Valdecon Group Builders & Developers Pty Ltd v Commissioner for Fair Trading, Office of Finance and Services

introduction

1. This is a review of a decision by the respondent, who is the Commissioner for Fair Trading ('Fair Trading'), to refuse a company contractor licence in the category of building to the applicant, who is the company Valdecon Group Builders & Developers Pty Ltd ('Valdecon').
2. On internal review, Fair Trading found that:

• as a director of Valdecon, Mr Samer Hraiki, was a close associate of the company who exercises a significant influence over Valdecon or over the operation and management of Valdecon's business;
• in light of his criminal record and his failure to disclose both that he had been known by other names and had been discharged from bankruptcy, Mr Samer Hraiki is not a fit and proper person to hold a contractor licence.

1. Section 20(6)(c) of the Home Building Act 1989 provides that an application for a contractor licence may be refused if it is considered to be in the public interest to do so on the basis that a close associate of the applicant, who would not be a fit and proper person to hold an authority, exercises a significant influence over the applicant or the operation and management of the applicant's business.
2. Given that Mr Hraiki was held not to be a fit and proper person to hold a contractor licence and in light of the fact that, as a director, he exercises a significant influence over the operation and management of Valdecon's business, the internal reviewer found that, in accordance with section 20(1)(d) of the Home Building Act, Valdecon must be refused a company contractor licence.
3. Before the Tribunal, Mr Coss, for Fair Trading, advised that the issues related to Mr Hraiki's bankruptcy were not relevant to the Tribunal's decision and so would not form part of Fair Trading's case.
4. Mr Nazarian, for the applicant, conceded that as a director of the company, Mr Hraiki was a 'close associate' of Valdecon who would exercise a significant influence over Valdecon or over the operation and management of Valdecon's business.
5. Accordingly, the issues before the Tribunal are as follows:

• in light of his criminal record and his failure to disclose that he had been known by other names, would Mr Hraiki be a fit and proper person to hold a contractor licence?
• If so, would it be in the public interest to refuse a company contractor licence to Valdecon?

1. Valdecon's application for review was lodged out of time. The Tribunal was advised that whilst the application itself had been completed the application within time, there had been delays in providing the relevant accompanying documentation. Under the circumstances, the Tribunal decided to accept the application and proceed to hear the matter.

Relevant law

1. The Home Building Act 1989 sets out the law in relation to the granting of builder contractor licences. Substantial changes were made to the Home Building Act on 15 January 2015. Relevantly, these changes do not apply to applications made prior to 15 January 2015. As Valdecon's application for a company contractor licence was lodged on 21 November 2014, the changes to the Home Building Act do not apply.
2. Section 20(6) of the Home Building Act 1989 provides that Fair Trading (and on review, the Tribunal) may refuse an application for a contractor licence if Fair Trading (or the Tribunal) is of the opinion that it is in the public interest to do so on the basis that Fair Trading (or the Tribunal) considers that a close associate of the applicant, who would not be a fit and proper person to hold a contractor licence, exercises a significant influence over the applicant or the operation and management of the applicant's business.
3. Section 20(1A) of the Home Building Act specifies that in determining whether an applicant is a fit and proper person to hold a licence the Director-General is to consider whether the applicant is of good repute, having regard to character, honesty and integrity.
4. The Tribunal has power to review the decision to refuse Valdecon a building contractor licence pursuant to section 83B of the Home Building Act 1989 and section 9 of the Administrative Decisions Review Act 1997.
5. The review is a hearing "de novo", on the merits. The Tribunal's role is to make the correct and preferable decision on the basis of all the material before it. The Tribunal may take into account material not previously before the decision maker. See Drake v Minister for Immigration and Ethnic Affairs [1979] AATA 179; (1979) 46 FLR 409.

Fit and proper

1. The issue of fitness and propriety has been considered in numerous matters before this Tribunal. It is well established that the meaning of "fit and proper" is dependent on the nature and purpose of the activities that the person will undertake.
2. In Australian Broadcasting Tribunal v Bond [1990] HCA 33; (1990) 170 CLR 321 at 380 Chief Justice Mason said that: "The question whether a person is fit and proper is one of value judgment. In that process the seriousness or otherwise of particular conduct is a matter for evaluation by the decision maker. So too is the weight, if any, to be given to matters favouring the person whose fitness and propriety are under consideration."
3. In Hughes and Vale Pty Ltd v New South Wales (No. 2) [1955] HCA 28; (1955) 93 CLR 127 the High Court discussed the meaning of the term fit and proper' (at 156-7): "The expression fit and proper' is of course familiar enough as traditional words when used with reference to offices and perhaps vocation. But their very purpose is to give the widest scope for judgment and indeed for rejection. Fit' (or idoneus') with respect to an office is said to involve three things, honesty, knowledge and ability ... When the question was whether a man was a fit and proper person to hold a licence for the sale of liquor it was considered that it ought not to be confined to an inquiry into his character and that it would be unwise to attempt any definition of the matters which may legitimately be inquired into; each case must depend upon its own circumstances."
4. In Sobey v Commercial and Private Agents Board (1979) 20 SASR 70 Walters J said: "In my opinion what is meant by that expression is that the Applicant must show not only that he is possessed of a requisite knowledge of the duties and responsibilities evolving upon him as the holder of a particular licence ... but also that he is possessed of sufficient moral integrity and rectitude of character as to permit him to be safely accredited to the public ... as a person to be entrusted with the sort of work which the licence entails."
5. In McBride v Walton (NSW Court of Appeal, unreported, 15 July 1994), the Court said that where there is evidence of misconduct, there should be consideration of any explanation for that misconduct, its seriousness to the particular activity, the motivation of the person, whether the misconduct is an isolated incident, the person's underlying qualities of character, and the person's conduct since the incident and whether this demonstrates recognition of the misconduct and subsequent reform.

Public Interest

1. Public interest is not defined in the Home Building Act. It can include concerns in relation to public protection, public safety and public confidence in the administration of the licensing system - see Constantin v Commissioner of Police New South Wales Police Force [2013] NSW ADT AP 16 at 33. The decision maker must exercise the discretion promoting the objects and principles of the Home Building Act. The applicant's interest in having a contractor licence is subordinate to that of the public interest in ensuring public safety - see Comalco Aluminium (Bell Bay) Ltd v O'Connor and Others (1995) 131 ALR 657.

Failure to disclose other name

1. On the application form for a company contractor licence in the category of building, completed by Mr Hraiki on behalf of Valdecon, Mr Hraiki stated that he had never been known by any other name. It is unclear from the application form whether the question is directed to the company Valdecon itself, as the applicant, or whether it is directed to Mr Hraiki as the company's director.
2. Fair Trading allege that the other name by which Mr Samer Hraiki has been known is Mr Sam Hraiki and that a failure to disclose this was relevant to his fitness and propriety to hold a contractor licence.
3. In an affidavit to the Tribunal, Mr Hraiki's brother, Mr Riad Hraiki, states that his brother Samer has been 'referred to as "Sam" since we were kids.'
4. In evidence before the Tribunal, Mr Hraiki stated that whilst his real name is Samer, he has always been called Sam and has never tried to hide this.

Criminal record

1. On 28 October 2011, Mr Hraiki was convicted of the following offences:

• two counts of attempt to pass a valueless cheque;
• three counts of use false instrument;
• three counts of obtain money by deception; and
• one count of doing an act with intent to pervert the course of justice.

1. In all, he was sentenced to a term of imprisonment of seven and a half years commencing on 20 April 2009. He was released to parole in October 2013. His parole period expires on 16 October 2016.
2. There are few details before the Tribunal in relation to the offences. The agreed facts on sentence in relation to the matters were requested from Mr Hraiki's former solicitors but were not forthcoming; nor are the remarks on sentence before the Tribunal.
3. In his affidavit, Mr Hraiki states that: The financial pressure I was under, coupled with my inability to handle this pressure, placed an enormous strain on my marriage and my partner..separated from me and left me. It was at this time of separation that I began to delude myself into thinking that the elimination of my financial problems would bring my family back to me. I then committed the acts for which I eventually pleaded guilty to and sentenced to imprisonment. Upon being charged, I was resolute and firm in my intention to plead guilty to all of the charges. I did this as I accepted full responsibility for my actions that constituted the offences for which I was charged. I accepted responsibility, totally, for what I did and I continue to do so. I am extremely sorry and ashamed for what I did… I was sentenced at the District Court at Sydney by His Honour Judge North on the 28th October 2011 and my sentences commenced from the 20th April 2009. This is because I was charged on this day and was bail refused. I did not apply for bail as I intended to plead guilty from the outset. I was aware that I was receiving a custodial sentence and I wished to commence serving this sentence as soon as possible so that I could pay back my debt to the community without any delay.
4. Mr Hraiki also sets out his achievements in gaol which include completing his Certificate IV in Building and Construction (Building) in addition to completing courses in work safety in construction, bonded asbestos removal, skid steer and backhoe operations and first aid.
5. Mr Hraiki has assured the Tribunal that he would not misplace any trust placed in him. He is currently working as a project manager but is keen to work for himself and to run his own business. He would be happy to abide by any conditions placed on a licence issued to him.
6. In his affidavit, Mr Hraiki's brother, Mr Riad Hraiki, states that his brother is working hard, is making sensible and very positive decisions in his life and has a strong desire to make a good effort in the building industry.
7. In his affidavit, Mr Michael Zaarour, who is a licensed builder, attests to Mr Hraiki's skill as a builder.
8. Mr Hraiki's priest, Monsignor Rt Rev Nabil Kachab, describes Mr Hraiki as a man who is very well respected and highly thought of among his friends, 'always ready to give and often called upon to help others.'
9. In support of the application by Valdecon, Mr Nazarian told the Tribunal that Mr Hraiki led a law-abiding life until he was 31 years of age, when his business collapsed. Mr Nazarian submitted that Mr Hraiki's integrity has been demonstrated by his acceptance of responsibility for his actions, his diligence in gaol, including his mentoring of young inmates and the fact that the Australian Securities & Investments Commission (ASIC) has allowed him to be a company director.
10. It is the respondent's view that in light of his criminal record and that fact that he remains on parole, it is too soon for Mr Hraiki to be found to be a fit and proper person to hold a contractor licence.

findings and reasons

1. It is conceded by the applicant and I accept that, as a director of the company, Mr Hraiki was a 'close associate' of Valdecon who would exercise a significant influence over Valdecon or over the operation and management of Valdecon's business.
2. In relation to the issues as to whether Mr Hraiki is a fit and proper person, I make the following findings.
3. I am not satisfied that Mr Hraiki failed to disclose that he was known by another name, namely Sam (rather than Samer) Hraiki. I accept that Mr Hraiki has been known as Sam as a child and that this is simply a diminutive of his birth name, Samer. For this reason I do not accept that, on the application form for a company contractor licence completed on behalf of Valdecon, Mr Hraiki erred in failing to answer yes to the question Have you been known by other names?
4. In October 2013, Mr Hraiki was released from gaol to parole. He spent four and a half years in gaol and will remain on parole until 16 October 2016.
5. Eight offences were offences of dishonesty. The findings of the sentencing judge in relation to those offences are not before me. Indeed, all I have in relation to the offences is a printout of Mr Hraiki's criminal record and Mr Hraiki's acceptance of responsibility for the offences. In the absence of more detailed information about the offences, I find that in light of the severity of the sentences imposed, these were serious offences involving dishonesty that merited a substantial period of imprisonment.
6. I accept that whilst in gaol, Mr Hraiki worked hard to improve himself. His list of achievements whilst in goal is impressive and includes the completion of a series of courses and being selected as a mentor for younger inmates.
7. Mr Hraiki was forthright in his evidence and gave the impression of a man who has gained insight into his earlier behaviour and has strong family and professional support.
8. On the evidence before me, however, I am not satisfied that enough time has elapsed since Mr Hraiki's conviction to satisfy me that he is a fit and proper person to hold a contractor licence. I have no reports from his parole officer as to his behaviour whilst on parole. I have no details as to the offences of which he was convicted, including the circumstances founding his conviction of a charge of an act with intent to pervert the course of justice. This is a serious charge and, when coupled with his offences relating to dishonesty, gives me concern as to his fitness and propriety at this point.
9. I note Mr Coss's submission that, whilst it is too soon to make a finding that Mr Hraiki is a fit and proper person to hold a contractor licence, should Mr Hraiki continue to maintain a clear record, Fair Trading may reach a different decision in relation to Mr Hraiki's fitness and propriety a couple of years after his parole period has expired.
10. Mr Hraiki is to be commended for his progress both in gaol and since his release. For the reasons set out above, however, at this stage I am not satisfied that he is a fit and proper person to hold a building contractor licence.
11. I am not satisfied that it would currently be in the public interest for Valdecon to be granted a company contractor licence. I make this finding in light of the concession that as a director of the company, Mr Hraiki was a 'close associate' of Valdecon who would exercise a significant influence over Valdecon or over the operation and management of Valdecon's business and in light of Mr Hraiki's relatively recent conviction for a number of offences relating to dishonesty which has led me to find that, at this stage, he is not a fit and proper person to himself hold a contractor licence. A different view may be reached in the future, however, should Mr Hraiki maintain a clear record and continue his progress following the expiry of his parole period.
12. For the reasons set out above, I find that in accordance with section 20(6)(c) of the Home Building Act, it would not be in the public interest for Valdecon to be granted a contractor licence. Accordingly, the decision under review is affirmed.

decision

1. The decision under review is affirmed. 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: 16 December 2015