Karall v Secretary of the Department of Customer Service [2025] NSWCATOD 38

1. The application for review and the material relied upon by the parties during the hearing identified the Building Commission NSW, Department of Customer Service as the Respondent in the proceedings.
2. Schedule 1 of the HBA now defines Secretary to mean "the Secretary of the Department" and "Department" to mean "the department in which this Act is administered". I am satisfied that the proper name of the Respondent in this application for review is Secretary of the Department of Customer Service.

1. The HBA regulates home building and specialist work within NSW. The Tribunal in McGufficke v Commissioner for Fair Trading [2022] NSWCATOD 176 at [48] noted that "the overall purpose of the HBA is to protect consumers in the contracting for and the construction of residential buildings."
2. Division 1 of Part 3 of the HBA regulates contractor licences. The Respondent is empowered to grant contractor licences pursuant to s 19 of the HBA, in accordance with Part 2 (other than s 10) of the Licensing and Registration (Uniform Procedures) Act 2002 (NSW_)._ A contractor licence is defined as an "authority" under the HBA.
3. Unlike supervisor and tradesperson certificates (to which Division 2 applies), s 21 of the HBA, authorises the holder of a contractor licence to contract with the public to carry out certain residential building work, do any specialist work described in the licence, and to supply necessary building components.
4. Section 33B(1)(a) of the HBA provides as follows:

33B General requirements for issue of certain authorities

(1) An authority (other than an owner-builder permit) must not be issued unless the Secretary is satisfied that -

(a) each relevant person in relation to the application for the authority -

(i) is not disqualified from holding the authority or an authority of the kind applied for, or from being a member of a partnership or a director of a body corporate that is the holder of the authority or an authority of the kind applied for, and

(ii) is not a debtor under a judgment for money owed to the Secretary that has not been satisfied, and

(iii) is not a debtor under a judgment for money that has not been satisfied where the judgment is for the payment of money in relation to a building claim under Part 3A or the payment of money to an insurer or provider in relation to a claim relating to cover under Part 6 or Part 6B, and

(iv) is not (and has not been within the period of 3 years before the date of the application) a director of a body corporate that is a debtor under a judgment for money as referred to in subparagraph (iii), and

(v) is not subject to any order of a court in relation to a building claim under Part 3A that has not been satisfied within the period required for satisfaction of the order, and

(vi) is not subject to any order of the Tribunal that has not been satisfied within the period required by the Tribunal, and

(vii) has not had what the Secretary considers to be an unreasonable number of complaints made against him, her or it and has not had a relevant involvement with a body corporate that has had what the Secretary considers to be an unreasonable number of complaints made against it, and

(viii) has not had what the Secretary considers to be an unreasonable number of formal cautions given to him, her or it and has not had a relevant involvement with a body corporate that has had what the Secretary considers to be an unreasonable number of formal cautions given to it, and

(ix) has not had what the Secretary considers to be an unreasonable number of penalty notices issued against him, her or it and has not had a relevant involvement with a body corporate that has had what the Secretary considers to be an unreasonable number of penalty notices issued against it, being penalty notices for offences under this Act that were not dealt with by a court and dismissed, and

(x) has not carried out work in respect of which the Secretary considers an unreasonable number of insurance claims have been paid and has not had a relevant involvement with a body corporate that has carried out work in respect of which the Secretary considers an unreasonable number of insurance claims have been paid, and

(xi) is not a director of, a partner of, or a person concerned in the management of, a body corporate or partnership that is disqualified from holding an authority, unless the Secretary is satisfied that the applicant took all reasonable steps to prevent the conduct that led to the disqualification, and

(xii) within 12 months before the date of the application was not a director of, a partner of, or a person concerned in the management of, a body corporate or partnership that is disqualified from holding an authority or that would be disqualified from holding an authority had it not been dissolved or wound up, unless the Secretary is satisfied that the applicant took all reasonable steps to prevent the conduct that led (or would have led) to the disqualification, and

(xiii) except in relation to an application for a tradesperson certificate - is not an undischarged bankrupt at the time of the application, and

(xiv) except in relation to an application for a tradesperson certificate - was not an undischarged bankrupt at any time within 3 years before the date of the application, and

(xv) except in relation to an application for a tradesperson certificate - is not at the time of the application a director of or a person concerned in the management of a Chapter 5 body corporate (other than Chapter 5 body corporate resulting from a members' voluntary winding up of the body corporate), and

(xvi) except in relation to an application for a tradesperson certificate - within 10 years before the date of the application, was not a director of or a person concerned in the management of a body corporate that was a Chapter 5 body corporate at any time within that 10-year period (other than Chapter 5 body corporate resulting from a members' voluntary winding up of the body corporate), and

(xvii) except in relation to an application for a tradesperson certificate - was not a director of or a person concerned in the management of a body corporate that became a Chapter 5 body corporate (other than Chapter 5 body corporate resulting from a members' voluntary winding up of the body corporate) at any time within 12 months after the person ceased to be a director of or a person concerned in the management of the body corporate and within 10 years before the date of the application, and

..

1. "Chapter 5 body corporate" is defined in the HBA to have the same meaning as in the Corporations Act 2001 (Cth), which defines "Chapter 5 body corporate" to include a body corporate that is being wound up or is under administration.
2. Section 33C of the HBA relevantly provide as follows:

33C Additional requirements for obtaining contractor licences

...

(2) Despite section 33B(1)(a)(xiii) and (xv), a contractor licence may be issued if -

(a) the licence does not authorise its holder to do general building work or swimming pool building, and

(b) the Secretary is of the opinion that there is no evident risk to the public that the applicant will be unable to complete contracts entered into in the future to do residential building work or specialist work, and

(c) the Secretary is of the opinion that the relevant person concerned took all reasonable steps to avoid the bankruptcy, liquidation or appointment of a controller or administrator, and

(d) the licence is subject to a condition that the holder must not enter into a contract to do work if the contract price exceeds $20,000 (inclusive of GST) or (if the contract price is not known) the reasonable cost of the labour and materials involved in the work exceeds $20,000 (inclusive of GST).

(3) Despite section 33B(1)(a)(xiv), (xvi) and (xvii), a contractor licence may be issued if, after considering evidence supplied by the applicant, the Secretary is satisfied that -

(a) there is no evident risk to the public that the applicant will be unable to complete contracts entered into in the future to do residential building work or specialist work, and

(b) the relevant person concerned took all reasonable steps to avoid the bankruptcy, liquidation or appointment of a controller or administrator, and

(c) the relevant person concerned has put in place sufficient risk mitigation measures to avoid a future bankruptcy, liquidation or the appointment of a controller or administrator.

(4) A contractor licence issued under subsection (3) may be issued subject to a condition that the holder of the licence must not enter into a contract to do work if the contract price exceeds $20,000 (inclusive of GST) or (if the contract price is not known) the reasonable cost of the labour and materials involved in the work exceeds $20,000 (inclusive of GST).

...

40 Renewal of authorities

(1) The provisions of this Act and the regulations that apply in respect of the issue of an authority also apply to the renewal or restoration of an authority (as if the renewal or restoration of an authority were the issue of the authority).

1. It was not disputed that as set out above, the Application was submitted on 21 July 2023 and that it was refused by the Respondent on 21 November 2023.
2. On 11 December 2023 amendments to the HBA, consequent to the enactment of the Building Legislation Amendment Act 2023 (NSW), commenced. Sections 20, 33B and 33C of the HBA were relevantly amended, including that s 33B(1)(a)(xvi) was amended so that the relevant prohibition period of a former director being granted a licence was extended from three years to ten years. The Respondent submitted that the amended provisions apply to this application for review. The Applicant did not dispute that this was the case.
3. Having regard to the decision of the Appeal Panel in Commissioner for Fair Trading, NSW Department of Customer Service v Kalkan [2022] NSWCATAP 112 at [43], I am satisfied that I am required to give consideration to the current version of the HBA, including the amendments made following the lodging of the Application.

1. In addition to material contained in the Respondent's s 58 documents, the Applicant relied on his affidavit dated 10 May 2024 (exhibit A1). The Applicant gave oral evidence and was cross-examined by Mr Bruffey, counsel for the Respondent.
2. The Respondent relied on the s 58 documents (exhibit R1), including a Historical Company Extract dated 19 April 2024 in relation to the Company which replaced the previous extract in the s 58 documents that referred to an apparently unrelated company.

1. The Respondent relied on written submissions dated 20 April 2024 and both parties made oral submissions at the hearing.

1. Section 83B(1) of the HBA confers jurisdiction on the Tribunal for administrative review of the Respondent's Decision pursuant to s 9 of the Administrative Decisions Review Act 1997 (NSW) (the ADR Act). Section 63 of the ADR Act provides that in determining an application for review, the Tribunal is to make the correct and preferable decision having regard to the material then before it, and any applicable written or unwritten law. The Tribunal makes its own decision in place of that of the Respondent and there is no presumption that the decision of the Respondent is correct: McDonald v Director-General of Social Security (1984) 1 FCR 354 at 357. In doing so it may exercise all of the functions conferred or imposed by any relevant enactment. There is no onus of proof: Nakad v Commissioner of Police, New South Wales Police Force [2014] NSWCATAP 10 at [28]- [30], [34].
2. In an application for review, the Tribunal is not restricted to a consideration of the material that was before the decision maker but may have regard to any relevant material before it at the time of the review: Shi v Migration Agents Registration Authority (2008) 235 CLR 286; [2008] HCA 31

1. It was the Respondent's position that s 33B(1)(a)(xvi) of the HBA applied to the Application, as the Applicant was the sole director of the Company that was a Chapter 5 body corporate within ten years before the date of the Application. This was not disputed by the Applicant. I am satisfied that the provisions of ss 33B(1)(a)(xiii) and 33B(1)(a)(xv) did not apply to the Applicant as of the date of the Application.
2. The Respondent submitted that as the Applicant's licence authorised him to do general building work, s 33C(2) did not apply to this matter and the Applicant did not dispute this. I am satisfied that the Application related to a renewal of the Applicant's contractor licence in building, which relates to general building work and accordingly that s 33C(2) does not apply to the Application. Additionally, s 33C(2) only relates to s 33B(1)(a)(xiii) and (xv) of the HBA and not to s 33B(1)(a)(xvi). Accordingly, I give no further consideration to the provisions of s 33C(2) of the HBA.
3. It was the position of both parties that despite the effect of s 33B(1)(a)(xvi) of the HBA, s 33(C)(3) provides that a contractor licence "may" be issued to the Applicant if, after considering evidence supplied by the Applicant, the Respondent is satisfied of the matters set out in s 33C(3)(a) - (c) of the HBA. In this application for review, the Tribunal steps into the shoes of the Respondent for the purposes of the HBA.
4. It was the Respondent's position that the Tribunal could not be satisfied of any of any of the three matters set out in s 33C(3)(a) to (c) of the HBA and that the correct and preferable decision is to refuse the Application. The Respondent also submitted that the Application should be refused as the Applicant is not a fit and proper person to hold a contractor licence pursuant to s 20(1)(a) of the HBA.
5. It was submitted on behalf of the Applicant that he was sorry for what had occurred, had learned from his mistakes and that the Tribunal could be satisfied of the matters set out in s 33C(3) of the HBA, particularly given that the Applicant was requesting that the Tribunal allow him to resume working in jobs limited to $20,000. It was also submitted that the Applicant is a fit and proper person to hold a contractor licence and reliance was placed on the various references provided by the Applicant in relation to the internal review.

1. Having regard to the evidence before the Tribunal, particularly the Historical Company Extract relating to the Company and the Statutory report by a liquidator to creditors dated 14 October 2022 (Liquidator's Report) (part exhibit R1), I am satisfied that the Applicant was the sole director of, and shareholder in, the Company from 8 September 2009 until 11 April 2023. I am satisfied that on 15 July 2022, the Company was insolvent and was wound up on the basis of a Creditors' voluntary winding up and a Liquidator appointed, with the Company being deregistered on 11 April 2023. Accordingly, I am satisfied that the Applicant was the director of the Company that became a Chapter 5 body corporate within a10 years before the date of the Application.
2. In all of the circumstances, I am satisfied that s33B(1)(a)(xvi) of the HBA applies in relation to the Application and as a consequence of that provision, that the contractor licence the subject of the Application must not be issued to the Applicant. I accept however that, despite this provision, a contractor licence may be issued if, after considering the evidence supplied by the Applicant, the Tribunal satisfied of those matters set out in s 33C(3) of the HBA.

Applicant's evidence about financial issues and external administration

1. I have found that the Applicant was the sole director of, and shareholder in, the Company. It was not disputed that he had been the sole nominated supervisor for the contractor licence held by the Company.
2. The Applicant provided information and material to the Respondent in the course of his Application and in his internal review request, including the Liquidator's Report, a statement from his accountants, Ideal Income Tax Pty Ltd (Accountant) dated 5 October 2023 and signed by Mr Antonio Jabbour as Manager, various letters and responses from himself as well as a number of references, including one from Mr Jabbour dated 18 December 2023. This material is contained in the Respondent's s 58 documents (exhibit R1).

1. The letter from the Accountant dated 5 October 2023 indicated that the Accountant acted for the Applicant and his associated entity Nato Building Pty Ltd and had acted for the Company for the last three years. The Accountant confirmed as follows:

"...[the Applicant] holds strong financial viability to complete contracts in the future for residential building work. His work ethic and quality of work in this field is the of the highest order which is conveyed by his success in the residential building field.

[The Applicant's] works are always on time, with a strong financial viability over the years."

1. The Accountant stated that the Company had been placed under external administration "under extremely unfortunate circumstances" that he believed were "out of the control" of the Applicant. The Accountant indicated that at the time that the Applicant became the firm's client three years previously, taxation obligations had not been lodged for seven plus years. The letter stated that at that time, the Applicant was dealing with an accounting firm who were advising him that the returns were being lodged, and all his obligations were up to date, and that he owed the ATO "nothing".
2. It was the Accountant's understanding that this other firm had charged the Applicant, fees in excess of $30,000 for accounting and taxation work that was supposedly being lodged. The Accountant said that "[i]n summary, all obligations were lodged which then led to the external administration of [the Company]" and that during the life of the Company, "the business under the supervision of [the Applicant] was doing extremely well, with consistent work and income that was growing over the years up until the external administration."
3. In Mr Jabbour's reference of 18 December 2023, he indicated that he had known the Applicant since mid-2020, and this had come about from the Accountant taking on the Applicant's accounting and taxation affairs. Mr Jabbour stated that the Applicant had approached the Accountant to assist him after he had been unfairly treated by another firm, and that the Applicant was under the impression that this firm was lodging his returns and keeping his affairs up to date when this was not the case and the Applicant continued to pay their fees which were "exorbitantly high". This left the Applicant with company and individual tax returns, as well as other obligations that were not lodged for a "good" three plus years.
4. Mr Jabbour said that once the Applicant approached the Accountant, they ensured everything was up to date and complete, and the Applicant was made to liquidate the Company due to the position his former firm had left him in. Mr Jabbour said that the Applicant had been placed in an unfair situation due to external circumstances.
5. Neither Mr Jabbour nor any other representative of the Accountant gave oral evidence before the Tribunal.

1. The Liquidator's Report provided by the Applicant indicated that the Liquidator calculated the unsecured creditor claims against the Company as totalling approximately $536,000, owed to 35 creditors, including an amount of some $284,000 owed by the Company to the Australian Taxation Office (ATO). The value of the assets of the Company was estimated at approximately $23,000, and the total liabilities of the Company as $541,000, leaving an estimated deficiency of some $518,000.
2. The Liquidator's Report also noted that a number of activity statements, income tax returns, PAYG payment summaries and a taxable payment annual report were still outstanding to the ATO as of 14 October 2022, the date of that report. It also referred to a Director Loan owed to the Company in the sum of over $100,000 and noted that the Company's management accounts had not been updated since at least 2020.
3. The Liquidator expressed the opinion in the Liquidator's Report that based on the financial information of the Company and other available information, that a dividend was unlikely to be paid to any creditor of the Company and suggested that creditors write off any debt owing to them by the Company.
4. The Liquidator also noted that based on the Company's non-payment of statutory debts as and when they fell due, that the Applicant may have allowed the Company to trade whilst insolvent since at least November 2020. The Liquidator estimated the quantum of the potential insolvent trading claim against the Applicant to be approximately $363,000, not including the non-verified creditor claims of almost $160,000. In the circumstances, the Liquidator indicated that he was of the view that there would be no commercial benefit to creditors in commencing an insolvency trading claim and that reliance might be placed by the Applicant on one or more potential statutory defences.

1. In the course of considering the Application, the Respondent sought further information from the Applicant in relation to three insurance claims recorded against the Company, namely: a claim in an amount of some $340,000 dated 8 July 2022 (the Kotara claim) relating to a major defect of a residential building project in Kotara (the Kotara project); a claim dated 20 July 2022 in an amount of some $23,000 (the Cameron Park claim) relating to a failure to commence a residential building project in Cameron Park (the Cameron Park project); and a claim in an amount of some $84,000 dated 19 August 2022 (the Swansea claim) relating to a major defect of a residential building project in Swansea (the Swansea project). The Applicant provided further information to the Respondent in relation to these claims and they will be further considered below.

1. As previously referred to, the Applicant provided an affidavit dated 25 May 2024 (exhibit A1), gave oral evidence before the Tribunal and was cross-examined. In his affidavit, the Applicant refers to having started his career in the building industry in 1985, originally as a painter, and to managing and operating the Company, a building business, between 8 September 2009 and 14 July 2022. He stated that the Company was successful for over a decade and that his expertise and professionalism earned him a good reputation in the industry, as shown by the various references provided by him in relation to his application for internal review.
2. In his letter dated 5 October 2023 (part exhibit R1), the Applicant stated that he aimed to have the Company avoid external administration by ensuring that his lodgements were all up to date, unaware of the result of this. In addition, he stated, he had multiple payment plans with the ATO and aimed to pay the "extremely exorbitant amount" that was due and had accumulated over seven plus years. He unsuccessfully tried to obtain a loan and to obtain outstanding amounts from creditors who had owed significant amounts to himself and his business money over the years.
3. He stated in his letter dated 22 October 2022 (part exhibit R1) that he moved his business from Sydney to Toronto in 2017 and that he had done a lot of jobs there with no complaints. He said that he spent lots of money on advertisements and that at one stage, he had approximately 1.5 million dollars of jobs to quote on and that was before liquidation in 2022.
4. In his affidavit, the Applicant stated that he believed the Company's downfall was due to a combination of factors, including the unpredictable challenges created by the global pandemic, cancellation due to rain and chiefly, his own misjudgements. He stated that he underestimated the impact of the COVID-19 pandemic on the building industry, including drastic price increases and significant skills shortages and overlooked the fact that taking on too many projects at once would severely limit his ability to adequately oversee each one.
5. His evidence was that he did not receive any government financial support during the COVID-19 pandemic, and that had his accountant applied for such relief, there would have been far less pressure on himself and the Company. He also mistakenly placed trust in hiring a relative to supervise two projects and the poor workmanship of this relative resulted in defects and two insurance claims against the Company. The Applicant stated that in relation to the Swansea claim, his team was organised to rectify the defects list relating to the Swansea project in January 2022, but the client denied access to the property, even though the Company was ready and willing to proceed.
6. In relation to the third claim, namely the Cameron Park claim, he stated that he was advised that the Company was insolvent and that he was not able to proceed with trading and as a result, was unable to proceed with the Cameron Park project.
7. The Applicant outlined the procedures that he had put in place to help prevent future disputes and liabilities due to faulty work as follows:

(i) Clearly specify the scope of work, timeline, estimated costs and dispute resolution mechanism in the contract;

(ii) Regularly monitor each project's progress and require timely reports from employees or subcontractors;

(iii) Handle communication about quality issues and ensure quick rectification of flawed work;

(iv) Conduct thorough qualification checks of tradesmen involved in his business;

(v) Regularly involve building inspectors and certifiers during construction to reduce the risk of disputes about the work; and

(vi) Maintain client funds in a trust account to clearly track expenses.

1. The Applicant stated that at the time he believed that he was fulfilling his reasonable steps to avoid liquidation, through his actions in employing an accountant. He said that he now realises that he should have taken further steps in his role as Director.
2. The Applicant stated that he relied on, and trusted, his previous accountant and neglected to familiarise himself with the Company's financial position. Including the accrual by the Company of debts of over $200,000 to the ATO due to the accountant's failure to lodge tax returns for an extended period. He stated that he has learned that he needed to be more attentive to his duties as a director and to ensure that lodgements are current. He stated that he is currently repaying the ATO to fulfill any remaining tax obligations.
3. In order to maintain any future tax obligations, the Applicant stated that:

(i) He will maintain clear and current business records and track client funds in the trust fund to closely monitor the business's cash flow; and

(ii) Will communicate actively with his accountant and require proof of lodgements.

1. The Applicant stated that he had been unaware of the existence of the Director Loan owed to the Company, as had his Accountant. He stated that following review of the Company transactions from 1 July 2016 to 15 July 2022, he had believed at those times that the sums in the Director Loan were legitimate business expenses and he did not understand they had been recorded as loans or that he was obliged to repay these amounts. He stated in evidence that he was not paid wages and that the amounts were to cover living expenses such as food and rent. In his affidavit, the Applicant said that had he been aware that there was a loan, he would have repaid it.
2. The Applicant indicated that he takes full responsibility for the liquidation of the Company, despite the actions of others and challenges brought about by COVID-19 and acknowledged that as the director of the Company, the final responsibility rested with him. He stated that he had come to understand that he was the most successful when operating as a sole trader and that is the nature of the work he wants to return to. He stated that he understood the risks made evident to him during his previous endeavour and asked the Tribunal for leniency, allowing him to resume working in jobs limited to $20,000 to allow him to provide for his family.
3. In his oral evidence before the Tribunal, the Applicant expanded on the matters outlined above.

"No evident risk to the public" (s 33C(3)(a) of the HBA)

1. As set out above, s 33C(3)(a) of the HBA requires the Respondent, and by extension this Tribunal, to be satisfied after considering evidence supplied by the Applicant that that there is no evident risk to the public that the Applicant will be unable to complete contracts entered into the future to do residential building work or specialist work.
2. The Applicant confirmed in his evidence that he was the director of Nato Building Pty Ltd and stated that it had been set up by the Liquidator. The Applicant said that if granted his contractor licence, he did not intend to use this company for any residential building contract entered into by him. Whilst the Accountant's letter refers to Nato Building Pt Ltd as the Applicant's "associated entity", there is no reference in the Liquidator's Report to this company and no other evidence was adduced in relation to it.
3. In cross-examination by counsel for the Respondent, the Applicant gave evidence that he became aware that the Company was insolvent in January or February 2022. This was some five or six months prior to 15 July 2022, when the Company was placed into external administration. Whilst the Liquidator's Report refers to the Liquidator's understanding that the Company ceased to trade prior to his appointment, no evidence was provided as to when this occurred.
4. The Applicant said that at the time that he became aware that the Company was insolvent, namely in January or February 2022, there was a period of heavy rain, the Company had no cash flow, and people were not paying their bills. The Applicant believed that if he could get through that period, things would improve financially. The Applicant conceded that the Company continued to trade for a couple of months after January or February 2022 and that during that time, he tried to talk to clients and to builders and to obtain loans.
5. The Applicant adduced two letters from Mr Matthew Kassulke dated 12 October 2023 and 19 December 2023. The first letter appears to indicate that the Applicant had sought advice from Mr Kassulke, and that he had acted as the Applicant's advisor with regards to his Company. However, Mr Kassulke did not give oral evidence, and the document does not set out any further details as to the nature of this relationship, the information provided by the Applicant or to any advice given to the Applicant by Mr Kassulke. The second letter refers to apparent comments made by the Liquidator, which are at odds with the Liquidator's Report. Moreover, the name of the Liquidator referred to by Mr Kassulke is not the same as the Liquidator named in the Liquidator's Report. In circumstances where the bases for Mr Kassulke's statements are not apparent from these documents, and where he did not give oral evidence, I give them little weight in my determination.
6. As previously referred to, the Liquidator expressed the view that based on his investigations, the Applicant may have allowed the Company to trade whilst insolvent since at least November 2020, a period of more than a year before the Applicant stated that he first became aware that the Company was insolvent in January or February 2022. The Applicant agreed in cross-examination that he had "deferred" to his accountant and stated that he was instead focussed on the Company and trying to increase cash flow.
7. Whilst no officer from the Accountant, including Mr Jabbour, gave oral evidence before the Tribunal, I am satisfied that the Applicant became a client of the Accountant in mid-2020, was a client at the time that his Company was placed into external administration some two years later and continued to be a client as at the time of the hearing. Whilst the Accountant and the Applicant referred to the Applicant's previous accountant not lodging taxation obligations for a period of up to seven years plus, no evidence was adduced in support of this by the Applicant or in relation to fees paid to that accountant, and no evidence was adduced from his previous accountant or from the ATO.
8. The Applicant did not provide details of the exact dates during which the Company failed to comply with its obligations to the ATO or the date that he first became aware of these failures. He provided no details of any steps taken by him during these seven years plus to check that taxation returns and other financial documents had been lodged with the ATO. Whilst the Applicant referred to "the extremely exorbitant amount" of liabilities that had accumulated and to the multiple payment plans that he had with the ATO, he did not provide any detail as to when he first became aware of any debt to the ATO or when these payment plans were put into place.
9. The letter from the Accountant indicates that after the Applicant became their client in mid-2020, all obligations were lodged with the ATO, which then led to the Company being placed into external administration. Even if it was the case that the Applicant was not aware that Company and personal tax returns had not been submitted for many years, both the Applicant and the Accountant would have been aware of this from at least mid-2020, and would also have been aware that the Company owed, or very likely owed, significant sums to the ATO. No detailed evidence was adduced by the Applicant as to what steps were taken by the Applicant and his Accountant at this time. No evidence was adduced by the Applicant as to the dates that the Accountant lodged documents with the ATO on his behalf or when he first became aware of the "_exorbitan_t" debt owed by the Company to the ATO.
10. Whilst the Accountant contended that all of the Company's obligations were lodged by them with the ATO, this appears to be at odds with the Liquidator's Report referred to above, which makes reference to the ATO listing a number of tax returns and activity statements relating to the Company as still being outstanding in October 2022 and also notes that the Company's management accounts had not been updated since at least June 2020.
11. The material from the Accountant also indicates that the Company was placed into external administration and liquidated solely as a consequence of the position that his former accountants had left the Applicant in. Whilst I accept that the debt to the ATO was a contributing factor to the Company being placed into external administration, I am not satisfied on the evidence before me that the failure by the Company to lodge returns or to pay taxation liabilities can be attributed to the Applicant's former accountants rather than to the Applicant. This is particularly so where the Applicant acknowledged in cross-examination that as the sole director of the Company, the finances of the Company were his responsibility and that the "buck" stopped with him. This was reflected in his affidavit, in which the Applicant indicated that in future he would require proof of lodgements from his accountant.
12. Whilst the Liquidator's Report indicates that the Applicant owed the ATO some $284,000, the total liabilities of the Company were estimated by the Liquidator as around $541,000, and in addition to the ATO, there were claims against the Company from 34 other unsecured creditors. It is also apparent from the Applicant's evidence, that he attributed the winding up of the Company to various factors, including COVID- 19, increasing prices, bad weather, shortage of staff and the poor performance of a relative that he employed. In his letter of 5 October 2023, the Applicant also referred to "significant amounts" of outstanding amounts of money owed to him by creditors over the years which he "aimed" to obtain, No evidence was given by him as to the process employed by the Company in relation to the recovery of debts owed to the Company. None of the other factors relied on by the Applicant, were referred to in the letter from the Accountant or in the reference from Mr Jabbour.
13. It is apparent that the view expressed in the Accountant's letter that during the life of the Company, the business under the Applicant's supervision "was doing well, with consistent work and income that was growing over the years until the external administration", is at odds with the evidence given by the Applicant, particularly his evidence that he was aware from at least January or February 2022 that the Company was insolvent. The Accountant's letter also refers to the Applicant's work ethic and quality of work to be of the "highest order", and that the Applicant's works are "always on time". In my view, this opinion is at odds with the insurance claims against the Company in 2022 and goes beyond the scope of the Accountant's expertise. No supporting evidence has been provided to establish a basis for the opinions expressed in either the letter or in the reference.
14. In light of these issues, I give no weight in my consideration of this matter to the explanations from the Accountant or from Mr Jabbour as to why the Company was placed into external administration or to the opinion "that [the Applicant] holds strong financial viability to complete contracts in the future for residential building work."
15. There are various letters dated 22 October 2022 in the s 58 documents from the Applicant relating to the three insurance claims lodged against the Company. Whilst no issue was raised about the date of these letters, it appears from the email header also contained in the material dated 26 October 2023, that the letters have been incorrectly dated and were in fact written in 2023. To avoid confusion, these Reasons refer to the stated date of these letters.
16. The letter dated 22 October 2022 from the Applicant in relation to the Cameron Park claim for failure to commence, refers to the contract for the works being signed, and the deposit taken, for the Applicant to commence in August 2022. The Applicant stated that whilst materials were ordered for this job on the Company trade account, the money was used for the "Kotara job" to pay trades and materials. He said that (sic) "once again due to lack of trades and covid and price increasing was getting hard for us financially." The Applicant indicated that he understood the situation the client was left in "financially and stress", however he did refer the client to a builder friend to do the job and the job was done.
17. The Applicant confirmed in cross-examination that he used the deposit paid to the Company for the Cameron Park project to pay for trades and materials on the Kotara project. The Applicant said that this was something that he had not done before and that he had "no choice."
18. A further letter dated 22 October 2022 from the Applicant relates to the Kotara claim. The Applicant's letter states that the Kotara project started in December 2021 which involved the full renovation of two dwellings, namely a granny flat and the main dwelling. The granny flat was said to have been 90% completed and as planned, work commenced on the main dwelling. The Applicant stated that due to rain, covid, lack of trades and price increasing, this job started to run behind. He said that he spoke to the client about this before liquidation, and the outcome was "not so good". The plan was to complete the project within four months, but financially the Company could not do so. The Applicant stated that the main dwelling was about 30% in construction before liquidation.
19. In a letter dated 20 December 2023, the Applicant provided further information in relation to the Kotara project, stating that the work ran from December 2021 to March 2022, and that the granny flat was 75% complete and that at the time of liquidation, the job was in construction stage only. The Applicant also acknowledged faulty workmanship on the Kotara project that was carried out by his relative who worked on the job. The Applicant did not adduce evidence from that person.
20. The Swansea claim related to major defects, and the Applicant stated in his letter dated 20 December 2023 that the job was completed to practical completion in November 2021 with a 90-day maintenance period and defects list commenced. The Applicant stated that he was not given access to the property by the client and that it was difficult to complete the defects.
21. The Applicant contended that the period leading up to the Company being placed into external administration was extremely difficult, and as outlined above, referred to various factors such as COVID-19, the bad weather, price increases, staff shortages and issues with poor work by a relative he employed.
22. The Applicant acknowledged in cross-examination, that he continued to rely on fixed price contracts and did not use "costs plus" contracts at any time. He acknowledged that he had been in the building industry for a long time and was used to factoring in costs for bad weather and increasing costs of building materials but stated that the circumstances in this period had been extreme. He acknowledged to having been busy and to not having closely supervised his relative on various jobs.

1. I am satisfied that the evidence establishes that the Company was placed into external administration following a Creditors' voluntary winding up on 15 July 2022 and that the Company had debts of some $541,000 at this time, including debts to the ATO of approximately $284,000, and total assets of only $23,000. Whilst the Liquidator makes reference to his investigations indicating that the Applicant may have allowed the Company to trade whilst insolvent since at least November 2020, on the limited evidence before me, I am not able to be satisfied to the relevant standard that this was the case.
2. I am however satisfied that the Company did not file the required returns and statements with the ATO for a period of at some seven years plus, and that it did not do so until sometime after mid-2020. I am satisfied that as of 14 October 2022, the ATO still listed a number of Company statements and returns as outstanding, and that the Company owed the ATO approximately $284,000 at that time. I am satisfied that whilst the Applicant changed accountants in mid-2020, the Company's management accounts had not been updated since at least June 2020.
3. I am satisfied from the Applicant's evidence that he was aware that the Company was insolvent in January or February 2022 and that he allowed the Company to continue to trade until at least April or May 2022. I am further satisfied that at the time that the Company was placed into external administration, the Applicant had not completed the contracts the Company had entered into relating to both the Cameron Park project and the Kotara project and that the Applicant used monies received by the Company in relation to the Cameron Park project for the Kotara project, as he had "no choice".
4. I have had regard to the Applicant's request that if granted a contractor licence, that it be subject to a condition that it be limited to contracts of $20,000. Whilst I accept that such a condition can be imposed on a contractor licence, in my view, 33C(3) of the HBA provides that the Tribunal must be satisfied in relation to each of each of the matters set out in s 33C(3) before it may issue a contractor licence. Accordingly, I find that the Tribunal is required to make a determination pursuant to s 33C(3) of the HBA in relation to the issue of a contractor licence, prior to considering whether a condition should be imposed on that licence. As a consequence, I have no regard to the Applicant's prosed condition in my consideration of the matters set out in s 33C(3) of the HBA.
5. The Applicant gave evidence that he had learned from his mistakes, and it was submitted on his behalf that there is no evident risk to the public that he would be unable to complete contracts entered in the future to do residential building work. Whilst I have had regard to the remaining references provided by the Applicant, they provide little assistance to my consideration of s 33C(3)(a) of the HBA.
6. It is apparent from the evidence that the Company had not lodged returns with the ATO over a period of some seven years plus and owed the ATO a significant debt. Whilst blame for this was attributed to the Applicant's previous accountant, the Applicant accepted that he was ultimately responsible for the Company's finances and that the "buck" stopped with him. However, the Applicant provided little detail as to what had occurred with the ATO over this lengthy period of time. From the Applicant's evidence, it also appears that "significant" debts were owed to the Company by creditors over the years which had not been followed up by the Applicant for some time.
7. Having considered the evidence supplied by the Applicant, and in particular: that the Applicant was the sole director of the Company that became a Chapter 5 body corporate on 15 July 2022, with liabilities of some $541,000, and assets of only $23,000; that the Applicant did not supply the Tribunal with full details of the Company's issues with the ATO; the Applicant's admission that he knew that the Company was trading insolvent for a number of months in early 2022. I have also had particular to the Company's failure in 2022 to complete contracts to do residential work for the Kotara project and the Cameron Park project and of which, the Applicant said he had had "no choice" but to use monies received for the Cameron Park project on the Kotara project.
8. In light of this evidence, I am not satisfied in accordance with s 33C(3)(a) of the HBA that there is no evident risk to the public that the Applicant will be unable to complete contracts entered into in the future to do residential building work.

1. Section 33C(3) of the HBA requires that the Tribunal be satisfied of each of the three matters set out in that section. It follows that having found that I am not satisfied in relation to the matters set out in s 33C(3)(a), that the exception in s 33C(3) of the HBA does not apply to the Application and a contractor licence to the Applicant must not be issued.
2. Whilst I am not required to give further consideration to the matters set out in ss 33C(2)(b) and (c), I note that even if I had been satisfied in relation to s 33C(3)(a) of the HBA, that after considering the evidence supplied by the Applicant, particularly the Applicant's concession in cross-examination that the steps that he had taken fell short of the reasonable steps to avoid liquidation of the Company, I would not have been able to be satisfied that the Applicant took all reasonable steps to avoid the liquidation of the Company pursuant to s 33C(3)(b) of the HBA.
3. In light of my finding above, it is not necessary for me to further consider s 33C(3) of the HBA or to consider whether or not the Applicant is a fit and proper person to hold a contractor licence pursuant to s 20(1)(a) of the HBA.
4. It follows that the correct and preferable decision in this matter is to affirm the Decision of the Respondent and to refuse the Application.

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.