Hale v Commissioner of Fair Trading

Legislative scheme

1. Section 20(2) provides that the regulations may fix or provide for the Director-General to determine additional 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.
2. Clause 28(1) of the Home Building Regulation 2004 ("HB Regulation") provides: 1. Before a certificate is issued, the Director-General must be satisfied that the applicant: 1. has such qualifications or has passed such examinations or practical tests, or both, as the Director-General determined to be necessary to enable the applicant to do, or to supervise, the work for which the certificate is required, and 2. 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 3. is capable of doing or supervising work for which the certificate is required.
3. Pursuant to s.25(2) of the HB Act and clause 28(1) of the HB Regulation, the Respondent has established standards for the issue of a qualified supervisor certificate for the category of building in an Instrument dated 3 July 2013 ('the Instrument'). The Instrument requires "at least two years' relevant industry experience in a wide range of building construction work".
4. The Instrument defines "experience" as: 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 experience was gained ("the Work"), where during the relevant period, the applicant was: (a) 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 (b) financially remunerated for the Work.

History of the application and issue considered

1. Mr Hale lodged his application for a supervisor certificate on 28 October 2013. Although he satisfied the qualification requirements, his application was refused on the basis that he did not have the required industry experience in a wide range of building construction work for a period of 2 years.
2. On internal review, the Respondent affirmed the original decision, concluding, in addition to the original findings, that Mr Hale was not lawfully engaged in the period of time he has claimed residential building experience.
3. I heard Mr Hale's review application on 18 June 2014 and adjourned the proceedings to allow him time to gather further information in support of his application. By the date of the resumed hearing on 26 September 2014 Mr Hale thought there was still more evidence which would support his claim in relation to the duration of his supervised work and the breadth of work he had undertaken.
4. The parties agreed that there was a threshold issue, namely the capacity in which Mr Hale had gained his experience. It was common ground that the applicant would need to rely upon his work with his referees, Mr Payne and Mr Sentence in order to meet the requirement as to 'experience'. The Respondent contended that he was not an employee of his referees, nor was he otherwise lawfully engaged. It was agreed that I should make my decision in relation to that matter, and only if the applicant succeeded in respect of that matter, would the hearing resume in order to determine the remaining issues.

What was the applicant's building experience?

1. It is useful to briefly refer to the applicant's experience, so as to contextualise the issue of whether that experience can count towards the '2 years experience' required by the Instrument in any event.
2. In support of his application Mr Hale provided a Referee Report from Leon Payne of Danco Constructions Pty Limited and LD Payne Building and Maintenance Services Pty Limited. Mr Payne completed 3 Applicant's Residential Building Experience forms dated 18 October 2013 relating to 6 building sites, fully identified, but conveniently described in this decision as Gould Ave, Cliff Drive, Kay Street, Arcadian Circuit, Elston Avenue, and The Drive. Dates for each project were recorded and Mr Payne's estimate of the total period of the contracts was 34 months, during which Mr Hale had worked part time.
3. On 13 June 2014, Mr Degenhardt, Senior Licensing Officer, Licensing Branch, Home Building Service of the Department spoke with Mr Payne, who clarified Mr Hale's involvement in the above building sites. The Respondent conceded that the scope of works provided by Mr Payne showed that Mr Hale had carried out residential building works at these sites.
4. The applicant also relied on his experience working for Mr Sentence of SJS Constructions, now of Port Macquarie. Mr Sentence referred in his statement to refurbishment and extensions at Kirribilli Shops, and renovations and extensions at McMahon's Point and at Greenwich. He wrote that the applicant had 'contracted to [him]' between 1991 and 2005. In his affidavit dated 18 August 2014 Mr Sentence wrote of a further 4 residential projects, on which the applicant had worked. He considered that, in total Mr Hales had worked the equivalent of at least 2 years. Mr Hale estimated that Mc Mahon's Point and Greenwich jobs together, were the equivalent of about 18 months full time.
5. There was also some evidence that Mr Hale provided project management services to an owner/builder in respect of 3 new dwellings, advising in relation to restoration and liaising with the engineer.
6. Without coming to a final view, it appears that the applicant had some general building work experience which may have been of at least 2 years duration.

What was the applicant financially remunerated for the work he did for Messrs Payne and Sentance?

1. The effect of the definition of experience is that the Applicant must have been either an employee of; or a person otherwise lawfully engaged by someone who held a relevant licence. In either case, the Applicant must have been both supervised and directed in the doing of the work by the holder of that licence and must have been financially remunerated for the work.
2. When Mr Payne was interviewed on 13 June 2014 by Mr Degenhardt, Mr Payne said that Mr Hale had carried out the works as an unpaid worker at Arcadian Circuit, (Mr Hale's own home) and Elston Ave (Mr Payne's home). The Respondent submitted that as Mr Hale had not been financially remunerated for that work, it does not satisfy the definition of "experience" prescribed in the Instrument, and, as a consequence, he is unable to claim any credit for his work at those sites, which according to Mr Payne's Statement accounted for 7 months and 8 months respectively.
3. Because one essential criterion in the definition of "experience" is that the person is financially remunerated for the work, I agree with the Respondent's submission that the work at Arcadian Circuit and Elston Ave are unable to be considered in the calculation of experience.

Was Mr Hale's other experience gained as an employee?

1. 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). There was no contention in relation to any of the sites that Mr Hale was an 'employee' of Mr Payne or Mr Sentance (or their companies), in the ordinary meaning of that term.
2. As SM Frost said in Zada v Director-General of Finance and Services, NSW Fair Trading [2014] NSWCATOD 16 ("Zada"), even if the applicant and the licence holder(s) came to the view that he was not an employee, that is not the end of the enquiry: In short, it is not safe to assume that the parties (that is, the worker and the supervising licence holder) will always have put the right label on the arrangement. It is necessary to examine the facts.
3. SM Frost noted that a simplistic distinction between an employee and an independent contractor (or subcontractor) is that while the former works for another, the latter works for himself and that, in earlier times the main indicator of an employment (master/servant) relationship was the control exercised by one person over another. Nowadays it is "the totality of the relationship between the parties which must be considered": Stevens v Brodribb Sawmilling Co Pty Ltd (1986) 160 CLR 16 at 29, cited with approval in Hollis v Vabu Pty Ltd (2001) 207 CLR 21 at 41. Supervision and direction are often very relevant to the enquiry. Notwithstanding the re-fashioning of the test to be applied, it remains that the greater the level of supervision and direction, the more likely it is that an employment relationship exists.
4. The applicant gave evidence about the nature of his relationship with Messrs Payne and Sentance, who had been partners until about 1994. At the time he met them in the 1980s he was 'running projects' and he 'brought them in' and they did some work together. Subsequently, the applicant said, each would approach him and ask him to assist in the project management. They would plan the project, and consider the costings and come up with an agreed schedule of fees. The agreement was for an hourly rate and the work would be part time. There were no agreements for any permanent payments. There were no written contracts either for his services or on a project-by-project basis. The 'closest' to a written agreement was an agreed schedule of fees, eg project management was charged at $65 per hour, supervision was charged at $50 per hour, and 'hands on' work such as carpentry was charged at $45 per hour. They knew he was not licensed and that is why, he said, he was engaged to 'assist'. He said they appreciate that he 'knows more than most tradies'. He regards himself as a professional project manager.
5. In his Referee's Statement, Mr Payne selected "Sub-contractor" in describing the nature of Mr Hale's "employment", as compared to the other options of "previous apprentice" and "employee". The applicant was said to have been paid on an hourly rate for the time he spent on the other 4 sites. In his evidence Mr Payne said that he considered Mr Hale as an "independent contractor". He said that the applicant had been project manager and also physically did construction work under his supervision. Mr Hale was engaged to do the work and was paid agreed rates to "cover his duration on the job". For each job there was a discussion only and no written agreement. Mr Hale's company would issue invoices for the work. There was no PAYG deducted, nor was there any entitlement to have PAYG deducted. The other material before the Tribunal and the evidence given by Mr Payne and Mr Hale are consistent with this arrangement including the issue of invoices from his company for payment of Mr Hale's services.
6. With regard to the work done with Mr Sentance, Mr Hale gave evidence that his engagement was on a similar basis as his arrangement with Mr Payne, namely, as an "independent contractor". This description is broadly consistent with the arrangements indicated by Mr Sentance in his affidavit dated 18 August 2014. There he described Mr Hale's engagement as "temporary", "part time", "on a job-by-job basis", "paid on an hourly basis, according to his schedule of fees", and in relation to 4 residential projects, his involvement depended "on his availability". However, he also referred to the arrangement being a 'temporary form of employment', during which the applicant was under Mr Sentance's supervision.
7. This matter is not like Shariati v Commissioner for Fair Trading [2014] NSWCATOD 146 where SM Lucy found there to be an employer/employee relationship. As in the present matter, Mr Shariati had some control over the manner of performing his work, although he was supervised by the licensee. However, Mr Shariati worked exclusively for the licensee and was paid in his own name and not that of his company. He had no flexibility as to when the work was to be performed and was paid sick leave and holiday pay. This significantly differed to the basis on which Mr Hale performed the work.
8. I find that Mr Hale was engaged by both Mr Payne and Mr Sentance (and their companies) as an independent contractor, and was not an employee.

As Mr Hale was not an 'employee', was he "otherwise lawfully engaged" to undertake the work for which he claims residential building experience?

1. There is no definition of "a person otherwise lawfully engaged" in the Instrument.
2. The Respondent contended that, as an independent contractor, the applicant had carried out residential building works without the appropriate licence or certificate under the HB Act. As a consequence, the Respondent submitted, he was in breach of ss. 4 and 12 of the HB Act and accordingly, he had not been "lawfully engaged", and is therefore unable to claim any credit, for any work at the four relevant Payne sites or for the work undertaken for Mr Sentance.
3. Section 4(1) of the HB Act makes it an offence to contract to do work without a licence. It states, relevantly, that a person must not contract to do any residential building work, except as on behalf of an individual, ... or corporation that is the holder of a contractor licence authorising its holder to contract to do that work. If that were the extent of the provision I may have come to the view that, having regard to the emphasis in the legislation on consumer protection, that there was no prohibition against a licence holder who contracts with the homeowner engaging a sub-contractor to carry out the work; section 4 provides only that an unlicensed person may not contract to undertake the work, that is, an unlicensed person may not contract with the homeowner directly. The HB Act contains a detailed insurance regime, such that the member of the public who engages a licence holder to undertake residential building work can be confident that the licence holder will be properly insured against faulty workmanship - either his own, or by those undertaking the work on his behalf. In those circumstances it would seem to me, if the licence holder chooses to engage a subcontractor the property owner would not be disadvantaged, unlike if the owner were to contract with someone who was unlicensed.
4. However s.4(2) prohibits the licence holder from subcontracting other than to a person who is themselves the holder of a contractor licence to do work of that kind. The effect is that the licence holder can subcontract to various specialist trades, providing those persons are themselves licence holders in respect of their trade.
5. Section 12 of the HB Act also makes it an offence to perform residential building work without a licence. It provides, relevantly: An individual must not do any residential building work, or specialist work, except: (a) as, or ... or an officer of a corporation that is, the holder of a contractor licence authorising its holder to contract to do that work, or (b) as the holder of an owner builder-permit authorising its holder to do that work, (c) or as an employee of the holder of such a contractor licence or permit.
6. Mr Hale submitted that he could not have breached ss. 4 and 12 as he has never represented that he or his company has authority to contract and/or do the work. However, misrepresentation is not an element of those offences under those sections, (albeit is an offence under s.5 of the HB Act in relation to unlicensed persons seeking work.)
7. I was referred by the Respondent to the Tribunal's recent decision in Ozcelik v Commissioner for Fair Trading [2014] NSWCATOD 100, where SM Lucy, found Mr Ozcelik not to have been lawfully engaged by the licensee because ss. 4 and 12 of the HB Act prohibited him from contracting to do, and from doing, residential building work on his own behalf, without a licence authorising him to do or contract to do that work. His engagement by the licensee was prohibited by the HB Act and he was not lawfully engaged by that company. Consequently his work as a subcontractor for the licensee was not "experience" within the meaning of the Instrument.
8. There was some robust discussion at the hearing about how a person who is not an employee could ever be "otherwise lawfully engaged", given the prohibitions in ss. 4 and 12. Neither at the hearing nor in the written submissions did the Respondent provide an adequate answer to this conundrum. In Zada the Respondent appears to have submitted that the expression "otherwise lawfully engaged", may, for example, 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, the Tribunal there considered, seemed to be driven more by pragmatism than by a close analysis of the words of the Instrument and the broader regulatory regime. The Tribunal noted that this was, of course, inconsistent with the respondent's position that a person who is not an employee will necessarily be in breach of s.12, and is therefore not "otherwise lawfully engaged". I agree with this analysis.
9. Section 13(1) of the Act makes it an offence to do residential building work without the relevant qualifications. It states that:
10. (1) an individual must not do any residential building work, except: (a) as the holder of an endorsed contractor licence, a supervisor or tradesperson certificate or an owner builder permit authorising its holder to do that work, or (b) under the supervision, and subject to the direction, of the holder of an endorsed contractor licence or supervisor certificate authorising its holder to supervise that work. (Tribunal emphasis)
11. Curiously, s.13(1)(a) seems to have the effect of repeating the prohibition of s.12, but s.13(1)(b) suggests that, a person may in fact, if supervised by the relevant licence holder, do residential building work. This would apply whether or not the person was an employee. The applicant contended that his work fell within the exception provided in s.13(1)(b) of the HB Act, that is, that he had done the work under the supervision, and subject to the direction, of Messrs Payne and Sentence, both of whom had endorsed contractor licences.
12. Again, in my view, the Respondent's submissions did not assist in attributing an explanation for the effect of s.13(1)(b).
13. After the hearing I sought the Respondent's view as to whether Messrs Payne and Sentance, upon whose supervision the applicant relied, held "endorsed contractor licences" or "supervisor certificates", as defined, in accordance with s.13(1)(b).
14. Those definitions, somewhat circuitously, provide: "endorsed contractor licence" means a contractor licence endorsed under this Act to show that it is the equivalent of a supervisor certificate." "supervisor certificate" means a supervisor certificate referred to in section 13, 14, 15 or 16.
15. The Respondent was invited, if Messrs Payne and Sentance did not hold such licences, to explain how "endorsed contractor licence" referred to in s.13 differs from a "contractor licence", referred to in s.12 and the regime by which an "endorsed contractor licence" (or a "supervisor certificate") is obtained. In providing information that each holds "a current Qualified Supervisor Certificate", the Respondent did not consider it necessary to provide a response. I therefore find that both held qualifications in accordance with s.13.
16. In my view, to give effect to the legislative intent, s.13(1)(b) should stand alone from the provisions of ss. 4 and 12 of the HB Act. It provides an exception in which the applicant could be considered to have been lawfully engaged in performing residential work. Support for this view is found in the Explanatory Memorandum to the Building Service Corporation's Bill 1989 (as the HB Act was then known) which introduced these provisions, which records: The Bill provides for the issue of contractor licences which will authorise individuals, partnerships or corporations who hold them to contract to do residential building work ….. Although a holder of a licence may contract to do residential building work …, individuals who actually do the work will (subject to certain exceptions such as those relating to owner-builders) need to hold an appropriate endorsed licence or supervisor or registration certificate or to be supervised by a holder of such an instrument. (Tribunal emphasis)
17. This suggests to me that it was intended that, notwithstanding the prohibitions in s.4 and particularly s.12, that if an unlicensed non-employee were supervised by an endorsed licence holder or supervisor that person could work on residential properties.
18. I therefore find that Mr Hale came within s.13(1)(b) when he worked as a subcontractor for Messrs Payne and Sentance under their supervision.
19. The Respondent invited my attention, in its general submissions to Project Blue Sky Inc v Australian Broadcasting Authority (1998) 194 CLR 355, where the High Court stated at [69]: The primary object of statutory construction is to construe the relevant provision so that it is consistent with the language and purpose of all the provisions of the statute [45]. The meaning of the provision must be determined "by reference to the language of the instrument viewed as a whole"[46].
20. I was also referred to Ullrich v Commissioner for Fair Trading [2014] NSWCATOD 11, where SM Scahill, in the context of considering the meaning of "supervised" in the HB Act, stated at [53]: The Home Building Act 1989 is essentially a consumer protection act, which regulates residential building work in NSW. It provides for the licensing and regulation of those engaging in residential building work, and makes provision as to their competence, fitness and solvency, and for their discipline.
21. There is nothing in these cases which is contrary to the view I have expressed. The scheme's focus is on consumer protection; and consumers are protected if a person's work is supervised in accordance with s.13.
22. Accordingly I find that Mr Hale may meet the 24 months experience requirement when the periods he was supervised by Messrs Payne and Sentence are taken into account.

DECISION

1. The Tribunal decides that the periods the applicant worked for Messrs Payne and Sentance may be taken into account in calculating his "experience".
2. The matter is to be listed for directions on a date to be fixed for resumption of the substantive hearing, if necessary. 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: 02 February 2015