Ferguson v Department of Fair Trading - [2017] NSWCATOD 144 - NSWCATOD 2017 case summary — Zoe

NSWNSWCATOD

Ferguson v Department of Fair Trading

[2017] NSWCATOD 144

NCAT Occupational|2017-08-23

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Source facts

Court

NCAT Occupational

Decision date

2017-08-23

Source

Original judgment source is linked above.

Judgment (40 paragraphs)

[1]

REASONS FOR DECISION

Mrs Amber Ferguson has applied for review in NCAT of the Respondent's decision to take disciplinary action against her under the Home Building Act 1989 (the HBA). The Respondent decided at internal review on 29 March 2017 to affirm its decision to take disciplinary action against Mrs Ferguson under the HBA. The disciplinary action arose out of Mrs Ferguson's role as a director and secretary of a Company - Carbon Management Solutions Group Pty Ltd trading as Australian Solar installations - the Company.
The Company was registered on 18 January 2013 with ASIC. The Company held a contractor licence numbered 262234c issued by the Respondent from 23 August 2013 until it was cancelled on 18 September 2015. Mrs Ferguson's husband, Cameron Ferguson, held an individual electrician's licence and was the nominated supervisor for the Company.
Around the end of 2014, the Company got into difficulties. The Court appointed a liquidator on 31 July 2015 for the Company.

[2]

Disciplinary action taken against Mrs Ferguson

The Respondent considered that the Company had been guilty of improper conduct under section 51 of the HBA in 3 respects. The Company had twice undertaken specialist work "other than with due care and skill" under section 51(1) (d). This was in relation, firstly, to a contract entered into in April 2014 with Mr Andrew Graves. The Respondent alleged that there was a second count of the Company undertaking specialist work "other than with due care and skill" in relation to a contract entered into on 28 June 2014 with Mrs Joy Connor.

[10]

Evidence of David Martin

Mr Martin is a senior compliance officer - electrical safety - employed by New South Wales Fair Trading. He investigated complaints made against CMS by Mr Andrew Graves and Mrs Joy Connor. He provided an affidavit dated 24 July 2017 and gave oral evidence before the Tribunal.
On 3 September 2015, Mr Martin inspected Mr Graves' solar PV battery management system which had been installed by Cameron Ferguson of CMS. As a result of the inspection, he issued a rectification order to Mr Ferguson. He also prepared a building inspection report on 8 October 2015 which was sent to CMS. Mr Martin received confirmation through the Australia Post registered post delivery system of receipt of the rectification order on 11 November 2015, signed by Amber Ferguson.
The rectification order addressed to Mr Ferguson stated that the residential building work specialists work done by Mr Ferguson had been defective and required the work to be rectified by 18 September 2015. The rectification order required Mr Ferguson as contractor:

to repair or replace the faulty battery management system including all component parts;
commission the system to ensure it is functioning correctly and as intended;
provide a certificate of compliance of electrical work to the consumer and a copy to NSW Fair Trading; and
to rectify defects identified by Ausgrid in relation to the main switchboard.

Mr Martin's building inspection report stated that he had identified work having been defective, incomplete or not of proper and workmanlike manner.
Mr Martin stated that the battery bank was not charging in the system and not functioning as intended. In his opinion, the contractor had failed to ensure that the system components were working correctly to provide the consumer with solar power during daylight hours and then from the battery reserves after the sun goes down. The contractor was responsible to ensure the system was installed as per the contract and that it worked as designed and intended. The contractor had failed to comply with the minimum standards set out in the Australia/ New Zealand standard. Mr Martin considered that the work as it had been carried out did not comply with section 18 B (1)(a) of the Home Building Act 1989 in that the work would be done with due care and skill.
Mr Martin also referred to the defects with the electrical installation that had been identified by Ausgrid in the Ausgrid defect notice dated September 2014. Mr Martin considered that the contractor had wired the new solar PV battery management system to the switchboard. As a consequence, the switchboard would no longer close. The contractor was required to comply with Australia/ New Zealand standard wiring rules and had failed to ensure the switchboard panel closed. There were live exposed conductors accessible. The electrical cables at the rear of the switchboard panel had not been installed in the correct manner. Common practice was to position the cable so that they were secured to the rear of the switchboard panel and did not cause an obstruction to the panel closing. Mr Martin considered the work as it had been carried out did not comply with section 18 B (1) (a) of the Home Building Act 1989 in that the work would be done with due care and skill.

[11]

Complaint by Mrs Joy Connor, Leura

Mrs Joy Connor made a complaint to the Respondent on 3 June 2015. On 22 July 2015, Mr Martin inspected the solar PV battery management system which had been installed by Cameron Ferguson of CMS at Mrs Connor's property. Mr Martin issued a rectification order to CMS. He sent three letters containing the rectification order to addresses in Lawson, Yarramundi and Winmalee on or about 22 July 2015. He issued another rectification order to Mr Ferguson in the same terms to a post-box in Winmalee on or about 4 September 2015. Mr Martin received notice from Australia Post in November 2015 that the letters had been delivered and signed for by Amber Ferguson on 11 November 2015.
The rectification order in relation to Mrs Connor's system stated that the residential building work specialists work done by Carbon Management Solutions Pty Ltd was defective. The contractor was required:

to repair or replace the faulty battery management system including all component parts;
commission the system to ensure it is functioning correctly and as intended; and
to provide a certificate of compliance of electrical work to the consumer and a copy to NSW Fair Trading by 31 July 2015.

The second letter dated 4 September 2015, nominating the contractor as Cameron Ferguson, required the order to be complied with by 18 September 2015.
Mr Martin prepared a building inspection report dated 8 October 2015. The system inspected on 22 July 2015 was found to be defective. The inspection revealed that the battery bank was not charging and the system not functioning as intended. It was Mr Martin's opinion that the contractor had failed to ensure that the system components were working correctly to provide the consumer with solar power during daylight hours and then from the battery reserves after the sun goes down.
The report stated that the contractor was responsible to ensure the system was installed as per the contract and that it worked as designed and intended. As the system did not work, the contractor had failed to complete the installation as per the contract or the requirements of the Australia/ New Zealand standard wiring rules - that is to function correctly as intended.
Mr Martin considered that the work as it had been carried out did not comply with section 18 B (1)(a) of the Home Building Act 1989 in that the work would be done with due care and skill.
Mr Martin said he had not received a response to the rectification orders from either Cameron Ferguson or CMS.
Mr Martin told the Tribunal that neither Mrs Connor nor Mr Graves had told him that their systems had been struck by lightning. He said that it was difficult to pinpoint what was wrong with the systems such that they didn't work. It was not clear whether it was the components or the workmanship.

[12]

Evidence of Mrs Joy Connor

Mrs Connor provided an affidavit dated 19 July 2017 and gave evidence to the Tribunal. Mrs Connor said that she obtained a quotation on 19 June 2014 from Carbon Management Solutions Group Pty Limited trading as Aussie Solar Installations for the supply and installation of a TM 5000 - battery bank, which had 5 kW hours of storage capacity. The purchase of the TM 5000 came with the supply and installation of a free 1.5 kW solar system, free of charge. The quotation was for an amount of $8295. Mrs Connor called Aussie Solar Installations on 28 June 2014 and accepted the quote over the phone. She paid a deposit of $829.50 by MasterCard to Rebecca administrator at Aussie Solar Installations.
On 23 October 2014, Mrs Connor received an email from Aussie Solar Installations wanting a partial payment of $6000 for the installation of the TM battery bank. There was an amount of $7540.91 on an attached tax invoice. Mrs Connor contacted Aussie Solar Installations as there were differing amounts on the quote and tax invoice. On 24 October 2014, Mrs Connor sent a cheque for $6000 as a deposit to Aussie Solar Installations. Mrs Connor told the Tribunal that at this time no installation had taken place nor was the battery or other equipment delivered prior to the request for payment of $6000. She told the Tribunal that she was prepared to pay the deposit, even though no work had been done, as she had previously used Carbon Management Solutions Group Pty Ltd and had been happy with their work. On 31 October 2014, Mrs Connor received a customer copy of the TM 500 installation report and certificate of compliance electrical work for the installation of the battery backup and solar system that had been installed by Cameron Ferguson from Aussie Solar Installations. On 3 November 2014 Mrs Connor received an email from Amber Ferguson from Aussie Solar Installations asking her to pay any outstanding amounts owed. The attached Aussie Solar statements stated that she still owed $7465.50. Mrs Connor contacted Aussie Solar and spoke to Rebecca who said it was a mistake. Mrs Connor sent a cheque on 11 November 2014 as final payment.

[16]

Ground 1 - Complaint from Mr Graves

The Respondent submitted that the Tribunal should accept Mr Martin's evidence and be satisfied that CMS was guilty of improper conduct in relation to the system installed by CMS at Mr Graves' home.
Mr Graves experienced problems with the battery bank and solar system in that the system appeared to only power a third of his home and the battery bank appeared to go flat as soon as the sun went down. Mr Graves contacted CMS, however the issues were not addressed.
Further, Ausgrid Defect Notice 139880 was issued on 11 September 2014 to Cameron Ferguson as the Electrical Contractor, in relation to the hinged switchboard panel not being able to be returned to its original closed position, due to excessive pressure on the electrical equipment behind the panel. The Defect was never remedied by Mr Ferguson or CMS.
Mr Martin, concluded that the system was defective and issued a Rectification Order dated 4 September 2015. The Rectification Order was not complied with. Mr Martin concluded in his report that: 17.1. the battery bank was not charging and the system not functioning as intended, in breach of the AS/NZS 3000:2007 Wiring Rules ("the Wiring Rules") Section 1 Clause 1.6.1 (b); and 17.2. the contractor had wired the system to the switchboard and as a consequence the switchboard could no longer close, as identified in Ausgrid Defect Notice 139880, in breach of the Wiring Rules Section 1 Clause 1.5.4.1 and Clause 2.9.6.
The Respondent submitted that the Tribunal should reject Mrs Ferguson's assertions in defence of CMS's work.
Despite the Applicant's assertions that the system was operating as intended after each visit by Mr Ferguson to the site, nobody from CMS attended the site after Mr Graves identified the issues in question in these proceedings. Mr Ferguson's last visit to the site occurred in October 2014.
The Applicant had stated in her submissions that "liquidators took possession of the business assets and operations, Company information and telephone and servers were disconnected from approximately April of 2015". However, a notification of application to wind up CMS was not received by ASIC until 7 May 2015, with the liquidator appointed on 31 July 2015. Mr Graves attempted to contact CMS to rectify the issues between November 2014 and February 2015, months prior to CMS being wound up.
There was an absence of reasonable explanation for why CMS did not return to the site to inspect and rectify the issues.

[17]

The Defect Notice

The Applicant stated in her submissions that the Defect Notice was sent by Ausgrid to the incorrect address. Notwithstanding this, the Applicant stated that Mr Graves contacted CMS regarding the defect and that: 25.1. "we attended the property to address the defect, however it was discovered that a new energy meter had been installed by another Company and this was the cause of the meter box not closing. Cameron informed Mr. Graves that he was required to contact the firm that installed the meter to complete the defect".
Mr Graves' sworn evidence is that the Applicant and Cameron Ferguson never attended his property to address the defect identified in the Defect Notice, nor did the above conversation between Mr Ferguson and Mr Graves take place.
Mr Martin further noted in his Building Inspection Report that the contractor was uncontactable and as a result, no explanation for non-compliance with the rectification order was available.
The Applicant asserted that a new energy meter had been installed by another company and this was the cause of the meter box not closing; however, Ausgrid identified Mr Ferguson of CMS as the contractor responsible for remedying the defect in the Defect Notice. Accordingly, Mr Ferguson of CMS had a responsibility to attend at the property and rectify the defect. The Applicant had stated that she and Mr Ferguson were aware of the Defect Notice, having been informed of it by Mr Graves. There is no evidence that Mr Ferguson contacted Ausgrid to assert that the Defect Notice had been issued to the incorrect contractor. Furthermore, based on Mr Graves' evidence, nobody from CMS visited the site to inspect the defect. Therefore, it is unclear on what basis the Applicant can assert that the defect was not caused by Mr Ferguson.
In the absence of evidence to the contrary, the Tribunal should accept the contents of Mr Martin's report in relation to the work at Mr Graves' home and find that CMS was guilty of improper conduct under Section 51(1)(d) of the HBA in that CMS had done the work "otherwise than with due care and skill or knowingly use(d) faulty or unsuitable materials in the course of doing the work."

[18]

Ground 2 - work at Mrs Joy Connor's home

The Respondent submitted that the uncontradicted evidence of Ms Connor and Mr Martin in relation to the defective system installed at Mrs Connor's home should be accepted. When Mr Martin attended at Mrs Connor's home on 3 June 2015, the battery bank was not charging and the system not functioning as intended, in breach of the Wiring Rules Section 1 Clause 1.6.1 (b).
The rectification order dated 22 July 2015 was not complied with.
The Respondent submitted that the Tribunal should reject Mrs Ferguson's assertions in defence of CMS's work.
As with his inspection of Mr Graves' system, Mr Martin formed the view that Mrs Connor's system was not functioning as intended, in that it did not work, and that Mr Ferguson was responsible for ensuring that the system functioned as intended.
Ms Connor's attempts to contact CMS and have them attend at her property to inspect and rectify the system, occurred between January 2015 and March 2015, months prior to CMS being wound up.
There is an absence of reasonable explanation for why CMS did not return to the site to inspect and rectify the issues. As the contractor, CMS was under an obligation not only to ensure the system was functioning correctly as intended at the time of commission, but also address issues that arose with the system in the months following its installation. It is inadequate to claim that consumers should address all issues themselves by reading the installation manual.
The Applicant asserted that if the system had been left idle in the months between the blackout and the building inspection, it would be common for the battery bank to lose its charge. However, CMS's failure to respond to Mrs Connor's requests for the Company to return to her property and address the issues was the cause of the system being left idle for an extended period. Prompt attention by CMS could have avoided this outcome.
In the absence of evidence to the contrary, the Tribunal should accept the contents of Mr Martin's report and find that CMS was guilty of improper conduct under Section 51(1)(d).

[21]

What is the appropriate disciplinary action in the circumstances

In the case of Ng & anor v Commissioner for Fair Trading, NSW Office of Fair Trading & anor [2007] NSWADT 259, Judicial Member Molony observed at [71] to [72]: "In Director-General, Department of Fair Trading v. Cohen [2000] NSWFTT 3 (cited in Younan [2007] NSWADT 170 at [26]; and Harb [2007] NSWADT 175 at [60]) the Fair-Trading Tribunal outlined a series of factors which might be relevant to the assessment of an appropriate penalty. They were: - the nature, width and extent of the contraventions - the loss or damage and prejudice in consequence of the contraventions - the circumstances in which the contraventions took place - whether the licensee has been found to have engaged in any similar conduct - the presence of fraudulent or dishonest intent and deliberation on the part of the licensee - the extent of carelessness or wilfulness of the conduct - the efforts made to correct the situation and what measures have been taken by the licensee - what consciousness the licensee (a) had (b) displayed, of its obligations under the relevant statute and to the owners - the effect upon the licensee - antecedents - attitude, building history and future compliance - the penalty range. To that list I would add two factors which were outlined in a list of relevant factors, which a court might take into account in determining the amount of a civil penalty, that were proposed by the Australian Law Reform Commission in Principled Regulation: Federal Civil and Administrative Penalties in Australia (2002) ALRC 95 in recommendation 29-1: see Calcaro v Chief Commissioner of State Revenue [2004] NSWADT 158. These are: - any gain made as a result of the contraventions - the degree of cooperation with the authorities.
In the case of Pilipczyk & anor v Commissioner for Fair Trading, NSW Office of Fair Trading [2007] NSWADT 85, Acting Deputy President Handley observed: "The Tribunal must therefore consider the second issue, whether disciplinary action should be taken and, if so, what from that should take. In doing so, it should be noted that the object of sanctions under the legislation is to protect the consumers of home building services and not to punish. However, as the Commercial Tribunal acknowledged in Mcllveen, at p 29 "[t]he concept of public protection is wide; it embraces fitness, the maintenance of public standards, public confidence and deterrence both of the particular builder and others in the same occupation"."
The Respondent submitted that the following circumstances were relevant to the current matter before the Tribunal:

The contraventions were not isolated incidents, with multiple consumers affected;
The contraventions resulted in real loss to the consumers, who both paid thousands of dollars for battery banks and solar systems which ceased to work within months of their installation;
Minimal, if any, efforts were made to correct the situation. Despite multiple attempts by the consumers to have the systems inspected and rectified, neither the Applicant nor anyone else from CMS attended at the consumer's properties to attempt to resolve the complaints. The consumers experienced great difficulty in speaking to anyone from CMS, and eventually CMS became uncontactable.
The Applicant had displayed little consciousness of her obligations as a director of CMS under the Act and to the consumers. In Saboune v Department of Finance and Services [2013] NSWADT 71, a relevant consideration was that the Applicant in those proceedings did not evidence any personal concern about the nature of the particular complaints, nor demonstrate acknowledgment of any responsibility to the particular consumers for what occurred [at 107].

The Applicant stated she is a single parent on a pension and that she cannot afford to pay the penalty of $3,000. The Tribunal has previously found that hardship to an Applicant is not a factor which the Tribunal can take into account in determining whether or not the correct and preferable decision has been made (Lal v Director-General, Department of Transport [2001] NSWADT 74, Khan v Roads and Maritime Services [2014] NSWCATOD 23).
The possible penalties under section 62 of the Act range from no further action through to disqualification. The Secretary may impose a monetary penalty not exceeding $11,000 (in the case of an individual). The penalty imposed on the Applicant was therefore towards the lower end of possible penalties.
CMS received payments of $7,995 and $8,295 from consumers for systems which did not function correctly as intended. The Applicant as a director of CMS gained financially from the contraventions.
The Applicant had not cooperated with NSW Fair Trading, as she and the other director of CMS, Cameron Ferguson, were unable to be contacted during the investigation process.
In conclusion, it is submitted that public protection would best be served by the Tribunal affirming the Respondent's decision to impose a penalty of $3,000 on the Applicant.

[23]

Response to disciplinary action

Mrs Ferguson said that she had not received correspondence from the Department of Fair Trading concerning the matters until 28 February 2017, when she received a letter containing a notice of disciplinary action sent to the correct address at a post office box at Winmalee NSW. She had nine days to respond and request an internal review. She did not have time to seek advice or to process and read the documentation thoroughly. She responded three days after she received the notice. She was emotional and felt defeated. She resigned herself to the process. She was overwhelmed by the fine of $3000.
Mrs Ferguson said that they moved the business to trade from home in November 2014. Her husband left in February 2015 and moved interstate. All jobs had been completed. Mrs Ferguson was required to deal with the winding up process for the Company. All telephones and servers were disconnected from approximately April 2015. The bank took possession of the business premises and their home in October 2015.
She said that their business address had changed in November 2014 from a post office box in Lawson NSW to a post office box in Winmalee NSW.
She had informed the Department of Fair Trading of the change of address. She had also spoken with officers of the Department of Fair Trading on a number of occasions during the closure of their business. The officers had not mentioned to her that mail to the Company had been returned to the Department. She noted that the Department of Fair Trading had sent correspondence to an incorrect post office box number at Winmalee NSW. Mrs Ferguson also noted that Ausgrid had incorrectly sent a defect notice to an address in Winmalee in September 2014 that she and her husband had left in 2007.
Mrs Ferguson said that an undated notice of disciplinary action had been sent to an address in Yarramundi where she was not living.
Under cross-examination, Mrs Ferguson agreed that she had signed on 11 November 2015 for registered mail from Department of Fair Trading containing rectification orders in relation to work at Mrs Connor's and Mr Graves' homes.

[26]

Complaint by Andrew Graves

Mr Graves' system was commissioned on 23 June 2014. The final payment was received on 14 July 2014. This indicated that the system was working.
The defect notice from Ausgrid of 11 September 2014 was sent to Cameron Ferguson at an address in Winmalee which they had left in 2007.
Mr Graves had contacted them and they had attended the property to address the defect. However, it was discovered that a new energy metre had been installed by another company. This was the cause of the metre box not closing securely. Mrs Ferguson said that Cameron Ferguson told Mr Graves that he was required to contact the firm that installed the metre box to complete the defect. Cameron had fixed the metre board at Mr Graves' property. There were wires sticking out, Cameron had shortened them. Cameron had not created the problem but Mrs Ferguson believed that he had fixed it.
Mrs Ferguson said that Mr Graves had not understood how the system was meant to work. The system was designed to offset power - not supply the whole house. The system stored energy from the solar system produced in the daytime and would offset peak power, saving the customer money on peak energy rates. Further the customer made change to the settings of the inverter between each visit to the site. This had made it operate incorrectly. Cameron Ferguson had fixed the settings on each visit and the system was operating correctly each time he left the site.
Mrs Ferguson provided a tariff management installation manual that showed that when total loads are larger than or equal to a certain level, the protected circuit will be switched off. This meant that if the client overloaded that system, part or all of the system was shut down in protection mode. It also drained battery life and shortened the lifespan of the battery units. If the user overloads the system in the incorrect mode, the system will shut itself down to protect itself. It will also shut down if a power surge has been active.
The complaints by Mr Graves had been made during the process of the business being liquidated. At the time the business ceased trading, they believed that they had satisfied their clients, to the best of their knowledge.

[29]

Closing of the Company

She had realised in March 2015 that CMS would be wound up when it became clear that Cameron would not be coming back. She called the Department of Fair Trading and the bank around the end of February/ early March 2015 to start winding things up. Mrs Ferguson said she had a limited understanding that she could not trade any more. She was aware of her responsibilities that she needed to cease trade immediately and begin the process of calling the relevant agencies such as the bank. She knew at this point that she would lose everything, including her home.
She called suppliers and services and immediately stopped accruing any debt. This would have included the telephone service. This would have contributed to the clients' phone calls being unanswered. She believed at all times that problems with systems had been addressed. Cameron had been to properties where there were problems and fixed them. She was assured that any problems had been resolved. She had no reason to distrust Cameron's abilities.
A winding up application was made on 7 May 2015, however the liquidation process had actually started around March 2015. The first liquidator had a conflict of interest, so a second was appointed. This explained the delay in the formal winding up of the Company until later in 2015.
Mrs Ferguson had many personal responsibilities at the time of the closing of the business. She had three small children. Her father was dying and he wished to pass away at her home. That is part of her culture. Her father passed away on 6 February 2015 at her home. This was followed by the Tangi. Mrs Ferguson said she was not on top of customer communication at this point. This was because of the moving of the business, the bank pressure and her father's passing. Within two weeks of her father's passing, her husband left and moved to the Northern Territory. There was no warning or plan. It was not expected. It was to be many weeks before she knew where he had gone.
Mrs Ferguson said she was placed in a very difficult situation. Cameron was the responsible contractor for their Company's electrical licence. He was also a signatory on all banking and Company documents.
Around this time, she had a series of phone calls with an inspector from the Department of Fair Trading. They spoke several times and emailed. They discussed outstanding customer deposits and worked together to reconcile those payments being refunded. They were satisfied with this. The officers of the Department visited her home and left a card at her gate.
As the weeks passed and she went through the process of the bank taking possession of the assets, she did not hear from the Department of Fair Trading. She has since moved three times over the two-year period. She maintained the post office box for the Company for just over two years. The communications for winding up and obligations had been addressed by her to the best of her ability.
Mrs Ferguson said she currently lives in the midwest of New South Wales, trying to find stability for her children. She receives a single parent pension. She sometimes finds it difficult to cover her expenses to meet the needs of her three children. She has limited outside support.
Mrs Ferguson did not believe that the process undertaken by the Department of Fair Trading was fair. She did not have all the information about the complaints. She was not given options to explain, rectify or even apply for a payment plan option for the fine.

[31]

Ground 1 - contract with Mr Andrew Graves.

The Tribunal needs to be satisfied that the Company had undertaken specialist work "other than with due care and skill" under section 51(1) (d) in relation to the work for Mr Graves.
The Tribunal had evidence before it from Mr Graves that the system did not work at all after December 2014. Mr Graves said that Mr Ferguson attended several times to look at the system - but not after October 2014. Mr Graves denied that anyone from CMS had attended in relation to the Ausgrid Defect notice issued in September 2014.
Mrs Ferguson's evidence was that she did not manage the technical aspects of the Company. She did not attend at sites. However, Mrs Ferguson asserted that:

Cameron Ferguson had attended to rectify the problem subject of the Ausgrid defect notice at Mr Graves' home; and
As at the time of winding up of the business she understood that all customers were satisfied.

Mrs Ferguson's evidence about the worksites was not based on first hand observation.
In the circumstances, the Tribunal preferred the evidence of Mr Graves and Mrs Connor to that of Mrs Ferguson, wherever that evidence differed.
The Tribunal is satisfied that despite attending Mr Graves' home on occasions, Mr Ferguson did not fix the system. The Tribunal is satisfied from Mrs Ferguson's evidence that the Company was aware of the defect notice from Ausgrid prior to the winding up of the Company. Neither Mr Ferguson nor the Company addressed the Defect Notice issued by Ausgrid in September 2014.
The Tribunal is satisfied that after December 2014, Mr Graves' system did not operate as intended or at all.
The Tribunal accepts Mr Martin's evidence that as at 3 September 2015, the system installed by CMS was not functioning as intended. The Tribunal is satisfied that the Company did not comply with the rectification order issued on 4 September 2015.
The Tribunal accepts the contents of Mr Martin's report and finds that CMS was guilty of improper conduct under Section 51(1)(d) of the HBA in that CMS had done the work "otherwise than with due care and skill or knowingly use(d) faulty or unsuitable materials in the course of doing the work."

[35]

Available Defences

Section 54 provides a defence to Mrs Ferguson if the improper conduct occurred without her knowledge; or she was not in a position to influence the conduct to prevent it; or she used all due diligence to prevent it.
The Tribunal had heard that Mrs Ferguson was involved in the day to day running of the Company. Such involvement is not necessarily the role of a director or secretary. However, the fact that Mrs Ferguson did have day to day involvement in the running of the Company makes it more likely that Mrs Ferguson was aware that there were customer complaints. The Tribunal accepts that Mr Graves had spoken with Mrs Ferguson about the non-functioning of the system. Mrs Ferguson asserted that Mr Ferguson had addressed the Ausgrid Defect notice. Mrs Ferguson told the Tribunal that she was aware that the message banks on the Company telephones had filled in January 2015. The Tribunal is not satisfied that Mrs Ferguson has proved that the improper conduct of failing to fix Mr Graves' and Mrs Connor's non- functioning systems occurred without Mrs Ferguson's knowledge.
Mrs Ferguson asserted that at the time of winding up of the Company that she considered that all customer complaints had been dealt with. The Tribunal accepts that Mrs Ferguson does not have technical expertise. However, Mrs Ferguson said that the Company had systems set up and administrative staff employed to undertake the business of the Company. She understood that as a director it was her responsibility to deal with the issues to the best of her ability.
Mrs Ferguson's evidence was that between November 2014 - February 2015 she was not so much involved in the administration of the business. She had many personal responsibilities at the time. Mrs Ferguson had 3 small children and her father was unwell and being cared for by her. Mrs Ferguson stated that she was not on top of the customer communication at this point, with the moving of the business, the bank pressure and her father's passing. The evidence before the Tribunal was, however, that problems with the Company's work at Mr Graves' home had arisen earlier than this period. Ausgrid had sent a defect notice to the Company in September 2014 and Mr Graves had already been dealing with Cameron Ferguson concerning problems with the system.
Mrs Connor's complaints to the Company commenced in January 2015 - during the period in which Mrs Ferguson was dealing with family issues. It is also Mrs Ferguson's evidence that Cameron Ferguson left in February 2015- after which time there was no nominated licensed supervisor for the Company. Repair work could not be performed by the Company after Cameron Ferguson, the nominated supervisor, left.
The Tribunal is satisfied that prior to Mr Ferguson's departure in February 2015, that the Company should have attended to customer complaints from Mr Graves and Mrs Connor and that it should have rectified problems so that the systems worked as intended. The Tribunal is also satisfied that at the time Mr Ferguson left in February 2015, Mrs Ferguson could have and should have been aware of the customer complaints, as it was her evidence that she was aware the telephone message banks were full around this time.
The Tribunal notes that the first contact between the Company and the Department of Fair Trading in relation to Mr Graves and Mrs Connor, was likely after Mr Martin issued a rectification order on 22 July 2015 in respect of Mrs Connor's system. The Department of Fair Trading then issued a rectification order in relation to Mr Graves' system on 4 September 2015. A liquidator had been appointed for the Company on 31 July 2015. The Tribunal is satisfied that by the time the 2 rectification orders were issued by the Department of Fair Trading, the Company could no longer have complied with them in the absence of Mr Ferguson as the nominated supervisor. Further Mrs Ferguson's uncontradicted evidence was that the liquidation process actually started much sooner than July 2015 and that it was delayed because of a conflict of interest for the initially appointed liquidator. The Tribunal is satisfied that it is likely that Mrs Ferguson would not have had access to the Company records once the liquidation process started, even had she received correspondence from the Department of Fair Trading. The Tribunal is satisfied that Mrs Ferguson received rectification orders from Mr Martin in November 2015 which put her on notice of the Department's action.
The Tribunal is satisfied that after February 2015, and Mr Ferguson's departure, that Mrs Ferguson was no longer in a position to influence the conduct of the other officer of the corporation, Mr Ferguson, so as to prevent the occurrence of the improper conduct. The improper conduct at this time was the failure to attend to the customer complaints, such that the systems of Mr Graves and Mrs Connor operated as intended.
Accordingly, the Tribunal is satisfied that the extent of Mrs Ferguson's responsibility for improper conduct by the Company should be limited to the end of February 2015. Mrs Ferguson was not in a position to prevent the occurrence of any improper conduct after this time. By the time the Department of Fair Trading initiated rectification and disciplinary actions in 2015, a liquidator was in control of the Company. Mrs Ferguson would have had little authority with which to respond.
The Tribunal does note that Mrs Ferguson's memory of and assertions about her knowledge of the Department's actions are contradicted by her signing for the rectification orders in November 2015. The Tribunal accepts that by this time Mrs Ferguson was substantially burdened by significant loss - her father, her marriage, her home, her income. In the circumstances, the Tribunal accepts that her recall of events surrounding the Company after February 2015 may be poor. The tribunal is not satisfied that Mrs Ferguson has been dishonest about her recall of events.

[37]

Penalty

The Tribunal adopts the approaches taken in Lotus Constructions and Pilipczyk & anor v Commissioner for Fair Trading concerning whether disciplinary action should be taken and, if so, what form it should take. The object of sanctions under the legislation is to protect the consumers of home building services and not to punish contractors: see Lotus Constructions Pty Limited v Director -General, Department of Finance and Service, NSW Fair Trading [2013] NSWADT 260 and Pilipczyk & anor v Commissioner for Fair Trading, NSW Office of Fair Trading [2007] NSWADT 85.
The Tribunal refers to the factors set out in Ng & anor v Commissioner for Fair Trading, NSW Office of Fair Trading & anor [2007] NSWADT 259, where Judicial Member Molony outlined at [71] to [72] a series of factors which might be relevant to the assessment of an appropriate penalty. The Tribunal notes that these were penalties imposed on a licensee as opposed to an officer of a corporation. They were: - the nature, width and extent of the contraventions - the loss or damage and prejudice in consequence of the contraventions - the circumstances in which the contraventions took place - whether the licensee has been found to have engaged in any similar conduct - the presence of fraudulent or dishonest intent and deliberation on the part of the licensee - the extent of carelessness or wilfulness of the conduct - the efforts made to correct the situation and what measures have been taken by the licensee - what consciousness the licensee (a) had (b) displayed, of its obligations under the relevant statute and to the owners - the effect upon the licensee - antecedents - attitude, building history and future compliance - the penalty range - any gain made as a result of the contraventions - the degree of cooperation with the authorities.
The Tribunal considers that the impact on the consumers of the 3 matters of improper conduct was serious. The instance of demanding/receiving excessive deposit - $6000 - involved a significant amount of money. It was specifically forbidden by law.
The undertaking specialist work "other than with due care and skill' has left both customers with non-functioning systems. They are out of pocket in Mrs Connor's case by an amount of $8295 and in Mr Graves' case $7995.
The Tribunal was not satisfied there were any mitigating circumstances in relation to the installation of either systems. The Tribunal was not satisfied that either customer had contributed to the failed outcome. The Tribunal rejects Mrs Ferguson's claim that the customers should have been able to use the manual to deal with system problems. The Tribunal was not satisfied by the evidence that Mr Graves had undertaken actions personally or with third parties which contributed to the system failure. The Company was still functioning in January 2015 when Mrs Connor asked for the system to be repaired.
The Tribunal was not presented with other instances of demanding/receiving excessive deposit or of specialist work undertaken "other than with due care and skill'. Mrs Ferguson told the Tribunal that their business had undertaken 10,000 jobs.
The Tribunal was not satisfied that there was deliberate or fraudulent intent on the part of the Company or Mrs Ferguson in relation to the deposit issue.
The Tribunal was not provided with evidence of carelessness or wilfulness in relation to the deposit issue. Mrs Ferguson told the Tribunal that the Company had a procedure which it always followed. It was not clear who had authorised departure from this procedure. There were no other instances cited.
The Tribunal is satisfied that initially the Company, through Cameron Ferguson, did attempt to rectify the problem with Mr Graves' system. After October 2014 however, it appears that the failure to attend to rectify was likely the product of a lack of care on the Company's and specifically, on Mr Ferguson's part. Similarly, the failure to attend at all to rectify Mrs Connor's non-functioning system after January 2015, was likely the product of a lack of care on the Company's and specifically, on Mr Ferguson's part. The Company and Cameron Ferguson exercised no concern about their responsibilities to Mrs Connor in and after January 2015.
The Tribunal has no additional information about the Company's antecedents - other than the history provided by Mrs Ferguson of the business beginning in 2003, changing in 2010 and falling into difficulty in 2014. The Company was wound up in late 2015. Mrs Ferguson said she had not attempted to go back into the business since this time.
The Tribunal is satisfied that after February 2015, Mrs Ferguson could not have acted to remedy the non-functioning systems, in the absence of the nominated supervisor, Cameron Ferguson. The Respondent has alleged that Mrs Ferguson did not assist the Respondent in dealing with the customer complaints. The Respondent first issued formal notices in September 2015. By this time, a liquidator was in place and it is likely that Mrs Ferguson's access to Company documents would have been limited, reducing her capacity personally to assist to deal with complaints. Mrs Ferguson said that she worked with Department of Fair Trading officers to assist with return of funds to customers.
The Company had the benefit of more than $16,000 in respect of the 2 non-functioning systems. Mrs Ferguson has now lost her home and relies on a single parent pension. Any benefit she may have enjoyed from the contracts has now passed. No evidence was provided about Cameron Ferguson's financial situation.

[38]

Possible range of penalties

Section 62 of the HBA sets out the range of penalties which can be applied. (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.
The Tribunal is satisfied that the matters are sufficiently serious to warrant a penalty being imposed on the Applicant. The purpose of disciplinary action is to protect the public. Certainly, a financial penalty could function as a deterrent to both an officer of a corporation and other licensees from engaging in improper conduct in the future.
Mrs Ferguson has referred to the hardship the $3000 fine will cause her in her current circumstances. Such hardship does not defeat the demands of public protection.
However, the Tribunal does not consider that a monetary penalty is necessary or that it provides the necessary protection to the public in these circumstances.
The Tribunal is satisfied that Mrs Ferguson did not act to prevent improper conduct by the Company prior to the departure of the nominated supervisor in February 2015. The need for public protection against improper conduct by a company would be served by Mrs Ferguson being prevented in the near future from being an officer of a corporation. Such a penalty would operate as a deterrent to other officers from neglecting their obligations in a business. It will also prevent the Applicant from being involved in a business as an officer during this time. In these circumstances, the Tribunal considers it appropriate to disqualify Mrs Ferguson from being an officer of a corporation that is the holder of an authority for a period of 3 years from the date of this decision - pursuant to section 62 (g) (iii) of the HBA.