Caleta v New South Wales Department of Fair Trading

NCAT Occupational|2014-10-08

reasons for decision 1This is an application for review of a determination by the delegate of the Respondent to refuse an application by Robert Caleta ('the Applicant') under the Home Building Act 1989 ('the HBA') for an individual contractor licence for the category of general building work. 2The primary reason that the Applicant's application for a contractor licence was refused was that the Respondent found that he did not possess the necessary industry experience required under relevant provisions of the HBA and the Home Building Regulation 2004 ('the Regulation'). This requirement is extrapolated to specify that an application must have a minimum of 2 years industry experience in carrying out or supervising a wide range of residential building construction work, whilst employed or otherwise lawfully engaged.

Brief Background 3Initially in support of his application the Applicant supplied relevant information in regard to his formal qualifications and Referee Statement forms completed by a number of Referees. 4The Respondent concluded that the Applicant satisfied the approved qualification requirements for a building licence but determined that he did not possess the necessary industry experience required under the HBA and the Regulation. On 18 March 2014 the Respondent issued a determination that: Based on the information provided, NSW Fair Trading is not satisfied that the applicant has attained "two (2) years acceptable relevant industry experience in a wide range of building construction work" to be issued with a building licence. 5An Internal Review was sought and the review was concluded on 24 June 2014. Following the internal review the Respondent affirmed the decision of the Director General's delegate. That Review went into more detail than the original decision. 6The internal reviewer advised in their Statement of Reasons that: It is therefore concluded that if an individual is employed on a subcontract basis to undertake residential building work when that person is not appropriately licensed to legally contract for the work then the individual cannot be considered to have been lawfully engaged. 7The review found that: The Director general's delegate was correct in refusing the issue of the authority because the evidence supplied by the applicant does not demonstrate that Robert Caleta has the minimum two years relevant industry experience in a wide range of building construction, in addition to not being lawfully engaged - as determined by the Director General as necessary to enable the applicant to do, or to supervise building work in accordance with Clause 28 (1) (b) of the Home Building Regulation 2004. 8The Applicant lodged an Application for Administrative Review with the Tribunal on 2 July 2014. The application was lodged within time. 9Initially before the Respondent Department, the Applicant lodged material in support of his application. This consisted of Referee Statements and reports outlining the details of the Applicant's residential building experience. 10The Applicant provided four addresses where he claimed residential building experience. Two of those addresses were interstate in Victoria. The experience requirement for a building licence is 'at least two years relevant industry experience in a wide range of building construction work'. The Victorian work totalled 16 months. The New South Wales experience totalled 11 months. 11The building sites referred to in the Referee Statements were located at Maroubra and Bondi addresses within New South Wales. In addition sites at Coburg in the State of Victoria and Pascoe Vale Victoria were nominated. In respect of the New South Wales addresses Mr Boniface (the Referee) was nominated as the licensed builder in control of each of the building sites. For the Victorian addresses the Referee was Mr Kraljevic.

The Hearing 12During the course of proceedings further Referee Statements were provided to both the respondent and filed with the Tribunal. A Referee Statement dated 26 September 2014 from Ante Rudan concerning work at Vaucluse New South Wales and another site at Maroubra was filed on 20 October 2014. During the hearing a further Referee Statement dated 29 October 2014 by Marinko Markotic concerning a site at Darling Point New South Wales was tendered. 13In respect of the Referee Statements tendered at the Hearing, the periods of time where the Applicant performed the relevant work were as follows:

Darling Point - 18 weeks (and continuing).
Vaucluse - two years (overlapping with Maroubra 1995-1997)
Cooper Street Maroubra - two years (1995-1997)
Bondi - (5 Months and 3 weeks)
Anzac Parade Maroubra - ( 6 months) 14The matter came before me for hearing on the 8th and 30th of October 2014. The Applicant (Mr Caleta ) was represented by Mr Klarica of Counsel. Mr Nicoletti Solicitor represented the Department Respondent.

The Evidence at Hearing 15The Applicant relied on the material and submissions filed prior to the hearing. Neither the Applicant or the Respondent required any of the Referees for examination or cross examination at the hearing. 16The Applicant relied upon the following evidence at hearing in support of his application:

Mr Markotic: Phone note of 28/10/2014 (including the addendum), Correspondence of 15/10/2014, Referee Report of 29/10/2014
Mr Boniface : Correspondence of 15/10/2014, Phone Note of 28/2/2014, Referee Reports of 24/3/2014 and 27/1/2014.
Mr Kraljevic: Phone note of 3/3/2014, Correspondence of 15/10/2014, Referee Report of 27/3/2014.
Mr Rudan: Referee Report of 26/9/2014 and Phone note of 7/10/2014.
Mel Sotiropoulos: Undated letter filed with other material on 18/9/2014.
Mr Caleta's oral evidence at the hearing.

Employed or otherwise lawfully engaged 17Mr Caleta gave evidence in chief that he worked for Mr Boniface under his instruction. He does what Mr Boniface asks him to do. He came and worked when he was told / asked to. Mr Caleta paid his own taxes. The builder supplied the materials. If he needed to leave the job he asked permission. In respect of his engagement with Mr Boniface, he described himself as a 'casual employee'. 18In respect of his engagement with Mr Kraljevic, Mr Caleta's evidence was that he worked in the same manner as he did with Mr Boniface. He worked as directed and was supplied materials. 19In respect of his engagement with Mr Rudan, Mr Caleta's evidence was that Mr Rudan paid his wages, workers compensation coverage and his superannuation. 20In cross examination in respect of the referee's Mr Caleta's evidence was as follows: The relevant builder pays the Applicant's company. He is paid an hourly rate or daily rate by his company. His work vehicle is registered to his company. His company ('NRC') is paid the hourly rate for the Applicant's services and the company pays the Applicant. In addition the Applicant gave evidence under cross examination that he supplies his own hand tools and pays for his own superannuation and workers compensation. 21The applicant was then cross examined in respect of his letter to Fair Trading dated 27 March 2014 which formed pages 65-66 of the Respondent's section 58 documents, and the following referee statement of Mr Boniface. The letter in effect addressed the apparent conflict in some of the dates when work was performed and how the two jobs in Victoria overlapped, and how there was also some overlap with some of the nominated New South Wales work.

Broad range of building experience 22The applicant gave evidence that all the building work that he performed was site specific. This often entailed : gyprock / plastering, carpentry, installation of beams, brickwork, load bearing walls, non- load bearing walls, and generally a broad range of residential building experience. 23Under cross examination the Applicant admitted that he never entered into a building contract. His evidence was that he had never taken out home warranty insurance. The Applicant's evidence was that in part this situation was due to the fact that the holders of the head contractor licences are responsible for doing the approvals, contracts and warranties etc. The Applicant understood that if he was granted the licence he would be responsible for these matters. By way of experience in approvals the Applicant gave evidence that previously as an owner builder he was responsible for and gained experience in approvals. 24The evidence in respect of the Bondi address was that it was a bathroom construction, and that whilst many aspects were supervised by the Applicant, he did not supervise the plumbing. 25The applicant conformed in his evidence that the works undertaken in Victoria were on behalf of a Company that the Applicant and the nominated referee (Mr Kraljevic) were Directors. 26In respect of the work for Mr Rudan, the Applicant's evidence was: that he did floors, windows, and everything. The Applicant had a poor recollection of Site 1 (the Vaucluse site), but that when he worked for Mr Rudan he generally was involved in setting up the formwork, footings, and carpentry. When working for Mr Rudan, he was not working for anyone else and worked for him all the time from when he commenced the jobs. 27The Respondent submitted during the hearing and by way of written submissions filed and served prior to the hearing date that the Applicant was not 'lawfully engaged' during the relevant period. 28The Respondent further submitted that that the fact that the Applicant was financially remunerated for the work carried out as a subcontractor or as an employee of another company which contracts for the work does not mean that he was lawfully engaged. The instrument states that any financial remuneration can only be as a consequence of being "otherwise lawfully engaged". 29In respect of the Victorian sites, on this point the Respondent submitted that the Applicant was a co-property developer of those sites in partnership with the nominated referee, rather than as an employee or subcontractor of the referee. The Respondent also submitted that as the building work was carried out in Victoria under Victorian regulations, then it did not satisfy the practical experience requirements for a contractor licence in New South Wales under the Home Building Act 1989. 30The Applicant countered the 'practical experience requirements' point of the interstate work adopted by the Respondent. They relied on the National Code, and submitted that the work undertaken interstate meets the requirements of the National Building Code. However, as the relevance of the interstate work turned on the issue of 'otherwise lawfully engaged', it was unnecessary to consider this issue further.

Legislative Scheme 31Section 20(2) of the Home Building Act 1989 provides that the regulations may fix or provide for the respondent to determine standards or other requirements that must be met before any contractor licence is issued or before a contractor licence of a particular kind is issued. 32Section 20(5) of the Act provides that a decision of the respondent relating to the determining of qualifications or other requirements under sub-section (2) cannot be reviewed by the Tribunal in an application for review made under this or any other Act. 33Clause 26(1)(b)(i) of the Home Building Regulation 2004 reads: Page 2. Before a contractor licence is issued, the Director-General must be satisfied that the applicant, if also applying for an endorsement of the contractor licence to show that it is equivalent of a supervisor certificate complies with the requirements prescribed by clause 28(1). 34Clause 28(1) provides: (1) Before a certificate is issued, the Director-General must be satisfied that the applicant: (a) has such qualifications or has passed such examinations or practical tests, or both, as the Director-General determines to be necessary to enable the applicant to do, or to supervise, the work for which the certificate is required, and (b) has had experience of such a kind and for such a period, as the Director-General considers would enable the applicant to do, or to supervise, the work for which the certificate is required, and (c) is capable of doing or supervising work for which the certificate is required. 35The current standards and other requirements determined by the Director- General in relation to the qualifications, examinations and experience required for an endorsed licence or supervisor certificate to do or to supervise building work are set out in an Instrument effective 3 July 2013 (see: NSW Government Gazette No. 90, 12 July 2013 pg 3425). 36I am satisfied that Mr Caleta has the relevant qualifications. I note that this aspect is not contested between the parties. The issue to be determined is whether Mr Caleta has the requisite experience as specifically defined and proscribed in the Instrument. 37The definition of experience in the gazette is set out below: "Experience" means experience gained by the applicant as: (a) an employee of; or (b) a person otherwise lawfully engaged by, The holder of a contractor licence authorising the holder to do the class of residential building work in which the experience was gained ("the Work"), where during the relevant period, the applicant was: (c ) supervised and directed in the doing of the Work by the holder of an endorsed contractor licence or supervisor certificate authorising its holder to supervise the Work; and (d) financially remunerated for the Work

Applicant's Submissions 38The Applicant's submissions were that he was employed or otherwise lawfully engaged, and during the relevant periods carried out and supervised a wide range of residential building construction. 39The Applicant's Counsel submitted that Mr Caleta in effect held notional employee status in respect of the works were he was not in partnership as a developer. The period whereby he was paid through his company for work undertaken, did not detract from his status as a person employed or otherwise lawfully engaged. 40Mr Klarica took me to the case of Southern Group v Smith (1997) ATR 107 98 ATC 4733 which provided some guidance on this issue. As cited from an Australia Tax Reports Ruling: Also, a payment to a third party is treated as a redirection of an employee's salary or wages (and hence a constructive payment of salary or wages to the employee) in circumstances where there is a subsisting employment contract that has not been terminated and the payments are attributable to services rendered by the employee. In Southern Group Ltd v SmithF3 the Full Court of the Western Australian Supreme Court found that the contract of employment was between the plaintiff and an individual rather than with the individual's private company. 41Finally the Applicant's Counsel submitted that it was necessary to look at the broad range of the work, and the totality of the works performed. The Tribunal should look at the overall nature and grouping of the work that the Applicant undertook.

Respondent's submissions 42In addition to their detailed written submissions, the Respondent's Solicitor submitted that effectively the arrangement was that the Applicant was paid by the Applicant's Company, and whilst he gave evidence that he was required to turn up (and this was born out by the Department / Respondent's own enquiries), in reality the practical manner of the Applicant's engagement was as a sub- contractor not as an employee. 43Finally Mr Nicoletti submitted that there was insufficient broad ranging experience as an employee or otherwise lawfully engaged by a person who at the relevant time held a contractor licence for general building work. Again, my attention was drawn to the relationship between section 4 and section 13 of the Home Building Act 1989.

Consideration 44In the case of Zada v Director General Department of Finance and Services NSW Fair Trading [2014] NSWCATOD 16, Senior Member Frost made the following observations on the issue of whether a person was lawfully engaged for the purposes of the HBA. At paragraph 36: In the absence of a statutory definition of "employee" in the HB Act, the word must take its ordinary meaning - "a person working for another person or a business firm for pay" (Macquarie Online Dictionary). A simplistic distinction between an employee and an independent contractor (or subcontractor) is that the former works for another while the latter works for himself. In earlier times the main indicator of an employment (master/servant) relationship was the control exercised by one person over another, but nowadays it is "the totality of the relationship between the parties which must be considered": Stevens v Brodribb Sawmilling Co Pty Ltd [1986] HCA 1; (1986) 160 CLR 16 at 29, cited with approval in Hollis v Vabu Pty Ltd [2001] HCA 44; (2001) 207 CLR 21 at 41. Supervision and direction are often very relevant to the enquiry. Those concepts are also relevant to the "experience" question, as is evident from their use in paragraph (c) of the definition in the Instrument. That is why it may be more instructive to start the enquiry by considering the level of supervision and direction provided by the licence holder rather than to focus on either the label used or the tax arrangements in place. The greater the level of supervision and direction, the more likely it is that an employment relationship exists. And if the worker is not closely supervised and directed, then he or she is not likely to reach the requisite level of "experience" in any event, no matter what label has been applied to the relationship. The proper task is to examine "the totality of the relationship between the parties". Having said that, there is still room for debate about the reach of the expression "otherwise lawfully engaged", given provisions in the HB Act such as s 12 which prohibit certain categories of work except as an "employee". The respondent suggested, by way of example, that the expression may allow a licensed carpenter (not being an employee) to carry out, under supervision, some incremental activities as a way of progressing towards a builder's licence. That suggestion seemed to be driven more by pragmatism than by a close analysis of the words of the Instrument and the broader regulatory regime. And of course there is an inconsistency between that suggestion and the respondent's primary position, which is that a person who is not an employee will necessarily be in breach of s 12, and is therefore not "otherwise lawfully engaged". 45Whilst I accept that such a situation as submitted at paragraph 40 (above) assists the Applicant in addressing the Respondent's submission on this point, there are other aspects to the claimed experience which call into doubt whether the requirement is sufficiently addressed for the necessary two year minimum period. The Applicant's own evidence indicated that there were significant departures from this approach with some 'engagements', in that broadly during the claimed period (other than the most recent period) Mr Caleta was not 'on wages'. In some jobs the Company payments met that requirement and paid workers compensation coverage and employee super, but on others he was responsible for his own Superannuation and Workers Compensation. 46In contrasting some of the evidence in this case against the matters referred to in Zada, the situation arises whereby it could be argued that irrespective of the working relationship between the Applicant and the Referee's companies / entities, i.e.: the Applicant was lawfully engaged, there remains an issue as to the nature and scope of the work performed under the period of supervision. There is little detail of the work performed being broad ranging and in all areas of residential building. On some sites the work was minimal in scope, however I accept that more than one type of skill and trade was required usually required. There was significant evidence that the supervision and other compliance matters relating to safety and building standards only applied to the Applicant's own colleagues working with him in his skill / expertise area. Whilst it is clear from the evidence and the referee statements that the Applicant has engaged in important areas of expertise, in my view they do not constitute a "wide range of building construction work" as specified in the Instrument. 47The case of Locking v Department of Finance and Services [2013] NSWADT 239 also provides some guidance on the one issue in this application. At paragraph 18 Deputy President Hennessy made the following observations: 18 A building contractor has the overall responsibility for a site and must be able to supervise all of the trades required to complete any type of dwelling. Additionally a builder must be able to determine that all trades have complied with all standards and requirements. There are many gaps in Mr Locking's trade supervisory experience and therefore his understanding of certain trades. Those trades include flooring, bricklaying, stonemasonry, wet plastering, painting, decorating, general concreting, tiling, demolishing, fencing, glazing and waterproofing. 19 A building contractor is also able to contract with the public, and must therefore be able to negotiate a contract, quote for a project and co-ordinate the trades to be able to complete the project on time and within budget. He or she must also be able to negotiate and discuss the jobs with council and private certifiers to ensure that the work is passed fit when appropriate.

Conclusion 48At present, on the evidence before me I am not satisfied that the Applicant was employed or otherwise lawfully engaged in accordance with the provisions of the Home Building Act 1989, the requirements of Clause 26 (1) (b) and 28 (1) of the Home Building Regulation 2004, having regard to the terms of the instrument. Therefore, based on all of the evidence before me, I am not satisfied that the Applicant has demonstrated a minimum of two years relevant industry experience, whilst lawfully engaged, in a wide range of building construction work. 49I note however that the Applicant may well satisfy the requirements in the near future, in part based on the evidence given during the hearing of this application. 50It follows however, that the correct and preferable decision is to affirm the Department's decision.

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 December 2014

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Judgment (12 paragraphs)

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Cases Cited (5)