the HBA provides for the issue of owner-builder permits and s 31(2)(c) requires that the single dwelling-house or one of the dwellings comprising the dual occupancy concerned will be occupied as the residence (being, in the case of a dual occupancy, the principal residence) of the applicant after the work authorised by the permit is done.
6. Section 32 sets out the authority conferred by owner-builder permits as follows: 32 Authority conferred by owner-builder permits (1) An owner-builder permit authorises its holder to do such residential building work as is described in the permit on the land specified in the permit. (1A) An owner-builder permit must not be issued to authorise its holder to do residential building work that relates to a dual occupancy unless the Secretary is satisfied that special circumstances exist that justify the owner-builder permit authorising its holder to do that work. The Secretary may issue guidelines as to the circumstances that will be considered to be special circumstances for the purposes of this subsection. (2) The authority conferred by an owner-builder permit - (a) is subject to the conditions applicable to the permit for the time being, and (b) may, on the application of the holder of the permit, be varied by an order of the Secretary set out in a notice served on the holder of the permit.
7. Section 32AA provides that the holder of an owner-builder permit must not contract with another person for that person to do any residential building work (or any part of the work) unless the person is the holder of a contractor licence to do work of that kind.
8. The Standard Instrument (Local Environmental Plans) Order 2006 (the Standard Instrument) contains the following relevant definitions: dual occupancy means a dual occupancy (attached) or a dual occupancy (detached). dual occupancy (attached) means 2 dwellings on one lot of land that are attached to each other, but does not include a secondary dwelling. dual occupancy (detached) means 2 detached dwellings on one lot of land, but does not include a secondary dwelling. … secondary dwelling means a self-contained dwelling that - (a) is established in conjunction with another dwelling (the principal dwelling), and (b) is on the same lot of land as the principal dwelling, and (c) is located within, or is attached to, or is separate from, the principal dwelling. dwelling means a room or suite of rooms occupied or used or so constructed or adapted as to be capable of being occupied or used as a separate domicile.

The evidence

1. The Respondent did not call any oral evidence at the hearing and relied on the s 58 documents (exhibit R1). The Applicant relied on a letter from his wife, Rita Bou-Harb dated 12 March 2023 (exhibit A1), a letter from Sam Kindo, Principal of Century 21 The Parks Realty dated 6 March 2023 (exhibit A2), a letter from Dr Bavanthi Balakrishnar to Dr Sanaa Guirguis dated 13 April 2023 (exhibit A3), a quotation from Granny Flats Australia dated 1 February 2023 (exhibit A4), a quotation from In House Granny Flats dated 24 January 2023 (exhibit A5) and a letter from the Applicant to the Tribunal dated 7 March 2023. The Applicant gave evidence and was cross-examined by Mr Coss, the solicitor appearing for the Respondent. Rita Bou-Harb was present throughout the hearing on the AVL link.
2. In summary, it was the Applicant's case that his wife had been previously diagnosed with cancer and had ongoing health issues. As a consequence, their current two storey-house was too large for his wife to take care of, and they wanted to build a granny flat (secondary dwelling) on their next door Property. The Applicant, his wife and some of their children intended to move into the existing three bedroom single storey house on the Property once some minor renovations had been completed and one of their sons would move into the secondary dwelling to give him some free space. The single storey house on the Property was currently leased to tenants and the tenants had been given notice that they will be required to vacate the house at some time.

Respondent's submissions

1. The Respondent relied upon written submissions dated 27 April 2023 and Mr Coss made oral submissions at the hearing. The Respondent submitted that the Applicant had listed his residential address in the Application as number 9 in the same street as the Property (number 7) for which he requires an owner-builder permit. It was submitted that the Property had been purchased in 2017 and that the Applicant had received rental income from it. The Property was most recently listed in January 2023 and continued to be tenanted. It was submitted that although the Applicant is the owner of the Property, he does not intend to live in the secondary dwelling upon completion of the Property and that the secondary dwelling "is to give his son some space".
2. It was submitted that it is the intent of the legislation for the Applicant to reside or intend to reside on the land where an owner-builder permit authorising specific construction work has been issued. The Respondent submitted that the Applicant claims that he intends to move from his current principal residence at number 9, with his wife and son, to the Property only after the tenants vacate that residence; the renovation is completed; and the secondary dwelling is constructed. The Respondent noted that the Council development approval does not include renovation of the existing dwelling on the Property.
3. The Respondent submitted that there is no confirmed timeline for the tenants vacating, the house renovation completion or the Applicant's relocation to the subject project. It was submitted that the way in which the Applicant chooses to structure his life is entirely a matter for him; however, this cannot of itself constitute a special circumstance. Reference was made to Oslear v Commissioner for Fair Trading [2022] NSWCATOD 110 and it was submitted that the Tribunal should affirm the decision to refuse the owner-builder permit.
4. In oral submissions, Mr Coss noted that the evidence led by the Applicant indicated that he still lived at number 9 and that tenants remained at the Property. Mr Coss stated that whilst the Applicant gave evidence that he intends to move and that he has three sons, he had never previously advised the Respondent of this. Mr Coss referred to the Applicant's evidence where it appeared that one of the Applicant's sons was to move into the granny flat when it was completed, and the Applicant and the rest of his family would only move to the house on the Property after work was done to it. It was submitted that whatever is intended to happen, there are no confirmed time frames. In further submissions, Mr Coss clarified that the issue of special circumstances only arises if the application for an owner-builder permit relates to a dual occupancy.

Applicant's submissions

1. The Applicant relied upon written submissions dated 15 May 2023. In the submissions he referred to the letter from Dr Balakrishnar (exhibit A3) that confirms that the Applicant's wife is very sick and weak. He submitted that he and his wife had no other choice but to downgrade their residence. He submitted that he tried getting quotes from building companies (exhibits A4 and A5) but the cheapest quote was at least $50,000 more than his budget and that the income lost from the time he has taken off work to assist his wife, he cannot afford to engage a builder contractor. The Applicant submitted that he has spent over $10,000 in relation to the proposed secondary dwelling already and has spent time sending plans and communicating with trades contractors. He submitted that he has done the training and obtained the certificate required for an owner-builder permit.
2. The Applicant submitted that he has waited for a long time for the Application to be approved while his wife's health is getting worse and their need to downgrade their residence is much greater. He submitted that the tenants in the house on the Property had been notified and are ready to vacate but the timeline has been extended until the Application is approved and the building work is ready to start. The Applicant submitted that the repair work for the house on the Property is only minor and requires paint and repairing damaged fixtures that do not require Council development approval. The relocation of his residence will be determined by how soon the work can be done. The Applicant submitted that he believes there is no justice in refusing the Application and that there are special circumstances to grant the Application and the Respondent's decision to refuse it should be set aside.
3. The Applicant reiterated these submissions in his oral submissions. He stated that he owns both the house he is currently living in and the Property, and that his family needed to move into the smaller house. His wife is not well, and they are struggling financially. He submitted that there were special circumstances and that he cannot understand why the Application would not be granted.

Further Tribunal Proceedings

1. Following the hearing, the decision in the matter was reserved. However, the matter was set down for a Directions Hearing on 28 August 2023 for the purpose of further consideration of the applicability of s 31(2)(c) of the HBA to a secondary dwelling. There was some initial confusion about the date of the directions hearing but ultimately both the Applicant and Mr Coss participated. Directions were made for the Respondent to give the Tribunal and the Applicant submissions on the legal basis for the contention that the requirements of s 31(2)(c) of the HBA are applicable to the Application for an owner-builder permit in relation to a secondary dwelling. The Respondent was also given an opportunity to make submissions in relation to the need for any further hearing in the matter. The Applicant was provided with an opportunity to provide any submissions in reply to these issues.
2. In accordance with the directions, the Respondent filed written submissions on 11 September 2023 and the Applicant filed written submissions on 20 September 2023. No objection was taken by either party in relation to the filing and service of any documents in the proceedings and no request was made for a further hearing.

Role of the Tribunal

1. Section 83B(1) of the HBA confers jurisdiction on the Tribunal for administrative review of the Respondent's decision pursuant to s 9 of the Administrative Decisions Review Act 1997 (the ADR Act). Section 63 of the ADR Act provides that in determining an application for review, the tribunal is to make the correct and preferable decision having regard to the material then before it, and any applicable written or unwritten law. The tribunal makes its own decision in place of that of the Respondent and there is no presumption that the decision of the Respondent is correct: McDonald v Director-General of Social Security (1984) 1 FCR 354 at 357. In doing so it may exercise all of the functions conferred or imposed by any relevant enactment. There is no onus of proof: Nakad v Commissioner of Police, New South Wales Police Force [2014] NSWCATAP 10 [28-30], [34]. In an application for review the tribunal is not restricted to consideration of the material that was before the decision maker, but may have regard to any relevant material before it at the time of the review: Shi v Migration Agents Registration Authority [2008] HCA 31.
2. For the purpose of this review the Tribunal stands in the shoes of the Respondent and has the same powers.

Ownership of the Property

1. The Application is in the name of the Applicant. At section 2 of the Application, he indicated that he and Rita Bou-Harb were shareholders in the company that owns the Property. At section 6 of the Application that requires a declaration by all shareholders of the company as recorded on the ASIC company extract, the Applicant and Rita Bou-Harb made the declaration as shareholders of JBH Pty Ltd. At section 7 of the Application relating to permission to carry out work, the Applicant and Rita Bou-Harb signed as directors of JBH Pty Ltd. An ASIC Company Extract relating to JBH Pty Limited was attached to the Application and shows that the Applicant and Rita Bou-Harb are directors, and that the Applicant is also the Secretary of that company.
2. Section 29(2) of the HBA is in Division 3 of Part 3 of the HBA relating to owner-building permits. Section 29(2) provides as follows: (2) If land is owned by a company that is wholly owned by individuals, the land is to be taken (for the purposes of this Division) to be owned by those individuals.
3. On the evidence before me, I accept that the Property is owned by JBH Pty Limited and that the Applicant and Rita Bou-Harb are the sole shareholders. As they are both individuals, I accept for the purpose of the Application that the Property is owned by the Applicant and his wife. Neither party in the proceedings disputed this to be the case.

Requirements for the issue of owner-builder permits relating to secondary dwellings

Secondary dwelling

1. As referred to previously, the description of the proposed building work in the Application is the construction of a secondary dwelling on the Property. Attached to the Application is Complying Development Certificate 220188 from CertOne Building Certifiers for the construction of a Secondary Dwelling at the Property that was determined on 5 December 2022. It was accepted by both parties that the Application related to an owner-builder permit for the construction of a secondary dwelling, and I find on the available evidence that this is the case.

Issue of owner-builder permits

1. Section 31 of the HBA is as follows: Issue of owner-builder permits (1) (Repealed) (2) The Secretary must refuse an application for an owner-builder permit if the Secretary is not satisfied - (a) that the applicant is an individual of or above the age of 18 years, or (b) that the applicant owns the land concerned, whether or not together with another or other individuals, or (c) that the single dwelling-house or one of the dwellings comprising the dual occupancy concerned will be occupied as the residence (being, in the case of a dual occupancy, the principal residence) of the applicant after the work authorised by the permit is done, or (d) that the applicant has completed any education or training, or holds any qualification, required by the Secretary or the regulations for eligibility for the grant of an owner-builder permit. (3) The Secretary must refuse an application for an owner-builder permit (the current application) if the applicant was an owner of other land when an owner-builder permit was issued in respect of that other land during the relevant period before the current application was lodged (whether or not that owner-builder permit was issued to the applicant), unless the Secretary is satisfied that special circumstances exist. (4) The relevant period is the period of 5 years or such other period as may be prescribed by the regulations.
2. It was not disputed by the Respondent that the Applicant satisfied the requirements of s 31 of the HBA, other than s 31(2)(c). Setting aside for the moment the provisions contained in s 31(2)(c), I am satisfied that the Applicant meets all of the other requirements contained in s 31 of the HBA for the issue of an owner-builder permit.
3. Other than s 31(2)(c), the only other potentially requirement of the HBA that could be relevant to consideration of the Application is s 32(1A) as follows: (1A) An owner-builder permit must not be issued to authorise its holder to do residential building work that relates to a dual occupancy unless the Secretary is satisfied that special circumstances exist that justify the owner-builder permit authorising its holder to do that work. The Secretary may issue guidelines as to the circumstances that will be considered to be special circumstances for the purposes of this subsection.
4. The issue of what constitutes "special circumstances" has been considered in a number of matters determined by the Tribunal, including in Oslear. However, the requirement to satisfy the Secretary that special circumstances exist only arises in the context of an owner-builder permit to authorise its holder to do residential building work that relates to a dual occupancy. It was not disputed by either party that the Application relates to the construction of a secondary dwelling, and I accept this to be the case. Accordingly, given that s 32(1A) of the HBA specifically refers to residential building work that relates to a dual occupancy, it clearly does not apply to the current matter. Accordingly, there is no requirement for the Tribunal to be satisfied that special circumstances exist in relation to the Application.

Section 31(2)(c) of the HBA

1. The Respondent submitted that the Applicant does not comply with s 31(2)(c) of the HBA. As outlined previously, the Respondent contends that the Applicant does not comply with this provision on the basis that the Applicant's son intends to live in the secondary dwelling when complete but that the Applicant does not intend to live in the existing house on the Property until after some work is done on that house. The Respondent submits that the Tribunal should not be satisfied in relation to s 31(2)(c) of the HBA and that the Application should be refused.
2. Whilst s 31(2)(c) includes references to a "single dwelling-house" and a "dual occupancy", it makes no reference to a secondary dwelling. As referred to previously, the parties were provided with an opportunity after the hearing to make submissions on the legal basis for the contention that the requirements of s 31(2)(c) of the HBA are applicable to the Application in relation to a secondary dwelling. In the Applicant's written submissions on this issue, he indicated that he understood the intent of the legislation and that he and his family intended to live in the existing house on the Property and that one of his sons intended to live in the secondary dwelling. He reiterated that the development of the Property is not for the purpose of a rental investment or speculative sale.
3. The Respondent submitted that it is the intent of the legislation for an applicant to reside or intend to reside on the land where an owner-builder permit authorising specific construction work has been issued. It was further submitted that as conveyed by the original decision, it is not the intention of the legislation to allow persons to develop land for the purpose of a rental investment or speculative sale.
4. The Respondent went on to refer to the definition of "dual occupancy" in the Standard Instrument and to the case of Stock v Wingecarribee Shire Council [2021] NSWLEC 1066 (16 February 2021) (Stock). It was submitted that the expression "established in conjunction with another dwelling (the principal dwelling) in (a) of the definition of secondary dwelling" was judicially considered in Stock and it was held that "the requirement that a secondary dwelling be established in conjunction with the principal dwelling does not, of itself, set a high bar" [at 46]. It was submitted that it could therefore easily be argued that it is akin to a dual occupancy.
5. The decision in Stock was an appeal to the Land and Environment Court against the refusal of a development application for the construction of a secondary dwelling and an issue was raised as to whether or not the proposed dwelling was properly characterised as a "dual occupancy (detached)" that was prohibited in the zone or a "secondary dwelling". The Court found that the proposal was a secondary dwelling but dismissed the appeal on other grounds. It is not clear what relevance the decision of Stock has to the current matter where there is no dispute that the Application is for the proposed construction of a secondary dwelling, and I have found this to be the case.

Construction of s 31(2)(c) of the HBA

1. Other than referred to above, the Respondent did not provide submissions in relation to the interpretation of s 31(2)(c) of the HBA. The Tribunal is required to interpret this provision in a manner that is consistent with the intent, purpose and context of the HBA as a whole. Section 33 of the Interpretation Act 1987 (NSW) provides: In the interpretation of a provision of an Act or statutory rule, a construction that would promote the purpose or object underlying the Act or statutory rule (whether or not that purpose or object is expressly stated in the Act or statutory rule or, in the case of a statutory rule, in the Act under which the rule was made) shall be preferred to a construction that would not promote that purpose or object.'
2. As set out by Senior Member PH Molony in Oslear at [22]: It is now well established that at common law a court or tribunal may have regard to extrinsic material when ascertaining the mischief that legislation is enacted to address (and some cases suggest the purpose of the legislation). In CIC Insurance Ltd v Bankstown Football Club Ltd 187 CLR 384 at 408, [1997] HCA 2 Brennan CJ , Dawson , Toohey , Gaudron and Gummow JJ explained at 408: 'It is well settled that at common law, apart from any reliance upon s 15AB of the Acts Interpretation Act 1901 (Cth), the court may have regard to the reports of law reform bodies to ascertain the mischief which a statute is intended to cure … Moreover, the modern approach to statutory interpretation (a) insists that the context be considered in the first instance, not merely at some later stage when ambiguity might be thought to arise, and (b) uses 'context' in its widest sense to include such things as the existing state of the law and the mischief which … one may discern the statute was intended to remedy.' See also French CJ and Hayne J in Certain Lloyd's Underwriters Subscribing to Contract No IH00AAQS v Cross (2012) 248 CLR 378 at [25].
3. In the second reading speech on the introduction of the Home Building Amendment Act 2014 (NSW) (Repealed) (HBAA) on 6 May 2014 the Minister for Fair Trading, said: The amendment also addresses home builders. The Act currently allows home owners to do building work on their home by obtaining an owner-builder permit from Fair Trading. The owner-builder provisions are being reformed to help ensure that the permit system is not being used inappropriately for commercial reasons as a means of circumventing the licensing requirements. These reforms will also help manage health and safety risks associated with owner-builder work. Currently owner-builders are only permitted to undertake work relating to a single dwelling or a dual occupancy. There are concerns that some commercially orientated, unlicensed people may be using the permit system in order to undertake dual occupancy work on land with a view to subdividing the land and on-selling it at a profit. The owner-builder permit system is not intended for such commercial development work. Owner-builders will not be able to obtain a permit for work on a dual occupancy unless the commissioner is satisfied that special circumstances exist, such as where a family could demonstrate legitimate non-commercial reasons for the work or where refusing the permit could cause family hardship.
4. The Explanatory Note accompanying the Bill advised that the amendment operated: (g) by broadening the definition of owner-builder work to include residential building work on a secondary dwelling on land, (h) by providing that an owner-builder permit must not authorise its holder to do residential building work that relates to a dual occupancy unless there are special circumstances,
5. The HBAA resulted in the broadening of the definition of owner-builder work in s 29 of the HBA to include residential building work that relates to a secondary dwelling. It also resulted in the introduction of s 32(1A) into the HBA as well as 31(2)(d) which is concerned with the qualifications of owner-builders. As was referred to by the Tribunal in Oslear, s 32(1A) was a completely new provision, whereas s 31(2)(d) replaced a similar provision but allowed for necessary qualifications to be prescribed by regulation. Section 31(2)(c) has been in its current form since the commencement of the HBA. The Tribunal in Oslear at [36] agreed with the Tribunal in McGufficke that the mischief addressed by s 32(1A) of the HBA includes the creation of a dual occupancy for a commercial purpose, including sale, sub-division, or renting part or the whole of the developed property for financial gain.
6. The construction of s 32(1A) of the HBA and the meaning of special circumstances has been considered in a number of Tribunal decisions, including in Oslear, and it applies only to owner-builder permits relating to a dual occupancy. I have previously found that s 32(1A) of the HBA does not apply to the Application as the proposed work relates to a secondary dwelling and not to a dual occupancy. Similarly, having regard to the definitions in the Standard Instrument, I do not accept the Respondent's submission that a secondary dwelling is "akin" to a dual occupancy.
7. Whilst it was not entirely clear from the Respondent's submissions, it would appear that the Respondent is submitting that s 31(2)(c) of the HBA is also intended to address the same mischief referred to in the second reading speech. However, the second reading speech limited such concerns to dual occupancy work, and this is reflected in the wording of s 32(1A) that in turn is limited to residential building work that relates to a dual occupancy. Section 31(2)(c) was in force prior to the HBAA Act and was not amended by it. Whilst it refers to a single dwelling-house or a dual occupancy, no reference is made to a secondary dwelling.
8. Section 29(1) of the HBA clearly allows for owner-builder work to include residential building work that relates to a single dwelling-house, dual occupancy or secondary dwelling. "Single dwelling-house" is not defined in the HBA or in the Standard Instrument but "dwelling" is defined in clause 2 of Schedule 1 of the HBA to mean "a building or portion of a building that is designed, constructed or adapted for use as a residence (such as a detached or semi-detached house, transportable house, terrace or town house, duplex, villa-home, strata or company title home unit or residential flat)."
9. In Commissioner of Taxation v Consolidated Media Holdings Ltd [2012] HCA 55 at [39], the High Court of Australia summarised the basic approach to statutory interpretation (as follows: "This Court has stated on many occasions that the task of statutory construction must begin with a consideration of the [statutory] text." So must the task of statutory construction end. The statutory text must be considered in its context. That context includes legislative history and extrinsic materials. Understanding context has utility if, and in so far as, it assists in fixing the meaning of the statutory text. Legislative history and extrinsic materials cannot displace the meaning of the statutory text. Nor is their examination an end in itself."
10. Having regard both to the context of the HBA and the text I am satisfied that the occupancy requirements in s 31(2)(c) of the HBA only apply to an application for an owner-builder permit relating to either a single dwelling-house or a dual occupancy. As the Application in this matter relates to a secondary dwelling, I am satisfied that the requirements of s 31(2)(c) of the HBA do not apply to the Applicant in this matter. Accordingly, I am satisfied that the correct and preferable decision is to set aside the Respondent's decision to refuse the Application.
11. I note that even if I had found that the provisions of s 31(2)(c) of the HBA did apply to the Application in this matter, I would have been satisfied on the evidence tendered by the Applicant; his oral evidence at the hearing; and the submissions made by him, that he intends to reside in the existing dwelling on the Property after the work authorised by the owner-builder permit is done and accordingly would have complied with the provisions of s 31(2)(c) of the HBA.

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: 10 November 2023