Champion Homes Sales Pty Ltd v Commissioner for Fair Trading

Grounds of appeal and submissions

1. The Notice of Appeal was filed 3 August 2017. The appellant raised three grounds of appeal in the following terms: 1. The order appealed from in the "earlier proceedings" was the penalty and not the order that a fine should not be imposed. It was therefore wrong of the Tribunal to waive the fine as it had done that in the previous hearing and was not appealed. 2. The Tribunal misdirected itself in paragraph 10, and subsequently, paragraph 20, by stating that the minimum action under s 62 of the Act is "a caution". The minimum action is the taking of no further action. The Tribunal thus did not consider all the range of actions that could be taken. 3. The Tribunal misdirected itself in paragraphs 14-19 by considering that the parties being natural persons and a company are materially different to answer the question of parity of sentence. By misdirecting itself the Tribunal erred in its consideration of the question of parity.
2. In written submissions, the appellant pursued two grounds of error.
3. First, the appellant said that the minimum disciplinary action available under s 62 was to take no further action.
4. The Reasons indicate the Tribunal failed to consider whether any penalty should be imposed at all; that is whether no further action should be taken, as occurred with the individuals. Rather, the Tribunal approached its task by considering what the penalty should be. The error was said to be at [10] of the Reasons where the Tribunal states "a caution is the minimum action that can be taken".
5. The appellant also submits that where there is a breach of statutory warranties there is no automatic or necessary requirement to impose some form of disciplinary action, even if only a caution. The purpose of the section is protection of the public and only when there are circumstances warranting protection should disciplinary action be necessary. A decision to take no further action was appropriate because the Tribunal found there was no need for protection of the community, and that the steps taken by the director to identify the defects and offer to rectify them were reasonable.
6. In addition, the appellant submits the decision was penal in nature and contrary to the decision in relation to the directors and supervisors. This was said to follow from the conclusion that there was no need for public protection.
7. The second error on which the appellant relies is the consideration by the Tribunal of the concept of parity.
8. The appellant accepted the statement of the "parity principle" at [20] of the respondent's submissions which we set out below.
9. The appellant said that the case referred to in the Reasons at [15], Lowe v R [1984] HCA 46; (1984) 154 CLR 606, concerned comments of Chief Justice Gibbs to the effect that as between two individuals, their positions may not always be equal having regard to the participation in the event to which the penalty proceedings relate.
10. However, in the present case the appellant submits it played no part in the commission of breach. That is, it was a "lesser player". Having regard to the issues that gave rise to the show cause notice and the findings of the original decision that the managing director acted reasonably in relation rectification, the appellant submitted that "it is difficult to see why the same minimum condition should not apply to the company". Further, the work for the company was carried out by the managing director and the persons who had day-to-day control over the work. There is no relevant separation of the type spoken by the Chief Justice in Lowe to warrant a different penalty for the company.
11. Lastly, in so far as the section was protective in nature, that protection was from those that did the work, not those that contracted to do the work.
12. In oral submissions, the appellant reiterated its written submissions and said that once there was a breach of warranty, a party should be treated on an equal basis. The appellant referred to the particular breaches which had gone undetected by those supervising and said there was a finding that reasonable steps were taken by the director. The appellant referred to the obligations imposed by ss 51-55 of the HB Act and said there were no real differences, the section simply referring to different roles of different people.
13. In short, the appellant submitted that if there is a breach of statutory warranty, all participants should be treated in the same way under the parity principle.

Reply to Appeal and submissions

1. The respondent filed a Reply to Appeal and written submissions.
2. Those submissions identified the particular people, the roles they played and the particular breaches for which the company and those people were issued show cause notices and the penalties originally imposed.
3. The respondent said that the grounds raised were not questions of law and that the appellant needed leave to appeal in consequence of s80(2)(b).
4. In relation to the range of penalties, the respondent asserts that the appellant's dispute is with the language used in the Reasons. The respondent says the Reasons make clear that the Tribunal knew the full range of options, including that it could decide to take no further action.
5. In relation to the parity principle, the respondent said at [20]: The "parity principle" has developed in the context of sentencing in criminal law. The Australian Legal Dictionary identifies the principal as follows: The principle that usually the same or similar sentence should be applied co-offenders who are equally in culpability and where the subjective characteristics are similar: Lowe v The Queen… [per Mason J at 610, 611, 613, per Dawson J at 623]… The principle operates even if the co-offenders are not charged with the very same offence: Jimmy v The Queen (2010) 778 NSWLR [sic]… However, where there is no real parity between offenders, the court is not required to attempt to equate sentences passed on the offenders: R v Gibson [1991] 56 A Crim R1.
6. The respondent said the parity principle was based on two grounds. First, an offender should not be left with a justifiable sense of grievance. Secondly, the appearance to objective bystanders of injustice by unfair and unequal penalties should be avoided. The respondent also submitted that it was necessary to consider whether particular people were "co-accused" for the purpose of application parity principle.
7. In relation to the application of the parity principle, the respondent said no error was shown in the Tribunal's consideration of the distinction between natural persons and companies. The respondent referred to Postiglione v R [1997] HCA 26; (1997) 189 CLR 295 at 301 and said the capacity and circumstances of the accused are considerations recognised as relevant to the application of the parity principle.
8. The respondent submitted that the appellant was the "principal ultimately responsible for the home building works". The individuals, Mr Grant the nominated supervisor and three directors, were accessories. The respondent says that the different roles of the different respondents would justify different treatment of the individuals and that the treatment of the company in the present circumstances was appropriate. The respondent said this approach was supported by the fact that there was a different range of penalties for individuals and corporations: see s 62(c) of the HB Act.
9. The respondent also submitted that, while an accessory may be liable to have imposed upon them the same penalty as the principal offender if the accessory had the relevant knowledge or knowing involvement in the principal offence, the HB Act abrogates this approach and confers a broad discretion on decision-makers in determining what, if any, penalty should be imposed.
10. Having pointed out that Mr Grant was himself a licensee, the respondent submitted he was not the licensee for the home building work and that his role was secondary, that of an authorised supervisor. This, the respondent says, was justification for imposing upon him a higher penalty than the other individuals. Consequently, the respondent submits that the parity principle only applies to the three accessory directors and that none of the individuals can be said to be "co-offenders" with the appellant because the breaches for which they were charged with different to those of the appellant.
11. In the result, the respondent said: 1. the Tribunal was correct to reach the conclusion it did in respect of the appellant because it was the licensee for the home building work which it had contracted to do; and 2. there was no error of the type referred to in House v R [1936] HCA 40; (1936) 55 CLR 499.

Consideration

1. This appeal relates to the imposition of a caution in consequence of disciplinary action taken by the respondent against the appellant under the HB Act.
2. There is no dispute in this appeal that the appellant contravened the provision of the HB Act. Rather, the appellant says that, in setting aside the monetary penalty originally imposed by the respondent, the Tribunal should have decided to take no further action against it.
3. The action that may be taken in disciplinary proceedings in consequence of the finding of a contravention of the HB Act is set out in s 62 of the HB Act. This section provides: 62 Disciplinary action that may be taken by Secretary 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.
4. In the present case, as recorded in the respondent's submissions and the show cause notices in the agreed tender bundle in the appeal (MFI 1), the contraventions of the appellant and the individuals referred above arose under the following sections: 1. s 51(2)(b) Improper conduct: generally - appellant as licensee and principal; 2. s 53(1)(b) Improper conduct: nominated supervisors - Mr Grant as licensee and nominated supervisor; 3. s 54(1) and (5) Improper conduct: members of partnerships or officers of corporations - the three directors.
5. Essentially, the basis of challenge is that the discretion under s 62 exercised by the Tribunal miscarried. The appellant contends this constitutes an error of law which entitles the Appeal Panel to intervene. In House v R, at 504-5 the High Court said: But the judgment complained of, namely, sentence to a term of imprisonment, depends upon the exercise of a judicial discretion by the court imposing it. The manner in which an appeal against an exercise of discretion should be determined is governed by established principles. It is not enough that the judges composing the appellate court consider that, if they had been in the position of the primary judge, they would have taken a different course. It must appear that some error has been made in exercising the discretion. If the judge acts upon a wrong principle, if he allows extraneous or irrelevant matters to guide or affect him, if he mistakes the facts, if he does not take into account some material consideration, then his determination should be reviewed and the appellate court may exercise its own discretion in substitution for his if it has the materials for doing so. It may not appear how the primary judge has reached the result embodied in his order, but, if upon the facts it is unreasonable or plainly unjust, the appellate court may infer that in some way there has been a failure properly to exercise the discretion which the law reposes in the court of first instance. In such a case, although the nature of the error may not be discoverable, the exercise of the discretion is reviewed on the ground that a substantial wrong has in fact occurred.
6. Two bases for the challenge are put forward. Firstly, that the Tribunal failed to have regard to the full range of penalties available under s 62 and failed to consider taking no further action. Secondly, the parity principle was applicable in the Tribunal incorrectly imposed a higher penalty on the corporation which was unjustified in the circumstances.
7. There is no dispute in this appeal that the purpose of disciplinary proceedings is for the protection of the public and not punitive in nature: see Clyne v NSW Bar Association [1960] HCA 40; (1960) 140 CLR 186 at [24] and the decisions of the Administrative Decisions Tribunal (ADT) of Pastrovic & Co Pty Limited v Department of Services, Technology and Administration [2012] NSWADT 177 and Pobjie v Commissioner for Fair Trading, NSW Office of Fair Trading (No 2) [2008] NSWADT 39 referred to in the oral reasons given in the first decision of the Tribunal in these proceedings (MFI 1 tab 6).
8. The first basis for challenge requires the appellant to satisfy the Appeal Panel that the Tribunal failed to have regard to the full range of penalties available to it under s 62. The appellant asserts the Tribunal's reasons at [10] reveal that it did not do so.
9. In our view, this ground is not established.
10. In its Reasons, the Tribunal recorded the following issues and conclusions on this: 9 The issue in dispute is what, if any, disciplinary action should be taken in relation to this conduct. 10 In my findings in the earlier proceedings I expressed the view that I could not see any benefit to the public in the imposition of a fine of $3500 against the (appellant) and I set aside that decision. However, I was of the view that some disciplinary action was warranted and I took the decision to impose a caution on the applicant. As can be seen from the provisions of section 62, a caution is the minimum action that can be taken. … 20 In my view, some disciplinary action is warranted in relation to the (appellant) because of its failure to meet its statutory obligations. However, in the circumstances I am satisfied that the minimum disciplinary action is sufficient. 21 In my view the appropriate disciplinary action is to caution the (appellant) in regard to the breach of statutory warranty in section 18B(1)(a) of the Act by its failure to constructed in accordance with the relevant contract.
11. It is clear from the Reasons that the Tribunal was cognisant of the full range of options available where a relevant contravention was established, including taking no further action. However, as the Reasons record, the Tribunal determined that some action was required and that "a caution is the minimum action that can be taken": at [10]. In the exercise of its discretion, a breach having been established, the Tribunal was entitled to take some action rather than adopt a course available under s 62 (a). The appellant did not assert that, if action was to be taken, a caution was not the minimum action applicable. Section 62 does not, by its terms, suggest a different position.
12. The Reasons of the Tribunal do not reveal any error of principle of the type identified in House v R which would constitute an error of law. For these reasons, we are not satisfied there has been any relevant error of law.
13. The second issue is the application of the parity principle and its relevance in the present proceedings.
14. This was an issue to be dealt with in the remitted proceedings in determining what, if any, action was required: see First Appeal Reasons at [27]-[28] and order 4 made therein.
15. The parties did not dispute that the parity principle could apply to these types of proceedings. The respondent itself submitted that it might apply in connection with the directors: respondent's submissions at [24].
16. Otherwise, the respondent asserted that the individuals were in a different position to the company, and in relation to Mr Grant (the supervisor of the work) he was in a different position to the directors. The respondent also said that the appellant is the company that entered into the contract with the consumer/homeowner and had the primary liability for the contravention of the statutory warranty provisions.
17. On the other hand, the appellant said that it was a "lesser player", any responsibility which it had being as a result of the act of others.
18. Having referred to the fact that the Appeal Panel had rejected a "controlling mind" submission in the First Appeal, at [14] - [19], the Tribunal dealt with the argument concerning the application of the parity principle in the following terms: 14 The Respondent contends that there is no requirement for the Tribunal to impose the same penalty on the Applicant as that imposed on the directors and supervisors. It submits that the consideration of the parity principle in case law is largely focused on sentencing natural persons involved in the same criminal conduct or a common criminal enterprise. There does not appear to be any basis in law for parity to be established in sentencing or imposing a penalty on corporations and directors when they are charged with the same offence, or in situations involving the same conduct. 15 The Respondent submits that the parity principle only applies in cases where the offenders' circumstances are comparable. In support of its submission it relies on comments in Lowe v The Queen (1984) 154 CLR 606 where Gibbs CJ stated: "It is obviously desirable that persons who have been parties to the commission of the same offence should, if other things are equal, receive the same sentence, but other things are not always equal, and such matters as the age, background, previous criminal history and general character of the offender, and the part which he or she played in the commission of the offence, have to be taken into account." 16 The Respondent submits that it is not possible to compare the Applicant, which is a company, with the directors and supervisor who are natural persons. Furthermore the circumstances of the Applicant, as the licence holder and party responsible at law for the work not built in accordance with the contract, is different to that of the directors and supervisor. 17 The Appeal Panel did not express a view in regard to the argument based on the principle of parity. 18 I agree with the Respondent in this regard. In my view there is no requirement for the Tribunal to take the same action in relation to the Applicant as that taken in regard to directors and supervisors. 19 I do not agree that the same considerations apply to the Applicant as to directors and/or supervisors in determining what action is to be taken for a minor breach of the s18B warranties. Under the Act the Applicant held the relevant licence to contract and under that contract the Applicant was the party liable to the consumers in the first instance. The Applicant, not directors or supervisors, is the party responsible at law for the work that was not built in accordance with the contract. In my view, there is no need to establish that parity.
19. In its Reasons at [19], the Tribunal points to the fact that the appellant, and not the individuals, was the party liable to the consumer/homeowner because the appellant was the contracting party. The Tribunal also found that the work was carried out under the licence held by the appellant. Consequently, the Tribunal said "there is no need to establish that parity". While this expression is somewhat odd, we take it to mean that the Tribunal was not satisfied as a matter of fact that there was equality in the relevant sense so that the parity principle should apply.
20. As indicated above, by the orders of the Appeal Panel in the First Appeal, the Tribunal was required to determine what (if any) disciplinary action should be taken. The Appeal Panel did not remit the proceedings to re-determine all issues. That is, the findings of fact in the First Decision were not altered on appeal or required to be re-determined on remittal. Further, in remitting the proceedings, the Appeal Panel in the First Appeal Reasons, rejected a "controlling mind" submission made by the appellant. The appellant's submission was to the effect that the appellant could not be liable if the officers of the appellant were not also liable: First Appeal Reasons at [17]. In this regard the Appeal Panel said at [19]-[20]: 19 The Appeal Panel is of the view that the Appellant's "controlling mind" submissions should be rejected. Simply because no penalty has been imposed on the directors and supervisor of the Appellant does not mean that those persons were not culpable and does not mean that no penalty should be imposed on the Appellant. What is the appropriate penalty for the Appellant can only be decided by applying the relevant law to the relevant conduct of the Appellant. The party to the proceedings who held the relevant licence under the Act to contract was the Appellant, and that was the party liable in the first instance to consumers under that contract. 20 There was no finding made by the Tribunal Member that the supervisor and the directors did not have guilty minds (cf par 7 of the Appellant's submissions where it was submitted that logic would dictate that if there is no guilty mind then there can be no guilt on the part of the company). There was no finding by the Tribunal Member that the supervisor and directors were not culpable. He only determined that no penalty should be imposed upon them.
21. The findings made by the Tribunal in the first decision can be summarised as follows: 1. The appellant failed to construct the work in accordance with the contract: Oral Reasons, MFI 1 tab 6 page 3. 2. The failures were minor defects, which included installation of a shower screen of dimensions that were shorter than that required and a vanity basin that was not installed in accordance with the specifications: Oral Reasons page 3. 3. Ultimately, the appellant was required to pay $1000 compensation for the defects, or at least one of the defects and was to refund $500 in relation to a shower screen: Oral Reasons page 3. 4. The appellant recognised the defects and took some steps to resolve the matter: Oral Reasons page 3. 5. The appellant had not complied with the rectification order within the required time, the time difference being "fairly insignificant in terms of the total time for the contract": Oral Reasons page 3-4.
22. These findings are relevant to determining the context in which the Tribunal decided the proceedings on remittal and the Reasons given for the orders made. We note these findings were not the subject of challenge in the present appeal and that leave to appeal was not sought by the appellant, its challenge limited to errors which it said raised questions of law.
23. The first issue to deal with is a submission to the effect that, in the proper exercise of its discretion, the Tribunal was required to impose the same penalty on the appellant company as on the individuals; that is, that it was required to impose no penalty.
24. We are not persuaded that the parity principle operates in the present circumstances. This is because the appellant was the party who contracted with the consumer/homeowner, was the holder of the relevant licence by which the work was done and was the only party found to have failed, without reasonable cause, to comply with a rectification order. The show cause notice issued to it related to the conduct of Mr Grant and that of the directors. The appellant had overall responsibility for the combined conduct of its officers and employees. As such, the proposition that it was a "lesser player" cannot be accepted. The impugned conduct was authorised by the appellant and done on the appellant's behalf. As such, it is illogical to suggest that the overall conduct of the company was other than the combined effect of the impugned conduct of each individual.
25. Further, even assuming the parity principle applies to this case, we do not accept the submission that all those who have engaged in improper conduct in this case must be treated equally.
26. In Lowe, Dawson J (with whom Wilson J agreed) said at [8]: There is no rule of law which requires co-offenders to be given the same sentence for the same offence even if no distinction can be drawn between them. Obviously where the circumstances of each offender or of his involvement in the offence are different then different sentences may be called for. But justice should be even-handed and it has come to be recognized both here and in England that any difference between the sentences imposed upon co-offenders for the same offence ought not be such as to give rise to a justifiable sense of grievance on the part of the offender with the heavier sentence or to give the appearance that justice has not been done. See R v. Golding [1959] VicRp 52; (1959) VR 311; Pecora v. R [1980] VicRp 47; (1980) VR 499; The Queen v. Tiddy (1969) SASR 575; The Queen v. Kite (1971) 2 SASR 94; The Queen v. Ciccone (1974) 7 SASR 110; R v. Tisalandis (1982) 2 NSWLR 430; Stroud (1977) 65 Cr App R 150; R v. Potter (1977) Crim LR 112. See also R v. Kameka (1973) 2 NZLR 592. Cf. Ruane (1979) 1 A Crim R 284. This has led to the variation of sentences by courts of appeal in order to reduce the disparity between sentences separately imposed upon co-offenders even where the sentence varied was not in itself excessive. The cases suggest that there has been a greater reluctance in England than here to vary the longer sentence in such a situation. There is always the dilemma that in order to eliminate the disparity the Court may have to reduce a sentence which it regards as proper in itself because of an inadequate sentence imposed upon a co-offender. To do so, it has been observed, is to compound the error. The view has been expressed in England that a court should not interfere unless the disparity is gross or glaring and the circumstances are "most exceptional". See Stroud at pp.153-4; Potter at p.113. The decisions in this country do not appear to be quite as restrictive as this but on any view the interference of a court of appeal is not warranted unless the disparity is such that the sentence under appeal cannot be allowed to stand without it appearing that justice has not been done. The difference between the sentences must be manifestly excessive and call for the intervention of an appellate court in the interests of justice; see Pecora at p.504; Tisalandis at p.438.
27. As Dawson J makes clear, there is no rule that requires co-offenders in exactly the same circumstances to have imposed upon them exactly the same sentences. While this is preferable, "the interference of a court of appeal is not warranted unless the disparity is such that the sentence under appeal cannot be allowed to stand without it appearing that justice has not been done. The difference between the sentences must be manifestly excessive and call for the intervention of an appellate court in the interests of justice".
28. The decision made in connection with the individuals was to take no disciplinary action. In the case of the company the decision was to issue a caution, the most lenient form of positive action possible under s 62. The differences between this outcome and deciding to take no action could not be described as manifestly excessive, and there is no basis put forward as to why the interests of justice would require interference with this decision on its face. There was in fact a contravention by reason of defective building work for which the appellant was responsible to the consumer/homeowner under a contract. The works were obviously not rectified, the consumer/homeowner ultimately being awarded approximately $1500 in separate proceedings against the appellant in the Tribunal.
29. The breach of contract was a matter which the Tribunal was entitled to take into account, as was the identity of the contracting party. While each of the individuals may have been contributors in different ways to this outcome, the company had overall responsibility to the consumer/homeowner.
30. In terms of public protection, the decision to issue a caution could not be said to be punitive in nature, particularly where there had been a breach of the statutory warranties in the relevant legislation and a failure to comply with a rectification order issued in consequence thereof, all matters for which the appellant was responsible.
31. There was justification for differential between the appellant and the individuals.
32. Further, the Tribunal did not conclude there was no need for public protection. Rather, the conclusion was that public protection did not require a monetary penalty.
33. Consequently, the decision could not be said to be "unreasonable or plainly unjust" in the sense used in House v R.
34. It follows that, even if the parity principle applies, there has been no relevant failure of the Tribunal in the exercise of its discretion to issue a caution to the appellant in circumstances where the decision in relation to the individuals involved was to take no further action.
35. Consequently, the appeal should be dismissed.
36. While the appellant has been unsuccessful, our preliminary view is that there are no special circumstances that would warrant the making of an order for costs. Accordingly, no order will be made.
37. If a party contends to the contrary, they may make an application provided it is lodged within 7 days from the date of these reasons. In that event, the respondent to any cost application is to file submissions in reply within days after these reasons and the costs applicant is to file any reply submissions not later than 7 days thereafter. The submissions must include submissions on the issue as to whether an order dispensing with a hearing should be made under s 50(2) of the Civil and Administrative Tribunal Act, 2013.

Orders

1. The Appeal Panel makes the following order: 1. The appeal is dismissed.

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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: 15 January 2018