Masri v Commissioner for Fair Trading

Legislation

1. Section 32(1A) of the HB Act states that an owner-builder permit must not be issued to a person to do residential work that relates to 'dual occupancy' unless there are 'special circumstances. Section 32 is in the following terms: (1) An owner-builder permit authorises its holder to do such residential building work as is described in the permit on the land specified in the permit. (1A) An owner-builder permit must not be issued to authorise its holder to do residential building work that relates to a dual occupancy unless the Secretary is satisfied that special circumstances exist that justify the owner-builder permit authorising its holder to do that work. The Secretary may issue guidelines as to the circumstances that will be considered to be special circumstances for the purposes of this subsection. (2) The authority conferred by an owner-builder permit: (a) is subject to the conditions applicable to the permit for the time being, and (b) may, on the application of the holder of the permit, be varied by an order of the Secretary set out in a notice served on the holder of the permit.
2. Section 29 of the HB Act defines 'dual occupancy'.
3. Section 55(1)(b) of the Civil and Administrative Tribunal Act 2013 (NSW) (CAT Act) permits the Tribunal to dismiss any proceeding if it considers that proceedings are misconceived or lacking in substance.
4. Section 6(1)(c) of the ADR Act defines 'decision' as including a refusal to issue a licence. A decision made by the Commissioner pursuant to the HB Act is a decision made under an enabling legislation; s6(2).
5. Section 7(1) of the ADR Act defines the meaning of an 'administratively reviewable decision' to be a 'decision of an administrator over which the Tribunal has administrative review jurisdiction'.
6. Section 9 of the ADR Act explains that the Tribunal has administrative review jurisdiction over a decision (or class of decisions) of an administrator if enabling legislation provides that applications may be made to the Tribunal for an administrative review under this Act of any such decision (or class of decisions) made by the administrator.
7. Section 55 of the ADR Act makes it plain that the Tribunal only has jurisdiction to review 'an administratively reviewable decision'. Pursuant to s63 of the ADR Act, the Tribunal is required, in determining an application for an administrative review, to decide what is the correct and preferable decision having regard to the material before it. The Tribunal may then affirm, vary or set aside the administratively reviewable decision. If the Tribunal sets aside that decision, the Tribunal can make a substituted decision or remit the matter for reconsideration by the administrator who made the original decision.

Mr Masri's case

1. Mr Masri has held a carpenter contractor licence since March 2016. He purchased a property at Yagoona in 2022 with the intent to build a dual occupancy so that he can continue to live on the same property as his ageing parents. Mr Masri took out a loan for $600 000 with St George Bank to purchase the property in July 2022. The variable interest rate at the time was 2.79%.
2. On 29 September 2022, Mr Masri completed the owner builder course. On 18 November 2022, a development application (DA) was granted to demolish existing structures and build a dual occupancy structure. On 24 November 2022, Mr Masri applied for an owner-builder permit. Mr Masri's description of the work in his application for the owner-builder permit was 'Demolition of existing structures and construction of a 2 storey attached dual occupancy with torreins (sic) tittle subdivision'. Market value of the work was estimated as $654 500.
3. In the attached statement, Mr Masri stated that he did not intend to subdivide or sell either of the dwellings and that his family and his elderly parents intended to live side by side on the property. A medical certificate dated 24 November 2022 was included with the application which set out a number of medical conditions suffered by Mr Masri's father and stated that his father required daily care by his son 'for many hours during each day'.
4. Mr Masri also attached a short note which stated that he had previously lived with his parents at another property. His parents lived in the house and Mr Masri and his family lived in a granny flat. Mr Masri stated that they had 'outgrown it.' At the hearing Mr Masti explained that he now has two children and they need more room. Mr Masri stated that he wished to continue living next to his parents in their old age which is the reason why he decided to purchase this land in Yagoona and build a dual occupancy dwelling. Ms Masri stated that 'we cannot afford a builder at the moment.' He pointed out that he is a licenced carpenter with 14 years' experience in residential construction. He attached a copy of the certificate for the owner builder course and a copy of the DA.
5. Since the demolition of the old structure, Mr Masri and his family as well as his parents had to find separate rental accommodation.
6. Based on the bank records provided, the variable interest rate was increased to 5.04% in December 2022. The application for the owner-builder permit was refused on 5 January 2023.
7. Mr Masri engaged a building company to construct the home for $550 000 on 27 February 2023. Mr Masri's evidence was that he could no longer wait for the owner-builder permit as he was incurring significant costs renting properties for himself and his parents and had to try to build the new home as quickly as possible. The building company commenced the build on 13 March 2023 and Mr Masri worked on the build, as a carpenter.
8. Mr Masri's oral evidence was that he was concerned of running out of money and not being able to afford to pay the builder to finish the rest of the construction because of the increase in mortgage repayments. Mr Masri stated that he had conversations with the manager of the building company and with the certifier about the possibility of him finishing the build if the permit was granted. He stated that the certifier was aware of past cases where this occurred and could certify the work of the builder before Mr Masri commenced the building pursuant to the owner-builder permit. Mr Masri stated that the builder was agreeable to end the contract if Mr Masri commenced the build pursuant to the owner-builder permit.
9. Mr Masri estimated a saving of $50 000 to $70 000 if he was able to finish off the building if he was granted the permit.
10. Mr Masri relied on the following facts to establish 'special circumstances' 1. That he and his family had lived together with his parents on the same property in different dwellings previously and he purchased the property at Yagoona with the intent of continuing this arrangement, particularly as his parents were aging and his father required daily care; 2. That the dual occupancy is for his family and his elderly parents and there is no intention to subdivide or sell one or both of the properties; 3. The significant increase in the interest rates has contributed towards financial hardship and he may not have sufficient funds to pay the builder to finish the build; and 4. The longer the build continued the greater costs he was incurring renting a property elsewhere for himself and his family.

Commissioner's Submissions

1. The Commissioner's reason for refusing the owner-builder permit was based on the finding that Mr Masri's father's health conditions and the fact that they (Mr Masri's family and Mr Masri's parents) outgrew their prior home were not 'special circumstances.' It is noted that no evidence was provided to demonstrate financial hardship as a result of engaging a builder and that the permit was not intended to allow people to undertake dual occupancy work with a view of subdividing it.
2. The Commissioner's submission is that Mr Masri's application should be dismissed pursuant to s55 of the CAT Act on the basis that the application is misconceived or lacking in substance.
3. The Commissioner submitted that the application has become 'otiose' because the demolition has already occurred, and the building has commenced. The Commissioner submits that an owner-builder permit can only be issued before the building commences and that the Tribunal has no 'jurisdiction to deal with matters outside of the application (Mr Masri's application for an owner-builder permit to the Commissioner).'
4. The Commissioner relied on information it has available on its website that a licence is required 'before you commence building work.' Reliance was also placed on s6.6(2)(c) of the Environmental Planning and Assessment Act 1979 (NSW) that an owner-builder permit is required before any residential building work is commenced.
5. The Commissioner referred to a number of authorities for the proposition that there are no 'special circumstances' that warrant the grant of owner builder licence based on the principles and observations in Hammoudi v Commissioner for Fair Trading [2016] NSWCATOD 57 (Hammoudi), McGufficke v Commissioner for Fair Trading [2022] NSWCATAD 176 (McGufficke); Oslear v Commissioner for Fair Trading [2022] NSWCATAD 176 (Oslear).
6. The Commissioner relied on the Minister's Second Reading Speech in May 2014: …. Owner-builders will not be able to obtain a permit for work on a dual occupancy unless the commissioner is satisfied that special circumstances exist, such as where a family could demonstrate legitimate non-commercial reasons for the work or where refusing the permit could cause family hardship.
7. The Commissioner asserted that Mr Masri was not candid with the Tribunal because he provided an unsigned quote from the builder for $880 000 and that his living arrangements are a personal matter.

Consideration

1. The Tribunal's jurisdiction to hear and determine this application is derived from section 83B of the HB Act and section 30 of the CAT Act as it is a decision of an administrator over which the Tribunal has administrative review jurisdiction. The role of the Tribunal is to make the correct and preferable decision on the material before it.
2. The Commissioner was not able to point to any provision in the HB Act or to any authority for the proposition that the Tribunal has no jurisdiction to hear and determine this matter because some of the building work has already taken place at the property for which the owner-builder permit is sought.
3. On a plain reading of s32, in consideration of the HB Act as a whole, taking into account its purpose and objective, there is nothing to suggest that an owner-builder permit cannot be issued because building work has commenced. On the contrary, s32(1) of the HB Act authorises a person with an owner-builder permit to do all such work as 'is described in the permit'. This suggests that there may be a number of different elements or parts or stages of the work that a person can do. Section 32(1) does not suggest that if any part of the work described in the permit no longer needs to be done the permit is 'otiose'.
4. Section 32(2)(b) of the HB Act gives an opportunity to an applicant to vary the permit. This demonstrates the practical and flexible effect this provision is intended to achieve.
5. Section 6.6(2)(c) of the Environmental Planning and Assessment Act requires, in this case, the builder to notify the certifier that Mr Masri would commence the building work as an owner-builder before he commences to perform the building work. An interpretation proposed by the Commissioner may mean that more than one 'principal contractor' would be unable to perform the building work if a change is required s6.6(2)(d). I do not need to decide this issue as I am satisfied that s32(1A) of the HB Act permits the Commissioner and in this case the Tribunal to grant a permit if it is satisfied that there are 'special circumstances'.
6. On a factual basis the submission that the application is 'otiose' cannot be accepted. The application for the owner-builder permit is not useless or ineffectual. The issue of the permit would be of significant use to Mr Masri.
7. I reject the Commissioner's application to summarily dismiss the application. Mr Masri's application to this Tribunal is not misconceived or lacking in substance.
8. Turning next to the substantive issue of whether or not Mr Masri demonstrated that there are special circumstances that warrant the issue of an owner-builder permit, I consider the decisions the Commissioner relies on. In McGufficke the Tribunal was not satisfied that the applicant sought the owner-builder permit to build a dual occupancy for retirement (the non-commercial reason) and found that the applicant sought the permit so as to avoid the payment of a home warranty insurance.
9. In Hammoudi, the Tribunal accepted that the applicant had a medical condition which required ongoing assistance and care from a family member. The purpose of the dual occupancy was so that the family member could provide care while living on the same property as the applicant. The Tribunal also accepted that the applicant would experience financial hardship if the permit was not granted.
10. In Oslear, The Tribunal found that the applicant intended to live in one of the properties on the property and the other property was to be rented out and possibly sold. On this basis the Tribunal found that there was nothing unfair or unjust about the permit not being granted or that suggested that there were 'special circumstances' warranting the issue of the permit.
11. Mr Masri provided an estimate of the amount he would save for building work as $50 000 to $70 000, however it was unclear whether this was per month or for the remaining 6 months of building work to be completed. The amount of interest paid was as at 20 December 2022 $3 203 per month. It was $ 2 463 in July 2022 (as set out in the bank records). Mr Masri's evidence was that since December 2022 the variable interest was increased in 2023.
12. The Tribunal is satisfied that the reason why Mr Masri applied for the permit was to build a dual occupancy dwelling for his family and his elderly parents.
13. Mr Masri was cross examined by the Commissioner, and I am satisfied that he is not seeking the permit with commercial purposes in mind of subdividing the property or selling one or both of the dwellings. I do not accept that he was not candid with the Tribunal.
14. The refusal of the permit has caused and would continue to cause Mr Masri financial hardship in that he may not be able to finish the build because of the significant increase in the mortgage payments or that the building work will be delayed which would result in Mr Masri renting premises for a longer period of time, also impacting on his financial circumstances.
15. The Second Reading speech specifically refers to a family demonstrating that legitimate non-commercial reasons for the permit refusal would cause family hardship is a 'special circumstance.' This is squarely, Mr Masri's situation.
16. The Tribunal is satisfied that special circumstances have been demonstrated by Mr Masri.

Order 1. The decision by the Commissioner for Fair Trading to refuse the Applicant's application for an owner-building permit is set aside. 2. The decision is made that the Applicant's application for an owner-building permit is granted. 3. The Respondent's application to dismiss the application is refused.

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: 06 June 2023